Investment

Banking
Career Guide
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What do the data say about
investment banking recruiting?
Percentage of 2021 MBA Graduates Taking Jobs in Investment Banking
30%

25%

20%

15%

10%

5%

0%
Stern Johnson Columbia Yale Wharton Tuck Ross Chicago Booth Sloan Anderson* Kellogg Harvard Stanford*

*Class of 2020

Source: School employment reports

Compensation at Investment Banking Firms Starting salary Signing bonus

$250,000
~$204,472
$200,000 ~$177,034

$150,000

$100,000

$50,000

$0
Average Investment Banking Post-MBA Average Post-MBA

Source: School employment reports

Investment banking was once the most popular career choice for MBAs. Although employment opportunities
in this industry have ebbed since the height of the 2008 financial crisis, investment banking is still a popular
and lucrative post-MBA profession. In helping clients access the capital markets, investment bankers gain
insight into a broad array of businesses. Those who stay in investment banking for the long term find the lively
pace and constant flow of new projects invigorating, whereas those who leave find themselves well equipped
to excel in leadership roles in corporate America.

Investment Banking Career Guide 4

The Org Chart
Director/Managing Director (MD)
Total compensation ranges widely from $500K–$5M+

Vice President (VP)/Director

Total compensation typically ranges from $300K–$1M

Associate
Total compensation typically ranges from $200K–$400K

Analyst
Total compensation typically ranges from $125K–$200K

Note: Total compensation includes all salary plus bonuses and will vary depending on firm, department within the firm, seniority, as

well as an individual’s perceived contribution.

Investment Banking Career Guide 5

 Analyst Vice President (VP)/Director*

A post-college but pre-MBA position, the investment bank- If associates survive three to four years, then they may get
ing analyst is often hired for a two- to three-year term and promoted to the position of vice president/director. A VP is the
is tasked with the “grunt work.” Analysts are the most junior project manager on each deal and project, ensuring that it is
members of the team and spend the majority of their time cre- perfect and fulfills the managing director’s or client’s requests.
ating and continually revising Excel models and presentations VPs have significant client interaction, and senior VPs work on
based on feedback from senior team members. Very rarely do developing relationships with potential clients in preparation
they have (or have time for) client interaction. After their two to for the jump to director/managing director.
three years are up, most analysts leave to either attend busi-
ness school or join a private equity firm or the strategy group
within a larger company.
Director/Managing Director (MD)*

Making the jump from VP to MD is the hardest transition in

Associate banking, but those who do so tend to be lifelong bankers (i.e.,
they joined as associates and worked their way up). Managing
A post-MBA position with no set terms, the associate is the directors are the head honchos. They are the most senior team
next step up in the banking hierarchy. Although associates members, and everybody from VPs on down answers to them.
may spend some time building financial models and putting to- MDs are the revenue generators; they maintain relationships
gether presentations, they spend most of it checking the work with corporate clients and PE firms, and they create and pitch
of the various analysts involved in their deals and ensuring that ideas to these clients through presentations (also known as
products meet the senior bankers’ specifications. Associates pitchbooks) to close deals. More than 90% of their time is dedi-
have more client interaction than analysts do, and they often cated to meeting with clients, both prospective and existing,
attend meetings with clients. Some associates make the jump and trying to win business (i.e., deals) while everybody below
to vice president, while others leave after a few years. them executes their plans.

*Naming conventions can differ slightly from one investment bank to the next.

Investment Banking Career Guide 6

What is the job?
Many people view investment banking through the lens of Hollywood films, particularly Wall Street. They
imagine men with slicked-backed hair in expensive suits competing aggressively for multibillion-dollar deals.
But beyond the stereotypes, what exactly is investment banking?

The term “investment banking” refers to a wide range of services and products that a large financial company
sells to wealthy individuals, corporations, investment firms, and governments, which is why the field is often
called the “sell side.” These offerings are split across three main areas: traditional investment banking (yes,
investment banking is a subset of investment banking), sales and trading, and research. The industry can be
confusing at first, so let us try to clarify:

ƒ Investment Banking: Investment banking in the traditional sense is the focus of most business school
students who want to start a career on Wall Street, given the high demand for MBA-level talent in this
field. The core responsibility of investment bankers is to help clients navigate the increasingly com-
plex financial markets. So, as a banker, you might help a company go public (via an IPO, or initial public
offering), provide advice and lend money to a private equity firm so it can acquire a company, or assist
a government in raising money by helping it issue bonds. Bankers are usually split into specific groups
that focus on certain industries (e.g., health care, consumer) and are also sometimes split according
to specific tasks, such as mergers and acquisitions. Regardless of their focus, virtually all bankers
work long hours (80 or more per week) in a fast-paced and intense environment.

ƒ Research: Research attracts MBAs who like analyzing companies, researching a wide range of sub-
jects, and writing reports. Tasks in research include gathering information (e.g., financial statements)
about a company and its competition, conducting industry research, and having discussions with
management teams. Research analysts write reports using this information, giving their recom-
mendation on whether the company represents a good investment. These reports are sent to clients,
some of whom will contact the research analyst to get more details. A research analyst also spends
time with sales and trading professionals, sharing opinions on specific companies to help them make
decisions on buying and selling stocks and bonds. Research analysts’ work hours are generally more
predictable than those of investment bankers, but longer hours are required when companies release
financial information, which occurs every three months (also known as earnings season).

ƒ Sales & Trading (S&T): S&T professionals are brokers between sellers and buyers of stocks and
bonds, and they are split across different desks, with each desk selling and trading different types
of securities. For instance, one desk may sell and trade only U.S. stocks, while another may focus on
Latin American stocks. Although roles vary at individual desks, sales professionals will generally call
clients (usually big investment firms like Fidelity) to persuade them to buy or sell certain stocks or
bonds through specific desks. Traders then execute (i.e., fulfill) these buy and sell orders. Work hours
in S&T are aligned with market hours. S&T professionals arrive early in the morning before the market

Investment Banking Career Guide 7

 opens at 9:30 a.m. to listen to conference calls, gather news, and develop strategies for the coming
day, and then they leave shortly after the market closes at 4:00 p.m.

We should note that job opportunities for MBAs are more limited within research and S&T compared to
investment banking. For every 50 MBA jobs in investment banking, only five to ten may be available in S&T
and approximately five in research. For S&T, the skills gained during an MBA program are less valuable than
learning how to trade or developing relationships with clients. Research, on the other hand, does value MBAs,
but these divisions tend to be smaller, which explains the comparative scarcity of opportunities. Therefore,
throughout the rest of this guide, we will focus exclusively on investment banking.

Investment Banking Career Guide 8

No, really, what is the job?
So, what does helping a private equity firm buy a company, assisting a company in going public, or facilitating
a government’s efforts to raise money through bonds really mean?

Investment banking is a hierarchical group effort, wherein senior bankers (MDs and VPs) direct junior bankers
(associates and analysts). MDs bring in the deals, VPs take the lead in executing those deals, and associates
and analysts are responsible for the plethora of tasks required to complete the deals/projects. Associates
provide support to everyone on a deal team. Several investment banking associates provided us a few ex-
amples of their responsibilities:

A client in the transportation industry wanted I worked on a sell-side deal where a small
to explore buying one of its competitors and consumer company was selling itself because
asked us to see if [the transaction] made the founder wanted out. I spent a lot of my
sense. As an associate, I had to check an time dealing with client inquiries and creating
analyst’s work on and make a ton of edits to a presentation for the management team.
a pretty complex pitchbook that gave the There was a ton of client interaction—the CFO
company our thoughts on why the transaction called me almost daily.
could make sense under different scenarios. I
got to go to the pitch meeting, too.

We worked on a big leveraged buyout of a

hardware company that needed a lot of debt
A company was selling one of its divisions, financing [borrowed money]. As a leveraged
so I worked with an analyst to put together a finance associate, I put together materials
stand-alone financial model. Then, the two on similar financings done and explained
of us [analyst and associate] compiled and the transaction to our research team that
organized information about the division was going to help us sell the deal [sell bonds
that we then uploaded onto a data site. issued] to investors.
Interested parties [buyers] from a list I helped
put together were given access. I got to
meet these parties and get a bunch of client
interaction.

Investment Banking Career Guide 9

What is good about the job?
The benefits of investment banking can be tremendous. You gain a broad and deep education in business and
finance, and you build a great network across the industry. Whether you contribute to the completion of an
M&A (merger and acquisition) deal or research a company’s stock, you learn how businesses operate and how
to analyze situations with a laser focus on details.

Because of the steep learning curve and intense hours, two years in investment banking can almost equate
to five years working in most other industries. You gain skills such as problem solving, communication, and
attention to detail while learning about all facets of business, including marketing and sales, finance, and
operations.

Beyond these skills, working as an investment banker offers

� Generous compensation and benefits

� A meritocracy in which top performers advance quickly and are compensated very well
� Exposure to C-level executives early in your career
� A well-defined career path (associate  vice president  director  managing director)
� A high-powered network across multiple arenas
� Boundless exit opportunities, such as working for a client company, working at an investment firm,
and starting a business

Investment Banking Career Guide 10

But surely the job has pain
points, right?
Any high-powered job is bound to have some drawbacks. For investment banking, these include

� An unpredictable schedule with very long hours (80 or more per week), including all-nighters
� An intense work culture with no room for error
� A steep learning curve and often a “sink or swim” culture
� Less job security—banks are quick to hire and quick to fire, particularly as the economy fluctuates

Banking jobs are highly sought after, not only because of the compensation, but also because of the skills and
responsibilities one gains early in such a career. However, some drawbacks exist. Since the 2008 financial
crisis (which accelerated with the collapse of the prominent investment bank Lehman Brothers), bankers
have been maligned publicly at times. In addition, the work environment is intense. An associate gets a few
weeks of training and then is expected to perform flawlessly with barely enough time to digest each project/
transaction before moving on to the next. Work hours are long, and work/life balance is nearly impossible to
maintain, though this is getting better as banks are trying harder to retain talent (for example, some firms are
now encouraging analysts to take one day off each weekend, and others are insisting that they do). Bankers
constantly cite the long hours and the pressure to perform as the biggest pitfalls of the job. In investment
banking, the responsibilities also change at each job level—the best associate, who is meticulous in checking
an analyst’s work, may not necessarily make the best VP, who leads all projects. Meanwhile, the top VP may
not have the sales skills to be a good director and bring the firm new business. To succeed, you must con-
stantly evolve and adapt to new demands.

Investment Banking Career Guide 11

What is the secret to success?
Balance is important in banking (though not the work/life kind). Success depends on having a good balance of
soft skills and technical skills and knowing how to lead and be led. To move up the ladder, you must constantly
excel in new areas (e.g., from managing analysts to leading deals), sell your abilities to senior bankers and
clients, and navigate an often hierarchical corporate culture by developing relationships with senior-level
bankers as mentors.

Investment Banking Career Guide 12

Who are the big fish?
Before we highlight the major players in the industry, you must understand the different categories of banks:
bulge bracket, Tier II and other firms, elite boutiques, and other boutiques.

When people discuss investment banks, they generally are referring to bulge bracket banks, which are the
largest banks, with multinational operations. Although the members of this group can change based on
perception and industry performance, bulge bracket firms include Goldman Sachs, JPMorgan Chase, Morgan
Stanley, Citigroup, Barclays, BAML (Bank of America Merrill Lynch), Credit Suisse, and Deutsche Bank. Job
responsibilities are identical across these firms (and at other large banks), though company cultures can vary.

Bank of America has grown through acquisitions—the latest being acquiring/saving Merrill Lynch
during the 2008 financial crisis. BAML’s approach is similar to that of JPMorgan Chase’s “financial
supermarket.” The bank grew rapidly through acquisitions with a hard-charging culture. This changed
after an outcry over long hours. Although an internal divide between former Merrill Lynch bankers
and former Bank of America bankers still exists, BAML remains one of the top banks on Wall Street
and constantly competes for deals, given its massive balance sheet. According to the firm’s LinkedIn
page, “At Bank of America Merrill Lynch, we have the strength, resources and global capabilities to let
you carve out a career on your own terms.”

Barclays is a large financial firm that was relatively unknown in the United States until it purchased
the remnants of Lehman Brothers after that firm went bankrupt. Its former CEO, Bob Diamond, helped
grow Barclays’ size and scale (employees and business lines) to compete with larger banks such as
JPMorgan Chase. However, Diamond stepped down because of the string of regulatory issues the firm
was facing. Today, Barclays is decreasing the size of its operations in hopes of becoming a smaller and
less risk-prone bank.

Investment Banking Career Guide 13

Citigroup (known as Citi) was the original financial supermarket built up by Sandy Weill and his lieuten-
ant, Jamie Dimon (who now leads JPMorgan Chase). Citi was another bank on the brink of collapse that
navigated the 2008 financial crisis with government aid and by shedding of billions of dollars in assets.
Citi is still one of the largest global banks and has a considerable international presence. The bank
offers many opportunities to gain experience in different groups and divisions, but insiders note that
the culture varies greatly across the organization. Citigroup’s website states, “With clients in more
than 100 countries, it’s no surprise that our people are incredibly diverse.”

Credit Suisse has a decidedly international culture, with offices in the Asia-Pacific region, the Ameri-
cas, the Middle East, Africa, and Europe. This Switzerland-headquartered bank has a strong global
presence. Credit Suisse’s brand used to be on par with those of the heavy hitters in the industry, but
it lost some luster when the firm pleaded guilty to helping wealthy individuals and some institutions
evade taxes. However, the firm’s investment banking operations are still strong, and it has survived
much better than its Swiss rivals, such as UBS.

Like Credit Suisse, Deutsche Bank has an international culture, with employees given many opportu-
nities to gain experience in different countries. Deutsche has a good presence in the United States,
but the bank is much stronger internationally with its offices in Europe—especially in Germany, given
its German heritage—and is routinely at the top of the industry’s list of advisors/banks (known as the
league tables) abroad.

Investment Banking Career Guide 14

Rolling Stone once famously called Goldman “a great vampire squid wrapped around the face of hu-
manity, relentlessly jamming its blood funnel into anything that smells like money.” Meanwhile, former
Goldman CEO (now Senior Chairman) Lloyd Blankfein once claimed that Goldman is doing “God’s work.”
Often reviled on Main Street, Goldman is the cream of Wall Street and is the preferred destination of
many MBAs interested in investment banking. Goldman consistently leads the most prestigious deals
and projects, and its employees typically have better long-term career opportunities outside of bank-
ing than employees of other banks.

JPMorgan Chase survived the 2008 financial crisis unscathed, and it even expanded by acquiring Bear
Stearns for what many consider a bargain-basement price. JPMorgan Chase’s CEO, Jamie Dimon,
was even once considered President Barack Obama’s banker because he advised and helped the
government during the financial crisis. Now one of the largest banks in the world, JPMorgan Chase is
a financial supermarket with a diverse array of products and services around the globe. Insiders note
the company’s commitment to employee development; long-term employees are encouraged to move
across divisions and groups.”

Morgan Stanley was once hailed as Goldman Sachs’s equal, but after coming back from the brink dur-
ing the 2008 financial crisis, the bank is now smaller and more risk averse. However, Morgan Stanley is
still a prominent player in investment banking, with one of the best M&A and technology teams on Wall
Street. Retention is a priority at Morgan Stanley.

Investment Banking Career Guide 15

Who are other notable players
in this space?
Beyond the bulge bracket are Tier II and other banks, such as Jefferies, RBC Bank, and Wells Fargo. Tier II/
other banks are generally either newer to banking (e.g., Wells Fargo) or not as strong across all products and
services the way firms such as Goldman Sachs are (e.g., RBC). Some are also retreating heavily from bank-
ing, including UBS, which lost its head of investment banking and has seen its operations shrink in terms of
both revenue and employee count. Although some of these banks are growing, MBAs tend to aim for the bulge
bracket banks, given the appeal of working on larger, marquee deals and having a better brand name on their
resume.

Elite boutiques are different from the bulge bracket and Tier II/other banks because of their smaller size (e.g.,
Moelis & Co. has approximately 850 employees, whereas Goldman Sachs has roughly 36,000) and because
they typically focus on providing M&A advice. These elite firms are just as prestigious as Goldman, but
because they do not hold and pool individual client or corporate assets, they cannot lend to their investment
banking clients, and this limits the services they can provide. However, many of these elite boutiques do com-
pete and win M&A assignments against larger banks because of their relationships (many of these firms were
started by top investment bankers at bulge bracket firms) and specializations (e.g., Qatalyst Partners focuses
on technology). However, post-MBA positions at these firms are limited because of these firms’ smaller size,
with some hiring only two to five MBAs a year.

Founded in 1995 by former Clinton-era deputy secretary of the Lazard was taken public by the late Bruce Wasserstein, who
U.S. Treasury Roger Altman, Evercore quickly built its reputa- was a prominent figure in the M&A arena. The firm is now run
tion as an elite, boutique investment bank. Evercore competes by Kenneth M. Jacobs and is known for its ability to compete
for junior staff with bulge bracket firms such as Goldman Sachs against larger banks for M&A assignments. Lazard is also
by giving significant responsibility to junior bankers. A public known on Wall Street for having one of the best restructuring
firm since 2006, Evercore has been growing through acquisi- groups in the industry. Insiders note that Lazard’s hours are
tion (Lexicon Partners), strategic alliances (Kotak Investment much longer than those at other banks, so be prepared to work
Banking), and an expansion of its services to include private hard if you land here.
equity and research. Today, Evercore’s revenues still come pre-
dominantly from investment banking, with the firm maintaining
that its independence from conflict (it has neither a proprietary
trading desk nor a lending operation) enables it to aggres-
sively challenge its larger competitors because it can provide
unbiased advice.

Investment Banking Career Guide 16

 Moelis & Co. was founded by Ken Moelis, the former head of
UBS’s Investment Banking Division. He has been called the Frank Quattrone—a legendary technology investment banker
best banker in the industry. Moelis the firm began operations who led and/or started the technology banking groups at Mor-
in 2007 but has quickly grown in size and now offers almost a gan Stanley, Deutsche Bank, and Credit Suisse—founded Qata-
full range of investment banking capabilities, including asset lyst in 2008. The firm focuses heavily on the tech industry and
management. The company’s culture is rooted in the famed participates in almost every marquee deal within it. Rumors
UBS Los Angeles office, which required long hours but offered indicate that compensation is far above average. Much like at
above-average compensation. Moelis, opportunities for MBAs at Qatalyst are limited, with only
roughly a dozen MBAs among its staff of 54 employees.

The following table provides a more detailed comparison of bulge bracket and elite boutiques:

Bulge Bracket Elite Boutique

Training Long and comprehensive Limited—you are expected to hit the ground running

Mobility Opportunities exist, though some banks encourage Limited—most boutiques have only a few offices with
this more than others lean team structures

Experience Varies across different types of deals and projects More focused on a certain area, such as M&A or re-
structuring

Compensation Fairly standard Can be higher than that of bulge bracket banks

Workload/Responsibility Hierarchical experience, where junior employees do Teams run lean, so junior employees are expected to
the grunt work carry a heavy workload

Investment Banking Career Guide 17

How do I get the job?
The three most important traits banks seek when hiring are as follows:

1. Strong analytical skills and detail orientation: You must be comfortable with numbers, analyses, and
finance. Paying attention to details is a must as well. Errors in financial models or even presentations
could make or break a potential transaction. When applying, ensure your resume, cover letter, email
correspondence, and all interactions are error free.

2. Good communication skills: Banks look for candidates who can communicate persuasively—how else
do you convince CEOs to sign multimillion-dollar deals? Being able to effectively describe your back-
ground and why you want the job will help demonstrate your communication skills.

3. Ability to pass the “airport test”: You must be more than just a number-crunching machine. You need
to be likable, someone with whom others would not mind spending more than 100 hours a week—or, at
worst, being stranded at an airport.

Beyond these traits, banks look for exemplary performance in school and prior leadership roles at work, even
if one’s previous positions were not related to finance. Strong undergraduate grades in analytical majors
such as science, technology, engineering, or math (STEM) from top-tier institutions are important. Banks also
favor athletes and former military personnel for their competitive nature and discipline.

Internships are very important because most banks hire interns for the majority of their open associate-level
positions. Landing an internship requires extensive networking with employees at banks and excelling in a
series of events (such as happy hours hosted by a prospective employer, roundtable discussions, candidate
dinners, and treks in which groups of MBA students visit various Wall Street banks) at which candidates are
judged by how well they get along with other attendees. After candidates are placed on a short list of poten-
tial interviewees, they will undergo a series of technical and behavioral interviews. Technical interview topics
can include how to value a company and/or how an income statement, balance sheet, and cash flow state-
ment work together to provide a complete picture of a hypothetical client firm’s finances. Preparation is key,
and many MBAs spend every free moment reading the Wall Street Journal and crafting answers to potential
technical questions.

During an internship, performance becomes critical—this period is really a ten-week interview! Good perfor-
mance equates to producing error-free work, communicating well within your group (and networking beyond
that group), and making sure everyone from the analyst level up likes working with you. Going in with a good
attitude, getting along with everyone in your group, and producing strong work will help you translate that
internship into an offer for a full-time position at the end of the summer.

Investment Banking Career Guide 18

If investment banking is your chosen industry for a summer internship or post-MBA position, get started
now building your network, conducting informational interviews with classmates and friends at target firms,
creating an investment banking–targeted resume, and preparing for case interviews. To learn more about
how an MBA Career Coach can assist you in securing an investment banking position by guiding you effectively
through each step of the recruitment process, schedule a free consultation with us at www.mbamission.com.

Investment Banking Career Guide 19

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