Investment Banking is often the most glamorous aspect of finance. Many films, social media platforms, and even presentations by universities present the image of a confident Investment Banker in a suit making Multi- billion dollar deals while receiving an impressive salary, living in luxury, etc.; therefore, many students aspire to this career because of the perceived prestige, power, and monetary reward it yields.

 

Though, in reality, Investment Banking is not nearly as glamorous or easy as most people envision it to be. There are many of these realities that are seldom discussed openly in the Finance Industry. You will usually discover these truths once you have started an Investment Banking career, or through frank conversations with individuals that have experienced working in Investment Banking.

This blog will outline the things about Investment Banking that very few individuals discuss, i.e., the good, bad and uncomfortable truths; in simple language, with a real world approach/insight.

Investment Banking Is Not Just About Finance Knowledge

Many students think of the investment banking industry as an arena full of financial models, valuations, and Excel skills. But while these aspects are significant, they're only part of the picture.

Investment banking is primarily focused on execution, coordination, and presentation. A large percentage of what you will do is prepare pitch books, synchronize information throughout PowerPoint presentation slides, make last-minute changes, and respond for business from the senior bankers to clients, all within a tight timeframe.

You may end up spending more time fixing font sizes, finding alignments, and verifying formatting than you will spend analyzing other companies. At the junior level, attention to detail is more important than creativity in many cases.

This may be surprising for new graduates who expect to be given a significant intellectual challenge every day, but much of your work will tend to be repetitive, particularly at the junior level.

Long Working Hours Are Not an Exception — They Are the Norm

A major reality that nobody fully prepares you for is the very long hours.

 

Investment bankers usually work between 10 and 14 hours a day, often including weekends. On live transactions, the time spent working past midnight usually becomes a normal occurrence. You might receive emails from senior professionals requesting you to make changes late at night, particularly for slight changes.

 

This type of working situation can cause issues with sleeping, health, personal relationships, and mental health. Many individuals try to establish a personal life during investment banking and have difficulties establishing that life during their earlier years of being invested in banks.

 

High Salary Comes with High Pressure

 

It​‍​‌‍​‍‌​‍​‌‍​‍‌ is quite understandable that the field of investment banking is flooded with young professionals seeking high salaries. However, such a level of compensation comes with a significant amount of stress and high expectations of work.

 

Any type of mistake, even a minor one (e.g., incorrect numbers, failure to use proper format, incorrect wording), will result in criticism, and Senior Bankers will focus heavily on you not giving them less than a perfect product when working with clients, especially for big transactions.

 

The pressure that you always have to produce and deliver results, coupled with the demand for a very quick turnaround, which is most of the time associated with unrealistic deadlines, is the main reason for the enormous stress and anxiety from the employer's and employee's side.

 

The mental and emotional wear that comes with being subjected to such constant monitoring by the employer and the possible negative consequences that follow if you make mistakes is very tiring and draining.

 

As long as you remain in the field of Investment Banking, the nature of the pressure you experience will be different but the pressure itself will still be there.

 

You Will Never Feel Like You Have Finished a Task

 

Most jobs allow an employee to complete a task and then move on. In Investment Banking, this rarely occurs.

 

Many times it will be you who has to do the work again and change your pitch decks, financial models and presentations, whether that be a client requesting changes or you not using your original work because an executive has given his/her opinion in the last minute. A client may request multiple revisions or adjustments. Moreover, a Senior Banker may request you to change something at the last minute.

 

There may be instances where you will work on something for hours and in the end, it will not be used (which is very frustrating), and at the same time you will never really understand the reason behind it. This causes confusion and uncertainty with respect to the work product that you have produced.

In order to be successful in Investment Banking, you need to come to terms with this ​‍​‌‍​‍‌​‍​‌‍​‍‌uncertainty.

 

Your Work is More Mechanical in Nature at Junior level

 

The first thing that comes to mind when you hear someone talk about analysts or associates in an investment bank is usually that their job is monotonous and lacks strategy. Junior positions in investment banks are inclined to be less strategic and more mechanical.

 

While working at junior levels (e.g., analysts and associates), most of a banker’s daily time would be spent doing the following:

 

·         Updating Excel models

·         Changing PowerPoint slides repetitively

·         Checking and rectifying numbers repetitively

·         Formatting documents of various types as per the standard being used

·         On all projects, coordinating different departments

 

As a junior banker, you are the most un-powerful one in the entire hierarchy. You are merely the person responsible for assisting the decision-maker(s). The recurring tasks and routine duties equip the junior bankers with the quality of being disciplined, precise, and of good technique; however, they might feel that their daily work is not related to the bigger picture of how an investment bank strategies and transacts deals.

 

Your Degree is Not as Important as Your Network

 

Once upon a time people held that only by having a finance degree could one get a job in an investment bank. Even though education is still somewhat relevant, the importance of networking has gone up so high that the latter is almost the sole deciding factor for one to be able to work in investment banking. 

 

In an ordinary career, the most determining factor for choosing the candidate to be given the job is usually the recommendation from someone already working at the investment bank, along with internships, graduating from the same alumni network, or having personal relationships with the decision-makers at the bank.

 

There are numerous highly qualified candidates who are still unable to enter the field of investment banking because they lack the professional network necessary to support them.

 

The investment banking sector will continue to work in the same way for quite some time, even though this inequitable advantage can be irritating, unfortunate, and exasperating that you as an outsider are ​‍​‌‍​‍‌​‍​‌‍​‍‌disadvantaged.

 

Investment​‍​‌‍​‍‌​‍​‌‍​‍‌ Banking's Lack of Work/Life Balance

 

Investment banking as a field offers very little work/life balance and is one of the most time-consuming careers as well.

 

Quite often, individuals miss out on important family functions, social events, and holidays. Even when a person is considered "off" from work, they probably still think about work.

 

This kind of lifestyle is only for those who have mentally prepared themselves to put work above everything else, especially at the beginning stage of their career.

 

Eventually, a big number of investment bankers will exit the industry to follow the life that they want which will be more balanced in terms of lifestyle.

 

Investment Banking Is Not For Everyone And That Is OK

 

Over time, the investment banking industry has built up a strong culture of prestige and status which, as a result, can make it very difficult for someone to decide to leave the sector even if they are not happy.

 

The fact is that investment banking is not suitable for everyone, and a large number of talented and hardworking people decide to quit the field after a few years.

 

It is not a failure to drop out of investment banking. The experience you get in investment banking can open up other career paths such as:

·         Private Equity

·         Corporate Finance

·         Strategic Role

·         Consulting

·         Start-ups

·         Business Leadership

What matters most is being given the opportunity to explore, learn, and then move ​‍​‌‍​‍‌​‍​‌‍​‍‌on.

 

Discipline​‍​‌‍​‍‌​‍​‌‍​‍‌ Is More Important Than Creativity

 

Investment banking is a very demanding culture and therefore puts a lot of emphasis on discipline, detail, time management, and professionalism. It teaches one to be composed under pressure, speak briefly, and do what is expected of him/her. 

 

Work is mainly done by using pre-existing templates and standards while only a little creativity is allowed.

 

If you are someone who loves creative thinking, innovation, or a flexible working environment then investment banking may be suffocating for you.

 

Understanding this at the very beginning of your career will help you set up proper goals.

 

Expect Uncommon and Direct Criticism

 

The criticism handed down to you by your bosses in an investment banking firm is not sugar-coated. Most of the time, senior employees do not take time to explain their criticisms or mistakes in a friendly and gentle manner.

 

It is just the demand of a very strict culture and is not meant to be personal.

 

However, for some people who receive it can feel like a huge weight. Some people get really tough as a result of such experiences, while others get emotional wounds.

 

For those who are new in this field, it is very important to learn how to detach yourselves from your work and not take any criticism ​‍​‌‍​‍‌​‍​‌‍​‍‌personally.

 

You​‍​‌‍​‍‌​‍​‌‍​‍‌ Can't Simply Switch off Your Phone

 

Information bankers should never expect to be in the dark about a transaction. If they cannot be contacted during deals, they are often looked at as being unprofessional.

 

Along with the awareness of the need for perpetual contact, there is the pressure always to be on. This, in turn, creates many problems like stress and mental exhaustion.

 

The Learning Curve Is Steep, but You Will Learn a Lot

 

Despite the fact that the work is tough, the banking on investments is a great place to grow your skills.

The employee gains

 

(a)    experience in large, complex financial transactions

(b) knowledge about Corporate Strategy

(c) and knowledge

(d) of Corporate Decision Making

(e) how Financial Analysis

(f) is done, as well as Professional Communication

(g) The experience that you get by working as an Investment Banker will thus give you a solid grounding for a career transition in other fields.

Titles Are a Big Deal

Investment Banking has a hierarchy which is structurally well-organized:

 

·         Analyst

·         Associate

·         Vice President

·         Director

·         Managing Director

 

An employee's role, tasks, and treatment differ significantly with every subsequent title.

 

Along with your title, your level of influence and authority will gather momentum as your duties increase, whereas you will simultaneously be more under pressure than before.

 

Burnout Is Not Fiction

 

Overwork coupled with high expectations that oftentimes come with investment banking inflict on many bankers and ultimately burn them out. Those who manage to keep it together make it known; however, majority of them suffer quietly. Despite the fact that the awareness of mental health issues is on the rise, a number of them are still there.

 

Border on Breaking Point

 

One of the major reasons why somebody would want to start off in this industry is because of the Exit Opportunities

 

Uncomfortable fact: most of people who are working in investment banking are mainly doing it for a short period and then they move to a different work field. After collecting an ample amount of experience in Investment Banking, therefore, they will be competent enough to take practically any other position that intrigues ​‍​‌‍​‍‌​‍​‌‍​‍‌them.

 

You​‍​‌‍​‍‌​‍​‌‍​‍‌ Will Question Your Choices (a Lot)

 

It's pretty common to doubt if investment banking pays off, especially when things get really tough and stressful. A lot of people working in this field experience such feelings.

 

Questioning your options doesn't signify that you are a weak character — it simply shows that you are a human.

 

It's necessary to take the good and the bad from your experiences and then make educated decisions.

 

Success in Investment Banking Can Be Defined Differently by Each Individual

 

Success in investment banking goes beyond the idea of just getting promotions and increasing the salary. Success for some people may mean remaining and developing their career in investment banking. On the other hand, success for some people may be the gaining of knowledge and then moving to a different field.

There is not one single definition of success.

 

Nobody Tells You That Confidence Is Developed, Not Required

 

A lot of beginners might feel that they lack confidence when they enter investment banking, simply because they see highly intelligent and long-term experienced people around and they feel intimidated.

 

In the long run, more industry exposure and training will enhance one's confidence level.

Everyone was a beginner at some point.

The Test of Endurance Is More Important than the Test of Intelligence

 

In the investment banking world, a person's endurance, patience, and perseverance are tested more than his or her mental agility and brilliance.

 

It is more important to be able to keep on working without breaks and at a constant level than to be brilliant and get the credit for it.

 

Dependability, consistency, and being able to keep your cool in difficult times are the characteristics which will lead you to success in the investment banking profession.

You Will Learn a Lot About Yourself Through Investment Banking Experience.

Investment banking is going to be a huge challenge for you, as it will put you in situations where you won't feel comfortable.

 

The skills that you learn about handling stress, motivation, strengths, and weaknesses during your time in investment banking will be transferable to all future endeavors that you undertake.

 

One of the biggest hidden benefits of working in the investment banking industry is that you will become much more aware of your strengths and ​‍​‌‍​‍‌​‍​‌‍​‍‌weaknesses.

 

Conclusion

 

In​‍​‌‍​‍‌​‍​‌‍​‍‌ conclusion, a few people might think that an investment banker is an exciting job, but it turns out to be a case of mistaken belief.

 

Working in an investment bank might be the most energizing and satisfying job that one can imagine, only a few of us. Nonetheless, the majority of people will say that working in an investment bank is a huge and exhausting task that drains on both their physical and mental well-being.

 

The head point to remind after entering a career as an investment advisor is to be very clear with yourself on the expectations.

 

A good amount of money will only come if you work smart, efficiently, and with integrity in the long run. If you choose this path to get rich quickly, you will likely fail.

 

Surely the process will be rewarding if at first, you become an investment banker because you want to learn and grow so that later you can be a successful executive.

 

Most importantly, individuals should comprehend that investment banking is far from being flawless. Investment banking is all about fighting spirit that you show every day to get the best result to you and the people you serve.

 

You have to accept that investment banking is just a small part of your whole ​‍​‌‍​‍‌​‍​‌‍​‍‌career.