Public Lecture - Reflections on Motivation, Measuring Individual Performance Compensation in the Investment...

Investment Banking management

Banking Investment / July 21, 2013

Plenty of undergraduate finance majors and Master of Business Administration (MBA) students consider pursuing a career in investment banking or investment management, two intensely competitive fields in the finance industry, after receiving their degrees.

According to projections from the University of St. Andrews, investment banks are expected to recruit an additional 1, 820 finance graduates in 2015. A separate study by High Fliers expects investment banking and investment management firms to offer some of the highest starting salaries for first-year employees in the United Kingdom, the United States and Japan. There's room for growth for those who are talented and ambitious enough to land one of these spots.

If you take away all of the industry terminology and boil these jobs down to their basic elements, investment bankers and investment managers (sometimes called "asset managers") are primarily responsible for channeling money from savers to companies that need capital. Some of the top experts in the investment world can be found in these positions.

Investment management is all about investment decisions. This means allocating money to property, equities or debt securities on behalf of large clients. Many in the industry refer to this as the "buy side, " where investment products are purchased in hopes of making profits for investors. Firms in the U.K. tend to call these workers "fund managers" rather than investment managers or asset managers.

Investment bankers work as high-level consultants and analysts for large companies (normally corporations) to help with initial public offerings (IPOs), stock purchases, mergers and acquisitions (M&As), and other capital-raising techniques. Almost every investment banker starts out as an associate or analyst and hopes to put in enough years to reach a role as a vice president or managing director.

Education and Skills

Competition for both careers is notoriously stiff. Investment banking firms are usually only interested in candidates who graduated from top schools and who have worked previously with major corporate players. It's virtually impossible to find an investment banking associate position without an MBA and strong recommendations from respected professionals in the field. Investment management positions aren't quite as crowded by top applicants, but it's still very difficult to break into major firms.

Networking is very important and sometimes matters more than experience or academic bona fides. A lot of firms use internships as extensive application processes; in fact, some investment management and banking internships are more competitive than entry-level positions for corporate finance or research analyst positions.

Undergraduate degrees are preferred in business disciplines, such as finance, economics, accounting or investment analysis, although degrees from other fields are considered. Some banks look for demonstrated analytical proficiency in health care or pharmaceuticals.

Firms are generally looking a strong combination of the following skills and characteristics:

• Strong written / verbal communication skills

• Analytical and problem-solving skills

• Demonstrated independence and responsibility

• Responsiveness and attention to detail

• Negotiation and client management skills

• Knowledge of investments, corporate finance and business negotiations (practical commercial expertise)

• Advanced mathematical and technical skills

• An ambitious, eager, get-it-done attitude


Investment banking and investment management jobs have attractive salaries and lofty bonuses. Even the lowest-level investment banking analyst at a smaller firm can expect a first-year salary of $65, 000 to $95, 000 and a hefty signing bonus. Third- and fourth-year analysts with major investment banks typically earn more than $250, 000.

Investment managers and asset managers in the United States earn anywhere from $50, 000 to several hundred thousand dollars annually. Senior managers for hedge funds or private equity firms are at the high end of the scale, but recent trends suggest that all buy-side analysts are experiencing income bumps.