Choosing between Investment Banking and Investment Management

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Choosing between Investment Banking and Investment Management

Investment banking and Investment management are aggressively competitive fields in a finance career. Many finance majors and MBA students find it difficult to choose between the two as their career choice. The reason is that both the fields offer plenty of opportunities for professional development with appreciable compensation too.

This article attempts to decipher the major differences between these two professions so that it might help the aspiring professionals to make an informed choice in their career.

Investment banking and investment management

Let us understand what it is all about, the educational qualifications and skills needed to crack the job, roles and responsibilities, present salary compensation, and career outlook.

Investment Management:

Investment management or Asset management is about decisions in investment and allocation of assets. Investment managers develop innovative strategies and direct funds to equities, debt securities, commodities, precious metals (gold, silver), or properties on clients’ behalf. They manage clients’ money efficiently.

The clients include –

  • Independent investors
  • Insurance companies
  • Pension funds
  • Retirement plans
  • Governments

Roles and responsibilities of an investment manager

The major roles and responsibilities of an investment manager are as briefed below:

  • Analyzing financial statement
  • Allocating portfolios like bonds and stocks
  • Providing buy and sell recommendations
  • Involving in equity research
  • Financial consulting, advising and planning
  • Helping in asset distribution
  • Estate and retirement planning

Required educational qualifications and skills

Investment management and investment banking firms that hire candidates are interested in graduates from top schools. The prospective candidate must hold a degree in business disciplines like finance, investment analysis, economics, or accounting. Graduates from other disciplines with exceptional skills or additional skills may be considered. Analytical proficiency in select business verticals like healthcare, insurance, pharmaceuticals, and, so forth is appreciated.

An MBA with a strong network is needed in both professions. Though investment management positions might not have top applicants, it is difficult to get into major firms. Most of the investment management and banking firms prefer internships as one of their eligibility criteria.

Apart from a strong educational background, the preferred skills are as follows.

  • Communication skills- verbal and written
  • Analytical and problem-solving skills
  • Negotiation and client management skills
  • Attentiveness to minute details
  • Advanced technical and mathematical skills

Salary of an investment manager

The average Investment Manager salary in the United States is $129,641. It ranges between $87,966 and $149,390.

Career outlook

These are lucrative careers with huge compensation. The investment managers will experience 11-19 percent job growth by 2026, the US Bureau of labor statistics reports.

Moving forward, let us understand investment banking.

Investment banking

Investment banking serves large corporations creating capital. They involve underwriting new debt and equity securities, enable sales of securities, facilitate mergers and acquisitions, guide issuers on stock placement and issues determine trades for private investors, institutions, and others.

The clients include –

  • Corporations
  • Pension funds
  • Financial institutions
  • Governments
  • Hedge funds

Roles and responsibilities of an investment banker

The major roles and responsibilities of an investment banker are as briefed below.

  • Help clients to raise capital
  • Enable businesses to grow
  • Act as financial advisory intermediaries
  • Price capital
  • Assist with mergers and acquisitions activity
  • Generate more revenues

Required educational qualifications and skills

To get into the investment banking profession, graduation in finance and related fields like accounting, economics, or mathematics is essential. An MBA degree is an added advantage. However, an elite company looks for an advanced degree from Ivy league School, University of Chicago, or Duke University.

Licensing is mandatory for security dealing in the US. An internship and strong network are highly recommended to gain successful entry into the investment banking job. An investment banking certification will increase the competency to acquire a job in a preferred company.

Apart from a strong educational background, the skills required are –

  • Planning skills – Able to explain the terms of offering, risks, plan, and manage the issuance process, and help in pricing
  • Deal closures- Able to act as a go-between in marketing deals, underwrite an issue with explained risks
  • Private placements – Help clients to raise capital through private placement
  • Conflict of interest – possess smooth interaction in the capital markets, address conflicts between business firm and its securities research activities

Salary of an investment banker

The average salary for an early career Investment Banker is $90,847 per year in the United States, PayScale reports.

Career outlook

A prospective investment banker must look for higher firms for more job-related skills, compensation, and bonus. According to a study, bankers are shifting to asset management. Candidates with transferable skills are able to sustain in the competitive investment banking market.

Wrapping Up:

Both investment bankers and asset managers have a tough time honing skills and completing work schedules. Any global event affecting the market affects investment. It is your conviction to gain success in your career.

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