How To Become an Investment Banker

By Indeed Editorial Team

Updated 22 November 2022 | Published 15 November 2021

Updated 22 November 2022

Published 15 November 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Investment banking is a prestigious and rewarding career in the finance sector. A background in finance and a great deal of analytical, mathematical and critical thinking skills are essential to be successful in this field. If you're interested in becoming an investment banker, there are many important steps you can take to prepare for this role. In this article, we look at what investment banking is, what they do and outline how to become an investment banker if you think this is the right career fit for you.

Related: 11 Types of Banking Jobs (With Salaries and Responsibilities)

How to become an investment banker

To become an investment banker, an undergraduate degree in finance or in a related field is typically the minimum requirement. Here are five steps you can take to become an investment banker:

1. Earn an undergraduate degree in finance or a related field

A good first step is to obtain an undergraduate degree from an accredited university. Subjects that are useful for a career in investment banking include finance, accounting, economics, mathematics, analytics, corporate finance, business administration and data analytics. Regardless of your degree, strong skills in maths and analytical skills and a solid understanding of economics and its relationship to corporate finance are essential in this field. Undertaking an internship while you're attending university can also help you gain on-the-job experience.

2. Consider a postgraduate graduate degree or MBA

You may consider obtaining a master's degree in finance such as a master's of business administration (MBA), corporate finance or another related field. Though it's possible to start out as a financial analyst, many employers at investment banks look for candidates with a graduate degree, especially at higher levels. Some universities have a better graduate recruitment rate than others, so it really helps to do your research. Look for universities that have strong connections to employers and internship opportunities. While it's helpful to obtain a postgraduate degree, having a degree from a well-known program can impress future employers.

Related: How To Become an Underwriter and What Underwriters Do

3. Get licensed and certified

Banking is a regulated industry by the Securities and Futures Commission of Hong Kong or SFC. Therefore, an SFC licence is a necessity for this role. You may refer to the resources provided by the SFC to establish the exact steps to acquire a licence. Some employers may also like you to be certified. You may wish to pursue optional certifications, such as the Chartered Financial Analyst (CFA) certification or the Certified Wealth Manager (CWM) certification.

4. Look for opportunities for on-the-job training

Entry levels positions are usually in the role of an analyst and you will typically be required to complete an employer-supported training program before you start working. Depending on the financial institution, this training generally covers the principles of accounting, markets, risk, financial analysis, statement analysis and financial modelling. The skills you'll gain from training on the job will include things such as negotiation, presentation and communication skills. Several employers also offer continued education program for entry-level investment bankers, to aid their career advancement.

5. Advance your career

There are many ways you can advance your career once you have started your career in investment banking. Your employer may provide you with opportunities for continued education, to become certified or further training. With more work experience you will also have the chance to move into higher-level roles. For example, an entry-level investment banker can move into management roles such as vice president or director, where they'll be responsible for managing analysts and associates under them.

What is an investment banker?

An investment banker provides financial assistance to aid companies, or even governments, to increase their wealth by issuing stock or borrowing money. They are the connection between private or public companies and investors. As an investment banker, you provide financial advice and consult on matters such as the types of securities to issue, what to price them at and how and when to issue them. You aid investors to purchase these securities and offer them advice. Investment bankers also carry out underwriting for municipal bonds and help with mergers and acquisitions.

What does an investment banker do?

An investment banker takes care of the numerous financial procedures to fulfil investment projects that companies undertake. They make a profit from the fees they charge their clients. Investment banking is an international job, which means you may be working with clients from all over the world. Sometimes, you might be expected to adapt your working hours to align with different time zones. People in this profession typically work long hours in a very high-pressure environment. Though the work is stressful, it can pay off with the potential for very high earnings.

Some of the job duties carried out by investment bankers include:

  • working with companies, organisations or governments to raise public or private funds by issuing securities, underwriting municipal bonds or through equity and debt offerings

  • consulting with companies to advise them on which securities to issue to investors

  • managing initial public offerings (IPOs) and creating supporting documentation

  • taking care of the required legal and compliance processes with financial regulatory agencies

  • deciding the initial stock price to appeal to those looking to invest in companies raising funds for growth and development

  • managing mergers and acquisitions, including building financial models to analyse and assist with the merger or acquisition

Related: How To Become a Private Banker (With Description and Salary)

Forms of investment banking

There are two distinct forms of investment banking that you may consider when pursuing this career path:

Industry coverage

When working in industry coverage, an investment bank divide its staff into two separate groups who are allocated specific market sectors or industries to cover. A managing director supervises the industry coverage team to ensure they remain up to date on current news, industry trends and competitors within their sector. The groups typically break up into smaller teams to manage various projects for specific clients.

Corporate finance

Corporate finance is focused on assisting clients to obtain the funding needed for new projects or to finance ongoing operations. Investment bankers that work in corporate finance look for ways for companies to obtain capital, including analysing equity, stocks and bonds. Corporate finance divisions within an investment bank manage IPOs, issue securities between companies and handle mergers and acquisitions.

Investment banker average salary

The salary of an investment banker depends on various factors including the financial institution, economic environment and the individual's professional experience. Investment bankers employed by larger banks typically earn higher salaries and bigger bonuses. The average salary for an investment banker is $1,184,233 per year in Hong Kong.

Top 5 skills for investment bankers

In addition to formal education, work experience and certification, there are some skills that are required to be successful in the role of an investment banker. Investment banking is a highly competitive field and being aware of the most important skills can help you know which areas to develop. Here are the top five skills that can help you to be successful in this career:

1. Critical thinking

Critical thinking allows investment bankers to come up with innovative solutions to solve complex problems. To do this, you require more than just skills in maths, finance, economics and analysis. Investment bankers are required to have a deep understanding of not only their role but also how other factors and their team's efforts fit into the overall goal.

2. Self-discipline

Investment banking is a career that demands long hours, attentiveness and self-discipline to be successful. Employers expect you to work in high pressured environments and work well with intense scrutiny. You can develop skills in self-discipline by setting small goals and working towards them.

3. Innovative thinking

Investment bankers need to obey regulations and rules, however, they're also tasked with finding innovative solutions to problems. It helps if they can look at a problem or situation from a variety of angles. To work on innovative thinking skills, you may think about taking a course in entrepreneurship or a related field while at university, or even enrolling in an online course in your spare time.

4. Cultural competence

Cultural competence, or being open-minded, is helpful in investment banking. Often, banking professionals work with or for international companies and having a good understanding of other cultures and societies can help them build strong ties. Foreign language skills are also highly sought-after for candidates in this field. Consider taking additional classes in foreign languages at university or taking part in an exchange program.

5. Relationship building

Interpersonal skills, such as relationship building, are extremely helpful in investment banking. This skill enables you to handle difficult clients which is key to being successful in this field. Due to the fast-paced environment, being able to maintain a positive attitude in outlook in stressful situations can help you develop and sustain client relationships.

Please note that none of the companies mentioned in this article are affiliated with Indeed. Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.