The role and status of investment banking analysts in the modern economy

Investment banking analysts are the professional financial consultants who carefully examine corporate balance sheets and keep their finger on what is happening across the economy. They analyze the prices of the materials a business uses in its products, the level of demands for these products, the impact of taxation, how the company pays back its creditors and a range of other factors that are affecting, or seem likely to have an impact on that business’s profitability.

The information that investment banking analysts gather, the experience they accumulate and the intuition they develop, enable them to recommend the best investments for their clients. Although there is clearly a strong relationship between the skills of the analyst and the success of your investments, it is important to remember that there are always going to be unpredictable factors that can ruin the best calculations.

For example, unexpected outbreaks of conflict or natural disasters can lead to steep rises in the costs of raw materials from affected areas and this in turn influences the fortunes of corporations marketing these materials or using them in their products.

The collapse of banks and major businesses in the current world crisis provides us with a sharp reminder of the need for organizations and individuals to exercise extreme caution while investing their funds. If in the past reliance could be placed on the good name of well-established financial institutions, the solidity of these famous commercial houses can no longer be taken for granted.

The complexities of international markets and the challenges of discovering the real risk and likely profit in a specific investment make it foolhardy to venture far without consulting reliable investment specialists.

Great care is also required in finding investment banking analysts worthy of your trust.  While the vast majority of investment specialists are surely upright people who try their best to advance their clients’ interests, the amounts of money involved and the gambling element in investment decisions unfortunately attracts some people of dubious integrity who give a bad name to the profession.

The earnings of senior investment banking analysts in the USA can reach over $20,000,000 per year at the top of the hierarchy; entry level positions deliver as much as $60,000 in basic salaries with bonuses more than doubling this sum.

By way of comparison, salaries of investment banking analysts in the UK are a little more modest with an entry wage of £30,000. But with experience this salary can triple, and bonuses more than double earnings to £250,000 per year or more.

Although the financial rewards of the job sound generous it should be born in mind that bonuses become scarce in periods of recession, and that many new recruits to the business find themselves having to work in their first year as many as fifteen hours a day.

It is often a high pressure job without time off for holidays and so it is certainly not everyone’s dream occupation. If you believe you have good analytical and mathematical skills with an eye for detail this might well be a good career to consider, but if you lack the stamina to take the pressure or you place a high value on free time to spend with your family, think twice.