Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges. Aspiring finance professionals may wish to examine whether a career in investment banking is worth it.
- While the compensation is high, so are the pressures in the investment banking profession.
- Investment bankers sometimes work long hours, and often under time pressure to close a deal.
- Despite the traditional culture of conspicuous work, many investment banks are reassessing workloads and encouraging employees to maintain less stressful schedules.
Investment Banker Work Environment
An investment banker works with companies and government entities that raise capital, and bankers also provide advice regarding mergers, acquisitions, and reorganizations. Traditionally, investment bankers work long hours, sometimes as many as 100 hours per week. Bankers are often under time pressure as many projects have tight deadlines.
However, the banking culture also values and admires people who work long hours, and many firms have a culture of conspicuous work. This term refers to a corporate culture in which each employee notices the hours worked by everyone else, and this situation creates a competition to take on more work at all costs.
Reliable bankers are given more work, and that leads to a work schedule that can become unmanageable. The work environment can take a physical and emotional toll on many people who work in the industry.
Changes in the Industry
In 2015, two young investment bankers took their own lives. Shortly before their deaths, both workers suffered from lack of sleep, and both workers reached out to family members to explain how much they were working.
Those tragedies led many firms to change their company policy on work hours. Some firms now enforce a protected weekend policy, which means that bankers cannot work on specific weekends. Nearly all companies now ask workers to say no to additional work if that work will result in too many hours at the office.
Ironically, recent studies have shown that overwork leaves bankers less productive, which means that more hours are not generating the same level of quality work. A common rule of thumb is that a banker should not work on more than two banking deals at one time, or the workload is not manageable.
The typical base starting salary of an investment banker, not counting signing or performance bonuses.
Traits of Successful Bankers
Finance professionals should consider whether they have the personal traits needed to succeed in investment banking. In addition to the potential for long hours, a banker must be able to handle stress well and work on multiple deadlines at once.
Investment bankers must be able to initiate projects on their own and manage time well. Financial modeling and the use of Microsoft Excel are often important skills that many investment banks must master.
Investment bankers should be able to speak out and turn away work if the existing workload is too demanding.
Alternatives to Investment Banking
Investing banking firms traditionally hire new associates from the best MBA programs in the country. But, many of these students are no longer considering banking as a career. Elite MBA programs, such as the Harvard Business School, are seeing more graduates moving into tech startups and other fields, such as private equity and corporate finance.
This shift has also pushed banking firms to assess the number of hours each banker works, and if those hours are justified, given client demands. Alternative career paths to investment banking can include asset management, corporate finance, or equity research.
The Bottom Line
If a professional is not willing to make these sacrifices and is not primarily driven by money, that worker may not succeed as an investment banker. Finance professionals who need a balance between work and personal life should not work in investment banking.