Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges. Aspiring finance professionals may wish to examine whether a career in investment banking is worth it.
key takeaways
- While the compensation is high, so are the pressures in the investment banking profession.
- Investment bankers sometimes work long hours, and often under time pressure to close a deal.
- Despite the traditional culture of conspicuous work, many investment banks are reassessing workloads and encouraging employees to maintain less stressful schedules.
Investment Banker Work Environment
An investment banker works with companies and government entities that raise capital, and bankers also provide advice regarding mergers, acquisitions, and reorganizations. Traditionally, investment bankers work long hours, sometimes as many as 100 hours per week. Bankers are often under time pressure as many projects have tight deadlines.
However, the banking culture also values and admires people who work long hours, and many firms have a culture of conspicuous work. This term refers to a corporate culture in which each employee notices the hours worked by everyone else, and this situation creates a competition to take on more work at all costs.
Reliable bankers are given more work, and that leads to a work schedule that can become unmanageable. The work environment can take a physical and emotional toll on many people who work in the industry.
Changes in the Industry
In 2015, two young investment bankers took their own lives. Shortly before their deaths, both workers suffered from lack of sleep, and both workers reached out to family members to explain how much they were working.
Those tragedies led many firms to change their company policy on work hours. Some firms now enforce a protected weekend policy, which means that bankers cannot work on specific weekends. Nearly all companies now ask workers to say no to additional work if that work will result in too many hours at the office.
Ironically, recent studies have shown that overwork leaves bankers less productive, which means that more hours are not generating the same level of quality work. A common rule of thumb is that a banker should not work on more than two banking deals at one time, or the workload is not manageable.
$82,027
The typical base starting salary of an investment banker, not counting signing or performance bonuses.
Traits of Successful Bankers
Finance professionals should consider whether they have the personal traits needed to succeed in investment banking. In addition to the potential for long hours, a banker must be able to handle stress well and work on multiple deadlines at once.
Investment bankers must be able to initiate projects on their own and manage time well. Financial modeling and the use of Microsoft Excel are often important skills that many investment banks must master.
Investment bankers should be able to speak out and turn away work if the existing workload is too demanding.
Alternatives to Investment Banking
Investing banking firms traditionally hire new associates from the best MBA programs in the country. But, many of these students are no longer considering banking as a career. Elite MBA programs, such as the Harvard Business School, are seeing more graduates moving into tech startups and other fields, such as private equity and corporate finance.
This shift has also pushed banking firms to assess the number of hours each banker works, and if those hours are justified, given client demands. Alternative career paths to investment banking can include asset management, corporate finance, or equity research.
The Bottom Line
If a professional is not willing to make these sacrifices and is not primarily driven by money, that worker may not succeed as an investment banker. Finance professionals who need a balance between work and personal life should not work in investment banking.
FAQs
Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges.
Do investment bankers have a good life? ›
Investment bankers work long hours and often earn a high income. Lack of work-life balance is one reason to avoid becoming an investment banker. Investment bankers must also be able to manage high-pressure situations.
Is it hard getting into investment banking? ›
The lucrative and fast-paced career of an investment banker is a highly competitive one. For instance, in a recent year, 236,000 applicants competed for roughly 3,500 internships at Goldman Sachs. This is common across the industry where acceptance rates for programs are typically less than 2%.
Do investment banker make good money? ›
Can you become a millionaire as an investment banker? It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year.
What are the cons of being an investment banker? ›
Cons of an Investment Banking Career
- Extended Work Hours: Investment bankers frequently grapple with long working hours, including weekends and holidays, to meet stringent deadlines. ...
- Heightened Stress Levels: The fast-paced nature of investment banking often results in elevated stress levels.
Across the industry, even at the firms which saw slight year-on-year falls, the norm seems to be that the crude percentage chance of getting accepted to an investment banking graduate program is a bit more than 1%, but significantly less than 2%.
Can investment bankers make 500K? ›
Sure, anybody can make a good living being a doctor or a lawyer or an investment banker where you can make ~$200-500K per year a few years after you finish with your studies, but you hit a ceiling very quickly unless you start your own practice (aka start your own business).
Do investment bankers really work 100 hours? ›
How Many Hours do Investment Bankers Work? Investment bankers work notoriously long hours, with the typical work week filling in 60-80 hours per week, and the occasional high-intensity work week that can push a banker to 100+ hours.
Why are investment bankers so rich? ›
High-Stakes Deals and Transactions
At the heart of an investment banker's earning potential lies their involvement in high-value deals and transactions. These professionals facilitate mergers, acquisitions, and IPOs for corporations, reaping substantial fees in the process.
What GPA is required for investment banking? ›
In recent years, the GPA cutoffs for investment banking have been trending higher. Currently, a GPA around 3.7 is often preferred for interviews at large banks, while elite boutiques and bulge bracket firms like Goldman Sachs and Morgan Stanley may look for a GPA of 3.8 or higher.
Investment banking is a quantitative field, and having a strong foundation in mathematics is essential. If you're considering a career in investment banking, it's important to have a deep understanding of mathematical concepts such as calculus, probability, and statistics.
Is investment banking a declining career? ›
Banks don't break out investment banker headcount specifically, but data released last week by research firm Coalition, suggests investment banker headcount across the industry fell only 4% year-on-year in the first half, which is when many of the cuts at Goldman and Morgan Stanley took place.
Why does IB pay so much? ›
High Demand and Limited Supply: Investment banking is a highly competitive field, and there is a limited pool of individuals with the necessary skills, expertise, and experience. Investment banks often compete to attract and retain top talent, which drives up salaries. 2.
Do all investment bankers become millionaires? ›
Highly unlikely if you remain an investment banker. It is fairly common for front-office investment bankers to be earning over US$1m after 8 years in the industry. But it caps out at around US$20m, which is how much a top-performing investment banking CEO gets.
Are investment bankers smart? ›
The field of investment banking has many people who want to be highly successful, and your peers are likely to work just as hard as you. The job requires intelligence and analytical capabilities, and colleagues and clients may need to perform at a high level to maintain their competitiveness.
Are investment bankers in high demand? ›
The U.S. Bureau of Labor Statistics (BLS) projects that securities, commodities and financial services sales careers—which include investment bankers—will grow by 7% from 2022 to 2032. This projected growth is faster than the 3% growth projected for all occupations nationwide.
Is investment banking becoming less popular? ›
As young professionals re-examine their work-life balance, investment banking is becoming a less popular choice despite the money.
Is there a high demand for investment bankers? ›
According to the US Bureau of Labor Statistics (BLS), this sector employed 466,900 people in 2021 and is expected to grow by 10% between 2021 and 2031. Compared to all industries, this is a faster-than-average growth and means that the job outlook for investment brokers' services is encouraging.
