Saturday, March 22, 2008

Qualifications Needed to Start an Investment Banking Career

Very often people ask me this question: What are the most sought after qualifications for investment bankers?

CFA: 80 per cent of my candidates have this professional qualification.

MSc / MBA: 80 per cent of my candidates have one of these qualifications.

However at an entry level, investment banks never require any particular qualifications, though most of them expect a basic bachelor’s degree. To start an investment banking career, personality fit rates higher than technical skills.

There are even real cases like these.

Peter Redhead, the former head of Asia Equities at JP Morgan, has none of his degrees related to banking.

Peter Sullivan, the former CEO of Standard Chartered Bank, studied physical education at university.

The present Japan country head of a US Hedge Fund, studied law at university and has only one bachelor’s degree.

On the contrary, one of my candidates has his resume full of all kinds of bachelor’s and master’s degrees and professional qualifications, that made me wonder why he had time to date his girl friend, get married and raise children. Unfortunately, he is not even a CFO yet, in his 20 years' career.

A basic university degree is your key to investment banking. Additional factors determining your success will include opportunities, your skills on networking, your capabilities on multi-tasking and problem solving. However to increase your competitiveness, CFA is highly desired.

Test of your investment knowledge
If you buy a company's bond,
A. You own a part of the company
B. You have lent money to the company
C. You are liable for the company’s debts
D. You can help manage the company
E. Don’t know

Investment Banking Career

31 comments:

Inquisitor said...

Very interesting how 80% of the senior candidates you work with have CFA degrees. I generally tell college students who ask me about it that it's usually not worth their time; I guess this is just a difference between junior and senior hires.

I wish people trying to get into banking at the junior level would realize it doesn't require much beyond a university degree, as you mentioned.

daisy said...

Dear Anna,

I have a question for you which I hope you can advise on.

I am currently working as a fund-linked sales sales structurer with 4 yrs of work experience in Singapore and London.

I am close to being made an offer of a fund-linked salesperson in a tier one investment bank in HK. No headhunter was involved in these jobs interviews. As HK is new to me, can you advise what kind of pay and benefits I should be asking for? I would have to relocate. Is it right to ask for guaranteed bonus in light of today's markets climate?

Thank you in advance,
Daisy

Anna Maria D'Souza said...

Daisy
Compensation package at your level of experience could be quite simple, namely base salary + performance bonus. For the first year of employment, you can ask for guarantee bonus and even sign on bonus if you have to forfeit anything from your previous employer. If you have to relocate, you can ask for housing and a one-time relocation allowance. For senior hires, employers usually ask for your current package and structure something attractive enough for you. However at your level of experience, IBs usually have a pay scale with some kind of flexibility for negotiation. In any case, performance bonus should contribute a great percentage of your total income. Make sure you are happy with the formula.

Joe said...

Anna, I am currently seeking a new career in investment banking. Currently, I am working for a big 4 accounting firm and don't think it is for me. I don't mind the long hours, but the challenge isn't there. I have always been drawn to the financial markets. I am looking for any kind of advice on how to approach IB firms throughout my transition as I have only held my current job for 6 months. Also, do you still provide resume critiques for new IB seekers? I would love for some advice.

Thanks,

Joe

Anna Maria D'Souza said...

Joe
Big 4s assist clients for M&A and IPOs and if you have that sort of experience with upside potential, some IBs are willing to hire you and train you for larger roles.

First, determine which area in an IB attracts you most. Do some research on the Net or make some phones calls to find out who's in charge of that area in the best IBs you've short listed. Email him directly and submit your CV. Go through my blog's 'top employers' section will give you some hints.

If it is your first job, it is ok to look for a change in 6 months if you find that it is not for you. But make sure you won't let this happen again in another 6 months, as this will spoil your work history.

Ben said...
This comment has been removed by the author.
Ben said...

Hi Anna,

I'm currently at university in England studying a BSc in Computer Science (first year). I am looking to enter investment banking and was originally planning to graduate (with a first), work for 3-4 years then apply for an MSc in Finance at LBS.

My question is; what sort of jobs should i be looking for straight out of university?

There is a chance i will be able to get internships at GS / IBM over the next two years, what effect would this have on the jobs i should apply for?

I should note that my current aims are to work as an investment analyst or a challenging job in trading.

Thanks in advance!
Ben.

Anna Maria D'Souza said...

Ben
I am happy that you plan early to start an IB career. Both analyst and trading are good to start with. An internship at Goldman Sachs is highly preferred. Your planning in getting an MSc in 3-4 years is also good. Depend on your career path, you can do it earlier or later.

Abhisheik said...

Dear Anna,

I am working in derivative sales, selling currency, interest rates and commodity derivatives for close to 5 years. I am wondering about moving to investment banking. Can you suggest what kind of a profile I should look at within investment banking and will it be possible to make this shift. I would also like to know what kind of things I should highlight in my resume to help meet this objective.
Regards,
Abhisheik

Anna Maria D'Souza said...

Abhisheik
Your experience is certainly valuable if want to move on to investment banking. Try top derivatives houses like JPM, Goldman and Citi and you should be able to develop your career further.

Strong client relation is needed in any sales job and you need to demonstrate your ability in developing and strengthening business relationship, expanding client base and maximizing revenues. Specify the broad knowledge that you have in a certain local or regional market.

Include these key words/phrases in your resume:
- strong commercial, influencing and negotiation skills
- proven track record
- decisive in a rapidly evolving environment
- a passion for finance
- team player
- stress-resistant and highly assertive
- result oriented

george said...

Dear Anna,
I've been trying to branch out of accounting for sometime and into IB. I decided to give CFA a go, however I havent had any success in passing level 1 on 4 previous attempts. It's not the knowledge that I feel is lacking, but I feel my incapability to do those muptile choice questions.
I wanted to know if there were any equally good qualification (from the employer's perspective) that maybe I could pursue besides the MBA'S and MF's.
I would really appriciate any advise.
Thank you
George

Anna Maria D'Souza said...

George

CFA is not a must. Try not to spend additional time on it if it is not for you. You can try CFP (Chartered Financial Planner) if you want to. As I mentioned before, personality fit is more important than skill set, to start an IB career. People who have drive, long-term commitment, interest in the business and an ability to learn quickly are generally wanted by IBs.

yiannis_ ps said...

Dear Anna,

I have a bachelor in electronics engineering (average grade 96.5/100 setting me first in my class) and a PhD in antennas. Actually my PhD is quite theoretical and has to do with applied mathematics in electromagnetics. Since 2002 I am working as a RADAR engineer.

I would like to make a turn in my career and work in Investment Banking. My only "contact" with finance lessons was in the first year of my bachelor. However I have read in my free time books about banking, economics and business.

I was wandering if I could pursue a career in IB or if I should start with taking CFA or perhaps an MBA. At the moment I am 28 year old and I would prefer to start looking for a career in IB now than going on for studies. What do you think about it?

Thank you in advance

Yiannis

Anna Maria D'Souza said...

Hi Yiannis

There is no conflict between studying and working, as far as you can manage your time. Turning to IB at 28 is fine. But IB is a people business, and its lifestyle is completely different from being an engineer. Suggest your talking to people in the business to get more insights before kicking off your IB job search.

Anna

amitabh said...

Hi Anna

I am persuing MBA from a top B School in India.Previously I had worked for an automobile company in project management role. I had graduated as Electrical Engineer.I want to move to Private Equity though I dont have great academics to boist of.I have taken CFA dec 2009. I have 1 year left at B school. What should I do in rest one year to make myself a competent person for a PE role? Needed your advice on that.
Thanks
Amitabh Vatsya

Shashank said...

Request a bit of advice here please. I am 34, with 4 years of corporate finance advisory experience (2 years with a Big 4), 1 year of PE experience and 2 years in Industry. Have an MBA (Management) from a Tier 2 school. Is there any chance of breaking into Research at this stage? If not, what qualifications do you recommend for a career in PE/VC, the choices being CFA vs CAIA vs CF (run by ICAEW)? Also, am I right that CFA is the most sought after for a career in Research? Thanks

Anna Maria D'Souza said...

Shashank
Never too late. But you need to convince your employer the kind of value and skills you can bring to Research and why you are interested in the move. Having an MBA is fine, but CFA is of course an additional asset.

Arshad said...

Dear Anna,

I have a question for you which I hope you can advise on.

I am currently studying(Engineering Computer Science) and will go for an MBA from London,I am interested in working as an investment banker.
Can you please advise me on the same

Thank you in advance

Anna Maria D'Souza said...

Hi Arshad

Ask yourself these questions before kicking start:
1. How much do you know about IB?
2. Why IB?
3. In which area of IB are you interested?
4. What does an iBanker do and their lifestyle?
5. Are you prepared to work long hours, under extreme pressure and multi-tasking...
Skills can be trained on the job, so don't worry too much about qualifications as far as you have a basic degree. More important is to find out if you like the job. Try to speak with people in the business and find out more.

Anna

sanhita_c said...

Hi Anna,

I have bout 5 yrs work experience (2 years in Revenue management in hotels, and 3 years in real estate brokerage and consultancy).I wanted to shift to real estate investment/private equity companies. But for that all of them asked for MBA(Finance)/CFA. I did some research and decided to do CFA from an Indian school called ICFAI as against AIMR as they did not have any test centres in my city. But gradually ppl have been telling me it will add very little value. Can you please suggest some qualifications which will be helpful for my above mentioned careers. I was thinking FRM or some certificate course in FOREX and treasury. Please advice.

Anna Maria D'Souza said...

Hi Sanhita

Qualifications may not help in your situation. You’ve already worked for a few years and certainly missed the opportunity for management training programs from global banks who always hire fresh grads. My suggestion is to work for boutique private equity / corporate finance advisory firms (Quam Capital, Anglo Finance) for some years, acquire essential analysis skills with super math background in number crunching and keep trying to build network with the banks. That way will possibly help set your feet into an IB easier.

RK said...

Hi,

I have been working within the public sector for most part of working life, Im 35 and i would like to move into the Private sector . My degree is in Psychology however i want to further educate myself within the finance arena. I know from reading the blogs , many of the individuals are experienced and qualified within this area. I am after some advise as to which qualification would enable me to progress. Is my age a disadvantage? With so many qualifications out there i want to study via distance learning and wondered if you could give me some feedback?

Anna Maria D'Souza said...

Career change at 35 is possible, provided you have the experience that banks wanted. It is important to land some interviews and convince the employers. I did see some successful bankers without a degree in finance or banking related subjects. Enhancing your qualification is of course not a bad idea, but at your age, employers will weigh your experience equally important.

Akshath said...

Hey Anna,

I am a law school graduate from one of the best law schools in India. However, during my corporate internships, I have realized that I have more of an inclination towards finance rather than law. I have been recruited from university by the legal division of the biggest private bank in the country, ICICI. My query is whether it is viable to start off as an investment banker 3-4 years down the line after completing the CFA exams and an MBA at a top B-school and whether my law school background will bode me well in this endeavor ? Also, would I have to start off at ground zero in the investment banking profession or could I expect to start at a higher level, after taking into consideration my qualifications ?

Anna Maria D'Souza said...

Akshath, you should be able to start at an Associate level with your legal background + exp at ICICI if coped with CFA and an MBA from a top school. It is earlier than later. Don't wait too long.

Becca said...

Anna,

I'm currently at Sixth Form College and I'm interested in a career in investment banking, I'd be very grateful if you could you advise me on the best courses to take at university? Also, is there anything I could do to set me apart from every other candidate, such as taking up a work experience placement?

Thank you in advance,
Becca

Anna Maria D'Souza said...

Hi Becca

IB generally hire fresh graduates from any discipline. But if you are good at numbers and people skills, you would have definite advantage. Economics or finance could be helpful. You would face competition no matter what you do. If you want to be really competitive, make sure to obtain your degrees from Harvard, MIT, Stanford, INSEAD or any college of similar brand and an intern program from Goldman Sachs.

Harsh Ramraika said...

Hi Anna,
I am currently doing my undergrad in Accounts from a reputed college of India and also doing CFP. I have a personal sort of liking for an Investment Banking firm which I would like to join in the future. Can you tell me what Masters should I prepare for or if CFA alone would solve my problem ?
To add I am also a part time Technical Analyst (Still Learning) for a group of traders. Will that be of any help ??

Anna Maria D'Souza said...

Hi Harsh

I've seen people without any finance related degree doing very well in IB. However a bachelor degree is a must. To be successful in IB will depend more on your personality, ability of networking and team work. Of course how well you prepare for the interview is another determining factor. And prior to that, write a compelling resume. There are resources in my blog to help.

Harsh Shah said...

Dear Anna,
I am 19 and currently in my Final level of Chartered Accountancy course. I have still a year left for graduation. I am planning to give my CFA level 1 exam next year after graduation. I am also planning to do MBA in finance from a reputed college. Right now I am doing my CA internship in an accounting firm.
Well Investment banking have always been my core interest but i don't know how to start a career in it. I even have good exposure of the stock markets in India and also hold various diploma certificates of the stock exchange.
I have read in your previous comments that personality and networking skills that matters, but without experience how can anyone get those things. The IB people can't take you just by your personality in the interview. There must be some criteria and requirement for it. If you can highlight those criteria's it would be a great help. Thank you.

Anna Maria D'Souza said...

Hi Harsh
Everything has a Day 1. The most experienced trader had his first day in a dealing room. If you don't take the first step, you won't even have day 1. In fact if you've gained an internship from an ibank, you are in a better position than having your intern at an accounting firm. Therefore your next step is to look for an ibank intern role. The following two posts should help.
Inside Investment Banking
3 Ways to Improve Your Investment Banking Resume