Investment banking is in the business of having a high amount of prospects and low number of actual revenue-producing events–those instances of money making produce a lot of money at once, but around those instances are a flurry of activity that itself generates no money at all. This is unlike commodity production, where you create a good or service for sale and sell it for a fixed cost every time one is produced. Investment banking is about creating, developing, cultivating, and monetizing relationships.
That can mean a lot of things, and the skills involved to succeed in one IB role won’t necessarily translate to another. This may be why IB analysts obsess over Excel and PowerPoint; they’re used ubiquitously and constantly, and those technical skills are essential to your workday for those first two years in the job. But then they largely disappear.
At the associate and managing director levels, relationships matter much more, as does the skill of developing new ideas and recognizing where markets are moving. The Facebook (FB) IPO was, at the time, largely considered a flop–so much so that a class-action lawsuit followed! It’s now not only one of the greatest IPOs of the digital era, but the template for many IPOs that have since followed, and others to come. An investment banker who navigated the roller coaster of Facebook’s IPO, before and after, could leverage the market’s sentiment to great advantage.
Therein lies the skill of an investment banker: knowing your clients, knowing the market, and anticipating the future. Then you can make deals that satisfy clients at a time when the market wants it, but before others can beat you to it.
Sound easy? It isn’t–and the skills involved in doing this don’t come from Excel macros or pristine PowerPoint templates. They involve a variety of soft and hard skills that themselves evolve over time–bankers not only need to know what they need to know, but they need to know how that is going to change in the future, and why.
And that is obviously very, very hard.
That is why the best associates and managing directors in investment banking will mentor their analysts and cultivate the kind of mix of curiosity, technical knowledge, and domain expertise needed to be good at investment banking. The worst won’t–instead ignoring or even abusing their underlings.
An analyst has two years to soak up as much as they can from their superiors. In some cases that is just impossible; a bad boss is a bad boss. In other cases, it is not as hard–by showing some initiative, curiosity, and reliability, analysts can get their boss’s attention, gain their trust, and ultimately become de facto apprentices.
That in itself is not easy, and you can think of it as an analyst courting her boss in the same way that the associate courts clients. It is so hard to describe and to do, in fact, that many analysts revert to refining and perfecting their Excel and PowerPoint skills, possibly also learning some Python, R, and PowerBI to boot. They may even memorize Bloomberg shortcuts.
But if they think that’s what is going to get them to the next level in their career, they’re wrong. They will be very good workhorses, middle or back-office employees that will have a reliable salary and little to no bonus up until the point that AI can replace them. The ones who, yes, recognize the value of these skills but ask more why and how questions of their bosses–why doesn’t this client want this structured product, why has this client done this every year despite it costing X amount of dollars, how do you convince a company to issue its first corporate bond–they are the ones who will ultimately thrive in finance.