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Fact or Fiction: Investment banking

Fact or Fiction: Investment banking

May 08, 2024

Today, in 5 minutes or less:
👉️ Upcoming events
👉️ Fact or fiction: Investment banking
👉️ Content picks of the week
👉️ Job opportunities you should care about

Upcoming events

Interested in exploring different business careers and hearing from experienced professionals? Look out for upcoming FREE events throughout the summer and school year. It’s the perfect opportunity to learn about different career paths and network with industry professionals.

📢 Intro to Sales & Trading (May 20th, RSVP 👉️ here)

📢 Intro to Management Consulting (June 3rd, RSVP 👉️ here)

📢 Intro to Private Equity (June 9th, RSVP 👉️ here)

Fact or fiction

Investment banking is arguably one of the most, if not the most sought-after careers out of college. Every year, tens of thousands of students apply for a limited number of internships and full-time roles. There are a lot of misconceptions about the industry and we’re here to clear some of those up.

Fiction: Investment bankers trade stocks

When people hear the words “Investment Banking” the first thing that usually comes to mind is Jordan Belfort from The Wolf of Wall Street.

Contrary to popular belief, investment bankers aren’t stockbrokers and they don’t invest in stocks (professionally at least). Investment bankers are advisors to companies, helping them strategize and execute critical financial decisions such as buying another company, selling their company, and raising money for their operations.

Put simply, investment bankers are like real estate agents, but for companies.

Fiction: You need to be a finance/accounting major to break in

Breaking into investment banking isn’t reserved for finance students and you certainly don’t need to be a “numbers person” to do the job. Sure, having a background in finance or accounting is helpful, but it’s only one piece of the puzzle.

The actual job is all about having a well-rounded skill set. That means being a pro at communication, thinking critically, being resourceful, and grasping the ins and outs of how businesses work. And guess what? You don’t need a finance or accounting degree to get a job in investment banking. In fact, many banks actively seek out students from diverse educational backgrounds because they value the unique perspectives they bring to the table (one of our co-founders majored in pre-law and still landed a job at a top investment bank out of school 😉).

To compete with finance majors as a non-finance student, it's essential to join extracurriculars reflecting your interest in investment banking or finance. Many campuses offer opportunities to join co-ed business fraternities or finance-related clubs. Securing a spot and aiming for leadership roles in one of these organizations is key.

Top clubs are often very competitive and limited leadership opportunities, so casting a wide net is crucial. Remember, even if you don't secure a leadership position in one of these clubs, showing any level of involvement demonstrates you are a serious candidate when speaking with recruiters and alumni. Trust us. We have been on both sides of recruiting and promise you that students with a track record of relevant club experience stand out.

Examples of respected organizations across university campuses include business fraternities like Delta Sigma Pi (DSP) or Alpha Kappa Psi and clubs like the TAMID Group. Be sure to attend your school’s club fairs and business school events to get plugged into these organizations.

Fiction: Every IB analyst works 80+ hour weeks

Investment bankers are known for having demanding hours (if you’ve ever met one before, it’s all they talk about). Junior bankers, in particular, are expected to work beyond the typical 9-to-5, with 80-hour workweeks (including weekends and holidays) not uncommon during busy periods. This is something every student should be aware of before entering the industry.

Although you will have some very long weeks, you will also have some down weeks where you only work a few hours a day.

@wallstreetoasis

It’s important to note that many investment banks have taken steps to address work-life balance concerns in recent years, implementing policies such as protected weekends and vacations.

Fact: Investment banking is one of the highest-paying jobs out of college

One of the main reasons that people pursue investment banking is, you guessed it, the 💰️💰️💰️. Right out of school, junior bankers can expect to make between $150k to $200k a year. Bankers get paid a base salary and receive a yearly bonus that is 50%-100% of their base. So if you are a first-year analyst with a $100k base, you can expect to receive a bonus of $50-$100k after one year. Check out some 2023 compensation figures below 👇️

Compensation is based on public survey data; age and years of experience are assumptions

Fiction: I have no personal or family connections in IB so I’m at a big disadvantage in recruiting

The idea that personal or family connections are the golden ticket to breaking into investment banking is a myth. While having an uncle who's a managing director might open a door or two, it's hardly the end-all, be-all of recruitment. Investment banks today prioritize top students from diverse backgrounds who have actively built relationships by engaging in networking calls and making strong impressions.

As we discussed a few weeks ago, while good grades and a perfect resume are prerequisites, networking and building relationships get most students in the door.

StepStone’s mission is to provide opportunities for all students to be competitive in landing top jobs. From crafting your first resume to interviewing for the job, we’ve got you covered.