Investment Banking Analyst
Are you comfortable with staying up late, working in Excel and Power Point all day long, and doing it seven days a week? If you are, investment banking might be a great fit for you. If you aren’t, you better start looking for something else.
Investment banking analysts are hired in order to support the business of investment banking. If you think of the senior management as the brain of the deals, analysts are thought of as the machine that produces all the work that managing directors need to deliver the results. As an analyst, you will spend 80+ hours/week on average working on various analyses and pitch books that help managing directors win new business, as well as on producing the necessary transaction documents once the business has been awarded to your bank.
Investment banking analysts are working on the private side of the business and are split into industry or product groups. No matter whether you end up in an industry or a product group, your responsibilities will be pretty similar.
As an investment banking analyst you will be expected to create financial models, pitch books, and transaction documents day in and day out. Some of the main activities will include:
- Conduct industry research
- Develop various financial models
- Prepare presentation materials
- Draft transaction documents (e.g. investor presentation, confidential information memorandum, rating agency presentation, etc.)
On top of that, sometimes you might be asked to print and bind various presentation materials. In certain situations, you will work very hard on assignments that will be mostly time consuming, and not always mentally challenging. However, this is your opportunity to excel. You should always show a good attitude and willingness to work no matter what is asked from you. It is not a good idea to wear an “I’m-too-smart-for-this” attitude around the firm. Too many analysts that get into this business think they’re on the top of the world, while they’re still really on the bottom of Wall Street.
A lot of students ask, “What do I have to be good at in order to get a job as an investment banking analyst?” Most of the time, the answer is surprising to students. The main thing bankers look for is someone who is a quick learner and willing to work hard with a good attitude. Many people think they have to be extremely good at math and be able to construct financial models and other analyses before they enter the job, but this is not true! As an analyst you have to be disciplined, responsible, detail oriented, hard-working, and excited about learning new things. Everything else can be learned. Once you realize that investment banks are looking for the right people, not for your current knowledge, you’ll be ahead of many of your peers.
Let’s say you finally got your dream job and you’re an analyst. What skill set can you expect to develop at your job? One of the most important things that you will get out of your analyst position is a deep knowledge of finance and how companies work. Specifically, you will understand what, how, and why a company is doing something. For example, when a company comes and asks you for money, you will be able to see what their needs are, evaluate their financial and strategic position in the market, and make a good recommendation that fits their needs. You will also know how to quickly assess a company’s financial statements and learn how to create a “story” about the company and how it is positioned within its industry. Finally, you will improve all of the skills that were required in the first place to get to the job.
So where do you go after your two years in investment banking? Well, first of all, if you’re good, you don’t have to go anywhere. Many banks will extend the offer to the best of their class for the third-year analyst position, and after that promote you directly to the associate level. However, if that doesn’t work out, you can always go back to business school to get your MBA. If you don’t want to stick with investment banking, and don’t want to go back to school, you might transfer to a private equity firm or a hedge fund. As you can see, options are plentiful. There is neither a right nor a typical career path. As an investment banking analyst, you will be lucky to develop such a valuable skill set that is transferrable to many industries and positions. A great thing about being an investment banker is the fact that you can pretty much go wherever you want afterwards.
In short, the lifestyle of a banker sucks. It’s pretty bad. You wake up, go to work, and then if you’re lucky enough, you get a good night sleep. It is not rare that you’ll have to stay in your office past midnight working on a model or a pitch book, and still be expected to show up tomorrow morning for work. Weekends? A little bit more flexible, but don’t expect to not work on weekends. Sometimes, weekends might be your biggest nightmare when you have something big coming up on Monday morning. All in all, don’t expect to work less than 70-80 hours per week, and be ready for weeks of 100+ hours. Remember, a week has 168 hours. You do the math of how much time you have left for sleeping and other activities.
Although this looks pretty bad at first, remember you’re not the only one doing it. When you stay late working, you’ll work with your colleagues. That definitely makes it easier. Another thing to think about is that this is only the beginning of your career. You have to look at it as an investment for your future. When you look at it that way, it doesn’t sound as bad anymore.
The compensation is great! You’ll get paid more than any of your peers working in any other industry. Although your base salary is pretty comparable with other prestigious jobs, the bonuses make the difference.
So to be a little bit more specific, the compensation splits into three categories – signing bonus, base salary, and year-end bonus. If you end up working in New York, here is the breakdown of how much you might expect to get paid:
- Signing bonus: ~$10,000
- Base salary: ~$70,000 – $90,000
- Year-end bonus: ~$30,000 – $60,000
All three of these categories can depend on the type of bank (bulge bracket vs. boutique) and how active the bank’s business is (many deals/higher revenue vs. fewer deals/lower revenue). Also, your year-end bonus as an analyst is typically based on performance, which is just an added incentive to always work hard and have a great attitude. In the end, these are pretty fair ranges to assume, but it is hard to generalize and encompass what every bank pays, so use this only as guidance.