We meet a Cambridge MBA alumna working in this sector and ask how her MBA education skills led her into a career in investment banking. We also hear from industry experts about what is involved to do well in this sector.
“Investment banking is a tough profession and is not for everyone. Getting into investment banking out of an MBA is challenging if you don’t already have finance experience. It’s possible – as you will read below from our external consultant Roger Howgego – but it’s not easy, especially if you are looking for roles in Europe. You will need three to six years of relevant experience, a laser focus on your goal and a commitment to building your knowledge, network and skills”, says Cambridge Judge Head of Careers, Margaret O’Neill.
The industry expert: Roger Howgego
Careers coach Roger Howgego has worked for Lehman Brothers, Morgan Grenfell and Orion Bank. Working as a specialist external coach with the Cambridge Judge Careers team, Roger outlines his views as a financial services consultant.
What kind of career is investment banking?
An investment banking career is almost vocational.
It’s constant hard work in a consistently high-pressure environment. When you reach senior level, your emotional intelligence, people and communications skills will be at a premium. Everyone is aware of the pressures; tight deadlines, volatile, unpredictable drivers and arduous working hours – 120-hour weeks are not uncommon.
You have to be sharp, constantly aware of the changing market and event driven conditions to enable you to complete deals.
It’s mentally, physically and emotionally exhausting. But there’s the good too: if you can withstand the pressure, investment banking has a high degree of job satisfaction and accomplishment. Additionally, you will be working with very smart, like minded and motivated people. And the financial rewards can be interesting.
What roles are there in this sector?
There are many roles to consider but they are broadly split into two parts, corporate finance and Capital markets.
Corporate Finance consists of advising companies on their capital structure and other financial optimisation solutions within industry sector groups, responsible for the main client relationship with the bank, for example, technology, energy, FMCG, financial services, and manufacturing. There are also product groups such as debt/equity capital markets responsible for new issuance of capital, leveraged finance working with financial sponsors and the mergers and acquisition team.
Capital markets, on the other hand, is responsible for the trading, sales and research of secondary market products in debt, equity, or FX for both cash and derivatives. Otherwise known as the trading floor and it is the main connectivity with the investing institutions such as pensions funds, sovereign wealth funds, asset managers, mutual funds, central banks and hedge funds, among many others.
What kind of person goes into this sector and what skills do they need to succeed?
Banking wants first class academics and those hiring would be looking for a GPA (grade point average) in excess of 3.4 or 3.5 or equivalent.
They are looking for raw intelligence. But your first degree doesn’t have to be in mathematics or economics. Engineering and physics are also common in the banking industry, but they don’t rule anyone out. What they do want is tenacity, flexibility, strong analytical and problem-solving skills and most importantly of all, exemplary communication skills. Intuition is a highly valued attribute – you need to be able to read and understand people to be successful in all aspects of your role.
Some of the additional hard skills required include financial modelling as a pre-requisite for Corporate Finance and a strong financial accounting background would also be highly advantageous.
On the Capital Markets side, asset pricing, derivative/option pricing, time series analysis, product and market knowledge of debt and/or equity markets would be the key attributes.
Many successful candidates would also have taken the CFA (Chartered Financial Analyst) exams. This qualification is tailored for those engaged in the capital markets and demonstrates both technical knowledge and a commitment to the industry.
What steps can I take to move into this sector – is an MBA a good route in?
An MBA is one of the most logical ways into the profession. There are three typical profiles of an investment banking MBA applicant: they’re already working for one of the big four – KPMG, PWC, EY and Deloitte in their transaction advisory groups – or one of the large management consultancies such as McKinsey or The Boston Consulting Group (BCG), or they come from a specific industry sector with knowledge of strategy, finance and operations. But many people from the public sector also do very well – if your clients are all big corporates, your experience with them will have given you knowledge of how they work. At MBA level the early days are in researching and valuing companies, working on “pitch books” to present to prospective clients, perhaps supervising junior analysts and generally understanding market dynamics and world events affecting these markets.
The MBA alumna: Dominique Aman (MBA 2016)
Dominique graduated in 2017 and now works as an Investment Banking Associate for London based Macquarie Group.
What was your career route into this sector?
Before my MBA I worked in an investment banking support role in India. My degree was in engineering, so it was my first step into the finance sector. After only a few years I had reached a natural learning curve in my career and quickly realised that I needed a role with greater challenges and responsibilities if I was to progress in my career. With a limited finance background, the transition was not going to be easy.
I wanted to undertake further studies to gain some academic finance knowledge and further insight into mergers and acquisitions. I also wanted to acquire broader business skills to properly shape my professional personality.
Given my objectives, and the fact that I was undertaking the daunting challenge of switching both my role and geography, an MBA was the natural choice.
What MBA skills and learnings have you applied in your career in this sector?
A career in investment banking is multi-faceted and involves a high degree of commercial thinking, communication to senior stakeholders and ownership. For me it was the soft skills and the overall experience I gained at Cambridge, that ultimately helped me integrate quickly into my new role in a new country.
The Cambridge MBA class featured forty plus nationalities and a vast number of professional backgrounds and sectors. This exposure to such a variety of cultures, personalities, skillsets and experiences, together with the practical learning during the key consulting projects across the year, equipped me with a priceless toolkit of strategic thinking, problem solving and collaboration skills.
Cambridge Judge Business School has the advantage of being a business school within the much larger Cambridge University community. Through the sports clubs, school societies and college activities, I interacted with a far broader group of academic peers, from philosophy PHD students to physics post-graduates.
This was the perfect organic training ground that helped me build self-confidence and learn how to adapt my communication style based on my audience – both of which have been invaluable in my role as an investment banker.
Margaret O’Neill concludes: “A decade ago, investment banking was seen as one of the most prized post MBA roles, but since 2008 the world of finance and technology has changed. We are increasingly seeing students pursue careers in other areas of finance, such as Venture Capital, Private Equity and Fintech. Students are attracted to VC firms for the opportunity to get involved with often novel technology at the early stages of fund raising and use their technical and managerial expertise to help companies grow and develop; Private Equity offers interesting opportunities to work with a more diversified set of investors and asset classes. The Financial Technology (Fintech) sector has exploded in recent years, disrupting traditional financial business models and allowing students to work with cutting edge technologies to provide new solutions for investors.”