There are two distinct roles within Investment Banking. The sell-side group deals with trading securities and facilitates transactions, and the buy-side group advises institutional investors. The latter includes the management of assets and providing financial advice to institutions, such as mutual funds, unit trusts, and life insurance companies. The latter also manages a firm’s capital. To get a full understanding of each role, read on. Here are the major roles within Investment Banking.
As a general rule, the investment banker will act as a company’s financial adviser and help the company raise capital. An investment banker may purchase all of the bonds issued, which is known as “firm commitment underwriting.” They can also sell them themselves. In this case, the investment banker will form a syndicate to sell the bonds to both the public and institutional investors. This process is known as the primary bond market. The issuer of the bond receives most of the proceeds.
The managing director, at the head of the investment banking hierarchy, is responsible for maintaining and establishing good relationships with high-level clients. Managing directors also oversee all investment bank operations and employees and provide expertise when necessary. They are responsible for the overall success of the investment banking business. And of course, they work long hours. However, investment banking is a demanding and lucrative career path. However, it requires an excellent academic background and extensive experience in the securities industry.
The top ten investment banks worldwide are considered to be part of the “bulge bracket” and belong to the Middle Market or elite boutique style. These banks offer the full range of financial services, from advising companies on strategic matters to selling assets. Some of these investment banks are listed below. The Wall Street Journal reports that these firms’ M&A advisory fees will reach $1.1 trillion by 2020. The top ten investment banks are typically categorized by their advisory arm, which includes M&A advisory, syndicated loans, equity and debt capital markets, and sales and trading.
To obtain a position in investment banking, you must have a bachelor’s degree and experience in finance. However, a master’s degree can be enough to gain you entry-level positions within the field of investment banking. Assuming you don’t mind spending money on specialized training, investment banking is a great career choice. And it’s an excellent way to earn $150K+ per year. You’ll be well-positioned for exit opportunities and a lucrative salary after you’ve achieved the status of investment banker.
Unlike other financial areas, most ordinary people don’t come in contact with an investment bank directly. However, the role of investment banks is very diverse and indirectly affects nearly every aspect of our lives. Investment bankers advise many different entities in society and provide advice on the best ways to raise capital. And while investment banks are largely invisible, their work influences our daily lives. That’s why they are so important. Think about it for a minute and think about what Investment Banking does.
