The truth about the investment banking jobs outlook now (2024)

Now that all the big investment banks (JPMorgan, Goldman, Citi, Bank of America and Morgan Stanley) have reported their third quarter results, there's more clarity on the performance of investment bankers working in M&A and debt and equity capital markets.

As the chart below shows, the clarity is not reassuring. Revenues in the investment banking division fell everywhere in the first nine months of 2023. And they fell proportionately more at Goldman Sachs and Morgan Stanley (17% and 18% respectively) than elsewhere.

While investment banking division revenues at the major players are down dramatically, headcount is not. Banks don't break out investment banker headcount specifically, but data released last week by research firm Coalition, suggests investment banker headcount across the industry fell only 4% year-on-year in the first half, which is when many of the cuts at Goldman and Morgan Stanley took place. Even allowing for a few more cuts in the third quarter, front office banker headcount has clearly not fallen to the same extent as fees.

The truth about the investment banking jobs outlook now (1)

The reason for the discrepancy is clear: banks expect revenues to rebound and don't want to be caught out. "Investment Banking activities are well below 10-year norms. I don't think that will stay that way," said Goldman Sachs CEO David Solomon yesterday. Speaking last week, Citigroup CEO Jane Fraser observed that investment banking downturns typically last no more than seven quarters "because that's often how long it takes for pricing expectations to fully adjust to new realities." We're now seven quarters into the current downturn, said Fraser. The recovery is due.

That doesn't mean the recovery is coming. For all Solomon's ebullience, Goldman also said its investment banking fee backlog is now "lower compared with both the end of the second quarter of 2023 and the end of 2022." Fraser said the market is "fragile"; deals that were expected in Q4 may now move to Q1.

Alastair Borthwick, CFO at Bank of America perhaps put it best. "Investment Banking can come back very, very quickly to a more historical range of $1.3 billion, $1.4 billion, $1.5 billion per quarter," he said yesterday. "-It's just that we've grown tired of predicting when that might be." In third quarter of 2023, BofA's investment banking revenue was....$743m.

For the moment, then, banks are stuck in a bind when it comes to hiring and firing bankers. They have far too many of them for the current size of the market. Despite a few successful IPOs and some better times for debt issuance, the comeback isn't upon us. Given current 'macro headwinds' and geopolitical events, it could be a while. But it will come. "I do believe that the capital markets and banking environment will improve in the coming years," declared Solomon, hopefully.

The outlook for investment banking jobs is therefore cloudy. We're still in a holding position. No one wants to cut to the bone, but no one wants to add headcount either. Expect one in, one out for a while. Unless you're Jefferies, Santander or Deutsche Bank, in which case this does not apply.

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The truth about the investment banking jobs outlook now (2024)

FAQs

What is the job outlook for investment bankers? ›

According to the US Bureau of Labor Statistics (BLS), this sector employed 466,900 people in 2021 and is expected to grow by 10% between 2021 and 2031.

What is the outlook for investment banking? ›

Investment banking trends for 2024 show the sector at a pivotal crossroads—one that's marked by demand for digital transformation, shifting economic paradigms, and opportunities in emerging new areas like sustainable finance, blockchain, and RegTech (among others).

Is investment banking still a good career? ›

Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges.

Why is it so hard to get a job in investment banking? ›

Investment banking recruiting is an extremely competitive process, so you'll want to do whatever you can to stand out during the recruitment process. Banks value the quality of your job experience, and the quality of your schools attended, and how hard you network or “hustle” for the role.

Is there a high demand for investment bankers? ›

According to the Bureau of Labour Statistics, jobs in the investment banking and securities dealing industry are growing faster than the average occupation, meaning that competition is fierce due to increased demand and a lack of skilled labor.

Do investment bankers make 500K a year? ›

Ways to make a lot of money in this world

Sure, anybody can make a good living being a doctor or a lawyer or an investment banker where you can make ~$200-500K per year a few years after you finish with your studies, but you hit a ceiling very quickly unless you start your own practice (aka start your own business).

Is investment banking high stress? ›

It is also one of the hardest. It is no surprise that the average day in an investment banker's life is long and stressful. Those who manage to survive the adjustment period often go on to have long and financially rewarding careers.

Why are investment banking salaries so high? ›

Investment bankers often work long hours, including weekends and holidays, and are expected to be available around the clock. The demanding nature of the job and the sacrifices required are reflected in the higher compensation packages. 4.

What is the future outlook for finance? ›

Overall employment in business and financial occupations is projected to grow faster than the average for all occupations from 2022 to 2032. About 911,400 openings are projected each year, on average, in these occupations due to employment growth and the need to replace workers who leave the occupations permanently.

Is investment banking a declining career? ›

Banks don't break out investment banker headcount specifically, but data released last week by research firm Coalition, suggests investment banker headcount across the industry fell only 4% year-on-year in the first half, which is when many of the cuts at Goldman and Morgan Stanley took place.

At what age do investment bankers retire? ›

Age plays a huge factor in the decision-making process. Wall Street is an up-and-out industry. Unless the goal is senior management, most people in finance are out of there by age 50. That's not at just the biggest investment banks, either.

Is it hard to be hired as an investment banker? ›

Getting into an investment bank is, with a lot of understatement, pretty tough.

What is the hardest bank to get into? ›

Goldman Sachs is often cited as the hardest investment bank to get into, due to its prestigious reputation, highly competitive hiring process, and rigorous standards for candidates in terms of experience, education, and skills.

Which investment banking job pays the most? ›

10 high-paying investment banking jobs
  • Hedge fund analyst. ...
  • Foreign exchange trader. ...
  • Budget analyst. ...
  • Internal auditor. ...
  • Finance director. ...
  • Senior direct sales representative. ...
  • Banking and commercial loan workout manager. ...
  • Mortgage branch manager.

How hard is it to get into Goldman Sachs? ›

With hundreds or thousands of applicants for every job opening, getting into this company is notoriously hard. The study says that Goldman receives at least 300 applications at every job it posts while the hiring percentage remains 0.33%. But last year, the job application acceptance rates rose to 1.27%.

Is it hard to find a job as an investment banker? ›

Getting into an investment bank is, with a lot of understatement, pretty tough.

What is the job outlook for finance majors? ›

The Bureau of Labor Statistics forecasts finance-related jobs to grow 7% from 2021 to 2031, with an expected increase of about 715,100 new jobs and about 980,200 openings from growth and replacement needs. As of May 2021, the median annual wage was $76,570, compared to those for all occupations at $45,760 (BLS, 2021).

Do investment bankers make 7 figures? ›

Total compensation is often in the $150K – $250K range (as of 2022). Investment Banking Analyst Hours: You'll be in the office for 70-85 hours per week, but you won't be working for that entire time. Investment banking hours are long, but there's also significant “downtime.”

Is investment banking a career path? ›

This career is often coveted because a successful investment banker can enjoy a high salary, abundant networking opportunities, and the ability to play a highly visible role in company success stories.

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