Overview of Jobs and Careers
Investment Banker Career Overview: Investment bankers raise funds for corporations and government agencies (regarding governments, see our discussion of public finance) by structuring the issuance of securities such as stocks and bonds. They also advise corporations that are contemplating mergers and acquisitions. Careers in investment banking require strong quantitative abilities combined with excellent sales skills, not to mention a large measure of self-confidence.
This is a fast-paced, pressure-packed field noted for long hours and extensive travel requirements. In particular, junior associates should expect to be on call virtually 24/7 for their first few years. The payoff for those who survive this grind is that compensation packages can be extremely generous, allowing a successful person to build a fortune within a relatively short period of time.
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Pay: The Bureau of Labor Statistics (BLS) includes investment bankers among what it calls Securities, Commodities, and Financial Services Sales Agents. Median pay for people in this very job broad category was $71,720 as of May 2012, with 90% earning between $32,030 and $187,200.
However, the BLS also notes that Securities, Commodities and Financial Services Sales Agents involved in what it terms "other financial investment activities" are the highest-paid subcategory, with median compensation of $108,250.
This seems to correspond most closely to investment bankers and represents about 11% of total employment in the broader job category. See below.
Job Outlook: Total employment of Securities, Commodities and Financial Services Sales Agents was 354,600 in May 2012. The projected growth to 2022 is 11%, or 39,700 positions.
Those engaged in "other investment activities," which include investment bankers, are projected to see their numbers rise from 39,500 in 2012 to 51,200 in 2022, a very robust growth rate of nearly 30% encompassing 11,700 new positions.
Investment Banking and the Financial Crisis: Data from the Boston Consulting Group (BCG) and Thomson Reuters indicated that industry-wide investment banking revenues were down by over 75% in the third quarter of 2008 from the same period in 2007, while the dollar volume of activity (securities issues, loans and mergers & acquisitions) in the first nine months of 2008 was down by around 50% from 2007.
The 2008 Wharton Finance Conference: The view of senior investment bankers participating in the annual Wharton Finance Conference on November 7, 2008 was:
- Merger & acquisition work should be in demand, especially as corporate restructurings increase in number.
- Capital markets work (such as securities underwriting), by contrast, generally should be weak over the next few years.
- Distressed debt, however, will be one capital markets area with growth prospects.
- Emerging markets will be the other capital markets area worth looking into.
- Boutique firms report booming M&A business, and generally are much stronger than their larger rivals.
In sum, there was still hiring by investment banking firms, though not in the same numbers or at the same pay levels as in previous years. Especially for ambitious new MBAs seeking entry-level positions, it was deemed to be a challenging environment, but with some opportunities still available.