What Do Investment Bankers Do? Definition and Career Guide

An investment banker is an individual who provides financial services to companies and governments to raise capital. The term covers several occupations in investment banks or the investment banking divisions of commercial banks, such as financial associate, financial analyst, managing director, and vice president.

Your job responsibilities as an investment banker vary depending on your client’s needs. Your primary occupation centers on providing impartial financial advisory services and overseeing asset management. The duties of investment banking work include:

• Debt financing: This means helping your corporate clients borrow money in the form of loans with a repayment plan over time or as a bond issuance through the United States Securities and Exchange Commission, where the company will repay the bond from increased production or tax revenue.
• Negotiating mergers and acquisitions: Mergers mean two companies merge to become one company, and acquisitions mean one company purchases another. Investment bankers provide advice, due diligence, and negotiating strategies throughout mergers and acquisitions.
• Presenting financial models: This includes providing valuation, equity research, and risk assessment. For example, you might put together a prospectus for potential investors when a startup launches an initial public offering (IPO) on the stock market.
• Private equity financing: Also called private placement, this means you’d connect non-public companies with private investors interested in investing in exchange for an equity stake in the company. Learn more about private equity.
• Sales and trading: This means you’ll be acting as an intermediary between buyers and sellers of financial instruments such as securities, mutual funds, hedge funds, and pension funds.
• Underwriting: Underwriting means a company takes on some of the financial risks of another company in exchange for a lump sum of money. Investment bankers sell shares of a company at a markup to generate profit for the client, with the financial risk spread among several parties.

Before you pursue a career in the highly competitive financial industry, consider gaining the following proficiencies:

1. 1. Analytical skills: You’ll spend much of your time poring over market reports and numerical data to create financial models and valuation of myriad profitable opportunities from real estate to health care. You’ll need to be skilled with numbers, metrics, and spreadsheets.
2. 2. Business administration: You’ll need to know how to complete office tasks such as organizing travel, scheduling meetings, editing reports, taking notes, and other administrative work.
3. 3. Critical thinking and problem-solving: Investment banking demands you see an overall picture of the market and how your company and clients can reach their financial goals. You’ll need to come up with innovative solutions to daily snags and issues.
4. 4. Cultural knowledge: Investment banking occurs internationally, so you’ll need to understand global financial markets and the cultural norms of different countries. Speaking a second language can significantly benefit your career prospects.
5. 5. Endurance and self-discipline: Investment banking analysts have relentless schedules, working up to 100 hours a week in a demanding environment. Often you’ll be dealing with foreign clients, so expect to work odd hours.
6. 6. Social and communication skills: You’ll need these intrapersonal skills to build relationships within the financial community and to deal with unhappy clients when situations become stressful. In addition, you’ll be preparing and presenting “pitch books” to potential investors, so you’ll need the ability to speak with confidence in front of others.

Follow these steps to start your investment banker career path:

1. 1. Get an education. You’ll need at least a bachelor’s degree, preferably in corporate finance or a related field such as economics or statistics. Though you can enter the occupation with an undergraduate degree alone, earning a Master of Business Administration (MBA) or completing a Chartered Financial Analyst (CFA) certification program will attract more employers.
2. 2. Intern. Before starting your investment banking career, consider a summer internship in the financial world while you’re still in college. Internships help you learn about the investment banking industry, gain work experience, and network for future job opportunities. Often investment banks offer paid internships to encourage future hiring.
3. 3. Get licensed. Before you start your career, you’ll need to register with the Financial Industry Regulatory Authority (FINRA) by passing a formal licensing exam unique to your field of expertise.
4. 4. Learn on the job. If you’re an entry-level financial analyst, your employer will enroll you in a training program that teaches you accounting, financial modeling, statement analysis, and other skills you’ll need to work at your financial institution.
5. 5. Gain experience and advance. If you started your investment banking job with a bachelor’s degree, your employer might fund further education or certification. As you gather years of experience, new opportunities and promotions will present themselves.

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