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.
Is being an investment banker worth it? ›
Investment banking is an exciting and lucrative career, but it isn't right for everyone. You may have a desire to earn over $100,000 a year as a first-year analyst in New York City, but you need to remember that investment banking is not just a high-paying job, but is also a high-stakes, high-pressure job.
At what age do investment bankers retire? ›
Age Range: It's nearly impossible to reach this level before your early 30's, so we'll say 35-50 for the range. Few MDs continue working until the official retirement age (65-70); it's a stressful, high-pressure job, and past a certain net worth, it's just not worth it.
How valuable is investment banking experience? ›
Employers love seeing Investment Banking experience in candidates because they recognize that former analysts can get things done, solve problems, and work well in teams.
What is a good why investment banking answer? ›
An example answer to the “Why Investment Banking?” question
Here is an example of how to answer the question concisely: I want to work in investment banking because it's the fastest way to learn financial modeling, valuation, Excel, and to understand the nature of large corporate transactions.
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.
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.
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.
Is 25 too old for investment banking? ›
"Most people who get entry-level jobs in banking are aged 20 to 25 years-old," says one former trader. "Once you get beyond 28 years-old, it becomes a lot more difficult to get a front office job (in trading, sales or M&A) in a bank," he adds. "Of course, there will always be exceptions, but it's tough."
How much do investment bankers make at 30? ›
Between 21 years of age to 25 years, Bankers get promoted from Analyst to Associate, and their base salary increases to about $120,000 from $80,000. Sticking till 30 will earn you the Vice President (VP) title and grow your base salary to at least $195,000.
Even with education, experience, and enthusiasm, investment banking might not be for you. 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 to be hired as an investment banker? ›
Investment banking recruiting is an extremely competitive process, so you'll want to do whatever you can to stand out during the recruitment process. Banks value the quality of your job experience, and the quality of your schools attended, and how hard you network or “hustle” for the role.
Why are investment bankers paid so well? ›
Investment banks often compete to attract and retain top talent, which drives up salaries. 2. High Levels of Responsibility: Investment bankers handle complex financial transactions, such as mergers and acquisitions, initial public offerings (IPOs), and large capital raising deals.
What attracts you to investment banking? ›
Investment banking offers opportunities for ambitious people, so ambitious and interesting people go into it. On the job, the people you'll meet and work with will be knowledgeable and passionate. Being in a workplace with like-minded people is one of the most rewarding parts of banking!
Why investment banking is the best career? ›
It has a good reputation and offers a solid platform for learning and two opportunities for career advancement. You will therefore gain a lot of knowledge once you work for an investment bank. A lot of hard and soft skills are developed as a result of being forced into a situation head-first.
Why should we hire you for investment banking? ›
Showcase your interest in the industry
A career in investment banking can be complex, so it's beneficial to reiterate that you understand the role. You may also showcase your knowledge of the industry and how you can apply your experience to the specific position for which you're applying.
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.
In the high-stakes and fast-paced world of finance, the work-life balance of Investment Bankers often teeters on a fine line. Known for their grueling hours and the high-pressure environment of financial markets, Investment Bankers are frequently at the mercy of market fluctuations and client demands.
Do investment bankers get paid well? ›
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.
