What Do Investment Bankers Do To Earn Their Money

What do investment bankers do is a question which many ordinary people continue to ask, as they know that the activities of an investment banker are completely different from those of the banking world they understand. There are no deposits of money into a personal account, no loans for mortgages or for a business, and no checking accounts to allow people to run their day to day life. The activities of investment bankers are aimed at a totally different group of people, and as such their activities are often little understood.


The most important activity an investment bank will get involved in is the creation of stock issues. These offer investors the chance to buy into a company now, for the opportunity to reap dividends from the company profits later. In practice, there is also the chance to sell the stock at a profit should it rise in value. There are many investors who specialize in targeting these new stock issues, especially when they are placed by a banking house with a proven track record. An investment bank can make huge profits just on one stock issue which is well placed, accurately priced, and well advertised.

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Investment bankers are also in the business of investing funds on behalf of clients. You will need to have a substantial amount of money to invest, and this service is really only open to institutional investors and wealthy individuals. There are other ways to invest in stock which are more suited to the smaller investor. The investment bank will invest in stock, in bonds, or in mutual funds, however it is instructed by the investor, and there are advisory accounts for those who wish to take advantage of the expertise of the bankers.

When people first ask what do investment bankers do, and get the answer given above, there is often one question which is immediately asked. That is the question of why this arrangement does not allow for the possibility of corruption, as the advisors in the buying arm could consistently tell the investors to buy the stock which is being issued by the selling arm, increasing their profits but not necessarily investing the money in the best interests of the client. The truth is that this would be a perfectly possible scenario, if the industry was not strictly regulated to prevent it from happening.

Most people who work within investment banking have to start at the lowest level and work their way up from there. This is after studying for several years to obtain a college degree. The early years can be extremely hard, as you will be doing most of the grunt work, for the lowest wages. It is common for an analyst to stay at this bottom level for three to five years, before being transferred to another department. This will often be on the other side of the business, in mutual fund investment or the running of institutional investor accounts.

The answer to what do investment bankers do when they obtain their degree is that they are usually printing off resumes to send to all of the major investment banking employees. This is a tough industry, and even an opportunity at the lowest level needs to be taken with glee and made to work for you. In some cases, this can be avoided by the banks coming looking for you, but these cases are very much in the minority. It happens when someone is completing a major MBA program, and the bank want to get in and offer employment before anyone else does. Now, you don't need to ask, "what do investment bankers do?"




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