There seem to be a lot of people rockin’ power suits on campuses across the country. It’s not some sort of strange, formal fashion craze. It’s job interview season—a time when soon-to-be college graduates race back and forth to interviews, carrying fancy folders with résumés, hoping that they’ll be employed come May.
Some of the most coveted—and mysterious—employers are investment banks (sometimes called “ibanks”). These include some of the biggest names in business, including Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, Bank of America, Merrill Lynch, Barclays Capital, and Credit Suisse, among others.
You’ve probably heard these names thrown around, but what do investment banks actually do? How do they do it? And what is it like to work at one?
Keep reading to find out!
Talking the Talk
Let’s start with some vocab.
Capital – (n.) stuff; refers to anything that was produced and is used to produce other things. In the context of investment banking, it’s the wealth you put into an investment—aka money.
Investment – (n.) using wealth (capital) to fund some other venture, which will hopefully make a profit.
Client – (n.) any individual, group, corporation, or even government that uses an investment bank’s services.
Analyst – (n.) an entry-level position.
Pitch Book – (n.) a compilation of all the information an analyst has about a certain investment.
Division – (n.) a department.
Investment Banking Division – (n.) helps businesses fund new ventures by connecting them with clients who are going to invest. They also assist with Mergers & Acquisitions (or “M&A” if acronyms are more your style). M&As may be friendly or hostile. Essentially, it’s like when Carol married Greg Brady and they had to figure out how to become one big, happy family. But unlike an episode of “The Brady Bunch”, the highly complex financial and political negotiations that define M&As take more than 30 minutes to solve, and the executives, analysts, and investment bankers that make M&As possible typically wear power suits instead of bellbottoms.
Sales & Trading Division – (n.) acts as the “mutual friend” between an investment and potential investors. Let’s say that Cindy (the investment) has a huge crush on this guy John in her class. She doesn’t know exactly how to talk to him, but thankfully her friend Bobby (Sales and Trading) notices Cindy casting lovey-dovey glances in John’s (the investor) direction. So after class Bobby tells John how wonderful Cindy is and that he should totally take her on a date to the local malt shop, drive-in movie, or a wholesome undergraduate party. John, intrigued, tells Bobby to set it up.
Research Division – (n.) collects information about potential investors and investments.
Compliance and Risk Management Divisions – (pl. n.) makes sure that every move the bank makes meets with government regulations and tries to make sure that the bank will not lose money in a deal. Compliance and Risk Management are like your two best friends. Risk Management is there to help you decide if it’s worth it to go out the night before a final, eat a third ice cream sundae, or try this totally adorable shade of mustard yellow lipstick. Compliance is there to slap your cell phone out of your hand when you attempt to call your ex-boyfriend “just to say hi.”
A Day in the Life
When I asked my roommate (a pre-med) if she knew what an investment banker actually does, she hazarded a guess: “Sit in an office and crunch numbers?”
And honestly, before I wrote this article, that was my impression too. But in the course of my research I came to realize that, like onions (and ogres), ibanking has many more layers than I thought.
Mark*, a senior who interned in the Sales & Trading division at an ibank this summer and was hired to work there full-time after graduation, said that entry-level positions are pretty demanding.
Environments vary greatly within the department, depending on what you’re selling or trading. “[In Sales & Trading,] each desk has its own culture, feel, products, hours, managers, and attitude. Some desks are like a football game, others are like going to a library,” he said.
As for the hours in Sales & Trading, Mark said that they vary based on when stock markets open around the world. “Depending on the market, expect to be in around 6 a.m. and leave around 7 p.m. Basically, you come in, grab a coffee, read the Wall Street Journal, and see what happened overnight in Japan and Europe.” Since stock markets are closed on weekends and on some holidays, traders and sales analysts work Monday through Friday. Much of the day’s work revolves around research and making each client happy.
In the Investment Banking Division, things are a little bit different. Chris*, a junior who interned at an ibank this summer in the Investment Banking Division, described a pretty intense work week.
“People always ask about the long hours in banking and wonder if we’re actually working that long. The short answer is yes, bankers do work long hours—often over a hundred hours per week. The analysts will get in first and then the senior people will start getting in between 9 and 10 a.m. During the day, however, you could be sitting around with very little to do.”
The reason for that? The Investment Banking Division is very client-based—you need to be there if the client needs you, so you’re there all the time, even if you’re not really working on anything at the time.
“Over the course of one day, you may be in multiple conference calls and meetings or you might be at your computer for hours working on a pitch book or other project,” Chris said. “When you’re finished with a task, you’ll show it to the person directly above you in the ‘hierarchy’ so they can check your work. Banking is dependent on the hierarchy: if you’re the analyst on the bottom, you’re doing the majority of the analytical and administrative work whereas if you’re the managing director on the top, you’re working with the big name clients.”
Hours tend to be long for every department when you’re just starting out. Tom*, a recent graduate who has worked in Compliance for two years, described his day: “First, you come in early in the morning and do some work, then you go out, get lunch, eat it at your desk. Most nights, you’ll eat dinner in the office too.”
In the Compliance and Risk Management divisions, analysts can expect to spend most of their day sifting through info about clients and investments. As Tom put it, “It’s painstaking work that’s very detail-oriented. Basically, you’re making sure that nobody—the bank, the clients, anyone—can get into trouble for a deal.”
Why do people want to do this?
The hours are long, the work may be tedious, and you might need to work through the weekend. So, you might reasonably ask yourself, why the heck does everyone I know want this job?
There are a few reasons:
- The pay. Even as an intern, you’re paid pretty well. Though wages vary by division, if you’re hired full-time, look forward to a sizable starting salary, signing bonus, and a hefty Christmas bonus too.
- The perks. Every firm has its own perks. According to Mark, “Some give out BlackBerrys (which is kind of a leash, really) and laptops to interns. Others help with housing and have fun nighttime events. Many have perks such as J.Crew and Brooks Brothers discounts, or free tickets at the Met.” Perks vary by location, firm, and your level.
- The proficiency. Unlike some entry-level positions or internships, you’ll learn more than how to make coffee the way your boss likes it. Jobs in an investment bank are very hands-on across the board so you’ll actually learn marketable skills.
- The prestige. Maybe it’s the enigmatic nature of the business, the clean-cut suits, or the way they say, “fixed income products,” but there’s something kind of intriguing about people who work at places like J.P. Morgan and Goldman Sachs. Or maybe it’s just me.
How do I get one?
If you’re interested in working in an investment bank, there are certain skills that are invaluable:
- Microsoft Excel. As Mark said, “Learn it, it is your best friend. Regardless of what field you go into, Excel makes life easier.”
- Be a people person. If you’re trying to convince your interviewer that they want you around for 12 or 13 hours every day, make sure they like you. That doesn’t mean you should offer to shine their shoes and walk their dog—just be a pleasant person and do good work.
- Know a little something about finance. This doesn’t mean you need to be a finance or economics major (Tom studied political science). Instead, keep up with what’s happening in the news around the world. Depending on what division you want to work for, you might need some knowledge of programming or advanced math.
- Learn the lingo. The terms defined earlier in this article are only the tip of the iceberg. You don’t necessarily need to be fluent in finance-ese. Have a good idea of what things mean and how they’re used.
- Show a genuine interest. This might seem painfully obvious, but in a field as competitive as investment banking, if you’re not genuinely interested in the work, the person reading your cover letter or interviewing you will see through it. Each division is so specialized that even if your passion is something completely unrelated to business, you can find something that interests you.
If you secure an internship or entry-level job, Mark had this advice (punctuation and all):
“Treat your summer as a 10-week interview! Shadow traders to see what they do! Ask them what their positions are, why they have them, if they’re happy about the projects they’re working on, ask them about college! Ask them about life! Grab coffee with them! If you got into their internship program, CONGRATULATIONS! Now all you need to do is prove to them that they actually like you enough as a person to keep you around for 12 to 13 hours a day. Meet with people, make them like you, follow up.”
So if you are considering applying for a job or internship with an investment bank, pick up the Wall Street Journal, decode the economic jargon, iron your best power suit (or invest in iron-free clothes), and get out there!
Happy job hunting!
Sources
Goldman Sachs website
J.P Morgan website
Tom*, a recent graduate and Compliance analyst
Mark*, a senior who was recently hired to work in Sales & Trading next year
Chris *, a past intern in the Investment Banking Division