Financial Analyst vs. Investment Banker: What Are the Differences?
Learn about the two careers and review some of the similarities and differences between them.
A career in finance can be both lucrative and exciting. If you’re interested in working in this industry, you may be wondering whether you should become a financial analyst or an investment banker. Both of these positions require strong math skills and the ability to think analytically, but they differ in terms of job duties and earning potential. In this article, we compare and contrast financial analysts and investment bankers, and we provide information to help you decide which career is right for you.
What is a Financial Analyst?
A Financial Analyst is a professional who performs financial analysis, which is a type of work that is concerned with forecasting financial performance and managing financial risks. Financial Analysts are employed in a variety of industries, including banking, insurance, accounting, and investment. They typically have a background in finance, accounting, economics, or business. Financial Analysts use their skills in mathematical modeling, statistical analysis, and financial analysis to provide insights that can help their employer make better decisions about where to invest their money.
What is an Investment Banker?
Investment bankers are the people who help companies and governments raise money by issuing and selling securities. They work in the securities industry. Investment bankers typically work for investment banks, large commercial banks, or large securities firms. They help their clients raise money by issuing and selling stocks, bonds, and other securities. Investment bankers typically have a four-year college degree, although some jobs may require a master’s degree.
Financial Analyst vs. Investment Banker
Here are the main differences between a financial analyst and an investment banker.
Job Duties
Financial analysts perform a variety of tasks to help companies and individuals make financial decisions. They might research market data, such as demographic information about customers or pricing trends, to determine the best course of action for their clients. Financial analysts also calculate financial projections, such as expected revenue and expenses, to advise their clients on how much money they’ll have available to invest in projects.
Investment bankers advise corporations on mergers and acquisitions, helping these organizations decide whether to purchase another company rather than develop business strategies internally. Investment bankers also assist high-net-worth individuals with private equity transactions.
Job Requirements
Both financial analysts and investment bankers typically need to have a bachelor’s degree in business, economics, finance or a related field. Many professionals in these fields also pursue a master’s degree, such as a Master of Business Administration (MBA), to gain more knowledge and improve their job prospects. Financial analysts might also pursue the Chartered Financial Analyst (CFA) designation to stand out to potential employers. Investment bankers can become certified through the Institute of Banking and Finance (IBF) or the Association for Financial Professionals (AFP).
Work Environment
Financial analysts work in a variety of environments, depending on the type of firm they work for. For example, some financial analysts work for banks or credit unions and spend most of their time working at these institutions. They may also travel to meet with clients and attend conferences. Other financial analysts work for investment firms that manage money for individuals and companies. These professionals often travel frequently to visit clients and attend investor meetings.
Investment bankers typically work in an office environment during regular business hours. However, because many investment banking positions require extensive travel, it’s common for investment bankers to spend more time traveling than other finance professionals. Investment bankers who work for large firms may have access to private jets to help them reach destinations quickly.
Skills
Both financial analysts and investment bankers use analytical skills to assess opportunities and make recommendations. Financial analysts typically conduct research on companies and industries to provide insights that inform investment decisions. Investment bankers, on the other hand, may analyze a company’s financial statements to identify potential acquisition targets or help a company raise capital by issuing new securities.
Both roles also require excellent communication skills. Financial analysts need to be able to clearly articulate their findings and recommendations to clients. Investment bankers must be able to pitch ideas persuasively to potential investors.
Financial analysts typically need to have strong math skills to perform their job duties. They use mathematical models to forecast future performance and assess risk. Investment bankers also need to have strong math skills. In addition, they need to understand complex financial instruments and transactions.
Salary
Financial analysts earn an average salary of $71,352 per year, while investment bankers earn an average salary of $116,983 per year. The average salary for both positions may vary depending on the size of the company, the location of the job and the level of experience the employee has.