1. Investment Banking Analyst

Bankers start off their careers at Investment Banking Analyst positions. Annually, hundreds of thousands of top-notch students from prestigious universities compete for intern and full-time slots here. It is easily understandable: working at Goldman Sachs, Morgan Stanley, and JP Morgan goes along with generous compensation, high-profile jobs, and paves the way for you to rapidly progress in the future.  The subject of becoming an analyst covers a lot of news and forums. Here below is what IB analysts are, what they do, should you go for it and How to get in. 

There are two kinds of Investment Banking Analyst: Summer/Winter Analyst and Full-time Analyst. While Summer/Winter Analyst is an intern position, IB Analyst refers to a full-time position. That means if you convert your internship into a full-time offer successfully, you will start off your career as an Investment Banking Analyst. 

In the hierarchy, the analyst position is above only the interns. The Analyst program can last from 2 to 3 years depending on each firm, in which you will be put on track to become an Associate upon Analyst position.

2. The Investment Banking Analyst Job Description

Here is the blunt truth of what an Investment Banking Analyst would do without exaggerating the job description, because you should know to assess if it would be the best fit to strive for. In fact, the job description includes 2 main categories: functional responsibilities, and actual responsibilities with several administrative responsibilities. You have opportunities to gain exposure to various tasks, which prepares you with necessary capabilities to handle massive tasks at Associate levels.

2.1 Functional responsibility

As an investment banker, the roles will differ depending on whether the bank is advising the seller of the company, or the distributors of the securities (Sell-side), or advising an acquirer of the company, or the investors of the securities (Buy-side). 

On the Sell-side engagement, your responsibilities include:

  • Keep your fingers on the pulse of market trends to set valuation expectations for client companies and help them plan their timing and go-to-market strategies for M&A, DCM, ECM deals/offerings.
  • Craft a set of key points by deploying your in-depth knowledge of the client and its industry, which helps form a compelling investment thesis—then assemble marketing materials such as the “Information Memorandum” to convey these points
  • Identify and contact potential buyers, manage information flow and hold strategic discussions with interested parties

On the Buy-side engagement, your responsibilities include:

  • Set a preliminary valuation by evaluating the potential target and its industry
  • Identify potential issues in the diligence process and follow up accordingly
  • Analyze the buyer’s capital structure to determine the correct transaction financing; help the buyer find financing
  • Craft a bidding strategy and helping draft proposed terms of purchase

2.2 Actual responsibility

Specifically, an analyst’s actual responsibilities include:

  • Analyze market data, building detailed financial models and preparing client presentations for mergers and acquisitions, leveraged buyouts and capital markets advisory
  • Manage client transactions from pitch to close under the guidance of our senior leaders
  • Come up with innovative and creative ways to solve complex, real-world business challenges
  • Revise slides, track potential buyers and sellers
  • Assist with creating initial screening memos and final investment memorandums

Besides, as the youngest member in a team, an analyst would do anything to support the team and senior levels. Sometimes, they can be ridiculous tasks that are not related to accounting or finance such as ad-hoc tasks, snack preparation, and document scanning.

3. Investment Banking Analyst Career Progression, Salary, and Working Hour

3.1 Career Progression and Salary

Simply put, the Investment Banking analyst salary includes two parts: base salary and bonus. The base salary at Bulge Brackets is generally around 80K USD to 90K USD. The base is slightly higher if you work at some certain Elite Boutique Banks, yet is 20-30% lower if you work at Middle Market Banks or Regional Boutique Banks

Regarding career progression, you will start off your banking career as an Analyst – after the undergraduate program, then move up to an Associate after 2 – 3 years, Vice President, Senior Vice President, and Managing Director.

Position

Promotion Timeline Base Salary (USD) Total Compensation (USD)
Analyst 2 -3 years 80K – 90K 150K – 200K
Associate 2 – 3 years 150K – 180K 250K – 400K
Vice President 5 years with a strong performance 200K – 300K 500K – 700K
Director/Principal/Senior Vice President 5 – 10 years 250K – 350K 500K – 1,000K
Managing Director   450K – 600K 1,000K+

Based on your work performance during a year, the bonus is often 60% to 100% of your base salary, which means the total compensation as an Analyst can go up to 200K USD. However, in terms of cash bonus payment, while Elite Boutique Banks tend to pay you in total cash, Bulge Brackets intend to pay a majority of bonuses in stock. 

Despite the financial hubs of the world, Investment Banks in London, Tokyo, Hong Kong  pay lower than those in the US.

HC43.2 Working hours

The working hours are quite intense in Investment Banking. For junior levels, the hours hover around 70 – 80 hours per week, and can be up to 90 hours during the busy season due to multiple deals and transactions at the same time.

4. Pros and Cons of working as an Investment Banking Analyst

4.1 Pros:

  • Various deal types: Investment Banking is a good environment, where you could learn a lot of things including technical skills, business exposure, work ethics and mental stamina. Right out of college, you have opportunities to gain exposure to various deal types, and work across different industries. If you work in industry groups, you will dig into the industry and work across all types of deals (M&A, ECM, DCM). And if you work in a certain product group, you will have a chance to experience a variety of industries. 
  • Greater exit opportunities: Your exit opportunities can be Private Equity, Hedge Fund, Venture Capital, Corporate Development, and Corporate Finance. Also, you can decide to move to either Associate role or Private Equity/Hedge Fund. You will be headhunted by Private Equity/ Hedge Fund since these firms offer On-Cycle recruiting processes, ideally suited for Investment Banking Analysts within 2-3 years.
  • Higher compensation: Investment Banking is one of the most lucrative jobs on Wall Street, not only in finance but other careers as well, and even higher Consulting.

4.2 Cons:

  • Multiple deals simultaneously: the workload of an Investment Banking analyst is extremely heavy. You are expected to work on 3-4 deals at the same times, plus constant requests from senior levels in a day. Last-minute emergencies at night can happen sometimes. 
  • Heavy tasks: You are assigned to align and revise a lot of decks, slides, and memoranda, so attention to technicals and specialization is not as high as experienced analysts and associates. It can cause boredom in the first place. However, as you move up higher to 2nd year analyst, 3rd year analyst, your job tends to be technical.
  • Crazy working hours: The working hours can be up to 80 – 90 hours a week in the busy seasons. Many Investment Banks have been trying to revamp their working hours by bringing out “Work-free weekend” or “Protected weekend”. Yet, the results are still controversial, most bankers don’t have free time to work out, or even hang out with friends and family. Work-life balance is kind of impossible here in the first few years.

5. How to get into Investment Banks?

There are two pathways for you to become an Investment Banking Analyst:

  • You can apply for Summer/Winter Internship for Analyst program. If you perform well at the bank, your internship can be converted into a full-time Analyst offer.
  • For those who are late for the internship, or can’t secure the conversion, they can apply for the Full-Time Analyst Program, designed for students in the penultimate year of undergraduate.

5.1 Common pathways to get into Investment Banking

Classification: Investment Banking Division (IBD) as Tier 1, Sales & Trading (S&T), Equity Research (ER) as Tier 2

The step-by-step guide created with 6 steps (embed a link to 6 steps) gives you the best shot possible at landing one of the most lucrative careers in finance. However, in this article, the pathway to get into Investment Banking is summarized with 4 main steps as follows:

  1. Resume / Cover letter
  2. Networking
  3. Internship / Relevant Banking Experience
  4. Interview

If you want to learn about your specific chance of breaking into investment banks, you can check our Wall Street Career Planning Tool. The tool examines the chances of getting into Wall Street for different backgrounds. It provides the big picture of Wall Street’s job market and acts as a career guideline for you to land your dream job.

For undergraduates:

For freshman and sophomore: 
  • Tier 1 summer analyst internships at Bulge Bracket banks are getting more and more competitive. If you have little to zero relatable professional work experience, applying for an Bulge Bracket internship in your freshman and sophomore year is infeasible. However, freshman and sophomore year are golden times to secure a summer analyst in junior year. You should start early and apply for an internship / part-time position at wealth management firms (most realistic if you don’t have a strong network), or ideally boutique investment banks & small private equity funds – this takes a lot of smart networking and some relevant finance course / experience though.  
For junior and senior: 
  • If you are unable to secure a Tier 1 IBD, S&T internship at Bulge Bracket banks, you should focus more on Tier 2 positions at Middle Market & Boutique banks or Sales & Trading and Equity Research. These are considered less competitive, yet still require a lot of smart networking and selling your relevant banking experience on your resume (link to our product). If you are struggling to land an investment banking internship, then internships in Private Equity, Hedge Funds, Venture Capitals, Corporate Development, Management Consulting, Big 4, and Valuations can be viable options. These industries provide a significant overlap or deals directly with investment banking. After equipping yourself with relatable experience, you can apply for full-time analyst roles whose recruitments happen annually. 

For graduates:

Top 20 MBA programs:
  • Associate roles at Bulge Bracket Banks are highly sought-after targets by MBA students. Top 20 MBA students have a decent chance of getting into both Tier 1 & 2 careers given the school’s prestige and strong alumni network. They are often approached by Bulge Brackets’ recruiters right at the campus. The key to win a full-time associate role upon graduation is to grab a summer associate internship right after the first year of MBA. You will need to bankify your resume and know how to sell your background (link to our product), especially if you did not work in Finance before your MBA. 
Outside-top-20 MBA programs:
  • Though students outside-top-20 MBA have less competitive advantages than highly achieving top 20 MBA students, they have certain chances of landing jobs at Bulge Brackets. Provided that you have strong finance-related work experience, and do a crazy amount of networking through LinkedIn or professional connection, you can stand a good chance of breaking into Bulge Brackets. In addition, you should consider Middle Market banks and Boutique banks since your chances there are higher.

Professionals:

  • Professionals with several years of relevant work experience in Big 4, Consulting, Valuation firms, etc can apply for associate roles and some customized professional programs. Over the past few years, Bulge Bracket banks have offered many slots to experienced professionals. A lot of recruiting programs and events are designed with the aim of diversifying the workforce. The programs vary from firm to firm. For example: Goldman Sachs has Neurodiversity Hiring Initiative, Career Pivots series for professionals who want to learn about the firm and get into the banking career. For this category, your chance will be more decent if you apply for associate roles at Middle Market banks and Boutique banks. The key to win a job at large banks is always sticking with having relatable practical work experience and an extensive network (embed a link to network products) with pro-investment bankers.

For a detailed assessment of your chance of getting into these Tier 1 & 2 division/ careers, leverage our Wall Street Career Tool. 

5.2 Resume

Make your resume stand out and finance-oriented

The investment banks generally look for two key differentiators on your resume.

  1. History of excellence (i.e. GPA / test scores, awards & honors, brand name, competition wins, leadership) – Quick fact: Goldman Sachs recommends applicants to submit their SAT scores to increase the chance to pass the application round.
  2. Interest for finance, specifically investment banking (i.e. school major, clubs, related coursework).
  3. Relevant Experience (i.e. past finance-related internships, past relatable work experience). – Investment banking internships (i.e. IBD internship) work best.

Mistakes: Candidates often just list their activities rather than putting their accomplishments. 

Beyond basic mistakes listed out above, what are some of the other common mistakes candidates make? If your resume is not “bankified”, it will be difficult to get past even the 1st screening round. BankingPrep Resume Toolkit (embed a link to resume product) is here to make your resume stand out among the piles of thousands of prominent candidates, and make it finance-oriented even for non-target backgrounds. Your profile will be proofed properly to make sure it has absolutely NO mistakes.

5.3 Network

Healthcare network

For undergraduates: 

Once you have finance-related experience, the most effective way to get an Investment Banking interview is to network with your school’s alumni. If there’s no alumni at your targeted banks, you better find current professionals in investment banks by connecting with them on cold calls, LinkedIn, or emails. (Need a template for this type of networking) 

You should start networking as soon as possible. The ideal time to start networking is 6-12 months before the application begins. 

For MBA graduates: 

You have to start networking as soon as you get accepted to MBA programs. Similar to the undergraduate group, you should reach out to your school’s alumni first, then current professionals who can give you the most insightful information source.

Mistakes: A lot of students reach out to investment bankers when they do not have any finance-related experience. It won’t look great. You still can connect with them, but it will be better if you can explain detailed plans for your upcoming internships and jobs, and you are looking for their advice. 

5.4 Internship

The internship is considered a prerequisite to land a place in bulge bracket investment banks. Although relevant finance internships in other financial corporations and firms are appreciated, investment banking internships always work best. 

For undergraduate: 

  • To improve your profile to break into large banks, you need to have at least 1-2 finance-related internships. If you do not have an internship from a bank or a financial services firm, activities such as student-run investment funds in college can be used to  support your profile. This is an example of a student’s resume without an internship (link to resume product)

For MBA graduates:  

  • Internship is particularly important. That’s why you definitely have to have one finance-related experience pre MBA or during MBA. If your pre-MBA full-time jobs are irrelevant to banking and finance, it will be very difficult to get into. Let’s equip yourself with at least one summer associate internship at investment banks/private equity firms/ hedge funds. Here, Investment Banking internships (summer associate programs) always work best. 

5.5 Interview

Healthcare InterviewThe interview process will include multiple rounds. Normally, there will be three rounds. The first round of application is to screen candidates’ resumes. The second round of application is to assess candidates’ practical abilities via short interviews. Specifically, if a resume is qualified, the candidate will be sent a link to complete a video-recording process – HireVue as some firms are deploying (i.e. two behavior/technical questions to test the analytical abilities, presentation abilities, etc) or phone screen, which is still popularly used by investment banking firms. The final round of application is Superday, when chosen candidates are gathered in the office or nearby hotel to meet interviewers in person. Superday (U.S)/ Assessment Centers (EMAM) are designed to assess both your technical capabilities and physical/mental stamina. Here, in order to receive offers, most highly-achieving candidates will have to get through an intense interview day (simulating the real working pressure) with a myriad of questions largely hinged on their respective division/industry preferences in their application.  

What do recruiters evaluate?

Investment banks will evaluate your skills, your technical knowledge, and how you are interested in the position you apply for. Many questions are designed to test these competences. Simply put, interview questions will be around 3 main parts:

  • Behavior questions (often asked in HireVue/Phone Interview)
  • Fit questions (Superday/Assessment Centers)
  • Technical questions (Superday/Assessment Centers)

In which, behavior questions largely resemble fit questions asked during Superday. Some say that HireVues/Phone screen just asks you behavior questions. However, as mentioned above, you can be asked both technical questions and behavior questions right after you proceed to the second round.  The full list of interview question samples and what you need to prepare, let’s check on investment banking interview questions. Presented below is the short version of what you should do to have an upper hand in the interview.

How to prepare and ace an interview

You can visit our interview questions articles for analyst and associate roles for more details. 

#1. For fit/behavior questions, this is the part where you tell your stories with interviewers. Thanks to these questions, recruiters will learn how your previous academic and work experience fits into the division/industry you apply for.  

The questions in the first place always surround:

  • Introduce a little bit about yourself  / Walk me through your resume
  • Your strengths and weaknesses
  • Your achievements and failures
  • Future plan and why Investment Banking?

What you should prepare here are crafting your own stories (reflecting your achievements, past experience, transferable skills and leadership), and backing up small personal stories to answer questions related to strengths and weaknesses. 

If you have some disadvantages in your profile such as low GPA, non-target background, fewer outstanding accomplishments, fewer finance internships, and etc., you have to prepare stronger responses to make up for these “real weaknesses”. 

#2. For technical questions, the interview always sticks with accounting, finance, valuations, and practical deals. 

  • Accounting: Financial statements (types of financial statements, links between different types of financial statements), revenues, operating costs, EBITDA, debt & equity, etc.
  • Finance: Equity Investments (stocks), Fixed Income Investments (government bonds, corporate bonds, commodities, currencies) , Derivative Investments (options, futures, forwards, swap), etc.
  • Valuation: Valuation metrics and multiples,  (Discounted Cash Flow, LBO modelling, etc.), knowledge about mergers and acquisitions, etc.

Beyond technical comprehension, investment banking’s recruiters also want to test your knowledge about the market, practical deals and companies. Your work is to keep abreast of news about markets, imminent IPO, bond issuances, and mergers & acquisitions on a daily basis. The questions largely depend on your experience shown on your resume. That means if you present your active involvement in transactions/deals, you might get many questions about it. Discussing the deals is considered the most challenging part in an interview. 

Leave a Reply

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