What Is Investment Banking and Why It Is the Best Job You Can Have Straight Out of School

Hello Wolf Pack!

Don’t know what investment banking is or why everyone wants to do it? You’ve come to the right place.

First, Let’s Talk About Why Everyone Wants to Do Investment Banking, and why you might too.

Investment banking is one of the most sought-after jobs for college and MBA students, with the major banks receiving 2-300k applicants each year and accepting only 1-3% on average. Why do so many people want this job?

For starters, if we are honest about it, many people are drawn to investment banking because it pays top dollars. As a 1st-year analyst straight out of college, you can average $130k+ with your salary and bonus. If you just finished business school, it’s even better; you’re looking at $200k+ as a 1st-year associate. While the vast majority of people never reach that type of annual income in their entire lives, you can get there straight out of school.

According to the New York Times, Economists have done studies and found that “Graduates’ first jobs have an inordinate impact on their career path and their… earnings over a lifetime.” Paul Oyer, an economist from Stanford GSB, released a paper titled “The Making of an Investment Banker: Macroeconomic Shocks, Career Choice and Lifetime Income” where he says:

“I estimate that a person who graduates in a bull market and goes to work in investment banking upon graduation earns an additional $1.5 million to $5 million relative to what that same person would have earned if he or she had graduated during a bear market and had started his or her career in some other industry.”

In addition to the money, there’s also the importance of the work. Nowadays, it’s often not enough to just be making a lot of money. You also want to be working on things that are high-impact, as it gives you a sense of purpose. Because of the nature of the work, investment bankers frequently rub shoulders with C-level executives. We talk more about what the work entails later in this post.

As a junior investment banker starting out, you also learn a tremendous amount about finance and just business in general. It’s hard to think of many jobs out there with such a steep learning curve in the beginning. Early on in your career, it’s always good to optimize for learning. Investing in yourself early is the best way to change the trajectory of your career.

Lastly, having investment banking on your resume is sort of like a badge of honor. Even if you don’t plan on staying in investment banking long-term (and most people don’t), your investment banking experience will open up many doors for you for the rest of your career. You often see job postings where the employer explicitly states that candidates with investment banking or management consulting backgrounds are preferred. This is because bankers and consultants are seen as people who have proven they can work hard and are also highly analytical. If you aren’t quite sure what your exact calling in life is yet, investment banking may be a good choice to maintain your flexibility and future exit opportunities.

Now, combine topnotch compensation, major responsibilities at a young age, great learning, and abundant future career opportunities, it’s no wonder investment banking is one of the most selective industries to break into.

What Do Investment Bankers Do Anyway?

For a lot of people, when they hear about investment banking, they assume the job has to do with investing (duh!). They confuse investment bankers with stockbrokers or financial advisors for wealthy individuals. In reality, investment bankers are indeed financial advisors – but their clients are corporations and sometimes governments, not individual investors. Investment banks will advise clients on all sorts of financial matters, but at a very high level most deals fall into one of two buckets:

  1. Financing activities: raising money through issuing debt or equity
  2. Mergers & Acquisitions (aka M&A): buying or selling parts or all of a company

These are usually some of the most important and strategic projects from the client’s perspective. Being able to raise money is the lifeline of any company that wishes to compete in the marketplace. Sometimes the company will do this by selling a part of its ownership to investors (issuing equity), other times the company will raise money by borrowing it (issuing debt). Investment bankers help connect their clients with potential investors, and sell the investors on why it’s a good idea to give their clients money.

As for M&A, there can be many reasons for doing so: to take out a competitor, to increase revenue growth by expanding one’s product offerings or market coverage, to improve one’s cost structure and profit margins, etc. It’s a huge undertaking that often involves millions, if not billions of dollars, and investment bankers help clients figure out an appropriate price to pay, how to structure the deal, and where to obtain financing if needed. Great investment bankers often become the most trusted advisors of their clients’ management team (yes, even more so than lawyers, according to the hit TV show Suits).

Wall Street Mastermind’s Purpose

And that brings me back to the original question at the beginning of this post: “What is this place?”

The concept of a mastermind was first introduced by Napoleon Hill in his famous book Think and Grow Rich (great book, highly recommended). A mastermind is an exclusive group of like-minded individuals designed to help its members achieve their goals through the collective intelligence and experiences of its members. In a way, it’s a lot like a wolf pack. And that is why I consider my readers a part of the Wolf Pack.

I started Wall Street Mastermind because I know firsthand how difficult it is to get a job in investment banking. I went through it myself about a decade ago (I highly recommend you read my story here first). In hindsight, I wish I could have had a group like this where we helped each other accomplish our goals. I have no doubt it would have helped me tremendously, and I could have avoided a lot of the mistakes I made throughout the recruiting process.

If you are interested in starting your career in investment banking, you owe it to yourself to take a look through this website. I try to post a lot of FREE, helpful content with tips and tricks and recruiting best practices. Click below to subscribe and grab a free gift that I give to everyone in the Wolf Pack, our all-in-one recruiting toolkit. As part of the Wolf Pack, you’ll also be the first to hear whenever the latest content comes out. Sometimes I will also send exclusive content to subscribers only instead of posting them here.

I’m hopeful that the bumps and bruises I accumulated throughout my journey can help you have a smoother path. I will also be tapping into my network of current and former investment bankers so that you can hear their perspectives as well. Feel free to reach out here or just leave a comment below if you have any questions. Or if you’d like more hands-on and personalized help, you can check out our personal coaching service here.

Now, let’s help each other achieve our dreams. Remember:


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