Investment

Financial Analyst vs Investment Banker | A Comparison Guide

Financial analysts and investment bankers conjure up exceptionally well big money men images. Thus, many college graduates from prestigious colleges want to work in these fields. Despite their similarities, these are two quite distinct professional choices best suited to two very different types of people. As a result, we’ve created this piece on the differences between a financial analyst and an investment banker to assist you. Let’s learn financial analyst vs investment banker.

Financial analysts and investment bankers are two different financial professionals with varied responsibilities and objectives. Financial analysts may provide capital markets analytics, corporate accounting, and financial statement analysis for a financial institution or any other sort of firm.

Investment bankers are often employed by a financial institution and specialize in raising funds for other businesses. Come along as we highlight more of this below.

Financial Analyst

Financial Analyst vs Investment Banker

Financial analysts get employed by a wide range of companies, including investment banks. They are usually market, economics, accounting, and regulatory professionals.

These are the most critical financial team members since they spend their days combing through data and generating reports for more minor analytical departments. Management often consults its financial experts to discover patterns or run estimates before making a big financial or investment decision.

Consider financial analysts to be forward-thinking accountants who apply complex modeling tools. Analysts and bankers must deal with different departments daily. Thus, they must manage interpersonal (and sometimes impersonal) conversations in a fast-paced workplace.

There will be a lot of conference calls, meetings, emergency emails, and quick-turnaround tasks for any job.

Financial analysts might consider earning a certified public accountant (CPA) or chartered financial analyst (CFA) certification to strengthen their qualifications. This is valid if they wish to move up the corporate ladder.

What Is the Role of a Financial Analyst?

Financial Analyst vs Investment Banker

The following are typical responsibilities of a financial analyst:

  • Individual investments and portfolios (collections of investments) get recommended.
  • Analyze financial data from the present and the past.
  • Examine current economic and commercial developments.
  • Examine the financial accounts of a firm to evaluate its worth.
  • Meet with corporate executives to better understand the firm’s future possibilities.
  • Examine the management team’s capabilities.
  • Financial analysts assess investment possibilities to make a profit.
  • Creating reports based on the available data and disseminating the findings to the rest of the company
  • To build long-term business objectives, consult with the management team.
  • Budgets and improvements are suggested based on the data above.
  • Creating financial models and forecasting financial data
  • Developing policies and activities to boost financial growth  

What does it take to be a Financial Analyst?

Financial Analyst vs Investment Banker

To become a Financial Analyst, you must have a bachelor’s degree in a finance-related field such as economics, statistics, or accounting. If you have a master’s degree in finance or a Master’s of Business Administration, you will have a considerably more comprehensive choice of options (MBA).

If you want to enhance your job, you must obtain certification. Many companies will need you to get the CFA charter for senior-level roles. The CFA charter is the highest honor that a financial analyst may get.

Three complex tests and four years of practical experience are required. It is not to get taken lightly; it gets advised that you prepare for each test for at least 300 hours.

Investment Banker

Investment Banker

The institutional world’s movers and shakers are investment bankers. They are crucial in underwriting new stock offerings and developing mergers and acquisitions (M & M&A) plans.

Investment bankers are responsible for evaluating businesses and timing the market to maximize earnings for their company or customers. As an investment banker, your day gets punctuated by spurts of activity interspersed by periods of stillness or even boredom.

Investment bankers, unlike financial analysts, are wholly accountable for earning income and making investment choices. Being a professional investment banker requires a lot of energy and the capacity to deal with stress.

Companies want their new workers to get right in and demonstrate initiative. They want them to put in a lot of hours, possibly more than anything else.

What Is the Role of an Investment Banker?

What Is the Role of an Investment Banker

A successful investment banker may have a high compensation, a plethora of networking possibilities, and the opportunity to play a prominent part in corporate success stories, making this a highly valued vocation.

Nonetheless, an investment banker’s day-to-day job is often challenging, fast-paced, and unpleasant to individuals who prefer a more peaceful work-life balance. Investment banking may not be the best job choice for you if you work a conventional 40-hour week and have a flexible schedule.

An investment banker may be engaged in any of the following financial advice operations for corporate customers, in addition to creating excellent client relationships:

  • Raising Funds
  • Building a Book
  • Creating a Prospectus
  • Investment Meetings on the “Roadshow”
  • Issuing and selling securities.
  • Capital Placement in the Private Sector
  • Purchases, Divestitures, and Mergers
  • Restructuring of Businesses
  • Advisory Services for Debt and Equity
  • Bond Issuance and Bond Market Pricing
  • Advisory Services for Hedge Funds, Mutual Funds, and Pension Funds
  • Job tasks will differ based on the function and the customer’s demands.

What does it take to be an Investment Banker?

What does it take to be an Investment Banker

Like other financial jobs, investment banking is simpler to break into if you have a solid foundation of financial knowledge through your conventional education and early work history.

Previous financial counseling, financial management, trading, or general business consulting expertise is standard on investment banker resumes. Undergraduate and graduate degrees in marketing management, finance, commerce, marketing, or an analytical subject like statistics frequently seek investment banks.

Individuals with different backgrounds may move to a job in investment banking, but they must demonstrate both mathematical aptitude and practical communication abilities.

It requires an investment banker that varies depending on the organization and the role’s requirements. Financial Top executives, including investment bankers, generally begin the sector with a bachelor’s college degree and at least five years of relevant experience, according to the US Bureau of Labor Statistics.

Financial Analyst vs. Investment Banker: Special Considerations

Financial Analyst vs. Investment Banker: Special Considerations

Both professions are highly analytical, and candidates are judged on their abilities to do research, analyze critically, and solve problems. Many people pursue securities licenses like the FINRA Series 7 or FINRA Series 63 to show their knowledge of financial markets and investment goods.

(Note: A FINRA member company or a self-regulatory organization (SRO) must sponsor you to take a FINRA test.) Even at entry-level positions, they are high-level and high-paying employment.

According to Bureau of Labor Statistics from 2020, a financial analyst’s average annual pay was $83,660. Analysts in the top 10% made more than $159,560 each year.

Financial analysts who do not get employed by big financial organizations, particularly sell-side analysts, do not make as much. Analysts in the bottom 10% earn less than $48,760 per year.

Investment bankers, particularly those in entry- and mid-level roles, are among the highest-paid professionals in the corporate world. In New York City, significant banks often give first-year bankers $100,000 or more, with a signing bonus of up to $25,000.

Some financial analysts in the financial business are infamous for having an inequitable work/life balance, but this is likely most true for investment bankers. Said, work-life balance for investment bankers particularly associates and other subordinates may be difficult. Investment bankers often work 80 hours or more each week (roughly six 13.5-hour workdays).

This is, in addition, to constantly being available by phone or email. This is in addition to weekends or vacations early in the morning. Financial analysts have the advantage in work/life balance, except those who genuinely love what they do.

Differences between a Financial Analyst and an Investment Banker

Differences between a Financial Analyst and an Investment Banker

Although financial analysts and investment bankers attract comparable prospects, they are ideally suited for distinct people.

Financial analysts operate more like accountants than traders, and this position is ideal for people who like a predictable schedule and a life outside of the workplace.

Investment banking is rewarding for ambitious individuals who flourish under pressure and don’t mind working long hours. Investment bankers eventually spend a lot of time engaging with customers and making important choices for the company.

Analysts get given far more time to delve through accurate data and create models for other team members. Depending on your disposition and work tempo, this kind of job may seem ideal for some employees or tedious for others.

Financial Analyst vs. Investment Banker: Tabular Highlights

Financial Analyst vs. Investment Banker: Tabular Highlights

For more clarity on financial analyst vs. investment banker, the following tabular highlights will aid you immensely:

Investment banker  Financial analyst
Investment banking is rewarding for ambitious individuals who thrive under pressure and don’t mind working long hours. Investment bankers eventually spend a lot of time engaging with customers and making important choices for the company.  Financial analysts operate more like accountants than traders, and this position is ideal for people who like a predictable schedule and a life outside of the workplace.
The institutional world’s movers and shakers are investment bankers. They are crucial in the underwriting of new stock offerings and developing mergers and acquisitions (M & M&A) plans.  Analysts get given far more time to delve through accurate data and create models for other team members.    
Raising funds through diverse meansAnalyze financial data from the present and the past.
Issuing and selling securities.Meeting with corporate executives to better understand the firm’s future possibilities.

Frequently Asked Questions

Is a Financial analyst the same as an investment banker?

No. The above highlight of financial analyst vs. investment banker will effectively inform you of the differences.

Is working as a financial analyst monotonous?

Finance occupations are just as monotonous and dreary as any other corporate job.

Is it possible for a financial analyst to work as an investment banker?

Most investment bankers begin as investment banking analysts, which they retain for two to three years before progressing to an associate post.

Is a business analyst or a financial analyst better?

The most significant contrast between a financial analyst and a business analyst is that the former is more concerned with investments. At the same time, the latter is more concerned with operations and management. It all boils down to the most confident and experienced area.

Conclusion

In conclusion, finance and investment provide various merits. And if you need more help, the above highlight on financial analysts vs. investment bankers will aid you immensely.