If you are a Nigerian studying at an Ivy League university abroad or a graduate of a Nigerian university with an excellent grade, you may want to consider a career in investment banking.
It should be noted that 20 American financial services companies, including Citigroup, JPMorgan Chase, Goldman Sachs and American Express, took the issue of diversity among African/Nigerian professionals in leadership positions more seriously.
As far as the Investment Banking (IB) career path is concerned, it is comparable to that of a “fraternity” or a “mafia”, offering a clear hierarchy, specifics that you must perform, but with increased benefits and responsibilities at each level.
This article will cover the pros and cons of the investment banking career path, focusing more on the role of analyst and partner before delving into vice president and other positions afterward. The role of an investment banker, hierarchy, opportunities for advancement, lifestyle, working hours, compensation, and exit strategies will all be covered here.
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What do investment bankers do?
Investment bankers advise companies on large-scale corporate transactions such as mergers and acquisitions, as well as debt and equity issuances.
“Advising businesses” means “working with management teams to market and sell businesses, finding potential acquisition targets and closing deals; or recommending the best terms and timing for a capital raise, then marketing that debt or this issue of shares to investors.
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On a large scale, the role is part consulting, part sales and marketing, and part negotiation and deal making.
Why a career in investment banking?
For financial reasons, many people choose a career in investment banking. Even at middle levels, they become the top 1% in most states and countries.
While some are fascinated by the mechanics of deals, others are drawn to the thrill of high-stakes deals and negotiations with influential people like CEOs and board chairs.
Yet more people are drawn to careers in investment banking by the exit opportunities, especially those open to junior bankers like analysts and associates.
Required skills, interests and requirements
- Ambitious, competitive, high achievers who are willing to work long, strenuous hours
- Extremely detail oriented
- Strong in reading/writing and basic math
- Interested in trading rather than just following the markets or investing in public companies or other assets.
- Interested in a specific exit opportunity that typically requires investment banking, such as business development or private equity.
- Junior investment bankers are usually, but not always, recent graduates from elite institutions of higher education, such as the Ivy League in the United States or colleges like Cambridge and Oxford in the United Kingdom.
- May have completed a traineeship in finance during their undergraduate studies, after which the bank offers them a full-time position.
- If employed full-time in a related industry, such as corporate banking or valuation at a Big 4 company.
- If you attend a prestigious business school and have the relevant work experience, you can enter the MBA level.
How break into the industry
- Work and leadership experience that appears to be highly relevant to IB roles;
- A strong academic record (grades, test scores, and university reputation);
- Lots of networking and interview preparation; and something “interesting” that makes you look like a human, not a robot.
- Because it’s nearly impossible to break into mid-level investment banking careers, you’ll need to do it early, i.e. fresh out of an undergraduate program, a MBA or as a recent university graduate; or later – if you are already a senior executive in another industry.
The corporate hierarchy and career path in investment banking is clearly defined and hasn’t changed much over time. This is the basic career path for investment banking, although there are a few variations with slightly different titles:
- Intern or Summer Intern – Monkey Assistant
- Analyst – Monkey
- Related – Better Trained Monkey
- Vice President (VP) – Monkey Manager
- Director or Senior VP (SVP) – Manager and Rainmaker-in-Training
- Managing Director (MD) – Rainmaker
- For now, here’s a summary of what to expect at each level:
NOTE: The descriptions, salaries, and bonuses listed below are for front-office roles in investment banking, not back-office or middle-office functions.
Also, the figures are based on the salary in USD according to salary reviews and reports, especially from the big New York banks. In other areas, such as London, and in smaller banks, wages will be lower, sometimes significantly lower.
Investment Banking Analyst Job Description
As an analyst, Excel and PowerPoint are the usual tools you will use to perform administrative tasks such as tracking buyers and sellers, managing data room and transaction documents, and responding to customer inquiries. customers and potential customers.
age range: The majority of full-time analysts have recently completed their undergraduate degree, while some have completed master’s programs or another full-time role, which should be around 22-27 years old.
Salary + Bonuses: Base salaries at major banks are usually between US$100,000 and US$125,000 (varies) with bonuses ranging from 0.5x to 1.0x of this base salary. The total salary is normally between $150,000 and $250,000 (as of 2022).
Working hours: Although you spend between 70 and 85 hours a week at the office, you will not be working all the time. Although investment banking hours are long, there is also a lot of “down time”.
Weekends are less stressful than weekdays, and sometimes you’ll have a sheltered weekend with Friday night and Saturday off.
Promotional requirements: It used to take three years to be promoted to associate, but many banks have shortened this requirement to reward long-term employment, so to be on the safe side, it now takes longer than two to three years.
Exit Opportunities: As an analyst at a major bank, you will have access to the full range of investment banking exit opportunities, including private equity, hedge funds, asset management, corporate finance business, business development and venture capital.
Your options at smaller banks will be more limited to other banks, corporate finance, and business development roles.
Investment Banking Associate Job Description
As an investment banking associate, you are a better-trained “monkey” with more life experience, higher pay, and more meaningful work.
In a team, the analyst will do the majority of the tedious work, while the associate will assign it, check it, and occasionally step in to do some Excel and PowerPoint, especially in more complex presentations and models.
Associates are also attending more meetings and interacting with more customers, although they are unlikely to have “speaking roles” in the majority of meetings.
Some associates are selected for recruitment into prestigious MBA programs or investment banking-related fields.
Analysts were previously considered short-term employees of the bank, while associates were considered permanent employees. The banks, however, tried to change that by encouraging analysts to stay longer.
age range: Since associates come from more diverse backgrounds, the best guess for the age range is 25-35. Unless you graduated from university at 18 or 20, it would be nearly impossible to become an IB Associate long before the age of 25.
Salary + bonus: At major banks, base salaries range from $175,000 to $225,000, and associates typically earn between $300,000 and $550,000 in total compensation. At smaller banks, expect bonuses to be significantly lower.
Hours: You are less in demand for last-minute emergencies, so the average is close to 65 to 80 hours per week.
Promotional period: If your performance is good, it may take 3-4 years to progress to the next level of Vice President.
However, getting promoted to VP is more difficult as the bank may not need another VP right away or may be skeptical of your ability to become a rainmaker.
Exit Opportunities: Exit opportunities for associates of investment banks are more limited.
Headhunters won’t actively seek you out like they do analysts at big banks as part of the on-cycle private equity recruitment process, so you need to be very proactive.
Corporate finance careers or business development careers are always options, but if you want PE or HF roles, you’ll need to be extremely focused and proactive to get a good shot, and you’ll almost certainly need to focus on small businesses.
The next in the series will focus on the job description of Vice President (and why these bankers have the title of “Vice President”, as well as Managing Director and Group Head. It will also profile some Nigerians from the diaspora who have reached the top management positions in some of these investment banks.