June 16, 2024

KT Business

The Business Servicess On for You

The qualifications you need to get a job and get ahead as an investment banker

5 min read

Investment banking isn’t known as being a qualification-obsessed industry.

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Students are more focused than ever on excellent academics, understandably, given the competition for each place on a summer internship program. But the race to the bottom for an internship place has pushed everyone except hyper-analytic undergraduates out of the industry.

That isn’t a good thing for either banks or prospective bankers. As a former bank recruiter told us last month, personal stories stick out to recruiters – academics are an empty pursuit beyond a certain point. It also doesn’t make for particularly interesting colleagues, to be quite frank.

Nonetheless, when we analyzed the CVs of investment bankers (defined as those involved in capital markets or M&A/Advisory) from the more than 1,000,000 CVs in our candidate database, there was a stark and clear trend: investment bankers are less qualified than ever before, by almost every single metric.

Taking a deeper look at the figures can give a clue as to which people have suffered the most from banking’s infinite quest for young blood – with an emphasis on young.

Getting into investment banking with just an undergraduate degree

It is perfectly possible to become an investment banker, and succeed as an investment banker, with just an undergraduate degree. Banks, after all, primarily recruit from undergraduate programs – and with spring internships becoming more and more important relative to summer internships, there’s definitely a trend towards joining a bank ASAP, as opposed to specializing before you join.

Although there has been a very recent (last three years) trend towards bankers only holding undergraduate degrees, there has always been a consistent and sizable plurality of bankers in our database that only held an undergraduate degree.

Getting into investment banking with a masters degree

Masters degrees, such as the masters in finance, are popular with students. Aside from the opportunity to stay another year or two in university (and hey, who can say no to that), they’re also a great way to reset the clock. Spring and summer internships at investment banks are extraordinarily competitive, and those that were a hair’s width from getting in, but didn’t, might just want another roll of the dice.

A masters degree offers exactly that, allowing you to apply to summer internship programs as a second-year student would. By that point the student (hopefully) now has just enough more experience to push them over the line and get them the job they’ve been angling for since they had spots.

Getting into investment banking with an MBA

It’s much too early to declare the death of the investment banker with an MBA, but it’s pretty clear that they’re not as popular as they used to be. MBA programs generally require at least 2 years of real-world work experience to take on a candidate, so even discarding people with less than that from our results, MBAs have fallen from over 14% of all investment bankers to not even 7%.

It’s a sharp fall from grace, but probably not a surprising one. MBA associates are not held in the same esteem as their colleagues who climbed the analyst ranks, and again, banks are trying to get bankers in as soon as possible – undergraduates are the vogue today, and it might kindergarten internships tomorrow. The MBA is a stalwart, but a stalwart in the opposite direction to that.

Getting into investment banking with a PhD

Although there was never a significant number of investment bankers that held PhDs across the years, the few unicorns that were milling about seem to have become an endangered species. There are a variety of reasons for the change. For one is, as outlined above, that banks are trying to recruit earlier and earlier, as opposed to later and later. The other reason is that the people that do enter the banking ecosystem as PhDs (equity researchers coming from industry and quants, mostly) that end up in investment banking take a while to get there – meaning that they cluster among the most experienced bankers, rather than the least.

Getting into investment banking with the CFA

We’ve said a lot over the years about the CFA exams, institute, and what banks thought about it, but the general trend is that students are still taking the CFA exams, even if banks don’t particularly care about them as much anymore. As we’ve said in other articles, the CFA is seen by international students as a great way to level the playing field in which the universities and colleges they’ve graduated from aren’t treated with quite the same respect as Western institutions.

Nonetheless, despite increased globalization, graduates from Western institutions, who make up the vast majority of bank hires, are forgoing the CFA. There’s also the juniorization effect at play – with banks putting first year undergraduates into their pipelines, there’s less of a reason or motivation to take on an academic and financial commitment like the CFA.

Getting into investment banking with an accounting qualification

Accounting used to be a relatively popular route to get into banking, but no longer. Although accountants were welcomed with open arms during the post-pandemic deal boom in 2021, it seems not many have stuck around – and that makes sense, as their work wasn’t always considered quite up to the standard of non-accounting investment bankers. Nonetheless, a stubborn minority remains, although as with PhDs, experienced hires mean that these bankers cluster in higher age groups.

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