Careers in investment banking have long been popular in the United States for a number of reasons. Investment bankers are able to work in an industry that is responsible not only for economic growth in the United States and other industrialized nations but are also able to spur on the economies of developing nations through investments in key industries. Bank associates who work at investment banks are often attracted by the possibilities for adventure, and the typical very high bank associate salary doesn’t hurt either.
Where does adventure come into pay in investment banking? Well, one of the characteristics of investment and trading, two closely related industries, is that they involve quite a bit of risk. Every time a bank chooses to buy shares of a stock, a commodity, or a currency, or when they choose to make an investment in another company or industry, they are taking a risk. These calculated risks are what keep the industry moving, spurring economic growth both inside and outside of the United States.
There are many jobs that involve working in the banking industry, but the position of a bank associate at an investment bank is rather different from, say, your local neighborhood bank tellers. Investment banks themselves are in a league of their own, often investing huge sums of money. While this may not be unusual for banks, as banks typically use deposits made by their bank members for investment purposes, investment banks have turned this practice into an art, often serving as venture capitalists and breathing much-needed currency into emerging markets.
What attracts many to the field of investment banking is the opportunity to be involved in an industry that involves a fair bit of risk-taking, and like other activities that involve risk, there are often opportunities for huge payouts. Investment banks are the Wild West of the American economy, and many men and women devote many years of education to be able to gain a slice of the large pie that this huge industry offers.
As nice as all of that may sound, it is important that anyone considering a career as a bank associate has an understanding not only of the lucrative salary, comfortably in the six-figure range, but also an idea of what this sort of work entails. There are a general set of skills that workers in this industry should have, aside from the educational requirements that will be tackled in the next section. This skill set encompasses quantifiable abilities, like skills with numbers, analytical ability, and the like, but also work ethic, ability to meet deadlines, and the ability to work long hours.
Skill and personality requirements for a career as a bank associate include the following:
The list of skills and abilities above may seem general, but, leaving aside education and training requirements, they represent the skill set that will lead to success in a lucrative, but often competitive industry. The old adage, it’s not what you know, it’s who you know, may not always be true, but there is some truth to it in the work of the bank associate, as careers are often made by establishing the right business contacts, and making friends in the right places. In this regard, the career of the bank associate does bear some similarities to other careers in business.
In terms of the day-to-day tasks of bank associates, these may vary, but there are certain sorts of tasks that are typical. Bank associates perform various analyzes and are involved in trading, portfolio management, risk assessment, and structuring. These professionals are involved in these activities under the aegis of the investment bank, which itself is involved in tasks so varied and often complex that a layperson may rack their brain attempting to understand it all.
For example, an emerging field within the investment banking arena is derivatives, and bank associates may be involved in creating structured products related to the derivatives market. Derivatives aside, bank associates may also be involved in securities, an area of investment that has been under much scrutiny due to financial crashes and downslides that have characterized the economic picture of the last 15 years in the United States and other Western countries. The complexity of the work in this industry is one of the reasons why the salary is often on the high end, even for finance.
Although it is a daunting task to summarize all of the duties of the bank associate, it is important that anyone considering a career in this area have at least a basic understanding. The duties of these professionals encompass the departments of trading sales, asset and portfolio management, research, and structuring.
What follows is a list of some of the major duties:
In terms of the long-term outlook for this career, entry-level bank associates often make in the six figures, and they can see their salaries increase as they gain more experience, more clients, and establish a reputation. The salary will be discussed in a later section, but workers in the investment banking industry can easily make in the seven-figure range with 10 or more years experience.
Most bank associates have a master’s degree in business administration, economics, or finance, which will prepare them for the complex analysis that will permit them to be successful in an industry that is built on often complex financial principles, and which is constantly changing. It should not be surprising that a background in business administration, finance, or economics is essential to work for an investment bank.
Most entry-level bank associates possess a master’s degree in business administration or a closely related subject. Two-year programs are available all over the United States, though programs located near large banking centers like New York are popular among men and women looking to work at large investment banks, or looking to earn high salaries early in their careers. Entry into many of these graduate programs is competitive, and most schools require strong academic backgrounds in undergraduate studies and standardized testing in order to be considered for admission.
There are other degrees offered, such as doctorates in economics and business administration, though most banking associates do not possess these, or may choose to obtain them later in their careers. A doctoral degree is not required to work as an associate though it is typically required to teach in academic programs at colleges and universities.
Depending on the activities of the bank associate, special licenses or certifications may be required. For example, it is common in currency trading that brokers or other professionals have a license, which allows the government to exercise some regulation of the industry. Most entry-level associates will not possess licenses, and any license that is required for daily duties can be typically acquired on the job.
Bank Associate Salary
The bank associate salary is often what draws aspiring professionals into this competitive arena even though for several years salary growth in this profession was described as being flat. An analysis of job postings for this position reveals that these professionals typically make in the six-figure range, with the industry standard bonus being part of the compensation package. A first-year associate can have a base salary of $$ with a bonus of $ or more, leading to a total compensation package that can easily be well over $$$ per year.
Compensation for these professionals increases with years on the job, with this seeming to be a big predictor of compensation. Managing directors at investment banks can have a base pay of over $ million and bonuses even higher than that.
It won’t surprise anyone that the high bank associate salary is a common draw into this career, even with an industry that has cooled somewhat in the last decade. As attractive as this may be, others are drawn to this career as it allows them to take risks in the work setting, something that is not always easily accomplished as a standard of control has infused itself into all aspects of modern life. Armed with a master’s degree, the bank associate is ready to meet the modern-day Wild West like a cowboy with his trusted Remington.