How to Break Into Investment Banking–What to Do From Freshman to Senior Year

To get into the highly competitive field of investment banking nowadays, you have to start preparing very early in your collegiate career. It can be difficult to know what you should be doing and when. Recruiting for internships and full-time roles is only happening earlier and earlier. At this point, to get a coveted summer analyst internship for your junior year, you’ll go through the interview process in your sophomore year, and will need to have a resume that can land you that interview.

In this article, we’ll provide an overview of the industry and roles and then guide you through the steps to an investment banking career. Of course, there are other ways to get into this industry, this is just one of the more traditional paths.

What is Investment Banking?

Investment banking is a special segment of banking operations that involves raising capital and providing financial consultancy services to individuals and organizations. Some of the services investment banks offer include proprietary trading, mergers and acquisitions, equity and debt capital raising, leveraged financing, restructuring aid, bond insuring, and IPO issuance.

To put it simply, investment banks are financial intermediaries and aid their clients with large and complex financial transactions.

Why is Investment Banking a Popular Career Path for Students?

There are a plethora of reasons why so many students want to get into investment banking but the two most common ones are high levels of compensation and great exit opportunities. For example, first-year analysts make an average of $170,000 to $190,000 a year, including base salary and the year-end bonus. This is much higher than almost all other entry-level positions in other industries.

Relatedly, students who aspire to work in other areas of finance like hedge funds, asset management, fintech, private equity, venture capital, etc. will get a ton of relevant experience and earn the prestige that comes with working at a large bank. It’s often a lot easier to get one of these roles after already having investment banking experience than trying to go directly from undergrad.

The Different Types of Investment Banks and What They Do

Bulge Bracket

Though there are a few different ways to classify investment banks, one of the most common is to do so by size. In this way, there are bulge bracket, middle-market, and boutique banks. Bulge bracket banks are the largest, international banks, for example, Goldman Sachs, Deutsche Bank, and JP Morgan. These firms’ clients include major, Fortune 500 companies and they work on deals that are valued from the hundreds of millions to billions of dollars. Bulge bracket banks offer the full suite of investment banking services, from financing to asset management, M&A, restructuring, etc. Some bulge bracket banks have middle-market branches that are sometimes integrated into the larger firm, and sometimes not.

Middle-Market

Middle-market banks are as the name implies: somewhere between bulge bracket and boutique banks. They offer most or all of the same services that bulge brackets do but work on deals that are typically valued at less than what bulge brackets handle, usually in the low to mid-millions, because they have fewer capital market capabilities. Some middle-market banks do specialize in a sector, industry, or location. For example, Lincoln International specializes in advisory services and financings, Houlihan Lokey in M&A, and Baird in equity research and institutional sales/trading.

Boutique

Boutique banks are often split into two subcategories: regional boutique banks and elite boutique banks. Elite boutique banks are the most similar to bulge bracket banks in that they deal with enormous transactions, often valued at over $1 billion; however, they differ in that they usually focus on a few specific services. Examples of elite boutique banks include Lazard, Qatalyst Partners, Moelis & Co., Evercore, and Centerview.

Regional boutique banks are smaller than the others and deal in lower-cost transactions. They’re called “regional” because they work with a variety of clients within a geographic area. Some specialize in certain services while others work across different areas. Robert W. Baird, William Blair & Co., and Brown Brothers Harriman are a few of the more prominent regional investment banks.

For more info on this career path, read:

• What Do Investment Banks Actually Do?
• How to Prepare for a Career in Investment Banking
• Wealth Management vs. Investment Banking: Key Differences and Career Prospects
• The Top 10 Investment Banks

Investment Banking Roles + Career Paths

Most aspiring investment bankers will start with a summer internship in their junior year that translates into a full-time role upon graduation. The hierarchy from there is pretty straightforward.

Analyst to Associate

The entry-level position is that of an Analyst, followed by Associate. Usually, you work as an analyst for two to three years and then as an associate for three to four years. The average compensation for an Analyst is $150K to $200K, including base salary and bonuses. For an Associate, that increases to $250K to $400K. Of course, this varies widely depending on the type of bank, educational background, location, and other factors.

Analysts are sometimes referred to as “monkeys” because they are doing a lot of the grunt work required by these banks, such as maintaining important Excel spreadsheets, tracking transactions, managing data, keeping track of important documents, and supporting those in more senior roles. Associates have slightly more responsibility. They supervise Analysts, handle more complex financial models, and increasingly interact with clients. Associates are usually recruited after they graduate from an MBA program or are promoted from Analyst.

Associate to Vice President/Senior Vice President

After three to four years, Associates are then promoted to Vice President. VPs are the middlemen between the Directors and the Analysts/Associates, they take direction and then run projects. They’ll also interact a lot more with clients, eventually getting to the point where they build their own relationships with and win new clients. Those at the Vice President level are typically looking to advance within investment banking as it can be difficult to pivot into a new industry at this point. After VP, there is Senior Vice President, which involves much of the same but with a much greater emphasis on attracting new clients and business. Depending on the bank, Senior VP may be the same position as Director. Total compensation usually ranges from $500-800K, including bonuses.

Senior Vice President/Director to Managing Director

The step after Senior VP is Managing Director. The gap between these two positions is much greater than the others as there are far fewer MDs than VPs. Managing Directors spend the bulk of their time building relationships and trying to get new clients. On certain deals, they may step in and help with terms and negotiations, though they’ll spend most of their time meeting with potential and current clients. Managing Director is pretty much the highest level that you can reach, other than CEO. Including bonuses, MDs make anywhere from the upper hundreds of thousands to several millions of dollars.

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How to Get Into Investment Banking

Now, let’s dive into how to actually land a role in investment banking, starting with freshman year in college. We’ve divided the progression by each year at university, but naturally, this will differ depending on individual, unique circumstances.

Freshman Year

Freshman year is the time to lay the foundation for an internship offer. The most important thing to think about is demonstrating a story for why you want to go into investment banking, and figuring out whether you want to pursue it in the first place. If you’re set on it, make sure that you’re showing interest in finance early and often. Here are a couple of things we recommend doing throughout your freshman year.

Join relevant extracurriculars

A lot of universities have a ton of resources for aspiring investment bankers through interesting clubs, an extensive alumni network, and tools to build technical skills. If your school has a business fraternity, this is also a great place to start. You’ll learn the finance “lingo” and meet peers interested in similar fields. Leadership experience in these clubs looks great on resumes so be active and take on responsibility where you can to prepare for a future leadership role.

If your school doesn’t have clubs that are interesting or relevant, start your own or join an intercollegiate one. Companies like Bloomberg also sometimes have on-campus representatives that you can sign up to be. Whatever you choose to do, remember the point of doing so, namely, meeting others aspiring to or actually in the industry, building your resume, and getting access to tools and resources.

Network, network, network

Start expanding your connections early, it will make a big difference as you advance. Most investment banks will only interview those who come through a referral. By growing your network, you’re increasing the chance that you’ll have someone to refer you, or, have high-performing contacts that you can refer. Talk to juniors and seniors about their experience recruiting at different banks as well as analysts and others who are early in their careers.

If your school hosts formal networking events with banks, attend, even if they’re targeted toward upperclassmen. Have an elevator pitch and go to learn and make connections. Preparing thoughtful questions beforehand will help you leave a positive impression on the recruiters. Also, don’t forget to sign in as the firms usually track who attends their events.

Immerse yourself in the industry

Start learning by reading the financial news, listening to podcasts, and subscribing to newsletters. Most universities provide free access to the Wall Street Journal, Bloomberg, or the Financial Times through the library and just a couple of minutes a day will help you stay up to date on market trends.

Read The Best Investment Banking Newsletters & Podcasts to Subscribe To.

Start learning technical skills

As interviews for internships start the following year, you’ll want to begin learning the skills required for technical interviews during your freshman year. At the intern level, this includes valuation, basic modeling, and basic accounting, as well as proficiency in Microsoft Excel and PowerPoint. Taking relevant courses will help, though you’ll need to balance them with general education requirements.

For more info on technical interviews, read The 20 Most Frequently Asked Investment Banking Technical Interview Questions.

Make the most of your summers

Even the summer after your freshman year, make sure that you’re making the most of your time. A great resume will land you an interview, but interesting stories will help you make a lasting impression. Find projects that you’re passionate about and that fit into your larger story. This means that you do not need to do something that’s directly related to finance. In fact, underclassmen summers are a great time to explore other interests. Some investment banks now offer Sophomore Summer Analyst positions, a few of which funnel directly into junior summer positions. As there are fewer people vying for these spots than for junior-year roles, this can be a great way to get in early. Examples of this include the Investment Banking Sophomore Summer Analyst Programs at Bank of America Securities and Morgan Stanley.

Get good grades

Investment banks do care whether you perform well in school. Start strong by getting good grades in your freshman year. There is usually a minimum cutoff for interviews and the higher your GPA, the less likely you’ll land below the threshold.

Though these things will help you get ahead, remember that school is about more than preparing for a single career path. Take time to explore your passions and take interesting courses. These firms want humans, not robots.

Sophomore Year

Preparation usually gets more intense during the sophomore year because that is when recruiting truly begins. Much of it, however, is an extension of the freshman-year to-do’s. Continue to take relevant courses and do well in them, network with peers and industry professionals, learn through podcasts/newsletters and the news, stay active and aspire to leadership positions in clubs, and build technical skills.

There are several additions to this list for sophomores, though, mostly in regard to preparing for interviews. First, you’ll want to polish your resume. Investment banking resumes should be no more than one page and have a specific format (Times New Roman, 10-12 pt. font, etc.). You’ll also want to make sure that the bullet points you have are relevant and impactful. One way to get a great resume is to work one-on-one with a Leland IB coach.

Second, you’ll want to increase your networking and technical skill efforts by specifically targeting recruiting prep. Ask upperclassmen to practice technical and behavioral interviews with you, and leverage them to grow your connections with those who already have offers. If you’re at a non-target school, make sure you’re networking widely, including with those who are at target schools or recruit at target schools in your region. Go for coffee chats, formal networking events, information sessions, etc., and don’t forget to send a follow-up, thank-you note after! Also, if there is someone with a similar path/background, consider asking them if they’d be your mentor. Mentors are a very powerful way to build a relationship and learn from someone who you admire.

Here are a couple of other resources you may find helpful on investment banking interview prep:

• How to Answer the “Why Investment Banking?” Interview Question
• How to Nail the Second Most Common Investment Banking Interview Question (“Why This Firm?”)
• A Guide to the Investment Banking Interview: Tips From an Expert

If you qualify as a diverse candidate, then consider applying to different banks’ DEI programs. Many top firms offer an accelerated program specifically for women, people of color, and other underrepresented groups in investment banking in an attempt to foster more diversity. These programs come with perks like trips to the firms, scholarships, increased facetime with recruiters, and more. Examples of these include Bank of America’s GBAM Scholarship of Distinction, JP Morgan’s Advancing Black Pathways Fellowship, Jefferies’ Diversity Symposium, and Morgan Stanley’s Fisher Scholarship Program.

The last thing you’ll do in your sophomore year is start to interview, depending on the firm/role! Right now, interviews for all summer analyst positions happen anywhere from winter/spring semester of sophomore year to the early fall of junior year. For the most up-to-date information, stay in contact with recruiters at your specific school.

Investment Banking Summer Analyst (2024) Program Deadlines

Here are the upcoming application deadlines for some of the top banks in the US. These dates will give you a rough idea of the different firms’ timelines, but remember that most, if not all, positions will be filled by people who have a reference. Networking is the key here and will get you in the door if you do it well.

• JP Morgan Chase & Co.: Applications close September 16, 2023
• Bank of America: Applications open June 1 - September 16, 2023
• Morgan Stanley: Applications close September 1, 2023 (rolling applications, apply as early as you can)
• Goldman Sachs: Some programs open March 15 and others August 15 (rolling applications)
• Citigroup: Application open now
• HSBC: Applications open now through May 31, 2023
• Barclays: Applications open now
• Credit Suisse: Applications close September 1, 2023
• Deutsche Bank (Investment Banking: Corporate Finance):
  • Deutsche Bank also offers Analyst Programs for Fixed Income and Currencies and Corporate Finance Capital Markets
• UBS: Applications are open now until May 1, 2023

Junior Year

For the traditional path, by junior year you’ll have an internship secured for the following summer, be in your major and taking far fewer Gen. Ed. courses, and start to take on leadership positions in your clubs/business fraternities. You’ll also have a good resume, a broad network of connections, and increasing technical skills. To land a full-time position after graduation, junior year should be spent ensuring a successful internship. Summer Analyst Programs are, after all, basically long, extended interviews.

Here are a couple of things to make sure that you’re doing in the year leading up to your internship.

• Stay current on the market and financial news – Continue reading The Financial Times, The Wall Street Journal, and whatever newsletters/podcasts you subscribe to. Also, read the annual reports of companies that are interesting to you or in your industries.
• Prepare for hard work – Do whatever you need to do mentally to get ready for excruciatingly long work hours. Though it’s gotten better in recent years after public pressure following the death of an analyst who worked for three days straight, you’ll still work far longer days than your typical 9-to-5. Expect 75 to 80-hour work weeks.
• Improve your PowerPoint and Excel skills – You won’t be required to do the same level of work as a full-time Analyst, but still learn the basics of financial modeling if you haven’t done so already.
• Reach out to last season’s Summer Analysts (who are this year’s full-time Analysts) and ask about their experiences – What worked for them? What didn’t? Why do they think that they got return offers? What specific things do they think you should do to stand out? The best way to learn is to hear from people who actually went through the program themselves.

In the summer, you’re off to be a Summer Analyst! In preparing beforehand, you’ll be able to go into the internship confident and ready. Be available and proactive in helping those above you. In every task, go above and beyond. You also want to pass what’s known as the “Beer Test.” In other words, would your coworkers want to go out for a beer with you? Or, would they be able to survive a long-haul flight with you? The point of this question is to measure cultural fit. You don’t have to be best friends with your colleagues, but you do need to be able to get along with them.

Senior Year

If you were given a return offer to come back to the bank the following year as a full-time Analyst, congratulations! Investment banking is an incredibly competitive industry, especially at the bulge bracket level, and it requires a ton of grit and determination.

Though you’ve secured the offer, continue aiming for good grades. This will help you later on if you decide to apply for an MBA program and also demonstrates continued academic success. If you’re fairly sure that you want to attend business school, consider applying for deferred MBA programs. Every M7 program now offers a form of this–you apply as a senior in college and are able to defer your matriculation for three to five years. During that time, you can pursue what you wish without having to worry about working full-time and trying to pull together an application. It’s also cheaper as almost every school waives the application fee. For more info on these programs, head to The Top 10 Deferred MBA Programs in the US–and How to Get In.

What To Do If You Didn’t Receive an Investment Banking Return Offer

If you completed the Summer Analyst Program and didn’t receive a full-time return offer, it’s not the end of the world. The right course of action will somewhat depend on why the offer wasn’t extended. For example, if the market isn’t performing well, then other firms aren’t likely to be hiring either; if it was the fit, then another bank could possibly be even better.

There are a few different routes you could take to secure a full-time offer somewhere else. Firstly, try a different firm. Use contacts at other banks to determine where there might be capacity and try to land an interview. Also, consider going to a smaller bank–regional or even elite boutique banks might appreciate the experience that you’d bring.

Secondly, extend graduation by a year. In doing so, you’d have the chance to go through the Summer Analyst Program again. Consider the pros and cons of this choice carefully. With tuition, this may cost more than it’s worth.

Lastly, consider an adjacent role. There are plenty of high-paying roles within the general industry of finance that aren’t in investment banking. Through clubs and other extracurriculars, you likely already have contacts in these areas that you can leverage to learn about interviews and the demands of the job. If you’re passionate about investment banking, you can either try to get in laterally or pivot post-business school.

Break Into Investment Banking With the Help of an Expert

Investment banking is a notoriously difficult job but one that comes with high rewards, both monetarily and in terms of future opportunities. By following the steps we’ve outlined above, you’ll give yourself the best chance possible of securing a Summer Analyst position and then a full-time offer.

To supplement this information, however, we highly recommend working one-on-one with an investment banking coach. They’ll be able to help you with interview prep, technical skills, resume review, networking strategy, and much more. Plus, it will all be customized to your specific background and goals. Here are a couple of our most popular and highest-rated coaches, browse all of them here. We've also got coaches for other top industries like venture capital, private equity, and management consulting.