Starting a Career in Investment Banking: Core Benefits

In current society, words such as investment banker or investment banking tend to be surrounded by negative stigma, with images of self-centred, wealth-maximising bankers prevailing. Following the crisis of 2008, which saw the exposure of multiple scandals from various large investment banks such as Société Générale, the image of the investment banker has become less popular, and more criticised.

With such negative sentiment surrounding the industry in recent times, and long hours and tight deadlines being a common occurrence, investment banking as an industry can appear alienating to say the least. So we asked ourselves the brutal question; is investment banking still an attractive industry to kick start your career? Upon close analysis, and conversations with various analysts, it became abundantly clear that the industry still remains one of the most promising fields to start your career. Aside from the attractive starting salaries and large bonus incentives, we found that the investment banking industry offers two core benefits not found in other industries:

1. The learning curve

2. The exit opportunities

The learning curve

Investment banking is often called out for its high-pressure working environment. While such pressure and fast pace can be daunting, we like to remind ourselves of the following; Diamonds are chunks of coal which did well under pressure. Without suggesting that students are the equivalent of a chunk of coal, the saying closely reflects the nature of a starting position in investment banking after graduating from either a bachelor or a master’s degree. Instead of viewing high pressure as a negative, it can also be considered a product of being surrounded by the brightest minds in an international setting. Coupled with intense deadlines, physical presentations, complicated calculations, and frequent client interactions, and personal and professional growth of the graduate becomes inevitable.

Another core component of the learning curve is the exposure starters gain to outside industries. With the investment banks being involved with a large number of clients, and thus a huge mix of industries, there is a massive opportunity to build a very strong network of leaders in different types of companies. Aside from this network, you will build up a basic understanding of many different companies, and their value chains, providing you with an excellent understanding of the global business environment.

Finally, you will become an expert in the division you will be active in. Whether it be sales and trading or M&A, the steepness of the learning curve will grant you a competitive edge if you do choose to stay in investment banking for the long run.

The exit opportunities

Investment banks have very strong branding. In fact, due to their extensive marketing efforts, professionals in other industries are aware of the reputation held by the big names, recognising the drive and mindset required to even land a position at a large investment bank. Being able to put such a name on your CV will show that you were able to endure years of high pressure, and that you have benefitted from an excellent formation due to the aforementioned learning curve those institutions present.

As most of the analysts will leave the industry to join either a competitor, a boutique (Private Equity, Hedge funds) or to start something new (Fintech), banks have widely shortened their time to reach the status of associate. One enters the institution as an analyst, and can get promoted every 3 years depending on performance. The typical path is to start as an analyst then associate, vice president and lastly managing director.

 

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(Major banks shortening their duration to reach associate)

What one should keep in mind 

Many former investment bankers will provide the same piece of advice: it is very important to keep a 3-5 years plan in your head. Long-term thinking is what largely separates high achievers from those who drop off. In essence, this will prevent you running the risk of ending up in a place where you are unhappy with the job.

If you are not satisfied with the idea of staying in investment banking, the best time to leave is after 2 years. You should look at your vice president and ask if you would like to have this role in the institution or not. If not, a 2-year position is perfect as after more years, you will be an expensive expert to hire. Leaving before the two years will not give the candidate enough time to really explore and learn about the industry.