A career in Investment Banking...?

[Realist]

Hi guys,

A mate of mine has worked in Marketing for about 10 years in Sydney, he has a BCom, and is telling me he is moving to London to do Investment banking.
He has not been offered a job, he is just gonna change careers there. It sounds weird to me..


So some quick questions for those in the know....

What exactly does an Investment Banker do all day?

How do you get into it, ie what junior role do you start in, what experience do you need, he is early 30's?

What is the approximate pay for a newbie and a senior dude in Sydney and in London?


Cheers.

 

[pepperoni]

The ones I know crank out financial models round the clock and then look for debt/equity/hedge/gurantee/rating providers to fund whatever the deal is.

They work until midnight so often its not funny. They also earn major $$$ (average pay at Macq is 300k and that includes pa s etc). MD gets $20mil or so. Its all about good six pigure pays and potential for 200% plus bonus.

In the UK deals would be 10x value and volume here and pay would be obscene.

Its the best paid profession I know atm but there are very few earning at the top.

Marketing probably wont get you in there but accounting, finance and a bit of law definitely will.

 

[Realist]

Thanks Pepperoni.

Marketing in Sydney to Investment Banking in London - not likely.

Is a bank in London gonna hire some guy from Sydney who has done marketing the last 10 years, Nahhh surely not...

 

[wayneL]

Could get work as a private client advisor though. A mate of mine did and all he ever did was run a restaurant.

Sales skills was what they were looking for.

 

[Realist]

That sounds interesting Wayne, tell me more...

Salary, commision?

Expectations, what did he do each day?

 

[wayneL]

That sounds interesting Wayne, tell me more...

Salary, commision?

Expectations, what did he do each day?

The job is to get as many rich clients as possible and churn the accounts as much as you can get a way with. Plus a bit of socialising, taking clients to F1 races... that sort of thing.

The guy is back in OZ working for Macbank and puls in pretty close to 400 g's a year.

The funny thing is he could never hope to get a job like has got living here. He had to go to London first.

It must be said that he is a superb relationship builder and that is his key. I have more knowledge of markets in my pinky than he does... he is quite woeful in this department. But that is not the important thing........

 

[Realist]

It must be said that he is a superb relationship builder and that is his key. I have more knowledge of markets in my pinky than he does... he is quite woeful in this department. But that is not the important thing........

such is life....

Thanks Wayne.

 

[scsl]

Usually, a first year (out of uni) investment banker is known as an analyst. Their names don’t appear on top of the broker reports that these investment banks release. Although they may often talk and obtain information from these stock analysts, they do more of the hypothetical stuff such as financial modelling (so they can pitch ideas to companies and get jobs/deals), researching companies in depth, pouring over financial statements, industry trends and compiling this info into presentations for pitches aimed at senior management of potential clients – not to mention constantly liaising with current clients to keep them updated with merger/takeover ideas, attend social functions etc. It is normal for these analysts to work 85-90 hour weeks with plenty of all-nighters as well.

(This is not coming off the top of my head. My sister’s a cadet in the M&A department of an investment bank and tells me about what goes on from time to time.)

As they progress up the ladder, investment bankers’ stress level can be even higher as mistakes are not easily tolerated. They take on more client contact and are put in charge of things such as takeover discussions and coming up with viable solutions. My sister says that with seniority comes less of the grunt work, but they must get the job done on time and are there to make sure everything goes smoothly.

Your friend may not have a finance/accounting/law background, but my sister thinks that if he has a proven history in his marketing jobs with great references, he could work on pitch/presentation ideas and formats as well as taking on client accounts and liaising with them. Although great uni marks or successful accomplishments are very important, investment banks also want people who have excellent communication and soft skills.

IBs are paid A LOT of money, no doubt about it. A first year analyst could get a base salary of about A$80-90,000 (depending on which IB) plus bonuses, which can sometimes be larger than the base itself! In his first year at MacBank, my friend’s brother got a bonus larger than his $90,000 base salary. (He was sent to Korea not long after he started in 2005 to work on what has since been MacBank’s successful move into Korean infrastructure – no wonder he got a massive bonus!!)

Hope this helps!

Btw Realist, is your friend moving into M&A or equity capital markets or something else?

cheers,
scsl

 

[Realist]

Thanks scsl,

I do not know exactly what he is doing, neither does he I think - but your post was a good help. I suspect he'll be an analyst.

 

[flyhigher]

Generally, IB prefer young guns. a first year analyst in aus earns 8-90,000 a year and a third year assoicate earns 160,000. stress level depends on deal flow. an assoicate at Deutch Bank told me that he could leave office on 7 pm quite often if no project at hand. Top academic records ( honour deegree with hd average), well-rounded, smart and hard working are essential for this job.
In aus, most of IB like to train bankers from grads. In usa and UK, To get a TOp School MBA is another way to get into this field.
Good luck and best wishes for your friends

 

[Realist]

an assoicate at Deutch Bank told me that he could leave office on 7 pm quite often if no project at hand.

I worked till 7pm once!! I feel asleep under my desk and missed my 5pm wakeup call.

Kidding, but thanks anyway, I suspect he is a bit old to be changing careers like that. He has an MBA - but like Wayne's mate - he did not even know a 50% gain disappears after a 33% loss. And he thinks managed growth funds perform well compared to the market index

 

[Ko Ko]

Hey guys,
I have a few mates working at macquarie bank as first to second years and their pay isnt near 80-90k as you guys have mentioned. More like 45-65k. But this is base salary with the bonus. Most of my mates are accountants and investment banks although investment bankers get paid more than accountants. Ill be trying to get a job there next yr as an accountant and possible I could contribute more to this conversation. But 80-90k for first yr is a bit over the top for an IB. Maybe a dentist.....
Keep it real

 

[scsl]

Hey guys,
I have a few mates working at macquarie bank as first to second years and their pay isnt near 80-90k as you guys have mentioned. More like 45-65k. But this is base salary with the bonus. Most of my mates are accountants and investment banks although investment bankers get paid more than accountants. Ill be trying to get a job there next yr as an accountant and possible I could contribute more to this conversation. But 80-90k for first yr is a bit over the top for an IB. Maybe a dentist.....
Keep it real

Ko Ko, are your friends working in the corporate finance (investment banking) division of MacBank or are they like you said accountants and work in the bank's finance and accounting division? i think you might be getting a little confused. yes, MacBank is a reknowned investment bank but not all employees there are investment bankers.

the investment bank/ers that we all hear and read of (and i'm assuming this thread too) are the ones that work in corporate finance ie mergers & acquisitions. however, investment bankers also do things such as advise clients on security issues, divestments, raising capital, IPOs, restructuring etc. and of course, the salary in these will differ from M&A bankers.

45-65k sounds like what 1st and 2nd year graduates receive in the accounting field regardless of employer. 80-90k is huge but definately not over the top for an IB. i know some who got this in their first year and only their first year... it would only go higher after that.

 

[Young Gun]

SCSL , I agree with your comments, Mac bank has alot of divisions inside it , for all you know the mates you have might be working as accountants in macquarie leasing or some division like that. I work in finance and aspire to a roll as a analyst , however a position as an analyst is very competetive , let alone an investment banked and further more to score a job at mac bank is like all your dreams comming true, as they are well renowned for their very generous pay packet. Their CEO Alan Moss is on $40k a day ....

 

[nizar]

Their CEO Alan Moss is on $40k a day ....

A good effort; but look at how much MacBanks earnings and market cap have grown since hes been in charge; and MacBank pioneered the (hugely successful) satellite funds model

By the way; iv got a mate doing final year IT/Commerce at Melbourne Uni and he says MacBank is really hard to get into; as in from every 1000 that apply; only a handful get interviews; and to get that interview; grades must be HD+

 

[scsl]

A good effort; but look at how much MacBanks earnings and market cap have grown since hes been in charge; and MacBank pioneered the (hugely successful) satellite funds model

By the way; iv got a mate doing final year IT/Commerce at Melbourne Uni and he says MacBank is really hard to get into; as in from every 1000 that apply; only a handful get interviews; and to get that interview; grades must be HD+

yeah, MacBank is one of the hardest places to score a graduate position, especially if you're going for an IB position. my mate's brother (who eventually got a job with them in M&A) told me their interview process was "gruelling" and involved something known as 'stress interviewing' to see if the applicants could handle intense scrutiny and pressure from interviewers... and they really picked at his answers to see if he was lying.

SCSL , I agree with your comments, Mac bank has alot of divisions inside it , for all you know the mates you have might be working as accountants in macquarie leasing or some division like that. I work in finance and aspire to a roll as a analyst , however a position as an analyst is very competetive , let alone an investment banked and further more to score a job at mac bank is like all your dreams comming true, as they are well renowned for their very generous pay packet. Their CEO Alan Moss is on $40k a day ....

A Current Affair tonight summed it up: $5,000 an hour!!

oh, and the guys i know who work at IBs are actually in M&A - they started as analysts in M&A straight out from uni. (that's where i got the $80-90K figure from)

 

[Young Gun]

A good effort; but look at how much MacBanks earnings and market cap have grown since hes been in charge; and MacBank pioneered the (hugely successful) satellite funds model

Yes he has been a highly influential figure at mac bank and he has done the company alot of good. However I think its a bit unfair to judge his pay solely on the performance of his company , as he is not running the company single handily. I agree he should be well compensated for his endevours but their are times when you think the line should be drawn. Im sure I could find ceos who have pulled out better financial sucess during their leadership whos salary isnt as generous.

 

[stockwhizben]

the dog eat dog competitive all night work and big pay and being exclusive may not be healthy. sounds like enron. quality of life way to go

 

[hardcoremike]

i'm doing a commerce degree majoring in accouting/finance.
is it possible to get a fairly basic finance job straight out of uni, and then enter investment banking area a few years with some work expereience under my belt?

 

[doctorj]

Sure is. The usual path is to hang around 3-4 years and complete a CA/CPA before making the move. Also., by this time you'll probably qualify for a highly skilled migrant visa and you'll be able to move to the UK to look for work and expand your horizons.

I'd suggest moving there to job hunt as opposed to job hunting remotely - it's tough doing it the other way around.