What Investment Bankers Do: Full Guide

Ronnie Gift

Investment banking is a branch of banking that assists organizations, corporations, and governments in raising capital by completing transactions such as mergers and acquisitions and gaining access to financial consulting services.

If you are passionate about finance and the stock market, a career in investment banking could be for you. Unlike other types of bankers, investment bankers only work with corporations and governments, providing financial advice and assistance with transaction execution. Knowing what investment bankers do can help you decide if this is a career path you want to pursue further.

This article will explain what investment banking is, what investment bankers do, how much investment bankers typically earn, the skills required to succeed as an investment banker, and the steps required to become one. So read on!

What Is Investment Banking?

Investment banking is a branch of banking that assists organizations, corporations, and governments in raising capital by completing transactions such as mergers and acquisitions and gaining access to financial consulting services. 

Investment banks serve as a go-between for institutions in need of capital to run and grow their businesses and investors looking for new investment opportunities. Investment banks also underwrite equity securities and new debt for all types of corporations, as well as advise them on stock issuance and placement.

Who Is An Investment Banker?

An investment banker is a highly educated professional who offers a variety of financial services to businesses, governments, and investors. They assist businesses in obtaining business loans, issuing stocks and bonds, establishing security prices, raising stock capital, allocating resources, negotiating mergers, and managing investments. 

They serve as the intermediary between private and public companies and investors. They would provide financial advice and consultation on what securities to issue, such as stocks and bonds, when and how to issue them, and what price to set for each security.

Many of them also provide services and advice to investors for them to purchase those securities. Some of them may even do municipal bond underwriting and help their clients with mergers and acquisitions.

What Do Investment Bankers Do?

An investment banker is responsible for a variety of financial processes associated with various financial transactions and investment ventures. They usually work in groups of managing directors, directors, vice presidents, associates, and analysts, and each group focuses on a different industry or market sector. They frequently must adjust their work schedules to different time zones to accommodate their clients and work extremely long hours. Work can be stressful, and they may be put under pressure. They typically carry out the following responsibilities:

1. Debt Financing 

This entails assisting your corporate clients in borrowing money in the form of loans with a repayment schedule over time or as a bond issuance through the United States Securities and Exchange Commission, with the company repaying the bond through increased production or tax revenue.

2. Negotiating Mergers and Acquisitions 

A merger occurs when two companies merge to form a single entity, whereas an acquisition occurs when one company buys another. Throughout a merger or acquisition, investment bankers provide advice, due diligence, and negotiating strategies.

3. Financial Model Presentation

This includes valuation, equity research, and risk assessment. For example, when a startup launches an initial public offering (IPO) on the stock market, you might put together a prospectus for potential investors.

4. Private Equity Financing

This also known as a private placement, refers to the process of connecting non-public companies with private investors interested in investing in exchange for a stake in the company. More information on private equity can be found here.

5. Sales and Trading

This entails acting as a go-between for buyers and sellers of financial instruments like securities, mutual funds, hedge funds, and pension funds.

6. Underwriting

Underwriting is when a company assumes some of another company’s financial risks in exchange for a lump sum of money. Investment bankers profit by selling a company’s stock at a premium, spreading the financial risk among several parties.

What Skills Are Required For Investment Bankers?

Consider acquiring the following skills before pursuing a career in the highly competitive financial industry:

1. Analytical abilities: You will spend a lot of time poring over market reports and numerical data to create financial models and value a variety of profitable opportunities ranging from real estate to health care. You must be proficient in numbers, metrics, and spreadsheets.

2. Business administration: You will need to know how to organize travel, schedule meetings, edit reports, take notes, and perform other administrative tasks.

3. Critical thinking and problem solving: Working in investment banking requires you to see the big picture of the market and how your company and clients can achieve their financial objectives. You’ll need to think outside the box to solve day-to-day problems.

4. Cultural knowledge: Because investment banking occurs on a global scale, you’ll need to understand global financial markets as well as the cultural norms of various countries. Speaking a second language can improve your job prospects significantly.

5. Endurance and self-discipline: Investment banking analysts work 100-hour weeks in a demanding environment. You will frequently be dealing with foreign clients, so be prepared to work irregular hours.

6. Social and communication skills: You will need these intrapersonal skills to build relationships within the financial community and deal with disgruntled clients when things get stressful. Furthermore, you will be preparing and presenting “pitch books” to potential investors, so you must be able to speak confidently in public.

How To Become An Investment Banker 

To begin your career as an investment banker, take the following steps:

1. Get a degree. 

A bachelor’s degree is required, preferably in corporate finance or a related field like economics or statistics. While an undergraduate degree is sufficient to enter the occupation, obtaining a Master of Business Administration (MBA) or completing a Chartered Financial Analyst (CFA) certification program will attract more employers.

2. Intern: 

Consider a summer internship in the financial world while still in college before beginning your investment banking career. Internships allow you to learn about the investment banking industry while also gaining work experience and networking for future opportunities. Investment banks frequently offer paid internships to encourage future hiring.

3. Get your license: 

Before beginning your career, you must register with the Financial Industry Regulatory Authority (FINRA) by passing a formal licensing exam specific to your field of expertise.

4. Learn on the job: 

If you are an entry-level financial analyst, your employer will enroll you in a training program that will teach you accounting, financial modeling, statement analysis, and other skills that you will need to work at your financial institution.

5. Advance by gaining experience: 

If you began your investment banking career with a bachelor’s degree, your employer may fund additional education or certification. As you gain experience, new opportunities and promotions will present themselves.

What Is The Average Time It Takes To Become An Investment Banker?

It can take seven years or more to become an investment banker. After passing your 10+2 exam, it usually takes three or four years to finish your bachelor’s degree. After that, you can pursue a two-year master’s degree program. It will take you another three to six years to complete a doctorate program. Furthermore, earning certifications can take anywhere from six months to four years.

How Much Do Investment Bankers Earn?

Investment bankers’ total compensation consists of several components. These are usually classified into the five categories listed below:

Base salary: This is the guaranteed pay that investment bankers receive from their employers on a bi-monthly or monthly basis.

Stub bonus: Associates who are hired less than a year before their bonuses are due will receive stub bonuses for their first few months on the job. These are usually lower than year-one base rates, ranging between 20% and 30% of their regular salary.

Year-end bonuses: Banks pay bonuses every year to keep their top talent and performers from leaving. Banks, in general, offer cash bonuses, which are similar to traditional bonus schemes in other businesses. They may, however, provide bankers with deferred stock options and provisions.

Benefits: These are typically paid in addition to the base salary and are not performance-based. Vacation days, health insurance, life insurance, and 401(k) plans are among them.

A Career In Investment Banking

Many investment banking firms will offer paid internships to college students and recent graduates, which can count toward the required years of experience and help with networking. Some investment banking firms may prefer candidates with advanced degrees from business schools, but before devoting time and money to an advanced degree, make sure to research position requirements in your field of interest.

Entry-level investment bankers are sometimes referred to as “junior bankers,” but job titles are more likely to use the term “analyst” to indicate a true entry-level position and “associate” to indicate a role requiring some experience. Those with extensive investment banking experience, on the other hand, will be referred to as “senior bankers.” This category includes job titles such as “vice president (VP),” “senior vice president (SVP),” “director,” or “managing director.”

Frequently Asked Questions

What are an investment banker’s responsibilities?

Investment bankers assist their clients in raising capital in the capital markets by issuing debt or selling stock in their companies. Other responsibilities include assisting clients with mergers and acquisitions (M&As) and advising them on unique investment opportunities like derivatives.

What is the best field for an investment banker?

The majority of investment banks prefer candidates with degrees in finance, accounting, business administration, and other business disciplines. If a candidate has a master’s degree in business administration, finance, or another highly relevant subject, undergraduate degree subjects have less influence in the hiring process.

What are an investment banker’s three primary responsibilities?

Underwriting new stock issues, handling mergers and acquisitions, and acting as financial advisors are all responsibilities of investment banks.

Is it difficult to work in investment banking?

Investment banking is one of the most coveted positions on Wall Street. It is also among the most difficult. It is no surprise that an investment banker’s typical day is long and stressful. Those who make it through the transition period are more likely to have long and financially rewarding careers.


Investment bankers assist their clients in raising capital to fund various activities and grow their businesses. They are financial advisory intermediaries who assist businesses and governments in raising capital for a variety of purposes.

While this activity helps to keep capitalism running smoothly, the investment banking industry has come under scrutiny, particularly because it is involved in so many aspects of the capital-raising process.


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