Investment bankers, like many other professionals, often don’t have the time or the extensive knowledge to formulate short- and long-term strategies for their personal finances. For that reason, they should look to financial advisors for assistance. If you're thinking that the jobs of investment banker and financial advisor seem similar — or even the same — that is not the case; there are many differences, even though both operate in the financial services industry. (For more, see: What Are Some Roles of an Investment Bank?)

Investment Banking vs. Financial Advisory

Investment bankers primarily deal with corporate clients and work in the following areas:

  • Initial Public Offerings: Underwriting, estimating company’s value, confirming validity of company, purchasing shares at discounted prices prior to offering them to investors at IPO prices. (Investment banks often charge as high as 7% on IPOs.)
  • Mergers & Aquisitions: Determining the value of each company. (Investment banks often charge 1% on M&A deals.)
  • Debt Capital Markets: Working with lenders to restructure debt obligations.
  • Equity Capital Markets: Advising clients on how, when, and where to raise capital.
  • Researching markets and developments daily.
  • Identifying new business opportunities.
  • Developing and presenting financial solutions to clients.
  • Maintaining communication with chief executive and chief financial officers.

Investment banking is more involved, but this gives you a general idea of what takes place in the investment banking world. In order to become an investment banker, you must pass the Series 79 exam to register with the Financial Industry Regulatory Authority (FINRA). This test focuses on some of the following topics: collection, analysis and evaluation of financial data, underwriting and financing transactions, tender offers, financial restructuring transactions, general securities regulations, and more. Keep this list in mind because it plays a big role in the conclusion. (For more, see: The Series 79 Exam: What it is and When You Need It.)

Financial advisors, on the other hand, primarily work with individuals and are highly trained in the following areas:

  • Retirement Planning
  • College Planning
  • Estate Planning
  • Taxes
  • Insurance
  • Investing

This is a shorter list than the one above, but these six points cover a wide range. However, that’s not the point. The point is that financial advisors have expertise in areas that investment bankers do not. Moreover, the investment banking industry has changed so it now focuses more on specialization — meaning an investment banker in today’s world might have a lot of experience in debt capital markets but very limited experience in M&A deals. This also means that investment bankers might not have much exposure to what’s taking place in the investing world, and because they work such long hours, the vast majority of investment bankers are short on time to devote to their personal finances. (For more, see: Financial Careers: Investment Banking Jobs.)


This, of course, is where the financial advisor comes in. A wise investment banker will opt for an advisor with the Certified Financial Planner designation. To become certified, a financial advisor must complete the four Es: Education, Examination, Experience, and Ethics. (For more, see: Why Financial Advisors Need To Earn The CFP Mark.)

If someone is an expert in one area, paying for that person’s skills is justifiable. For example, if you have never power-washed your house before, are you going to give it a go and expect stellar results? The most likely outcome is average-at-best results with the possibility of breakage. This, in turn, leads to the potential for increased costs despite the original goal being to save money. In other words, investment bankers shouldn’t let pride get in the way by attempting to do a job where someone else will excel. (For more, see: How to Find and Hire New Advisors.)

The Bottom Line

More often than not, investment bankers just don't have the time or expertise to manage their own personal finances. The most adroit investment bankers prefer to outsource their personal finance strategies to a qualified financial advisor, though collaboration does play a key role. (For more, see: 5 Things to Ask Before Hiring a Financial Advisor.)