Investment Banker
He thought he would be a “kid forever” and assumed he would figure out a career path when he got to college.
FAMILY INFLUENCE
HC’s father was an electrical engineer and business owner. His mother was a homemaker who later worked in the insurance industry and served as a trained grief counselor for her church. His parents offered no specific career guidance beyond setting the expectation for each of the three brothers to attend college, as they had.
EARLY CAREER THOUGHTS
As a child, HC knew what his parents did, but he had no career goals. He believed he had to pursue the progression of academics: elementary, middle, and high school, then college, and by then he would figure out a career. In high school, HC worked to achieve “good” grades while also playing varsity football.
COLLEGE CHOICE CONSIDERATIONS
HC narrowed his college choices to two schools, based upon his personal criteria: 1. good academic reputation; 2. relatively small size school instead of a vast university; 3. general liberal arts curriculum to gain broad perspectives instead of being too specialized since he didn’t yet have even a general career path in mind (until later in college); 4. a realistic opportunity to play football at a Division 1 Level but with less sports emphasis so a D1AA program would best balance both academics and athletics.
Each of his two college “finalists” met all four criteria. But one stood out for several reasons: A. very subjectively, his final choice college seemed to have a slightly better academic reputation than his runner-up school; B. an uncle and the uncle’s family had all enjoyed and appreciated their experience at the same school and C. HC was more familiar with the area of his chosen school due to its campus near his often-traveled route to the family vacation cabin.
INTERNSHIPS FACTOR INTO EVENTUAL CAREER CHOICE
During college summers and other breaks in the college schedule, HC found part-time employment as an electrician’s helper due to his father’s business connections. The manual labor was a good change from classroom attendance, and he enjoyed the camaraderie of his co-workers but this field did not interest him as a career.
HC’s college course selections involved more history and political science than math and pure science. As he neared college graduation, HC thought law school might be an interesting option, so he found a summer internship with a DC law firm, which happened to focus its law practice on defending clients involved in various criminal charges. Having to deal with such an array of less than prominent citizen clients left a general, negative impression that perhaps having to deal with unsavory people on a routine basis would be a less than interesting career path.
Editor’s note: Internships are valuable time investments to observe, participate and realize either (A) This could be interesting, lifetime work! or (B) From the outside, this career path seemed interesting but on the basis of a several month sample experience, I have no interest – for any number of possible negative reasons – so now I eliminate it from future consideration.
NETWORK CAN OPEN CAREER DOORS
During his senior year in college, still undecided about a specific career path, HC checked with his college’s alumni group involved in job placements. Many opportunities were available to pursue within the large geographic area of the New York City metropolitan area. HC considered New York a nice place to visit but not to live or work. So, he sought job interviews outside New York, now at least generally focusing on “business.”
SOME DOORS NEVER OPEN; OTHERS OPEN SLOWLY
While HC pondered his career path now as a college graduate, his parents introduced him to some of their friends involved in local businesses such as insurance and banking. He talked to those folks to get a basic understanding of their respective industries. And he applied to a local bank for an interview within their management training program. But he received no response, so he opted to take a brief detour from the job application process while visiting his older brother, then in graduate school in the warm weather south, where HC found part-time employment at a golf course.
WHEN DOORS ARE NOT OPENING QUICKLY, PUSH ON THEM!
HC knew that hanging out with his older brother should only be a temporary break from an adult pursuit of a career so having received no prompt response from his management program trainee applications, he decided to initiate some follow-up calls instead of looking vainly at his mailbox or waiting for his phone to ring. One bank recalled his application and made a sudden offer: start next week in our management trainee program! This seemed like a great opportunity and with no other offer open, HC jumped at it. Had he not called the bank where his application was being overlooked, who knows where his career path might have eventually taken him?
FIRST JOB NARROWS THE GENERAL “BUSINESS” CAREER PATH
HC’s initial perception of his great opportunity within a management training program proved correct. (Editor’s note – Approaching a new job with an optimistic attitude is often self-proving; if you hope and expect the best, you can more easily overlook annoyances while you see the positive goal ahead. On the flip side, expecting a negative experience can also be self-proving.)
HC spent the next six months within the bank’s training program getting paid to learn (!) this business’ basics: bank accounting, underwriting and corporate finance, followed by in-field rotations within these various specialties, shadowing experienced bankers.
CAREER CHALLENGE RECOGNIZED AND DEALT WITH
While the bank’s training program provided a valuable transition from general college academics to applying critical thinking to a specific industry’s workplace, unfortunately the bank itself was not competitive within its banking marketplace. Accordingly, the bank was not expanding while trying to deal with declining revenue by focusing on cutting expenses rather than being innovative and aggressive in expanding their presence in the local banking community.
HC observed the decline in his bank employer’s fortunes and decided it was in his future career interest, to explore other opportunities within the banking world, about which he now had some experience and favorable interest in pursuing, long term.
Editor’s note: While your career is hopefully progressing through your own diligent efforts to learn and do your best daily, it is important to keep your eye on the current and future growth prospects of your employer. Perhaps you can take initiative to help your employer change their prospects from lackluster to promising but if it’s a situation with a likely irreversible future declining course, it may be most reasonable to take the risk of moving sooner rather than later.
NO LIMITS ON TAPPING INTO A NETWORK
Editor’s note: when you decide to consider other employment options, who do you talk to – confidentially – since you could be terminated (“fired”) if an employer knew you were shopping around rather than fully dedicated to your current job? HC had several options: (A) Newspaper ads seeking employees; (B) a recruiter whose fee could be paid by an eventual employer; (C) friends who know about the job market for your interest and experience; (D) internet; (E) college alumni or college job placement groups.
HC opted to utilize the free services available once again from his college’s job placement group. They arranged an interview with a college alum at a private bank which provided several types of banking services, including private equity investments. He wisely decided to work within a banking service which most closely matched his experience, which turned out to be the investments area.
WHAT IS AN “INVESTMENT BANKER”?
When a business ownership (one or more individual partners) group is considering raising public or private capital to help fund future growth, they may hire an investment banker to help raise the funds from their network of capital sources. In addition, when a business ownership group is considering selling all or part of its business, the owners may hire an investment bank to (1) analyze the value of the business, then (2) arrange a confidential process to elicit interest from possible buyers, then (3) help negotiate the sale, including raising capital (money) from various sources to complete the sale. Lastly, a business ownership group that is interested in growing through acquisition by acquiring another business, may hire an investment banker to help them value, structure and negotiate such a transaction.
One way to understand more about an investment banker is to contrast that occupation with traditional commercial banking (i.e., making loans to borrowers). As HC noted, a commercial banker worries about what could go wrong with their possible involvement providing money to a business buyer; thus, the banker must consider all possible negative risks for the bank to loan money to the buyer and address the safeguards the bank will insist that the bank’s credit committee include as conditions of its loan. In contrast, the investment banker, while aware of risks, focuses more on the potential rewards of a successful investment in, or sale of, the business when the investment banker tries to persuade investors to loan the money to the buyers (i.e., what could go right).
CAREER CHALLENGE – INEXPERIENCE WHEN MAKING IMPORTANT DECISIONS
Soon after HC started his new employment position as a junior investment banker, most of his coworkers departed for other employment opportunities – for reasons which HC decided were unrelated to the prospects for successful business going forward. So, he decided to stay but this involved HC having to accept assignments involving business analysis and sales for which he could have used some experienced guidance while first starting out with his new employer. But rather than panic or quit, HC approached each assignment as a personal challenge to use his general banking experience and apply his common sense and optimism to meet the challenges as presented. Long hours and much stress followed but gradually HC became more comfortable in his decisions. A few early successes built his business confidence one step at a time.
FORMAL REQUIREMENTS FOR INVESTMENT BANKING?
Anyone with a checking account or a credit card knows that banking deals with numbers and numbers involve math. But fear not: the level of math competency is not trigonometry, calculus, or quantitative analysis. A comfort level with general college math courses and involvement with a general college curriculum to develop critical thinking skills, when matched with desire to learn the specifics of your employer’s business, constitute a sufficient basis for a successful career in investment banking.
Many people pursuing this line of work opt to enroll in a post college, graduate course to obtain their Master’s in Business Administration (MBA). An alternative to enrolling in additional, formal classes is to pursue certification as a Chartered Financial Analyst (CFA), involving a three-part exam held over several years.
As of 2021, investment bankers are required to pass certain regulatory exams known as FINRA, specifically Series 63 and 79 designations.
Editor’s note: Licensing requirements and applicable regulations imposed by Federal and State governmental agencies – to protect the public from incompetent and fraudulent individuals in many businesses – ranging from plumbers and electricians to lawyers, doctors, and bankers – are frequently revised so it’s important to constantly monitor specific legal and professional requirements applicable to your business and its area of practice.
CAREER SATISFACTION
Winning the professional respect of clients hoping to sell their business at or above market value may also lead to earning the respect of the business buyers. Thus, there are two sets of individuals who are often glad to return for repeat business or recommend their friends for your investment banking services: sellers and buyers.
Investment bankers do not advertise in the newspapers or social media. A satisfied client is the best advertisement.
Oh, and by the way, many investment bankers are relatively highly compensated but HC notes that he never took a job based solely upon its potential, personal financial prospects. If you can earn while learning an interesting, dynamic field with income somewhat related to your success, you can achieve career satisfaction. Certainly, HC has done so.
