Investment Banking?

[sharaik]

Most of the people you see who want to pursue a career in finance, you ask them where do you see yourself in 5-10 years, they are like Investment Banking! So, what exactly is investment banking? Is Portfolio Manager who handles your portfolios and investments within Investment Banking? Any I B could share the input..

Another thing what are steps needed to become one? and experience required in each step?

Thanks in advance!

[jayk]

it's a good way to make money but only if

1. you are prepared for VERY long hours and LOTS of stress

2. you excel in your work, otherwise you will find yourself fired easily

3. you can only do this for 10 years or a bit more. It's high stress work, and I think good investment bankers work for a short period of time when they're young.

[RedLightning]

This article sums up what the job actually entails pretty nicely.

What Investment Bankers Actually Do

I’ve seen lots of explanations of what investment bankers actually do, but none have seemed particularly good or satisfactory. I think I can sum up what we actually do in 2 words:

Ari Gold.

If you haven’t seen Entourage (shame on you, but I guess that’s possible), an alternate explanation will be offered at the end of this post for those interested in understanding investment banking.

Investment bankers are agents, just like Ari. We don’t create anything and we don’t buy anything; we just sell things that aren’t ours to begin with. And we make a lot of money doing that, thank you very much (more on investment banker salaries). If the business world were like Entourage, bankers would be the agents, private equity firms and large companies would be the studios, and companies would be the actors and movies. Private equity firms buy and sell companies. Studios buy and sell actors and movies. Bankers make introductions and try to sell things. Agents make introductions and sell their clients.

Vince Chase would be Facebook: young but huge success in store, even with occasional missteps along the way.

Medellin would be WebVan. Or maybe Kosmix.

Just like in Hollywood, starting or running a company (movie/actor) carries the most risk but can also the most fun for those involved. If you look at all the characters in Entourage, it’s hard to argue that Vince doesn’t have the best life. But it’s not easy to get there and it’s far riskier than being the agent (banker) or the studio (private equity firm).

The agents and the studios, on the other hand, have a much easier but less fun job: they must distribute risk properly so that they don’t end up getting screwed. It’s just like Terence says when chatting with E at the end of Season 2:

“We all start out believing that our clients care about us, but in reality they don’t. There’s only one way to look at clients, Eric. Like stocks. Invest without emotion. Diversify.”

So when picking a career, instead of asking what job you want, instead ask yourself, “Would I rather be Vince, Ari or the head of Warner?”

If you’re an Ari guy (aka Navid Mahmoodzadegan), you might just be a banker.
And If You Haven’t Seen Entourage…

If you’ve somehow not seen Entourage, think of investment bankers as real estate agents but for companies instead of houses. Just as a real estate agent introduces buyers and sellers of property, bankers introduce buyers and sellers of companies and try to make a deal happen. Just like real estate agents, the only thing at stake is our time - we have no money invested on either side.

As the above poster said, investment bankers typically work 70-100 hours a week (depending on how the economy is doing), so if you like going home at 5pm then it's probably not the job for you.

[brucemeng]

they sell things that aren't theirs.

just like how a car salesman sells cars, or a real estate agent sells houses... they sell companies.

and a portfolio manager is on the wrong side

[faken]

This article sums up what the job actually entails pretty nicely.

As the above poster said, investment bankers typically work 70-100 hours a week (depending on how the economy is doing), so if you like going home at 5pm then it's probably not the job for you.

LOL. My friend knows someone that works as an IB.. she sleeps under her desk sometimes haha.

[steevee]

2. you excel in your work, otherwise you will find yourself fired easily.

I don't know why I find this pun somewhat entertaining.

[bk33]

two stupid questions
1. when they work 100 hrs, does that mean they go in on weekends?
2. can they not just hire more people to lighten the workload?

[DaFonz]

two stupid questions
1. when they work 100 hrs, does that mean they go in on weekends?
2. can they not just hire more people to lighten the workload?

1) Yes.
2) No. The finance industry is structured in such a way that you are expected to be worked to death during your 2-year analyst stint. It's just the way things go. As you get to VP/MD level, the hours aren't quite as insane though they can be.

In finance, there are two sides: the sell-side and the buy-side. Investment bankers are on the sell side. What that means is that they will be brought in to package companies to raise capital and be advisors. They get paid based on fees calculated by how big the fees are.

To get in, you either come in at the analyst level from Ugrad (you've missed recruiting season btw), at the associate level from business school or as a lateral from somewhere else (IE, industry, accounting firms, etc).

Not to say that it isn't possible, but it is *very* rare for someone to move from say.. CSR/Financial Advisor to IB. It's very much an industry driven by prestige and back-office roles are looked down upon.

Given what I know about you and from looking at your resume - don't even bother trying to get into banking now. You will not stand a chance. What I suggest you do (and do some research on it first) if you really want to get into banking is to get a good MBA and go through the formal recruiting program.

[B0000rt]

I have a friend that does M&A at one of the big 5.

He got terribly sick once had a high fever so he called in to his boss and said he wasn't coming in because he was sick. So his boss said "Ok fine, see you in 30 minutes"

Of which my friend said "But I have a xxx degree fever!"

His boss said "Fine, see you in an hour"

At the end of the year he got a more than his salary in a bonus.

[mahoro]

Does CFA help in gettin in one of those?
Thinking of enrolling in the dec lvl 1 examination, currently reading the Schweser notes, but found it very tedious...

I am currently working miserably @ CIBCMellon just because I am a freshgrad and doesn't have much choices to begin with.

Any advice

[george benjamin]

Does CFA help in gettin in one of those?
Thinking of enrolling in the dec lvl 1 examination, currently reading the Schweser notes, but found it very tedious...

I am currently working miserably @ CIBCMellon just because I am a freshgrad and doesn't have much choices to begin with.

Any advice

CFA does not help for getting into investment banking.

As others have mentioned, the only way to get in is:

[1] through undergrad, must be target school, must be top 10% in class
[2] through top 3 MBA (or maybe Top 5, don't know..but i mean in canada).
[3] by networking

[tombyman]

CFA does not help for getting into investment banking.

As others have mentioned, the only way to get in is:

[1] through undergrad, must be target school, must be top 10% in class
[2] through top 3 MBA (or maybe Top 5, don't know..but i mean in canada).
[3] by networking

I agree with number [2], I currently study at Rotman and all the big banks recruit at Rotman for their Investment Banking positions. One of my 'colleagues' is also the MD of investment banking at one of the big banks.