Guide to Investment Banking: Part 2 of 3

 

Are You an Ideal Candidate?

For junior financial analyst positions, the ideal candidate is someone with a bachelor’s degree in finance, business administration, economics, math, accounting and other majors that show a person can sift through and make sense of reams of complex financial data.

But because investment banks deal with a wide array of companies, those with special secondary majors — particularly in biology, chemistry, computer science, and healthcare — are particularly desired by investment banks, which often represent and interact with software firms, biotech and pharmaceutical companies, healthcare institutions and other corporate entities that might be going public or merging with another company.

The bottom line? Having a secondary major in a specialized non-finance field is often considered a major plus if an analyst, associate or vice president can grasp the lingo and intricacies of a client’s product or services, industry officials say.

A grade point average of 3.5 and higher is considered a must for a position at most investment banks, many of which will recruit heavily, and sometimes exclusively, at top-rated colleges and universities. Smaller investment banks may not be as picky what schools people attended, as long as candidates show they’re razor sharp and ready to handle complex investment-bank duties.

In addition, some industry insiders also say they’re always on the prowl for young candidates who have proven they can commit themselves to projects and can work within team environments. As a result, some investment banks favorably view those who played varsity sports or excelled at some other extracurricular activity.

For those wanting to move up the leadership and compensation ladder within investment banking, getting an MBA degree is generally considered critical after someone has served about three years as a junior and senior financial analyst.

Job Interviews and Prep

Never underestimate the importance of job interviews at investment banks, but also don’t psyche yourself out beforehand to the point you act unnatural and come across as uncomfortable, industry officials say.

The entire goal, from the interviewer’s standpoint, is to gauge whether candidates are as sharp as their cover letters, résumés, school records and recommendations may suggest. So, if you’re young, expect lots of questions about your college studies and activities, internships, and prior summer and post-college jobs.

  • If you’ve already worked at an investment bank in a part- or full-time job (or as an intern), expect detailed questions about projects and deals you’ve worked on, as the interviewer will try to gauge the depth of your knowledge about investment banking.
  • Know the names of investment bankers and other executives you have worked with in the past. You may be asked about them.
  • Have mental lists ready about your strengths and weaknesses, and be prepared to talk about them. Questions about careers goals and special fields of interest are also common, as are questions testing skills with spreadsheets and various software programs, including Excel, PowerPoint and other programs specific to various industries.
  • Some investment banks may pose verbal tests to candidates, such as outlining a hypothetical scenario in which a company is trying to buy a similar firm — and then ask how you would approach researching the deal.
  • Have questions ready for the interviewer — about what type of deals you might be involved in as an analyst or associate, or the prospects for promotion within an organization.

By all means, convey a strong desire to work hard and passionately, because that’s exactly what you’re going to be expected to do if hired.

Compensation — What are You Worth?

After all the long hours of research, deadlines, travel and nerve-racking meetings required to piece together major capital and M&A deals, it can be all worth it.

First-year analysts at big Wall Street firms can make salaries of $100,000 to $150,000, with signing and performance bonuses potentially pushing those figures up by 25 percent or more, according to industry insiders and experts.

But the pay goes up almost exponentially in later years as one moves up the corporate ladder. The reason? Commissions off of capital deals can range from 1 to 5 percent for investment bankers — and that means big bucks for mid-level bankers and even bigger fortunes for senior managers.

Every bank has different titles conferred on personnel, and investment banking is no different. But after junior and senior analyst positions usually progress to associates, and then on to vice presidents.

  • Associates generally hold an MBA and have more than three years of experience. Total compensation often ranges from about $250,00 to $500,000.
  • Vice presidents generally have an MBA and a minimum of five years of experience. Compensation hovers between $300,000 and $1 million.

The top-echelon jobs, such as directors, principals, partners, managing directors and department heads — however they might be described — is where the seven-figure salaries start kicking in. The compensation for the very top managers, depending on the size of a bank and its deals, can easily get into the millions or even tens of millions of dollars.

About the Author: Jay Fitzgerald is a business journalist based in Boston. Over the years, his articles have appeared in The Boston Globe, the Boston Business Journal, the Boston Herald and other publications.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>