What does an investment banker do?

Investment bankers serve as financial advisors to assist companies and organizations in securing funding for various purposes like expanding their operations. They engage in a wide array of daily tasks with some common responsibilities including:

• Conducting a comprehensive analysis of a company’s financial records in preparation for an initial public offering (IPO).
• Thoroughly researching market trends and their applicability to the financial position of a company.
• Employing financial modelling techniques to project a company’s profitability and overall performance.
• Facilitating the restructuring of a company’s organizational framework to facilitate the issuance of bonds, equity, or stocks for capital raising.
• Presenting compelling investment opportunities within a company to prospective investors.
• Expanding a client’s network of potential capital sources by providing contact information for potential investors.

Now let’s look at the pros and cons of Investment Banking.

Pros of being an investment banker

For individuals considering their career options, there are many benefits to working as an investment banker. Pros of being an investment banker are: 

High earning potential

A career in the financial industry holds the promise of significant earnings potential, with investment bankers typically earning an average national salary of $66,493 annually. Successful professionals in this field have the opportunity to secure substantial base salaries along with substantial commissions. This makes investment banking an attractive career choice for those who prioritize their income potential when making career decisions.

Valuable benefits packages

Investment banking careers offer appealing compensation packages, which extend beyond salaries. Professionals in this field frequently enjoy generous benefits, including commission and bonus opportunities, comprehensive insurance coverage, and stock options. These additional perks make investment banking an enticing career choice.

Working with driven peers

In the realm of investment banking, you’ll find a multitude of ambitious individuals striving for high levels of success. Your peers are likely to be equally dedicated and hardworking. This profession demands intelligence and strong analytical skills, and your colleagues and clients often need to perform at peak levels to stay competitive. Collaborating with such motivated individuals can serve as a constant source of inspiration, encouraging ongoing learning, and providing capable co-workers when assistance is required.

Powerful networking

Investment bankers frequently engage with senior officials from the organizations they work with, affording them the chance to establish both personal and professional connections with these high-ranking individuals. This presents a valuable networking opportunity that can significantly advance your career. Within your network, you may find individuals willing to aid you in discovering new job prospects or serve as references when pursuing positions you’ve identified or seeking promotions.

Continued development

Investment banking is a dynamic field where market landscapes and industries under analysis are in a perpetual state of change. This constant evolution demands a commitment to ongoing learning and adaptability. While the skills and knowledge acquired early in your career retain their relevance, the need to develop new ones to address emerging trends becomes imperative. Investment banking, therefore, offers an exceptional career pathway, allowing professionals to continually enhance their skill set and stay abreast of evolving business sector dynamics.

Cons of being an investment banker

To make an informed career decision, it’s crucial to carefully evaluate the potential drawbacks of pursuing a career as an investment banker, along with strategies to mitigate their impact. Some of the disadvantages of this profession include:

Long working hours

A career in investment banking often demands a significant time commitment, with work hours extending well beyond the conventional 40-hour workweek. This entails weekends and long shifts during the week. While this extended work schedule can pose a challenge for professionals, it’s worth noting that these rigorous hours are a trade-off for the substantial financial rewards that come with the role of an investment banker.

Increased availability

In addition to regular working hours, investment bankers may find themselves on-call during non-traditional times for their employers or clients. This includes tasks like answering phone calls and emails, addressing inquiries, or conducting research. Being accessible to meet these demands can enhance your ability to deliver superior service, leaving a positive impression. In turn, this commitment to responsiveness can contribute to bolstering your long-term career prospects and ultimately increasing your earning potential.

High competition levels

The investment banking industry is known for its high compensation, but it also carries a reputation for intense competition. Professionals in this field often face heightened pressure to consistently perform at a top-tier level. Seeking assistance or advice from peers can be challenging due to this competitive environment. To thrive in such an environment, it’s advantageous to be someone who excels under pressure. Additionally, cultivating strong interpersonal relationships with colleagues can provide valuable resources and support that enhance your chances of success.

Highly repetitive work

Working as an investment banker often involves tasks that can be highly repetitive in nature. For instance, conducting research on companies and creating reports may yield varying outcomes for each company, but the procedural steps involved tend to remain consistent across different cases. If you thrive on dynamic and ever-changing work, this aspect of the career might be a drawback for you. Conversely, if you appreciate the stability and consistency that repetitive tasks offer, the predictability of these duties may align well with your preferences.

Conclusion

In conclusion, pursuing a career as an investment banker presents a mix of advantages and challenges. On one hand, the potential for high financial rewards, impressive career prospects, and the opportunity to make a significant impact in the financial world can be incredibly enticing. On the other hand, the demanding work hours, the competitive nature of the industry, and the potential for repetitive tasks can be demanding. Ultimately, whether this career path is the right fit for you depends on your individual preferences, strengths, and long-term goals. It’s essential to weigh these pros and cons carefully to make an informed decision that aligns with your aspirations and lifestyle.