by Girl Banker®
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I get asked this question very frequently by people that want to become investment bankers.
Investment banks hire candidates from all degree disciplines. Investment banking is not a vocational career like law or medicine where you actually need to study that subject to get a job in that field. Investment banks handle a very broad client base and because of that they like the people that they hire to reflect the diversity of that client base.
Every team in an investment bank focuses on a very narrow field of finance and it is unlikely that any one degree will cover everything you need to know to function efficiently on a given team in an investment bank. Most of your learning will happen on the job.
That said, the majority of investment bankers will have done finance-related degrees. Doing a finance-related degree shows that you do have an innate interest in finance so when you're asked, "Why do you want to be an investment banker?" You can point at your degree as one of the reasons.
Economics is probably the best degree you can do to maximize your chances of getting into an investment bank. This is because it gives you a broad appreciation of how the economy works; it includes modules on finance and it develops quantitative skills. More than anything it also gives you practice in thinking up out-of-the-box solutions to random problems.
Accounting is very specific. People who work in the capital markets section of an investment bank don't need to learn all that much about accounting. They need to understand financial reports and to be honest it doesn't take all that long to learn that.
Corporate finance bankers (classical investment banking) do need highly developed accounting skills but not nearly as much as what an accountant needs to know. Corporate financiers also need to appreciate other areas of finance.
Accounting does develop quantitative skills but does not provide as broad an appreciation of how the economy works at the macro- and micro- level like economics does.
Like accounting, finance is very specific. Whilst a degree in finance will go much deeper than the financial modules in an economics degree you won't use most of that knowledge when you go into investment banking.
The team you join will only be focusing on a very small segment of your finance degree and they will take that knowledge to a deeper level. E.g. You might learn about how an interest rate swap works on a finance degree but likely won't learn how to build different types of swap pricing models.
Finance does develop quantitative skills but, again, does not provide as broad an appreciation of how the economy works at the macro- and micro- level like economics does.
Economics folk view people that do business as people who wanted to do economics but failed to get onto an economics degree....hmmm? Business is less quantitative than economics. It includes some accounting which would be useful on a classical investment banking team and it helps one to understand the concerns of people that run businesses a lot better. However, it won't tend to include any deep finance modules.
Develops analytical and of course, quantitative skills but much of that knowledge will not be applied in an investment bank unless you're a quant. However, I would personally rate maths as the second-best degree to do (after Economics) if you want to become an iBanker.
If you're in the US you might want to double major in Economics and another finance-related subject.
So, there you have it. You can do any degree that you want and still become an investment banker. I have met investment bankers that did Art History, Sports Science, Engineering and even Medicine and they turned out to become fabulous investment bankers.
11/8/2016 12:17:33 pm
Hello. Thank you for the article. I am trying to figure out how to break into banking and investment and this shed some light.
Heather as "Girl Banker"
11/8/2016 12:17:59 pm
11/8/2016 12:18:24 pm
Hello. Thanks for the article. I am 17 and I want to pursue I-banking. I have been offered a place for actuarial science at LSE ,London for Undergraduate studies but I am not sure that if this degree carries the same weight and popularity as finance,eco ,math etc in I-banking. However, given the prestige of LSE I think it might work out. Will I be at a disadvantage from the employer's point of view? What is your advice? Please guide me. Thank you :-)
11/8/2016 12:18:49 pm
Hi Girl Banker,
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I created my investment banking blog in 2012 as soon as I resigned from i-banking & published my book, To Become An Investment Banker.
Initially published at girlbanker.com, all posts have now been subsumed into my personal website under katsonga.com/GirlBanker.
These blog posts make it as straight-forward for you as possible to get into a top tier investment bank.
I have 7 years of front office i-banking experience from Goldman Sachs and HSBC, in both classic IBD (corporate finance) and Derivatives (DCM / FICC).
I'm also a CFA survivor having passed all three levels on the first attempt within 18 months - the shortest time possible.