what does an INVESTMENT BANKER do?

Question

my dad, who is a financial risk manager at the local energy business, got me interested in investment bankers. i think i know the basics, like that they advise clients on stock, and that they manage stock. but i dont really know that much about them at all.

i was wondering what the job entails. what would you do in the average day? i was also wondering what i should be doing to prepare myself for a career as an investment banker?

Answer 1

You might be confusing an investment banker with an investment manager. There is a huge difference.

Investment bankers help companies. This could be to get access to capital, to acquire other companies, and sometimes when they want to be sold to another company. A typical day will be depend on your role in the investment bank. If you are an analyst you will be preparing reports and analysis. If you are in sales you will be presenting your firm to companies and trying to win deals. Investment bankers are known for working long hours when the deals are running, and for making huge salaries when times are good. By huge I mean starting salaries of over $200,000 and bonuses that can run from a few hundred thousand to many millions per year (after you have been in the firm for a while.) Investment bankers tend to have MBA, Finance or Math backgrounds. They tend not to come from retail brokerage backgrounds. If you are young and want to get into Investment Banking I'd get an MBA and do web searches on firms like Goldman Sachs, Thomas Weisel & Partners.

Investment advisors manage investments in stocks, bonds, mutual funds etc. Some advisors focus on managing investments for companies, but by number I think there are many more who advise individual investors. There are around 100,000 advisors in the US who are registered with the SEC. To become an investment advisor you will need to work for a brokerage firm and take an NASD series 6 or 7. Or you can work for an investment advisory firm and take an NASD series 65 exam. Both are 2-8 hour exams, and you can take study courses to prepare for them. Retail brokerage firms are always looking for bright energetic people to help investors and this is a field where you can work your way up without an advanced degree, but I think a college background will help you.

What would your day be like as an investment advisor? I can tell you that because my firm is an investment advisor. There are variety of roles depending on your interests: interacting with clients, managing portfolios, and account administration. Small firms start with one person doing all three but pretty quickly advisors tend to focus different people on either managing the client or managing portfolios.

You asked how you could enter this field. If you are just getting started and willing to work from the ground up you could apply at one of the retail brokerage firms (Schwab, Fidelity, AG Edwards) and start in account administration. Over time you'll have opportunities to get further training and eventually move into client management or portfolio management.

Another path is to start your own advisory firm. But every advisor I know started somewhere first and learned the ropes, built a base of clients, and then left to go out on their own.

I started my firm in 1999, and am very happy that I did. It was hard at first and took longer than I thought, but it has been lots of fun and rewarding to help clients.

Answer 2

I invest, so I get involved with investment bankers a lot. These guys offer a lot of banking services like other bankers do, except, they deal with professional investors and businessmen. These folks make a pretty penny for an employee; they even make more than doctors. Most of the investment bankers I deal with make close to a million dollars per year; usually between $800,000 to 1.2 million per year. For college degrees, a lot of them have degrees in Finance/Commerce, Financial Accounting etc.

Answer 3

You must first get hired! Then you will have to pass the NASD exams, such as a 63 & 7 at bare bones minimum. Then you will call all day long to attract clients. Then once you have them you treat them like gold since they make your pay check. Youwill handle thier portfolio's and advise them when to buy and when to sell. You will actively do this ALLLLLL day long. So you must be diligent as to the trends in the market. Remember it can be a thankless job. When you advise them correctly-- they made the descision to buy or sell. When you were wrong it is always your fault--even if you advised againts the change and they did it any way. So you must have tough skin to do this job. You can make lots of $$ doing it but you will need to add clients all the time as some will die, some will take their business elsewhere, etc.
I am a former regestered Principal.

Answer 4

Go to an Ivy league school that companys like that recruit from. I personally wanted the same thing while in college but it was a pipe dream. I became a stock broker but if you want to become an investment banker and increase your odds with the big dogs you will need to go where they are.

Do some serious research on where they hire their employees from like what schools and you might have a shot at it or maybe your dad knows a congressman. That helps too. hahah

Answer 5

In my humble opinion, if you want a job that allows you to go home nights with a clear conscience, you'll find another career.

No one knows for sure what the stock market will do. Therefore, no one can really advise anyone about how to invest in it. All they do is try to lure a potential customer to do business with them rather than someone else. Then they sit back and collect commissions whether they make money or lose money for their customer. It's a rip off. The customer is a sucker that pays a high commission for something he can do himself for $10 a pop by opening his own account on the internet and buying and selling stock as he sees fit. That's why those self controlled internet investment accounts are so popular now. By investing on his own, his chances of succeeding are just as good as they would be when doing it through a bank or other broker. You'd just be a middle person sucking in money from your customer whether you make money for him or not. Nothing to be proud of or feel good about.

My advice is to walk away from that idea, take tests to determine what other careers you have a natural tendency to be able to be successful in, and choose one that sounds like it would be fun.

You'll never regret going into a field you'd most likely be good in (based on tests of your natural abilities) and that you think would be fun to do. You'll come home nights happy rather than torn by guilt feelings that you are ripping people off and have to do so because you need to earn a living.

To help you make your decision, keep in mind that NOBODY knows what the stock market will do. So, when you place yourself in a position to advise people, you are selling a lie. You don't know anymore than they do. And you are taking money (a commission) from these people for doing that. Let your conscience by your guide, walk away, and live a much happier life.

I never made much money in my life, but what I did make, I made with a clear conscience. I'm retired now, and guess what. I think I'm happier than many of the high rollers. I learned to be happy driving a low-end Toyota rather than a high-end Mercedes; I also learned to be happy in a small condo rather than a mansion. So, now it takes less money to make me happy.

For me happiness is a piece of cake. For high rollers, it's constant worry about where the next million will come from.

All of this is, of course, my perspective. You may want to show this response to people you trust and ask them if they think I'm telling the truth.

In the end, it's your life. So I recommend thinking long and hard about the decisions you make about this thing called your life. And, in whichever path you decide to travel, good luck.