The qualifications you need to make it in investment banking now

Investment banks have never been overly big on formal qualifications, but the new breed of recruit is more focused than ever on academic excellence than ever.

In an advisory function in investment banking, historically qualifications would have been secondary to connections and the university you attended. This is changing – not only has the financial crisis highlighted a need for higher professional standards in banking, but graduates being hired are doing more than ever to stand out from the competition.

Now, those securing the plum jobs in investment banking have multiple internships, they have Masters in Finance degrees, they have led investment societies at university and have often taken it upon themselves to start the Chartered Financial Analyst (CFA) exams.

Our own research – based on analysis of 1.4m finance professionals on our CV database – shows that junior investment bankers being hired are better qualified than those at the top now. The figures below relate to those working in IBD functions.

34% of analysts have either an MSc in Finance or Masters degree, compared to 22% of managing directors. 28% of associates also have Masters degrees, but the proportion of people equipped with post-graduate qualifications declines as investment bankers become more senior.

MBAs have become more marginalised in investment banking. While there's a debate about who dumped who, the fact is that banks are hiring fewer MBAs as they focus on training more analysts and MBAs are choosing to go into other sectors. There are, of course, very few analysts who possess an MBA, but no more than a quarter of people on our database at any level have the qualification under their belt.

Meanwhile, studying for the CFA level I qualification is increasingly common among university students, but it's still a marginal qualification in investment banking. 19-20% of juniors have embarked on the CFA, but just 10% of those in MD roles possess a CFA qualification. This suggests either that technical know-how is more of a launchpad for your career than a key to progression, or that the CFA wasn't so popular when MDs started out.

Accountants in IBD roles (M&A and capital markets) were once a relatively common sight, but not the route into the front office is tougher. No more than 7% of front office employees on our database possess an accounting qualification.

Contact: pclarke@efinancialcareers.com