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Both financial analysts and investment bankers evoke images of well-dressed corporate professionals, and many college graduates seek out these jobs. For all of their similarities, though, these are two very different career paths that are suited for very different kinds of individuals. Whether you’re suited for one job or the other depends on your goals, strengths, temperament and work pace.
Key Takeaways
- Financial analysts and investment bankers are both financial professionals, but they each have different duties and expectations.
- Financial analysts are future-focused accountants with sophisticated modeling techniques. They may do capital markets research, corporate accounting, and financial analysis.
- Investment bankers typically work for a financial institution and specialize in raising capital for other firms.
Financial Analyst
Financial analysts work for a variety of businesses, including investment banks. They are normally experts in markets, economics, accounting, and compliance. These are the ultimate support members on a financial team, spending their days poring over data and preparing models and reports for other departments. Before a business makes a major financial decision, management often consults its financial analysts to identify trends and run projections. This job is best for those who like a consistent workflow and a life away from the office.
Financial analysts often hold a certified public accountant (CPA) or chartered financial analyst (CFA) designation, especially if they want to advance up the ladder.
Investment Banker
Investment bankers play a key role in underwriting new issues of stocks or developing merger and acquisition (M&A) strategies. They evaluate companies and time the market to make the biggest profits for their firms or clients.
Life as an investment banker is characterized by uneven bursts of activity followed by times of calm or even boredom. Unlike financial analysts, investment bankers are directly responsible for generating revenues and pulling the trigger on investment decisions.
It takes a lot of stamina and the ability to handle stress to be a career investment banker. Firms expect their hires to hit the ground running and show a lot of initiative, but perhaps more than anything else, they expect them to put in a lot of hours.
Eventually, investment bankers spend a great deal of time communicating with clients and making crucial decisions for the firm.
An investment banker can begin as a low-level financial analyst with solely a bachelor’s degree. Investment banking associates, on the other hand, typically have either three to four years of experience or a Master of Business Administration (MBA).
Similarities
Education
A minimum of a bachelor’s degree in a field such as economics, finance, mathematics or accounting is an absolute must for financial analysts and investment bankers. However, competition for these positions is notoriously steep. It may be a good idea to enter business school and earn an MBA to bolster your résumé.
Skills and Credentials
Both careers are deeply analytical, and applicants are highly scrutinized for their ability to perform research, think critically, and problem solve.
Communication skills are also key. Analysts and bankers must communicate with other departments every single day. They must handle interpersonal (and sometimes impersonal) communications in a dynamic work environment. There are a lot of conference calls, meetings, emergency emails, and quick-turnaround projects.
Many seek out securities licenses such as the FINRA Series 7 or Series 63 to demonstrate an understanding of financial markets and investment products. Note: Taking a FINRA exam requires sponsorship from a FINRA member firm or a self-regulatory organization (SRO).
Differences
Work-Life Balance
While some financial analysts struggle with work/life balance, the hours aren’t as long as what’s required in investment banking.
Put simply, work life can be very tough for investment bankers, especially associates and other junior-level staff. It is not uncommon for investment bankers to work 80+ hours a week (roughly six 13.5-hour workdays) or to always be available via phone or email, even during early morning hours on weekends or vacations.
Compensation
These are both high-earning jobs, even at the entry level. However, investment bankers tend to make more than financial analysts.
According to 2023 Bureau of Labor Statistics data, the median salary for a financial analyst was $99,890 per year. The top 10% of analysts earned more than $175,840 per year. But financial analysts who don’t work for major financial institutions, especially sell-side analysts, don’t earn quite as much. Analysts in the lowest 10% make less than $60,830.
Investment bankers make unusually high salaries. The median salary for an investment banker is $403,000. Major banks in New York City often offer $100,000 or more to first-year bankers along with a signing bonus that can add another $25,000 or more.
Do Investment Bankers Have a Good Work-Life Balance?
Typically, no. Investment banking is a high-pressure job with long hours.
Do Financial Analysts Have a Good Work-Life Balance?
Sometimes, yes. Depending on where they work, financial analysts can carve out a healthy work-life balance.
Are Financial Analysts in Demand?
Yes. According to the Occupational Outlook Handbook released by the Bureau of Labor Statistics (BLS), the number of jobs is expected to grow 9% from 2023 to 2033, which is much faster than the average for all professions. The BLS credits increased complexity in financial markets and a growing industry for its projected growth.
The Bottom Line
Financial analysts and investment bankers often attract similar candidates, but they are really best suited for different individuals. If you’re considering a career as one of them, reach out to the career services office at your university.
