Investment manager and investment banker are both popular career choices for finance students, but there exist some key differences between the two jobs. This article will analyze their differences in work nature, required skills and long-term career development from the perspectives of buy side vs sell side, public markets vs private deals, valuation vs financial modeling. By understanding the core distinctions, students and graduates can better set their career goal and prepare for securing the job position. The key to career success lies in finding the best personality-job fit according to one’s intrinsic interests, skills and values. With adequate preparation tailored to the specified track, aspiring investment talents will thrive in the dynamic investment industry.
Investment managers focus more on fundamental investing while investment bankers focus more on deal execution
Investment managers work on the buy side, meaning their primary job is selecting and managing investments for institutions or individuals. For example, a portfolio manager at Fidelity is responsible for stockpicking and making buy/sell decisions to generate returns for mutual fund investors. The buy side values research, valuation and investment analysis abilities. On the other hand, investment bankers work on the sell side. As intermediaries, they provide M&A, IPO, debt financing and other advisory services to corporate clients and earn fees through commission. Their main goal is to build relationship, pitch convincingly, and close deals under tight deadlines. Therefore, interpersonal skills like communication and executive ability are highly desirable.
Investment managers focus on public securities while investment bankers work more on private deals
Public securities like stocks and bonds are traded in exchanges accessible to most investors. Investment managers need to conduct research and analysis on these public companies. Investment bankers, however, work more on large-scale private deals like M&A, LBO that involve non-listed companies. These complex corporate transactions require skills like financial modeling to evaluate and structure the deal terms. While CFA certification is coveted in public markets investing, modeling skills are imperative in investment banking.
Investment managers enjoy more stable workflow while investment bankers work in a more cyclical fashion
Since markets are open on business days, investment managers can expect a more stable schedule without too many extremely late nights. Major tasks include updating models, meeting corporates and clients, attending conferences and writing research reports. However, investment bankers work in a cyclical way depending on deals. During live deals, exceedingly long hours are normal as tasks pile up. But they may enjoy downtime between deals. This feast-or-famine cycle also leads to regular campus recruiting by investment banks.
In conclusion, investment manager and investment banker differ fundamentally regarding their work nature, skills required and career development. Recognizing one’s personality, skills and interests early on helps make an informed career choice.