We all have this in our dream profession list. Some of us even fantasize and hero worship the life of an investment banker. Tremendous rewards await those at the top, it’s a very steep climb to get there. Investment Banking is a field that generates a lot of interest, but for most outsiders, it is also shrouded in mystery.
What we know is what we have learnt
The conventional image of an I-banker is a young, ambitious guy in a pin-striped designer suit puffing on a Cuban cigar after closing a deal. We think an investment banker is a person who has put his/her social life on hold, eats Vada Pao in the five minutes break near D-street, works for 16 hours a day and prints money faster than the RBI. We think of it as supercool and complicated world which is made for us after we have sat in our semester finance class. Well it isn’t our fault. We didn’t delve into its details, neither did anyone bother to tell us.
What does it mean?
When asked about I.B., the names that come to our mind are Jordan Belfort, Christian Bale (from the Big Short) and more popularly Hrithik Roshan (from Zindagi na Milegi Dobara).
Unlike commercial banking (what we’re so accustomed to referring to as banking here in India), Investment Banking is a concerted effort to connect the capital markets with firms that need the money. Banks give you money. Investment banks help you where to get your money from. The capital markets take the form of investors in debt (such as banks who give firms loans) and equities (such as private equity players) and publicly traded equity markets (primary – IPOs and secondary – trading in the stock exchanges).
Investment Banks also advise clients on strategic acquisitions, dis-investments and restructurings that are connected with enhancements to firms’ balance sheets. Thus, investment banks play the role of an advisor and arranger, helping to bring firms an ability to do better by accessing capital and financial advice.
What does it take?
Most of us after taking a class in Finance and hearing 2-3 jargons make up our mind that I.B. is our dream career.
Why? It gives you money. But do we know if we have what it takes?
1. Spreadsheet and presentation skills: Investment banking is about being smooth with numbers. The right classes are great practice.
• Make sure you are creating presentations with spreadsheets attached.
• Microsoft Excel and Powerpoint are mainstream. Don’t spend as much time with alternate programs.
2. Specialization in Banking/Finance: There is no investment banking major, so an individual must pick from an investment banking-related major such as finance, economics, business or accounting.
Any of those majors should be fine. Having said that, increasingly banks accept and look to attract students with a mathematics or engineering background. The assumption is that students comfortable with quantitative sciences will find finance relatively easy to grasp.
3. Hitting the networks: Join Linkedin groups for investment banking.
• Talk to alumni from your school that have recently joined investment banks. You can contact them via Linkedin or Readyforce or even Facebook. Ask them to lunch (if you are local) or a phone call if you are remote.
• Don’t be afraid to travel to another city to meet people, if it will help you find better leads.
4. C.F.A.: Investment bankers can also pursue voluntary certifications like the Chartered Financial Analyst (C.F.A.) credential offered by the C.F.A. Institute. To become a C.F.A. , one must have four years of investment work experience and complete the C.F.A. program, which is a three-part course of study that covers investment valuation, company analysis, and portfolio management.
Are you ready?
The intensely competitive, profit driven world of investment banking can seem like the Holy Grail: great pay, big deals and phenomenal training. But at what price?
The high pressure and long hours aren’t for the risk intolerant, fixed income lovers.
(Who said earning millions would be easy.)