financial analyst investment banking

financial analyst investment banking

Career Advice: Financial Analyst Vs. Investment Banker

Both financial analysts and investment bankers evoke images of well-dressed corporate money men, and college graduates from prominent schools seek out these jobs. For all of their similarities, though, these are two very different career paths and are suited for very different kinds of individuals.

Financial analysts (sometimes called "equity research analysts") work for a variety of businesses, including investment banks. They are normally experts in markets, economics, accounting and compliance. These are the ultimate support members on a financial team, spending their days poring over data and preparing reports for other, less analytical departments. Before a business makes a major financial or investment decision, management often consults its financial analysts to identify trends or run projections. Think of financial analysts as future-focused accountants with sophisticated modeling techniques.

Investment bankers are the movers and shakers in the institutional world. They play a key role in underwriting new issues of stocks or developing mergers and acquisitions (M&As) strategies. It's up to the investment bankers to evaluate companies and time the market to make the biggest profits for their firms or clients. Life as an investment banker is characterized by uneven bursts of activity followed by times of calm or even boredom. Unlike financial analysts, investment bankers are directly responsible for generating revenue and pulling the trigger on investment decisions.

A minimum of a bachelor's degree in a field such as economics, finance, mathematics or accounting is an absolute must for financial analysts or investment bankers. However, competition for these positions is notoriously steep; it may be a good idea to enter business school and earn a Master of Business Administration (MBA) to bolster your résumé.

Both careers are deeply analytical, and applicants are highly scrutinized for their ability to perform research, think critically and problem solve. Many seek out securities licenses such as the FINRA Series 7 or Series 63 to demonstrate an understanding of financial markets and investment products. (Note: Taking a FINRA exam requires sponsorship from a FINRA member firm or a self-regulatory organization (SRO).

Analysts and bankers must communicate with other departments every single day, so it's also important to demonstrate the ability to handle interpersonal (and sometimes impersonal) communications in a dynamic work environment. There are going to be a lot of conference calls, meetings, emergency emails and quick-turnaround projects for either profession.

Financial analysts should probably consider pursuing a certified public accountant (CPA) or chartered financial analyst (CFA) designation to bolster their credentials, particularly if they want to advance up the ladder. An investment banker can begin as a low-level analyst with just a Bachelor's degree, but investment banking associates should either have three to four years of experience or an MBA.

It takes a lot of stamina and the ability to handle stress to be a career investment banker. Firms expect their hires to hit the ground running and show a lot of initiative, but perhaps more than anything else, they expect them to put in a lot of hours.

These are both high-level and high-earning jobs, even at entry-level spots. According to 2016 Bureau of Labor Statistics data, the mean salary for a financial analyst was $81,760 per year. The top 10% of analysts earned more than $125,000 per year, and senior analysts at top firms can pull in more than $175,000.

Financial analysts who don't work for major financial institutions, especially sell-side analysts, don't earn quite as much but normally still start out in the $45,000 to $60,000 range.

Investment bankers are among the highest-earning professionals in the business community, especially at entry- and mid-level positions. Major banks in New York City often offer $75,000 or more to first-year bankers along with a signing bonus that can add another $25,000. Senior bankers and vice presidents commonly earn more than $250,000 per year.

The financial industry is notorious for offering an inequitable work / life balance to employees. This can be problematic for some financial analysts, but it is perhaps most true for investment bankers.

A study in 2013 suggested that one in three financial analysts worked at least 70 hours per week during their first year on the job. Other estimates place the typical analyst week at 55 hours, but note that financial analysts still receive 20+ paid vacation days per year and rarely have to go into the office on weekends.

Put simply, work life can be very tough for investment bankers, especially associates and other junior-level staff. It is not uncommon for investment bankers to work 80+ hours a week (roughly six 13.5-hour work days) or to always be available via phone or email, even during early morning hours on weekends or vacations.

Except for those who truly do live for their work, the edge in this category goes to financial analysts.

According to the Occupational Outlook Handbook released by the Bureau of Labor Statistics (BLS), the U.S. economy is expected to add an additional 32,100 financial analyst positions between 2016 and 2026 This represents an 11% increase over the decade, which is faster than average for all professions. The BLS credits increased complexity in financial markets and a growing industry for its projected growth.

The BLS does not offer comparable statistics for investment bankers, but the same dynamics that drive growth for analysts should drive growth for investment bankers.

Financial analysts and investment bankers often attract similar candidates, but they are really best suited for different individuals.

Financial analysts serve more like accountants than traders, and this job is best for those who like a consistent workflow and a life away from the office. Investment banking is a career for ambitious people who thrive under pressure and don't mind the long hours. Eventually, investment bankers spend a great deal of time communicating with clients and making crucial decisions for the firm.

Analysts get to spend much more time digging through the actual data and creating models for other members of the team. This kind of work may sound perfect for some workers or very boring to others, so much depends on your individual temperament and work pace.

Investment Banking Analyst Salary

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  • Country: United States
  • Currency: USD
  • Updated: 1 Apr 2018
  • Individuals Reporting: 279
  • Country: United States
  • Currency: USD
  • Updated: 1 Apr 2018
  • Individuals Reporting: 14

Job Description for Investment Banking Analyst

An investment banking analyst is an entry-level position at most investment banks and financial firms. The position is a stepping stone for further advancement and responsibility in banking. Investment analysts work with more senior members of the company on various investment banking transactions. The most common duties for investment analysts are producing deal-related materials, performing industry research, performing financial analyses, and collecting materials for due diligence.

Investment analysts help compile and prepare financial packages used in deals. They have to be comfortable interacting with high powered clients like CEOs and CFOs. Financial analysts may have to analyze tax returns and financial reports and then prepare written reports about them for review by more senior staff. Investment analysts must be able to understand and work with complex financial modelling. Often, they are left to their own devices on projects, so adaptability and quick thinking are real assets.

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A Day in the Life of an Investment Banking Analyst

“6:30 Sycophant drops by on his way out.

Client meeting next Friday but wants complete turn of a pitch for first thing tomorrow morning (tomorrow morning = when he finally gets around to looking at it at some point next week).

A quick calculation; there’s no way I’m getting out of here before four in the morning.”

Ah, the life of an investment banking analyst.

What will your hours be? How much work do you actually do? Do you really just play Solitaire most of the day and then only work at night?

Some days you’ll be so busy that you have to discreetly use a bottle under your desk if you need to go to the bathroom.

Other days you’ll have so little to do that you can take 3-hour lunch breaks and download different themes for Windows Solitaire.

Doing investment banking is like doing drugs: on your good trips you dance in clouds of marshmallows, surrounded by beautiful women (or men) serving you fruit in canopies.

On your bad trips you scratch your eyes out and jump off buildings.

This 24-hour period was a bad trip. And unlike The Bitter Investment Banker Email, it actually happened.

7:30 AM – I am woken up by an Associate at work asking where I am. He told me to come in at 8:00 AM to send out a status report. It’s 7:30 and I’m not there yet, so a cloud of panic has descended. I roll out of bed, shower for a minute and head into work.

8:00 AM – 9:00 AM – The Associate hands me a marked-up version of the status report in question. Most of his changes consist of adding/deleting commas, capitalizing nouns or changing font sizes. I send it to our team at 8:55, in advance of our call at 9:00.

I am vaguely listening but also working on a pitch book for an IPO in the background – multi-tasking is easy when all you do is copy and paste Excel into PowerPoint.

12:30 PM – We send out a draft of the IPO pitch book to 3 Managing Directors who will be at the meeting the next day. This is the “final” version, which means that everything will be scrapped and re-done in the next 24 hours.

Master PowerPoint by creating a sell-side M&A / valuation pitch book for Jazz Pharmaceuticals - plus company/deal profiles and more.

12:45 PM – One of the Managing Directors is traveling and has requested a Briefing Book on the company we’re pitching because he doesn’t know anything about it. It’s not feasible to FedEx the book because he is 3,000 miles away and needs it ASAP – we need to PDF this bad boy.

1:00 PM – The Associate drops off revisions to a presentation we’re working on for another client. I tell him I don’t have bandwidth because I’m working on a big IPO pitch for the next day as well.

He tells me to finish by 5 so he can give me more changes and I can “turn” another revision by the morning. It’s probably going to be an all-nighter.

1:30 PM – One of the Managing Directors who received the Briefing Book calls another Associate (Associate #2) on my team and yells at him for sending 100 pages of material – it’s taking 30 minutes to print out everything.

The Associate takes the brunt of the damage. I’ve cleverly avoided the fallout by having Associate #2 be the point person for this project.

3:30 PM – After speaking with our equity research analyst, the Managing Director decides we need to add more analysis to our pitch and focus on completely different metrics. I need to re-do most of my work.

5:00 PM – I finish up with the other client presentation that Associate #1 wanted me to finish. Now it’s a waiting game on that one as I continue revising the IPO pitch.

7:30 PM – I’m eating dinner at my desk. No time to go join everyone else today but it’s Japanese food so I’m satisfied. Meanwhile someone from Equity Capital Markets, the team responsible for IPOs, comes over and tells me to scrap all the analysis the MD wanted.

10:00 PM – I get last-minute changes from everyone else on the team. Shouldn’t take too long to process, but production can only start printing at midnight, which means I’m going to be here until 1 AM minimum.

10:15 PM – As I’m going through changes, Associate #1 stops by and has a bunch of changes to the client presentation I finished at 5 PM. I tell him I can only get started after 1 AM so I probably won’t have anything until the next morning. “Dance, monkey.”

12:30 AM – I finish up and production starts printing the presentations. Associate #2 comes over to “supervise” the production and review the finished product.

1:00 AM – I notice an inconsistency on 1 slide – stock prices have been updated earlier in the presentation but not here. Time to check over everything again.

2:00 AM – We’re done re-checking every single page for the same mistake now. Time to re-print.

2:15 AM – The printers all have paper jams and are out of ink. Since it’s late, the printing/production crew has disappeared and I have become the production team.

2:15 – 3:30 AM – I need to refill the ink and fix all the printers. This requires a group effort so I call some other analysts over to help.

4:00 AM – Go home and go to sleep. I need to wake up by 6 to finish work on the presentation Associate #1 told me to “finish by the morning.”

6:00 AM – I’ve overslept. Associate #1 is already up and has left 3 voicemails on my cell phone asking why I haven’t sent the presentation to our client yet. I Blackberry him that I was up all night working on another pitch and was going to send it by 9 but needed an hour of sleep first.

6:15 AM – 6:30 AM – As I’m coming into the office we’re trading angry emails back and forth. He says I should have emailed our entire group saying that the presentation would be late.

8:00 AM – Associate #1 strolls into the office just as I’m about to hit the “Send” button. I tell him that I’m about to send the presentation.

He tells me to email everyone twice – once to tell them that they’ll get the presentation in the next 2 minutes, and then once again to actually send the presentation.

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