An investment bank is a financial institution that offers a range of services from financial advisory, underwriting, trading, research, raising capital, issuance of shares and bonds, to the advisory on mergers and acquisitions. They are typically involved where a large amount of money moving happens. As lots of money involved, typically the clients of investment banks are large business corporations, but sometimes high net worth individuals (HNIs) may also take these services.
Do not get confused the term investment banking and commercial bank. The investment bank is very different from traditional and commercial banking in terms of their core operations. The investment bank making money through charging a consultation fee, putting interest on the fund raised and commission for the trading service. In the investment bank, investment banks who is the one do the job. All the activities of an investment banker can be divided into 4 broad categories:
- Data management. Investment bankers always have to deal with a lot of numbers and a large set of data points. The nature of work demands an investment manager be good in number crunching. It includes collecting data from various sources and storing them in a systematic manner for future reference. This data can be collected from multiple sources like annual reports, balance sheets, analyst reports, books of records and reported company financials.
- Financial analysis. It is one of the principal responsibilities of investment bankers to make those numbers talk. In other words, there is a lot of financial analysis required for deriving conclusions and insights from the collected data. They utilize a variety of financial models and tools in their day to day operations. This is the most time-consuming task for investment bankers.
- Investment bankers, individually or in a team, need to act as a middleman and coordinate with the clients and the external entities involved. This activity is predominantly true in profiles of mergers & acquisitions and raising funds for the clients. It involves a lot of communication, both oral and written, between the parties involved.
- Client management. This is one of the most vital responsibilities of an investment banker, particularly at a senior position in the organization. It involves creating reports, presentations and client interface. Since investment banks work for clients across the globe, investment bankers need to travel a lot to service their clients.
Investment bankers frequently start their careers at the analyst level and, with experience and additional education, advance into associate positions. Others enter the field as associates after working in another industry and earning a graduate degree such as an MBA.
It is known that investment banks commonly need work long hours. Firstly, the reason is that the work is based on client needs. Since nature of the work is such, that investment managers need to work around the client’s schedule and requests, long working hours are a commonplace sight in investment banks. To serve the clients for urgent and immediate requests, investment bankers are known for burning the midnight oil.
Also, since a lot of work revolves around the stock markets, the real work of an investment banker normally starts after the markets are closed, and that’s why finishing a day’s work requires staying back in the office till late hours of the day.
Secondly, the job requires precision and accuracy. Wherever there is a lot of data involved in the working operations, precision and accuracy are of highest importance. Investment managers require being extra careful about the precision of data they work with since even a decimal shift can alter the landscape of the analysis. Thus, perfecting the work and making sure that there are absolutely no mistakes in all that number crunching take up loads of time.
Last but not least, the job essentially has very less delegation of work. The kind of services that investment banks offer to their clients, it requires a good amount of time and efforts to be spent on getting to put everything in place before the real work starts.
It becomes imperative to make a single person responsible and accountable for major tasks to avoid confusion and element of error, which ultimately leads to long working hours for an investment banker. It does not mean that investment bankers do not work in a team, they do, but they have clearly separated and well-defined roles and responsibilities.
So, are you ready working in the investment bank?