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Investment Management vs. Investment Banking

Comparison between investment banking and management

After getting their degrees, a large number of MBA and undergraduate finance majors are interested in working in investment banking or investment management, two fiercely competitive sectors of the financial industry. For individuals who are bright and ambitious enough to acquire one of these positions, these professions provide some of the best beginning wages in the industry, and there is plenty of possibility for advancement.

Investment bankers and investment managers, also known as asset managers or fund managers in the U.K., are primarily in charge of directing capital from investors to businesses that require it. If you strip away all of the industry jargon and break these jobs down to their most fundamental components, you will find that this is their primary duty. In these roles, you may find some of the finest investing gurus.

Asset allocation and investment choices are the two main components of investment management. On behalf of customers, this entails developing investment plans and allocating money to real estate, stocks, or debt instruments. Contrarily, deal-makers are investment bankers. They assist major corporations with capital raising initiatives by working as highly qualified advisors and analysts.

Management of investments

By managing their customers' money, investment managers assist clients in achieving their financial objectives. Both individual investors and institutional investors, such as governments, insurance companies, pension funds, and educational institutions, may be clients of investment managers. Investment managers may deal with stocks, bonds, and commodities, including rare metals like gold and silver.

Depending on the company, investment managers may have a variety of tasks and duties, such as:

  1. ·         Analysis of financial statements
  2. ·        A suitable mix of bonds and equities is one example of portfolio allocation.
  3. ·         Equity analysis and buy-and-sell advice
  4. ·         Financial guidance and planning
  5. ·         Planning for retirement and estates as well as allocating assets.

Financial Trading

Investment bankers assist with business finance requirements such as capital or funding raising. Investment bankers are employed by businesses and governments to help with complex financial transactions, such as:

  1. ·         issue of debt, like a bond offering
  2. ·         underwriting new securities
  3. ·         Acquisitions and fusions
  4. ·         Debuts on the market (IPOs)

Researching stock and securities and offering buy, sell, and hold advice are all possible components of investment banking. Investment banking companies act as market makers by facilitating transactions or bringing buyers and sellers together to create a market.

Almost all investment bankers begin their careers as associates or analysts with the goal of accruing sufficient experience to become vice presidents or managing directors.

Particular Considerations

Knowledge and Skills

Both professions are highly competitive. Typically, investment banking organizations are only interested in people with advanced degrees and experience working with significant corporations. Without an MBA and good references from reputable industry leaders, it is very hard to acquire an associate job in investment banking. Although the competition for excellent candidates for investment management roles has lessened, it is still quite challenging to get a job at a big company.

Networking is often more important than competence or academic qualifications. Indeed, certain banking and investment management internships are more competitive than those in entry-level corporate finance or research analyst positions. Internships are often used by businesses as thorough application processes.

Although degrees from other professions are taken into consideration, undergraduate degrees are desired in business disciplines like finance, economics, accounting, or investment analysis. Certain banks search for proven analytical expertise in industries like healthcare or pharmaceuticals.

Companies often seek candidates that possess a potent mix of the following qualifications and traits:

  1. ·         Strong communication abilities, both in writing and speaking
  2. ·         talents in analysis and problem-solving
  3. ·         independent and responsible behaviour
  4. ·         Response time and meticulousness
  5. ·         Skills in customer management and negotiation
  6. ·         understanding of corporate finance, investments, and agreements (practical commercial expertise)
  7. ·         advanced technical and mathematical abilities
  8. ·         a driven, enthusiastic, and ambitious attitude


Jobs in investment banking and investment management provide competitive pay and benefits. At a smaller company, even the entry-level investment banking analyst may anticipate a first-year pay of $65,000 to $95,000. Companies may also provide a signing bonus as an incentive to qualified applicants.

According to glassdoor.com, investment managers make an average base salary of $95,829 with earnings that may go as high as $180,000.

Commissions and incentives make up the average $14,900 in additional remuneration.

According to glassdoor.com, investment bankers make an average base salary of $119,110 with compensation that may reach $235,000.

Analysts in investment banking may earn anywhere between $73,000 and $108,000.

Work-Life Harmony

High-level investment employment is heavily concentrated in New York, London, and Tokyo. Despite some evidence to the contrary, as the twenty-first century progresses, a career in investment banking or investment management is likely to require migration to one of these three main global financial cities.

Investment managers' workloads might vary. Mutual funds and hedge funds hire people to work throughout the opening and closing hours of the stock market. If the company just participates in one market, this period of time may be relatively brief, but those that participate on all three main markets may have severe irregularities. The typical workweek in private equity companies is substantially longer, averaging 65 to 70 hours.

Investment bankers like to say in jest that they have a good work-life balance. Investment banking is one of the few professions that requires as much time and effort as it does; 12- to 14-hour days, six or seven days a week, are not unusual. Despite the great pay and respect an associate or analyst receives, many experience burnout and mental and physical suffering after a few years on the job. These positions are for career-driven individuals who may not have much time for weekend relaxation or family time.

Occupational Prospects

Given the high incomes and prestige of these jobs, there should be fierce rivalry for the foreseeable future. The U.S. Bureau of Labor Statistics predicts a 15% increase in employment for financial positions including analysts, bankers, and financial managers between 2019 and 2029.

Most likely, a potential lender or management will have to make their choice based on each individual company. The option may depend on the particulars of the profession and the person's career aspirations, and pay structures and workloads may differ