Careers in finance can be extremely rewarding, exciting, and lucrative, but also high pressured, demanding and nerve-wracking. Because of the confluence of emotional and mental aspects required for these careers, investment firms often look for specific skills and characteristics in potential employees.
There are various roles in investment firms, but one of the highest profile and most sought after is investment banking. Investment bankers facilitate transactions between two firms (like mergers or acquisitions) or between the firm and the market (think IPOs), or within a firm (helping to establish business plans). These varied roles influence the types of skills investment bankers need to possess — many of which are tangible and measurable but some of which are intangible.
- Finance careers are lucrative and rewarding, but also stressful and demanding, requiring a basket of skills both tangible and intangible.
- An intellect with a great understanding and interest in math and economics is crucial, as is intellectual curiosity.
- Discipline is needed for a financial professional, due to the long hours and demanding workload.
- It's also key to have an entrepreneurial spirit, the ability to create and innovate, and to do it with a global audience in mind.
- Being good with people is essential, including being able to cultivate and develop relationships.
The Top 5 Skills an Investment Banker Needs
Top 5 Skills
Many characteristics that firms look for in potential employees are obvious but others are surprising; within each, there are nuances that are difficult to quantify that may make one person more geared toward an investment banking career than someone with a similar skill set. We’ve put together a list of the top five skills that an investment banker needs to characterize and areas of study that may aid in the acquisition of the skills.
Investment bankers facilitate transactions between two firms (like mergers or acquisitions) or between the firm and the market (think IPOs), or within a firm (helping to establish business plans).
This is perhaps the most obvious characteristic. A strong intellect with particular emphasis on analytics, mathematics, finances, and economics goes a long way toward performing many of the job requirements. But it goes beyond these basic core competencies. Investment banking also requires an intellectual curiosity such that you not only perform and understanding your silo of work, but you branch out to understand how a colleague’s work or other factors fit into the overall puzzle.
Investment bankers possess a desire to solve complex problems and to create new and innovative solutions. Areas of study that often drive the intellectual skills and propel this type of problem-solving and curiosity tend to focus on mathematics, science, such as physics, economics, engineering and finance/accounting, as well as post-graduate certificate programs like the Chartered Financial Analyst (CFA).
News outlets often report on the high salaries of investment bankers but little is told about the long hours, hard work, diligence and self-discipline that goes into those high rewards. Investment bankers, from the entry-level analyst to the top level managing director, work in a pressure cooker environment and because of that, need to be able to perform under intense scrutiny and demands. These traits are often innate, but can also be learned throughout life in numerous ways, such as by subscribing to and accomplishing a demanding task, like graduating law or medical school, or through athletic accomplishments like performing on a collegiate sports team.
Interestingly, with all the rigor and structure in investment banking, creativity and innovation are very highly regarded skills. The top-performing bankers are able to approach a task or provide a solution in a way that may be new, pioneering an avenue for products and services. There is an intangible characteristic that compels individuals to approach a situation from a different angle, and while this may be reinforced by academics, it is often instinctive. University classes, such as entrepreneurial business classes, as well as some science and social science classes, can provide a foundation for more innovative thinking.
We know the world is more globally connected and business is no different. Broad-mindedness, which opens the door to a deeper understanding of culture and societies, expands the ability to work with and for international businesses. Combining that knowledge and understanding with an ability to communicate in more than one language is an added and sought after skill in investment banking. Academics concentrating on sociology, anthropology, and complemented by advanced linguistic skills (i.e. becoming fluent in a second language like German or Mandarin) are desired skills. A good example is participating in study abroad programs, which promotes these types of skills.
5. Relationship Building Skills
This final skill is perhaps the most intangible but considered to be one of utmost importance, particularly as investment bankers climb the career ladder. Social and relationship building skills, such as being able to deal with difficult people in extreme situations, having high energy and a positive attitude that exudes power but also an “I understand your needs” attitude and developing and maintaining client relationships are characteristics that bankers must possess in order to be successful. At the end of the day, investment banks make money based on the amount of fees they get paid by clients. So a strong set of interpersonal skills goes a long way in acquiring and keeping clients.
What Makes a Good Investment Banker?
A good investment banker has tangible skills, such as knowledge of finance, math, and economics, and intangible skills, such as creativity and innovation.
What Intangible Traits Should an Investment Banker Have?
In addition to creativity and innovation, other intangible skills an investment banker should have are the ability to read a room, connect with people from a variety of different backgrounds, and sustain business relationships.
What Are the Top 10 Investment Banks?
The 10 largest investment banks in the world by market cap are JPMorgan Chase, Bank of America, Industrial & Commercial Bank of China, China Merchants Bank, Wells Fargo, Morgan Stanley, China Construction Bank, Charles Schwab, Agricultural Bank of China, and Royal Bank of Canada.
The Bottom Line
Investment banking takes a certain personality and a specific skill set—much of which can be taught and learned in universities, but some of which is intangible and/or inherent. In addition to these learned and natural skills, investment banking takes someone who strives for, commits to and hungers to learn and perform at the top echelon in a challenging environment.