Tag: hiring trends in 2023

Would you like to earn 5-6 figures in salary with lots of bonuses right off from graduation? You can get this by working with a big bank, a finance company, an investment house or even with the Big 4; as an investment banker. It is a high-profile job with lots of critical thinking, analytical and mathematical skills involved. This article will explore the pros and cons of investment banking and how you can get in if you feel this is the career for you.

Here are some of the pros of being an investment banker

  • Huge Compensation: The money you make as an investment banker is one of the main attractions of this profession. The salary is great, running up to 5,6 and even 7 figures. Then there are starting bonuses, performance bonuses and other deferred bonuses that you get later. You can start as an analyst, and grow to become an associate, a VP, a director, a managing director or even a CEO. All these with a salary which increases every year and increases at every level. 
  • Smart Colleagues: A career in investment banking exposes you to working with smart people which includes both your colleagues and clients. You meet with people who are working on real-world problems and people working with the latest technologies. Interacting with driven people helps you learn more and develop faster in your knowedge of the business world. Within a few months of joining, you will get responsibilities which will help you learn a lot in a short space of time as your colleagues will challenge you to put on your best foot always. All these will help in your personal development journey.
  • Good Perks: Apart from the mind-boggling bonuses, there are lots of benefits like free lunch and dinner if you work late at night. If you need to travel for your work, you can be sure of getting the best treatment. You get to stay at the best hotels, and wine and dine at the best restaurants and bars and of course, you have business-class flights. The medical coverage you get working in this career is great, with awesome paternity and maternity leave as well as a great pension when you retire. 
  • Open Doors: This job will open doors for you that other jobs cannot. For example, this job will help you to meet and interact with wealthy people and build a network of great connections. If you decide to leave this job, there are loads of places you can work. You can decide to go into coaching and consulting and you will have lots of clients. You can decide to move into another section or department in a bank if you are thinking of a better work-life balance. You can start your own company with the knowledge you’ve gained working as an investment banker. 
  • You Gain Experience Fast: Working in a high pace environment like the one offered to investment bankers helps you learn a lot about business. You get to learn about brokering deals, negotiating debts, equities, raising capital and much more. Working in a fast-paced work environment all day every day, helps you gain expertise fast. You cannot be compared to someone who works fewer days and will take years to learn what you learn in a few months. You can make a partnership at a young age and start earning millions in your late 30s or early 40s.

But it’s not all rainbows and sunshine. There are some disadvantages involved in this career too. Here are some of the demerits of working as an investment banker:

  • Long Hours: You get to work long hours often staying late at night. Sometimes you stay weekends working in the office. This is a high-paying yet high-stress job. An analyst typically works 80-90 hours with average work hours based on a survey reaching 102 hours. 16 hours days are quite the norm in this career though it gets shorters as you progress up the ranks.
  • No Off-clock: You can’t stay off the clock when working as an investment banker. You are expected to be available 24/7 when working especially when you are just starting. You have to be at work in the evenings, at weekends and sometimes on holidays. This can take a toll on your personal relationships. 
  • Highly Competitive: A career in investment banking is full of competition. The reason is obvious, it pays better than most jobs so there is fierce competition before you can get in. After you get the job you still have to be on your best performance so you don’t get kicked out and replaced by others.

You can see that the benefits far outway the cons, and that is why many people are doing all they can to get into this career. If you are dreaming of getting in as an investment banker, here are the 4 steps you take to make sure that you make a success of it.

  1. Good Education: To start your journey into investment banking, you need to make sure that your foundation is right. You need a good bachelor’s degree in finance or a related field from an accredited university or college. You can also get a graduate degree or an MBA to further qualify yourself.
  2. Certifications: Before and after you get a job as an investment banker, it is good to get a certificate to augment your degree. Having great certificates from reputable institutions will help you scale through during the interview. You can get certificates like Certified Fianal analyst (CFA), Certified Public Accountant (CPA) or Commercial banking & Credit Analyst. 
  3. Job Interview: Passing an interview is a requisite to getting a job as an investment banker. Proper preparation will help you to excel in it. Remember that this job is highly competitive so you need to make sure that you are ahead of the competition. You can check out this course that specifically teaches you how to prepare for an interview as an investment banker. 
  4. Get experience: You can get an internship during your bachelor’s degree program. This will give you the needed experience and develop the math and analytical skill needed for the job. You can also get jobs in banks or work in a smaller finance or investment business while you wait for your dream job. The on-the-job training you get will add to your CV and help you to get better jobs later.

Conclusion

A job as an investment banker comes with lots of perks, and a great salary. You work with smart people, get open doors and gain lots of experiences fast. Even though you get to work long hours, most people don’t mind because the money is great. In 4-7 years of consistent work, you can get to the top and start earning 7 figures with huge benefits. With a few years of consistency, you will make a great income while helping a lot of people with their finances. 

Authored by: Juliet Ugochi, Fintech Content Curator

How can you earn a six-figure salary at top investment banking firms without any experience

On average, a first-year investment banker makes a 5-digit salary, in the range of $70,000 – $90,000, while a 7-digit salary is considered above average and is difficult to achieve for most people in their careers. A six-digit cheque hits the sweet spot in the middle, which fresh graduates strive for and can actually achieve. However, is it possible in your first year, to start without any experience? Let us find out. 

Break up of an investment banker’s salary

To understand how you can make six figures as a fresh investment banker, we first must understand how investment bankers make money. Unlike other industries, pay in investment banking is not a fixed, end-of-the-month salary. Instead, it is made up of several components and varies based on the parameters that define them. These components may vary from bank to bank, however, they are similar among the top global investment banks. 

  1. Base salary

The most important but not necessarily the largest component of the overall compensation is base salary. It is “salary” in the traditional sense. It plays a huge role in the overall compensation as other components are usually a percentage of the base salary. The base salary is generally paid biweekly, is stable, and increases each year. An investment banker’s performance does not influence this component unless there is a serious lack of productivity.

  1. Stub bonus 

Stub bonuses are a sub-component of the overall bonus structure but only represent a fraction of the usual bonus. These bonuses are paid to align employees with the financial year as investment banks recruit graduates in the middle of the calendar year. It is generally 20%-30% of the first-year base salary and is paid for a duration of four to six months. 

  1. End-of-year bonus

The end-of-the-year bonus defines your overall compensation as an investment banker. You will earn this after a full year of working. Analysts, associates, and senior bankers receive this sum entirely in cash or in the form of ESOPs. Two of the most important parameters used to determine the ‘end-of-year bonus are deal flow and overall individual performance. Year-end bonuses are again represented as a percentage of base salary.

  1. Stock-based bonus:

Associates, positioned above analysts, at publicly listed investment banks receive a part of their total bonus in the form of company stock, vested over a defined period of time. As an analyst, in most cases, you won’t be eligible for stock-based compensation. However, a few of the young investment banks have initiated stock-based compensation for fresh graduates as well. In such a case, stock-based compensation could be a significant part of your year-end bonus. 

  1. Signing bonus

When analysts accept full-time offers, they generally receive about $10,000 to $15,000, while associates receive $50,000 to $60,000 as signing bonus.

How to get a six-figure pay?

Now that you are aware of the compensation structure of an investment banker, you would realise that bonuses represent a big portion of the overall pay. A six-figure pay as a fresh graduate, in the first year, might not be possible solely based on your base salary but is certainly possible as your total compensation.

In order to earn this amount you must work hard on two things, first maximising your chances of getting a full-time job at one of the top investment banks and second, making a decent amount as bonuses. To get a full-time job you must focus on the following factors: 

  1. An impressive educational background: as a fresh graduate l, you don’t have experience and all the necessary skills required to be a top-class investment banker. Therefore, having good grades and completing your education at a tier-one university can give you an edge. Having done abridged courses related to economics, finance and business always add to your resume. 
  1. Required skill set and technical knowledge: You must be aware of the fundamentals of corporate finance, valuation methods, company and business evaluation, and the basic working of the industry. Moreover, you must have decent communication and presentation skills and must be willing to work hard and learn new things. 
  1. Experience in the form of internships: As a graduate, it is not possible for you to have a lot of job experience, however, you can make up for it through investment banking internships. Internships allow you to learn business practices and show your passion for the industry.

To improve your chances of getting higher bonuses, you must analyse the compensation structure of each investment bank, individually. In general, your base salary is the biggest determinant of your bonus, since bonuses are disbursed as a percentage of your base salary. In addition, other bonuses such as signing bonuses vary by bank and can be higher if you have a commendable academic record from a top university and a strong resume.

Conclusion

In the US, the average base salary for analysts is between $75,000 and $95,000 a year, and they may receive $40,000-$60,000 in total bonuses, depending upon the base salary, year-end bonus structure and the signing bonus. This takes the total remuneration to $115,000 to $150,00. Therefore, dedicated a first-year investment banker could make up to $140,000 in their first year, without any significant experience. It is important to note that some experience, in the form of internships, could help you break into the industry and get that full-time job. 

To learn more about investment banking and the working of the industry, check out the investment banking newsletter published by FMI. 

How you can get a front-facing role in a top investment bank without any experience

Keywords: top investment bank, financial institution.

Traditionally, job roles are divided into three categories, front desk, middle desk and back desk jobs. Front desk jobs are the face of the company, responsible for generating revenue. Job roles such as sales, trading, and product departments are part of this group. Middle desk positions are responsible for strategy making and ensuring that the company stays solvent, for financial institutions. Risk management and treasury roles generally fall under middle desk roles. Back office positions are job roles which provide support to these activities, positions such as accounting, compliance, and technology support come under back desk jobs. 

With changing organisational structures, technology incorporation and adoption of multi-disciplinary employee backgrounds, the line dividing front, middle and back-end positions are becoming blurry. As a result, these roles are changing with different financial institutions, geographies, and job responsibilities. This article will explore how you can get a front desk role in a top investment bank as a fresh face in the industry. 

Front Desk Jobs in Finance 

Before we dive into how to get a front desk job in a top investment bank, it is important to understand what is a front desk job in finance. In the financial services industry, unlike other businesses where the job role is limited to sales representatives or receptionists, front-desk employees generate revenue for the company by providing services directly to clients, such as wealth management or consultancy. 

Similarly, in investment banking, there are two main branches within the front desk roles, investment banking, and markets. As an investment banker, you would be required to make presentations and work with clients on M&A and capital-raising deals. You would also spend significant time networking to acquire new clients for the financial institution. Graduates or employees working in market-related roles, on the other hand, would perform sales, which involves selling investment products to the bank’s target customers, or trading and research activity.  

How to get a front desk role in a top investment bank

The process of getting a front desk role is very similar to getting any other job role in investment banking. It requires you to prepare and apply for your desired position, and develop the required skills. Moreover, since front desk roles involve dealing with large institutions directly, with millions of dollars and the bank’s goodwill at stake, the position places a great deal of responsibility on you. Therefore, you might spend your initial years working in a team before you could get a full-fledged front desk role. 

To improve your chances of getting a job you can refer to the following guidelines: 

  1. Get the right qualification

A relevant educational background helps you establish yourself as a worthy candidate for the role. Along with your degree courses, you can also commit to specialised courses relevant to front-desk investment banking roles. Bridge courses such as algorithmic trading, statistical analysis, and valuation of distressed assets are highly useful certifications to mention in your resume. 

  1. Develop the right skill set 

When going through a resume, recruiters look for skills pertaining to investment banking, or a trait that differentiates you. You must focus on both, the hard skills (career-specific), and the soft skills (personal skills) that are considered important in investment banking. 

  1. Get Internships 

Internships can help you demonstrate a deeper understanding of the job role and the working of the industry. They also show your willingness to dedicate time and effort to the chosen job role and the financial institution. Internships in business and equity investing and private equity are also considered useful. 

  1. Network 

Networking is one of the key tools that many people use to start their careers in investment banking. Making a good impression on people who can recommend you to recruiters or hire you will help you stand out and increase your chances of getting an interview.

Conclusion

To get a job at one of the top investment banks, it is important to first understand if you enjoy the job role and whether you possess the required skills. Most of the important skills required in investment banking can be developed over time. You can develop a better understanding of the industry by reading the FMI investment banking newsletter. Moreover, you must have a strong educational background, as a fresher, to enter the industry. An internship would be a huge differentiator and an added advantage.

To stay relevant and competitive, investment banks have adapted new hiring practices in the technology-dominated, post-COVID world. These hiring trends were visible across financial institutions. While in the previous calendar year institutes were worried about staffing and labour shortage, banks were predicting a long struggle for employees to continue to post the COVID-19 pandemic, according to the American Banker. Let’s see how the hiring trends are predicted to be in 2023. 

2023 – Back to ‘Normal’

Employees were instructed in 2021 to strictly comply with Covid guidelines. Many were told that if they weren’t vaccinated, they would lose their jobs or get lower pay. Global financial institutions like Citigroup and JPMorgan laid out a clear Covid mandate and required COVID-19 vaccinations for employees to return to the office. 

Since then things have changed. 2023 seems like a ‘back to normal’ year, and banks are indicating fresh hiring. Investment banks such as Goldman Sachs and Morgan Stanley have dropped their mandates for Covid vaccination and loosened other restrictions. Many other financial institutions have followed the same trend while easing Covid-related restrictions.

High Demand for Accounting and Finance Professionals

Accounting and finance jobs along with other middle office roles performed the best and showcased high demand. This, perhaps, suggests that banks expect their added infrastructure to prove useful in the near future. There is also a concerning fact behind this strong demand. The average age of a financial advisor is 55, and 20%, or 1 in 5 financial advisors, is over 65. This suggests that in less than a decade, over 100,000 of those advisors will retire, accounting for over one-third of the industry workforce. To stay ahead of the problem, banks are changing their hiring and retention strategies and therefore, this trend might only be a cyclical catch-up to avoid future struggles.

Rising number of applicants

According to a study conducted by EFinancialcareers, in London, there is a large rise in the number of job applicants, across the financial sector. As a general trend, for the top 10 job categories, companies have received close to nine applicants for each role, which was previously around six applicants. This is a 50% increase. Competition is rising in investment banking as well. This trend, however, might be limited to London or could be a result of mass layoffs done after the Covid pandemic. 

A slowdown in remote jobs

Financial institutions witnessed a large rise in remote jobs in 2021 and 2022. From 4% in 2019 to nearly 12% in 2022, the share of jobs explicitly stating remote working nearly tripled from the pre-pandemic levels, according to ZipRecruiter data, 

According to a study conducted by LinkedIn, in 2023, the number and share of remote jobs in the overall job market will stagnate or decline, as employers prefer their staff in the office. The study showed that the trend is already underway. On the other hand, remote working is becoming increasingly popular among employees and job seekers. This was evident from the rise in demand for remote jobs from job seekers. 

While current technology allows people to work from anywhere in the world, CEOs from top global investment banks have previously expressed their concerns about remote working due to issues like insider trading, leaking of information, etc. Investment banks have spent millions of dollars in upgrading their infrastructure to make it Covid compliant. This could create a mismatch between demand and supply in the near future. 

Promoting Internships 

Investment banks have been at the forefront of employing interns, recruiting good talent and introducing fresh graduates to the required work culture. Goldman Sachs and other top investment banks are promoting investment banking internships and encouraging participation by women and minorities historically underrepresented in the industry.

Conclusion

Investment banking hiring trends are constantly changing, so you must also adapt accordingly. Major hiring trends to look forward to in 2023 are:  

  • A slowdown in remote working
  • Rising competition in terms of number of applicants per job role
  • A rise in investment banking internships
  • A rise in PE jobs 
  • Increasing use of AI and ML in investment banking

By following the trends and making the necessary changes, you can increase your chances of getting a job. To check out for more details on hiring trends you can also read LinkedIn learning reports.