Investment banking offers limited job titles and functions on a strict hierarchy, common globally. A typical hierarchy starts with investment banking analysts, followed by IB Associates, Vice President, Senior Vice President, all the way to Managing Director and CEO. Global investment banks, functioning in multiple countries, often have different job titles, however, the job descriptions tend to be consistent in most banks.
Investment banking analyst, the entry-level position, is the most popular job title in investment banking. However, with the growing popularity of summer internships, applicants prefer starting their careers with an investment banking internship and then moving to the position of analyst or in some cases directly as an associate. In this article, we will take a deeper look at the job role of an investment banking analyst.
Investment banking analyst
Most college graduates, from the best business schools around the globe, enter investment banking as analysts. They spend most of their time researching companies, the economy, macroeconomic factors, financial modelling, and creating PowerPoint presentations. On average, an analyst earns between $100,000 and $150,000 annually. After successfully completing a two-year period, the IB analyst rises to the rank of associate, in most investment banks.
Duties of an investment banking analyst
- Research: analysts are required to evaluate financial information and present it in the form of reports, to help a bank determine whether they should buy, sell, or hold a particular business. These reports are also used by bank clients which are looking for M&A opportunities or are planning to raise funds. IB analysts are categorised on the basis of industries, such as healthcare, manufacturing, consumer goods etc, or on the basis of geography.
- Prepare an argument: Developing arguments for or against investments in companies or specific industries by interacting with company executives and other investors.
- Financial modelling: gathered information must be converted into numbers to reach a company valuation. Moreover, by tracking the financial performance of a business, an investment banking analyst forecasts the profits of a business in the future.
- Presentation: gathered information, derived inferences and financial data to back it up is presented in the form of a research report or Powerpoint Presentation to the clients or senior executives.
What are investment banks looking for in an analyst?
Financial institutes, such as investment banks, prefer candidates with certain attributes:
- Financial skills include the fundamental knowledge of corporate finance, company valuation, risk management, and securities analysis.
- A willingness and passion to learn.
- A clear understanding of the current banking business model and its working.
- Expertise in statistics, quantitative analysis, and financial modelling.
Prerequisites for becoming an investment banking analyst
Investment banking analysts from top investment banks share similar backgrounds. The first and most important commonality is their educational background. You must demonstrate relevant education. In addition to being a graduate or postgraduate from a tier 1 university, the majority of analysts have an educational background in business, accountancy or finance.
Analysts can also be enrolled in courses related to investment banking or finance. For example, a bridge course in algorithmic trading, statistical analysis, bond valuations, or valuation of distressed assets can be highly useful to demonstrate in your resume.
Moreover, you should also showcase relevant work experience such as investment banking internships (summer internships) from top investment banks.
Apart from your educational background and hard skills, networking is an extremely important piece of the puzzle. This is doubly important if you did not graduate from an Ivy League or have a family member or close friend working in the industry.
Investment banking internships
The barrier to entering investment banking has slightly reduced, thanks to investment banking internships. Graduates with a bachelor’s degree can directly apply for an investment banking internship or go with the traditional path of applying for a full-time position.
According to an ex-banker, investment banking internships are an extended form of interviews. It allows the banks to separate worthy candidates, who are willing to put in the effort and learn from those who pretend to have these qualities in order to grab a lucrative job. It is easy for a candidate to prepare for investment banking interviews if they have relevant financial knowledge, however very few can put in the daily work required, deliver work on time, and do it consistently for over two months.
As part of the investment banking internship, you are required to assist full-time analysts or associates with everything that they do, ranging from tasks such as making copies, correcting presentations or collecting and evaluating data.
You can apply for most investment banking internships through the official website of investment banks, by submitting an online application and going through a series of interviews and assessments, depending on the region. However, due to the intense competition, the most effective way to get an internship is through your own network.
Conclusion
Investment banking analyst is one of the most competitive positions in the world, however, if you are successful in landing the position, it could be your gateway into a very lucrative career. As an analyst, you would be expected to work hard, follow instructions well, and continuously learn. Investment banking internships and networking vastly increase your chances of landing a job in the world of finance.
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