Investment Banking and Investment Management are two of the most chosen but often confused careers for business and finance undergraduates, both offer a high-profile career with handsome benefits and bonuses. However, sometimes it gets little difficult to make an informed career-choice without a proper knowledge of each of them.
In this article, let’s dive deeper about understanding both of these and the differences between them.
Investment Banking
Investment Banking (IB) is a kind of financial service that generates capital for individuals as well as for enterprises by counselling on market strategies that can reduce their risks and enhance their returns to the maximum. They offer assistance for Mergers and Acquisitions (M&A), and restructuring.
Investment Management
Investment management is also called as the asset management or fund management or portfolio management. It is the professional management of investment assets, which involves stocks, bonds, real estate, and several other securities, for assisting individuals, institutions, or funds, with the objective of achieving certain financial objectives. This field involves the strategic allocation of investment portfolios to enhance returns while managing risk according to the client’s or fund’s investment goals.
Difference between Investment Banking and Investment Management
Choosing between a career in investment banking and investment management is completely based on the interests, skills, career goals, and personal preferences which one has. Both gives remarkable career paths, responsibilities, and work environments. Let’s find out some of the essential differences between them.
| Category | Investment Banking | Investment Management |
| Focus | Financial advisory services, raising capital for clients, and executing complex financial transactions. | Invest and allocate assets to achieve specific financial objectives while minimizing risk. |
| Assistance | Mergers and Acquisitions (M&A), initial public offerings (IPOs), debt and equity issuance, and other corporate finance activities. | Investment decisions based on client goals and risk tolerances. |
| Activities | Deal structuring, financial analysis, due diligence, and transaction execution | Asset allocation, security selection, and risk management |
| Roles | Analysts, Associates, Vice Presidents, and Managing Directors. | Portfolio Managers, Research Analysts, and Financial Advisors. |
| Clients | Corporate clients, governments, and institutions | Investors, pension funds, endowments, foundations, and other institutional investors |
| Advisory | Capital raising, strategic transactions and corporate finance. | Manage investment portfolios to achieve financial goals. |
| Work Environment | Demanding and fast-paced work environment | Demanding and less frenetic work pace |
| Working Time | Long hours and high-pressure situations are common. | more predictable hours |
| Skills | Analytical, financial modeling, and deal-making | Financial analysis, research, and portfolio management skills |
| Deep Understanding | Effective communication and relationship-building skills | Various asset classes |
| Career Progression | Structured career path with the potential for advancement | Diverse career path |
| Compensation | High starting salaries and performance-based bonuses | Competitive, with performance-related incentives |
| Exit Opportunities | Transition to roles in private equity, venture capital, corporate finance, or business school for further education | Explore roles in asset management, family offices, or even start their investment firms. |
A career in investment banking represents a vast cluster of roles, which include capital market analysts, research associates, and valuation analysts. In addition, finance, economics, mathematics, or accounting degree is often a prerequisite. An investment banking career is comparatively more demanding than investment management, although it requires the same skills in communication, people management, negotiation, and analysis. Professionals in investment banking require to typically clock in 75 to 100 hours per week as most of their tasks are fueled by in-depth research. While work-life balance is a rare commodity in the lives of investment bankers, the sizable year-end bonuses are a great extent.
JPMorgan Chase, Goldman Sachs, BofA Securities, and Morgan Stanley are considered to be the world’s best investment banking firms.
Here is a glimpse of typical progression of the career in investment banking, if one meets all the excelling standards of performance.
| From | To | Average Period |
| Analyst | Associate | with MBA 2 years |
| Associate (typically MBA) | Vice President | 3 years |
| Vice President | Senior Vice President | 3-4 years |
| Senior Vice President | Managing Director | 2-3 years |
Investment Banking Courses
To be part of this rapidly-growing industry doing investment banking courses is the perfect choice. One will have a lot of opportunities to learn and enhance their skills because they will be in the industry where they will be surrounded by a highly talented group of individuals. As on will be working in a competitive environment, a course will offer the best learning path.
|Learn More: Investment Banking Interview Preparation
To summarize with…
Choosing between Investment Banking and Investment Management can be tough sometimes but both are incredible career opportunities. However, one is required to work on a vast range of skills if one wants to establish a sustainable career in either of these fields.
