You might think of a bank as just a place to keep your money. But in the world of finance, people and companies need banks that can do a lot more than just keep track of the balance in a checking account. A huge international company which wants to buy another company, for example, might turn to an investment banker to make the deal. Investment banks help companies and governments issue stocks and bonds (also called securities), help investors buy stocks, manage financial assets, trade stocks and provide financial advice.
Some investment banks are really huge, like Merrill Lynch (you might have seen their TV ads which show a bull walking around in an office). When they get to be that big, they are part of the "bulge bracket," which basically means that they are worth a lot of money and they deal with huge companies. Other smaller investment banks called "boutique" firms often specialize in a specific area, such as bond trading, mergers and acquisitions or working with troubled companies.
Investment banking pays well and it’s exciting, but it seems pretty stressful. Working well with people, having good sales skills, being creative, analytical and a good communicator are necessary in this field which can demand 50 to 120 hours a week of work. In this field your work is high risk—you are taking chances with other peoples’ millions of dollars. But it’s also a highly rewarding profession.
You may work in New York City, where many firms are located. Traveling around the world—if you are employed with one of the bigger investment banking firms—is standard. So if you are interested in breaking in, you better get used to Hong Kong, Tokyo, London, Moscow and Singapore!
You also can expect a good salary. If you have a bachelor’s degree, your salary as an analyst would range from $50,000 to $70,000 (including bonuses). If you have a master’s in business administration (MBA degree), your salary as an associate would range from $60,000 to $135,000 (including bonuses). In a recent interview, Bernard Zaia, a managing director of Barrington Associates, spoke about his career from the 22nd floor of his West L.A. office.
Tell me about yourself.
My nickname is Bernie. I was born in Washington, D.C. and went to a small private high school.
What do you do?
Barrington Associates is a "boutique" company which deals with small to medium-size companies. We do merger and acquisition transactions. In mergers and acquisitions, we represent a company and they are our client. We try to sell their business to another company.
Where did you go to school?
I studied economics at Stanford and took accounting and finance classes.
When did you decide you wanted to enter the world of finance?
Well, I started with the analyst program at Dean Witter Reynolds here in L.A., a two-year training program. A financial analyst gives analysis and presentation. You must have an understanding of accounting, finance and capital markets. You must also try to sell a company.
How long have you been working in finance?
I graduated in 1986. After I worked at Dean Witter Reynolds as an analyst, I joined a company called Falcon Cable TV and raised capital to assist their growth. We ended up buying a lot of other cable companies and then in June of 1994 I started working here at Barrington and now I am one of the four partners. We have 33 bankers working here.
What is your position here?
I am a managing director. It’s basically like I play the quarterback on deals. A "deal team" is made up of an analyst, an associate, a vice president and a managing director, which is me.
How are the workdays and hours?
I’m always doing something. It’s pretty intense. I would say I work about 60 to 100 hours a week. You basically sell your soul because the hours are so intense.
Is it a fulfilling job? Do you enjoy it?
Well, I deal with the most important asset our clients have—their company. They have typically built it from scratch and it has most of their net worth tied up in it. It is satisfying when a deal is closed and when I see we have succeeded and our client has achieved their goals.
If you don’t mind my asking, how much money do you make a year?
Well, when you work your way up to a position like managing director, you are looking at seven-figure salaries.
Is your job exciting?
It’s so fun being exposed to different industries, everything all the way from strawberries to bowling balls. It is amazing.
Companies trust you with their money. Do you ever worry that you may make a wrong decision?
It is very stressful, but one must have a certain mentality and focus and be tough.
People say this job can be very stressful. How do you cope with the pressures?
I am a firm believer of activities outside of work such as golf and surfing. I love the ocean and being near the water.
Is there an achievement on your part or on the part of your firm that you feel proud of?
Well, we had a terrific year and I personally made five deals. I am really proud of one of the deals that I made though because we had been working with this company since 1999 and put it on hold because it was facing some tough times. And finally, it paid off and we sold the company for over $50 million.
If you were to advise teens on how to prepare for a career in investment banking, what would your advice be?
I would tell them to study hard and get good grades because G.P.A. is important to the folks doing the hiring. Develop a well-rounded perspective on life and have outside interests. Play sports. Take accounting classes in college. You do not have to major in business because liberal arts, and being able to write and communicate, are also really important aspects of the field.