Investment banking career paths: It doesn't have to be linear

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There are a myriad of career options available in financial services and it’s more than possible to move straight up the ladder within your chosen sector.

However, some roles lend themselves to a sideways move or a career switch, so you should plan ahead and know your options. Here, for a number of key sectors, are traditional exit routes...

Investment banking (M&A/Capital markets)

Few private equity firms recruit graduates directly, and instead tend to target investment banking analysts after a couple of years’ experience.

Recently, this move has become a more popular route, but it’s still tough – hundreds of analysts are recruited into M&A and capital markets every year, but only a handful make it into private equity.

As you move up in seniority within an investment banking role, you’re drafted in to advise companies on key strategic initiatives – fundraising on the debt or equity markets, or merging with a peer or competitor are, after all, key decisions. These companies sometimes want this expertise in-house, so investment bankers can make a move into business development (advising on partnerships or stakes in companies) or corporate strategy (competitor analysis, big-picture planning) within a large corporation.

Trading

Regulation, such as the Dodd-Frank Act in the US, has forced investment banks to curtail their proprietary trading activities. Moving from trading in a bank into a hedge fund (where the pay is more substantial) has long been a popular route, but because of regulation, there’s a proliferation of experienced prop traders starting up their own fund.

Another switch is into an interdealer broker, which acts as a market intermediary across a range of asset classes including fixed income, foreign exchange and commodities.

Of greater risk, but increasingly prevalent in the current era of headcount reduction in trading, is to trade using your own money.

Good risk management should be a prerequisite for any trader – after all, a few bad trades could wipe out profits if proper risk management isn’t deployed. Recently, however, it’s been a trend for traders in investment banks to start moving into risk management jobs in the middle office where job security is greater.

Equity research

Working as a research analyst for an investment bank (‘sell-side’) involves a combination of producing market intelligence and marketing. Analysts analyse companies and sectors, producing research reports based around models of company results and conversations with customers, competitors or industry experts. But they’re also client-focused and the clients in this case are institutional fund managers, or the ‘buy-side’.

Buy-side research is more about creating trade ideas for fund managers to get ahead of the competition. In hedge funds, research analysts are often called ‘idea generators’. Nonetheless, moving between sell-side and buyside roles is common. As it involves a degree of report writing and marketing as well as communicating sometimes complex information to shareholders and investors, investor relations is another popular switch for research analysts.

Big Four accountancy firms

Once you’ve gained your ACA accounting qualification from a Big Four firm, the world is your oyster (well, to an extent). You can either stay put, or look for a role in private equity or investment banking.

Banks often recruit newly qualified ACAs into product control roles – accounting and financial reporting for trading desks – and (although this is less common these days), into corporate finance, usually as a third-year analyst.

Due to their quantitative skills and experience of financial modelling, Big Four ACAs can also switch into equity research. A harder sell is private equity or venture capital; it’s more likely that a small or mid-tier firm will hire an ACA (provided they’ve had some exposure to private equity) and this is more common in Europe – where language skills increase your employment prospects – than in the US or Asia.

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