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You're an analytical thinker, and you look good in a suit, which prompts you to wonder, "What does an investment banker do?" We understand where you're coming from. Investment banking is a highly sought-after career option.

But if you're smart, you probably know that there's a good reason why investment bankers earn six-figures yearly. They work hard. But what is it that they do precisely? Keep on reading to find out the answer to "what does an investment banker do?"

What Is An Investment Bank?

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Before we can answer the question "what does an investment banker do," we need to clarify the function of an investment bank. After all, most investment bankers work for investment banks.

An investment bank is a banking institution that operates in high finance. For example, when a company wants to raise additional capital for expansion, it more often than not chooses to sell stocks and bonds.

However, special expertise is needed to execute these financial transactions successfully. That's where investment banks come in. Investment banks find buyers for a company's stocks and bonds. Furthermore, they deal with all the paperwork.

But that's not all. Investment banks also assist with mergers and acquisitions and provide financial advisory services. Trading and sales, asset management, and wealth management are an investment's bank's additional sources of income. Not everyone that works at an investment bank is an investment banker, though.

Your Role Depends On Your Position

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The answer to "what does an investment banker do?" depends, at least partially, on the position that an investment banker holds.

Investment bankers tend to progress along a standard career path that goes something like this:

  • Analyst
  • Associate
  • Vice president
  • Director
  • Managing director

Analysts and associates are junior bankers. Usually, analysts are either undergraduates or individuals with experience in finance. Either way, they're new to investment banking.

Typically, it takes analysts a couple of years to earn a promotion. However, at times, they might need to gain additional education. Most investment banks want their associates to have an MBA.

Analysts and associates spend their days doing basic research and compiling reports. Analysts do most of the grunt work, whereas associates assign this work and check it. Furthermore, associates also act as a link between junior bankers and senior bankers.

Most associates are promoted to Vice President within four years. Vice Presidents supervise analysts and associates and interact with clients.

Directors supervise teams in their area of expertise. Moreover, they solicit clients and handle client relationships.

Managing directors are the bank's leading "salespeople." Their main task is to attract new clients. However, they also serve as the primary contact person for valuable existing clients.

As you climb the corporate ladder, you move away from labor-intensive tasks such as generating reports and move towards cultivating relationships with clients.

What Does An Investment Banker Do?

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Investment bankers assist in complicated financial transactions. For example, companies and non-profit institutions often seek an investment banker's advice before they feel confident enough to go ahead with planned developments.

By identifying risks associated with each project, investment bankers save their clients both time and money.

But that's just a basic answer to "what does an investment banker do?" Let's go into a bit more detail.

5 Responsibilities Investment Bankers Share

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Most investment banks split their employees into working groups that cover particular market sectors or industries. Separate teams are generally assembled to handle specific projects.

The exact responsibilities of an investment banker depend on the bank that he or she works for as well as the industry category and division their bosses assign them to.

Nonetheless, there are certain responsibilities that all, or almost all, investment bankers share.

PowerPoint and Excel are an investment banker's best friends

It's all about the capital

Taking risks is part of the job description

Most companies couldn't grow without an investment banker's help

There's a lot of reading

What does fetching coffee have to do with it?

Is Becoming An Investor Banker Worth It?

Now that you know the answer to "what does an investment banker do?" you should have a better idea whether or not this career path is for you.

The role of an investment banker is not only prestigious but also well-paid. Besides, the educational requirements are more than doable. While most investment bankers have an MBA, some make do with just a bachelor's degree or even less than that.

However, competition in this field is intense. Every year, applicants far outnumber the job openings. Moreover, individuals interested in making it in high finance require specific skills. Being good with numbers is not enough. Investment bankers also need to be aggressive, quick-witted, cool-headed, and persuasive.

Finally, investment bankers work grueling hours, sacrificing their personal lives for the welfare of the company.

If the drawbacks are not enough to repel you, and if you find high-stake negotiations and the mechanics behind deals exciting, investment banking might be the perfect career for you.

Do you have experience as an investment banker? Want to become one? Sound off in the comments below.

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