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 banking? ›

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. Compared to all industries, this is a faster-than-average growth and means that the job outlook for investment brokers' services is encouraging.

What is the outlook for investment banks? ›

Investment Banking's Future: A Market Outlook

Growing Demand for Sustainable Solutions: As ESG considerations become paramount, the demand for sustainable investment products and services will continue to rise. Investment banks that can cater to this demand will be well-positioned for success.

What are the odds of getting an investment banking job? ›

The lucrative and fast-paced career of an investment banker is a highly competitive one. For instance, in a recent year, 236,000 applicants competed for roughly 3,500 internships at Goldman Sachs. This is common across the industry where acceptance rates for programs are typically less than 2%.

Is investment banking still a good job? ›

A career in investment banking or private equity can be incredibly rewarding , both financially and intellectually . These industries offer the opportunity to work on high - profile deals and make a significant impact on the global economy .

Is investment banking slowing down? ›

Revenues at investment banks are down 50%+ year over year as rising interest rates and slowing economic conditions have put a complete pause on most M&A activity around the world. It's crazy how an industry can go from having an insanely good record year like in 2021 to layoffs just one year later.

Is investment banking a high stress job? ›

The intense competition, constant deadlines, aggressive atmosphere, high-stress environment and lack of work-life balance have been linked to mental health issues and burnout among financial services employees, with many considering leaving their jobs due to the impact on their well-being.

What is the outlook for investment banking in 2024? ›

On the back of expectations for a recovery in M&A and ECM activity and more DCM deals, IB firms have started responding positively and expect modest growth in 2024. We expect an increase in restructuring activity, especially in sectors such as commercial real estate, technology and consumer.

What is the most prestigious investment bank to work for? ›

Goldman Sachs, JP Morgan, Bank of America: They're global, prestigious, diverse, and influential. And they boast long histories, household names, high-profile clients, and acclaimed alumni too. They underwrite the biggest offerings and boast all the resources and advantages.

Who makes the most money in investment banking? ›

1. Goldman Sachs is the highest paying bank overall - $398k in combined salaries and bonuses, on average. Goldman Sachs, which paid average salaries of $200k and average bonuses of $199k for 2023, was the highest paying bank we polled.

Do investment bankers really make a lot of money? ›

Can you become a millionaire as an investment banker? It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year.

Does investment banking have a good future? ›

The Investment Banking Global Market Report 2022 predicts a compound annual growth rate of 11.9% in 2022 and 10.4% in 2026, indicating a significant expansion in the global investment banking sector. The projected growth in the number is astounding.

Is being an investment banker prestigious? ›

That said, investment banking is a highly competitive field. Because the pay is so high and the job is so prestigious, particularly in cities such as New York, applicants far outnumber job openings every year.

At what age do investment bankers retire? ›

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. In January, Charles Schwab Corp.'s Chief Financial Officer Christopher Dodds announced plans to quit in May, at age 47, to pursue greater “work-life balance.”

What are the cons of being an investment banker? ›

Cons of an Investment Banking Career
  • Extended Work Hours: Investment bankers frequently grapple with long working hours, including weekends and holidays, to meet stringent deadlines. ...
  • Heightened Stress Levels: The fast-paced nature of investment banking often results in elevated stress levels.
Sep 8, 2023

Why consulting over investment banking? ›

Generally, you can expect broader roles available for consultants vs. more specialized with higher pay roles available for bankers. Consulting is a great stepping stone into industry, and most former consultants move into strategy or operational roles at corporations ranging from startups to large firms.

Is there a demand for investment bankers? ›

The U.S. Bureau of Labor Statistics (BLS) projects that securities, commodities and financial services sales careers—which include investment bankers—will grow by 7% from 2022 to 2032. This projected growth is faster than the 3% growth projected for all occupations nationwide.

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

The demand for coveted positions in investment banks consistently exceeds the available supply, making it a highly selective field. Statistics indicate that acceptance rates for top investment banks, such as JP Morgan and Goldman Sachs, typically range between a mere 3% to 5%.

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.

What is the highest paid job in investment banking? ›

10 high-paying investment banking jobs
  • Portfolio manager. ...
  • Investment banker. ...
  • Asset manager. ...
  • Wealth manager. ...
  • Equity trader. ...
  • Equity analyst. ...
  • Hedge fund analyst. ...
  • Foreign exchange trader.
Apr 18, 2024

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