Investment banking is an area of finance in which banks assist various companies and governmental entities with their financial needs. Investment banks assemble and supply the capital needed by business to expand, merge and acquire other businesses. They “are intermediaries between corporations issuing new debt and equity securities and investors that buy the securities.” They may also create markets for new securities, facilitate trades between buyers and sellers or perform other financial services, such as market and acquisition advice and market analysis. The major areas of investment banking include corporate finance, sales, trading, and research. A large part of investment banking is simply developing the relationships with potential buyers of new securities and with corporations or governments that want to issue new securities or acquire other companies. The larger investment banks work on a global level with a number of foreign investment banks that participate in the US market.
Investment banks are well known for the long hours they require from their entry-level workers as well as a somewhat stressful work environment. “They are often under great pressure to meet deadlines and generate new business. This is often balanced, however, by large salaries. Some jobs require extensive travel, especially in corporate finance and mergers and acquisitions departments. Most investment banks strongly emphasize teamwork, and as such they often promote socialization among the staff members. Because customer relations are so important, investment bankers often get to take their clients to exclusive restaurants, sporting events, and other exclusive places.”
Investment banking is an industry that is directly impacted by the state of the economy. It is essential that students interested in this field stay abreast of current trends and events. As the sale of Merrill Lynch to Bank of America in the fall of 2008 demonstrated, dramatic changes can occur in a very short period of time.
Who They Serve:
There are approximately 2,000 investment banking firms of various types in the United States.5 Bulge Bracket firms are large, full service firms that usually have a formal recruiting program to hire interns and analysts. Boutique firms specialize in specific industries. There are also mid-size full-service firms, regional firms, as well as many others. Some of the major Bulge Bracket firms of investment banking include: Morgan Stanley, Merrill Lynch, and Goldman Sachs.6 Highly regarded regional investment banks, such as Piper Jaffray and Houlihan Lokey, fill the middle of the market. Boutique firms, such as Moelis & Company, concentrate more on the local level and/or “specialize in M&A advisory, bond-trading, program trading, and technical analysis.”
There are a plethora of job titles available in the investment banking industry. They include:
Corporate Finance, Mergers and Acquisitions, Project Finance, Sales and Trading, Structured Finance, Derivatives, Advisory, Equity and Fixed Income Research, International Sales/Emerging Markets, Public Finance, Retail Brokerage, Institutional Sales, and Ratings Analyst. Below is an examination of some of the most prominent fields.
Corporate Finance - The job of the corporate finance officer is to create value for a company. Those in this field work for a company in order to help it “find money to run the business, grow the business, make acquisitions, plan for its financial future and manage any cash on hand.” Corporate Finance professionals “determine the funding needs of their clients and analyze the best alternatives to meet these needs, such as debt or equity issuance. Typical clients include corporations and public institutions. Other duties may involve working with investors interested in financing these ventures.”
Corporate finance professionals are trying to maximize shareholder value. They do this through managing cash flow, negotiating terms with leaders and suppliers, monitoring liquidity, managing risk, and raising funds. Typical job titles in this area include treasurer, credit analyst, cash manager, investor relations officer, and controller. Corporate Finance opportunities can be found in both large and small companies and in diverse industries. The skills most needed for a career in corporate finance include analytical and negotiation skills, computer and communication skills, a willingness to take risks, a strategic way of thinking, and a competitive spirit. The major leaders in corporate finance are Smith Barney, UBS Wealth Management, and Merrill Lynch. Entry-level employees in this field will spend most of their time as a member of a client team staffing conferences for securities investors and arranging registration statements.
Sales & Trading - “Positions in this area involve analyzing stocks, bonds, and other securities for potential trading. This information is then shared with institutional investors and corporations. These positions require an in-depth knowledge about financial markets, as well as the ability to make quick decisions that may involve a great deal of risk.” Sales staff are responsible for developing relationships with corporate finance departments in order to promote their services for facilitating mergers and acquisitions and acquiring capital. Other salespeople work with individual investors.
Mergers & Acquisitions - “Companies utilize investment banks when they want to sell all or a portion of their corporation. A career in this area involves analyzing the value of assets and negotiating the sale.” M&A professionals are responsible for determining how much involvement their clients should have. Those in this field spend most of their time working heavily on spreadsheets and valuation models, although opportunities to work with clients do appear. The major companies in this field are Morgan Stanley and Goldman Sachs.
Analysts - “These individuals follow the economy and key indicators of market stability. They may research individual companies and industries or the overall market. Forecasting future activity and risks involved are their key responsibilities.” Analysts are usually recent college graduates. They work long hours and do much of a company’s grunt work. An analyst’s primary responsibility is helping their boss to get his/her job done well. Key skills for an analyst include: the ability to work with Excel spreadsheets, write macros in VBA, track and generate weekly newsletters, keep schedules, generate prospectuses, get burgers, put in and retrieve pitch books from the copy center, and answer client phone calls. A good analyst also networks, observes, and thinks.
Research - Most major investment banks employ a research staff that “performs the risk, economic, and financial analysis used to support internal operations, from acquisitions and mergers to formulating trading positions in world, US, and regional markets. The profitability of an investment bank is directly related to the quality of its research analysis.” Researchers in investment banking usually have strong math skills in stochastic calculus, differential equations, or other advanced mathematical fields. They have also taken classes in advanced financial theory like bond valuation and options pricing.
What Employers Want:
Investment bankers are expected to have very strong education backgrounds, including courses in finance, accounting, and economics. A competitive candidate will combine strong quantitative skills with excellent interpersonal skills and the ability to work in teams.” For instance, an investment banker who can easily get high-powered professionals to work together and to serve clients is considered an extremely powerful asset.
There are many key steps that people looking for a career in investment banking can take to improve their chances for finding a job. Networking is extremely important due to the high competitive level of the industry. Banks like candidates that have talked to members of their firms, or candidate who have perhaps even sat on the trading floor while doing an informational interview with an alumnus/a.
According to Hopkins alumni, those looking for a career in investment banking should have a strong resume that says, “I live for Wall Street.” Classes in finance, accounting, economics, and math are essential. In addition, classes related to trade, business, game theory, or behavioral finance all indicate an interest in the field. Gaining relative experience in the field is invaluable. Interested candidates should have participated in internships related to finance such as interning at a branch office, SEC internships, or any internship that has a finance focus. Employers also look at what sort of activities potential employees have participated in. They are interested in students that have overseen budgets, participated in investment clubs, or invest on their own. Activities show leadership and team experience. Along with this, those interested in this field should keep up with the market by reading the Wall Street Journal, Economist, or other finance magazine on a regular basis. Finally, those serious about this field should plan to invest in a very conservative suit. Black, navy or charcoal gray suits, with white or blue shirts are de rigueur for men and women on Wall Street.
In addition, more and more students looking for a career in investment banking are making visits to New York on their own or with a small group in order to go on informational/job interviews. This is an important way in which prospective employees can market themselves, get face time, and significantly raise their chances of getting a job. It is important that students have a strategy about the type of job they want, whether it is quantitative, MIS-oriented, emerging markets, etc. Hopkins students should be prepared to demonstrate their knowledge of an area and explain why they would like to get into it. The Financial Literacy Class and Wall Street Trip hosted by the Career Center each intersession will help, but those interested should also set up informational interviews on their own. See the Career Centers' Networking Handout and the Career Center website for more information on how to prepare.
What They Hire Undergraduates to Do:
The most common entry-level position for recent college graduates is as an analyst. College graduates usually remain in this position for 2 to 3 years, during which they receive large amounts of training. These entry-level analysts will spend much of their time doing routine work of the investment bank, and will spend most of their time working in teams. Successful entry-level analysts are usually promoted to similar jobs at the associate level, and may eventually be promoted to the level of vice president. Many recent college graduates are now working at investment banks for two to three years as analysts and then returning to business school to receive their MBA, after which they return to the field at the associate level.
As an entry-level employee in investment banking you will often write reports, do research, and handle trades, run spreadsheets, and code programs. You need to be fast, accurate and complete. As you gain experience, you will have the chance to work with clients. Your efforts to increase customers will be recognized handsomely.” Whatever the position, entry-level employees should expect long work hours in which” the mood can regularly shift from energetic elation to frantic frustration, depending on the situation.”
Ipsita Smolinski- Equity Research Analyst, JPMorgan Natural Sciences/Public Health, Class of 1995
- Describe what you do and how you got started in your current career. - After getting my MBA and MPH, I worked as a healthcare sales specialist at a large Wall Street firm in NYC. There I analyzed healthcare stocks from all sectors -- pharma, biotech, managed care, med devices, hospitals, etc. When I learned I could analyze healthcare policy for an investment bank, I made the move to equity research four years ago. This was a pretty easy transition since I had done health care policy work after graduating from JHU.
- What is most rewarding about your job and/or industry? What is most challenging? - Most rewarding is being right when recommending a stock or sector, and making clients smarter. Most challenging is that the sector is constantly changing -- whether it is legislation on Capitol Hill, an unexpected FDA drug approval, or change to Medicare reimbursement. So, keeping my finger on the pulse is a daily challenge.
- Is your career the same or different from what you had envisioned your career would be when you started at Hopkins as an undergraduate? How is it similar and/or different? - Completely different. I was pre-med at Hopkins. Now I am using healthcare in a business capacity and love it.
Jason P. Somerville- Vice President, Entertainment Industries Group, J.P. Morgan Securities Inc. International Studies, Class of 1997
- Describe what you do and how you got started in your current career. - I provide corporate and investment banking products and services (principally access to the debt markets) to entertainment companies. The majority of my clients produce and/or distribute feature films and music.
- What is most rewarding about your job and/ or industry? What is most challenging? - The entertainment industry is like no other in the world. On a daily basis it provides an opportunity for those who consume its content to escape their daily lives for the period of time it takes to enjoy a song, an album, a concert, a television show, a movie or a Broadway show. Its subject matter either leads or follows public sentiment and consequently is always relevant, always evolving. Rarely does a day go by in my career that does not yield a story worth repeating over dinner or among friends. However, banking the entertainment industry is laced with pitfalls. Most bankers ultimately drink too much of Hollywood's Cool Aid and "go Hollywood", becoming more concerned about which celebrities they know than how they can get repaid. Everything you hear about Hollywood is true, and the personalities that dominate the landscape require a great deal of patience and a healthy degree of skepticism to remain objective and successful.
- Is your career the same or different from what you had envisioned your career would be when you started at Hopkins as an undergraduate? How is it similar and/or different? - Very different. I had intended to go into the Foreign Service upon graduation.
- What advice do you have for a Hopkins student entering your career field / industry? - Too many people who go into corporate or investment banking do so out of greed. If you want a career in banking, find something you are passionate about and don't let the money race distract you from it. The best bankers are those that love what they do and do it well. Financial cycles come and go and with them thousands of corporate and investment banking jobs. Those who persevere do so because they are driven by more than money. There's always someone willing to work harder or for less money, so the best way to differentiate yourself is by loving what you do and doing it well. If your career is guided principally by this objective, colleagues and clients alike will want to work with you and help you succeed.
Keith Gertsen- Global Head of Trading, AllianceBernstein Political Science, Class of 1991
- Describe what you do and how you got started in your current career. - I am responsible for managing the trading desks for the asset management division of AllianceBernstein in New York. I started my career at Alex. Brown & Sons as an analyst eventually moving into equity and derivative trading for the firm and its acquirer, Deutsche Bank, where I continued to act in a trading and capital markets function for over 14 years.
- What is most rewarding about your job and/ or industry? What is most challenging? - I very much enjoy the dynamic and ever changing characteristics of capital markets environment and find the people, the evolving market structure and strategic changes in the industry to be fascinating. Things are constantly moving and if you work with a like-minded team that's up for the challenge, it can be a lot of fun. Teamwork is a big deal on the Street and that aspect of interaction is a big deal in the trading world. The challenge is the constancy of building competitive teams that possess the right mix of skill and perspectives that complement one another well and result in positive returns.
- Is your career the same or different from what you had envisioned your career would be when you started at Hopkins as an undergraduate? How is it similar and/or different? - Initially I thought I would go into medicine...so this is a long way off from where I was headed early on in my student career at Hopkins.
Liz Zeuschner- Vice President, MuniMae International Studies, Class of 1998
- Describe what you do and how you got started in your current career. - I close institutional investors into private equity funds that invest in either international workforce housing or renewable energy. I began my career in affordable housing working at Fannie Mae as a consultant helping governments and private companies in emerging markets develop primary and secondary mortgage markets.
- What is most rewarding about your job and/ or industry? What is most challenging? - The most rewarding aspect of my job is putting investor capital to work in investments that provide both opportunistic returns and social benefits. The most challenging is that the process is slow and market conditions can definitely throw you curve balls.
- Is your career the same or different from what you had envisioned your career would be when you started at Hopkins as an undergraduate? How is it similar and/or different? - Different. I envisioned working for a non-profit or a think tank focused on international development.
- What advice do you have for a Hopkins student entering your career field / industry? - Take advantage of internship opportunities and don't be afraid of new opportunities. My most rewarding career experiences have been ones that forced me to dive head first into the deep end and tackle tough new subject areas.
Matthew Zaft- Vice-President Investments, Merrill Lynch Sociology, Class of 1997
- How did you get interested in your field? Was it your original goal when you started at Hopkins? - Through interning as an undergraduate. No, when I started at JHU I was convinced I was headed to law school.
- What was your career path? How did you get to where you are today? - I interned both during intersession of my junior year and during the summer between junior and senior year. I started full-time in August after graduating.
- What was your first job after college? Was it in your current field? - Technically my first job was lifeguarding at Hopkins' pool which was for May, June, July, and part of August. My first "real" job after college was in my current field, and I have never looked back.
- What advice do you have for current students? - Freshmen and Sophomores--take as many different courses subject as possible; do not worry if you do not know what you want to do; have fun. Juniors--intern, intern, intern. Seniors--do not hesitate to ask alumni for help and advice even if you have never met them; JHU alums like to help other JHU alums and students
- What is your typical day like? - In the office between 7:30 and 8. Review all of my client's accounts activity from the previous day. Review what happened in all of the foreign markets overnight. Review any economic news of the day. Review any news on any of the companies in the portfolio I manage. Answer questions of clients. Work out with a personal trainer. Leave the office for home around 4:30.
- What’s most rewarding about your industry and/ or job? What's most challenging? - Rewarding: Both the relationships I form with my clients and the joy I get from making them lots of money. Challenging: Managing over $300 million of other people's money.
- Where do you see the field going in the next 5-10 years? - Even more towards money management and less towards "typical" brokers.
- What skills and out-of-class experiences (i.e. internships, co-curricular activities, volunteering, etc.) are ideal for entering your industry / career field? - Strong work ethic, outgoing personality, good time management skills
- Where can someone in an entry-level position expect to be in two years? Five years? Ten years? - Two years--just starting to feel like they have a handle on things. Five years--just starting to "make it". Ten years--making high six figures and worth over $1,000,000
Additional Alumni Profiles
Networking with alumni and other professionals who work in these fields can help you learn very specific information about a career field. Use Johns Hopkins Connect to contact alumni to ask for their advice. You may also find professional contacts through professional associations, faculty, friends and family.
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If you would like to talk about how your search is going, we invite you to make an appointment with a Career Counselor by calling 410-516-8056.