Careers In Investment Banking vs Commercial Banking (Compensation, Lifestyle, Exit Options)
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- เผยแพร่เมื่อ 3 ก.ค. 2024
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What are the career differences between commercial banking vs investment banking? What is the difference in compensation, work lifestyle, skills development and exit opportunities between investment banking vs commercial banking? In today's video, we compare the entry level roles of an investment banking analyst vs a junior commercial relationship manager. Topics covered include:
- What is commercial banking? What do you do in the entry level role?
- What is investment banking? What do you do in the entry level role?
- How does an investment banking analyst compare with a commercial banker based on a number of factors including compensation, prestige, working hours, sales skill development, exit opportunities and the number of clients you work with.
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Thank you so much for the insights! its super helpful!
In the US (maybe Canada is different) the ‘entry level’ CB role is many times as a Credit Analyst or Underwriter … or lower than that really.
Nowadays most Commercial Banks have a ‘management trainee’ type rotational program which you may come out an analyst/underwriter (but typically not straight to RM even then - only if mgmt views you highly)
So I’d say an RM isn’t typically an ‘entry’ role out of college/university. Absolute best case within a year or so out of bachelors degree (in the US market at least).
Good comment, especially in Canada (where the market is smaller) it all depends on the size of the lending group. If you are working with SME businesses $1-$10MM, there is not enough size on that team to warrant a full time credit analyst so you get access to clients quicker. If you join a division focused on larger deals $50MM+, then yes it will take at least 12-18 months before you are given a chance at direct client selling. Even in Canada there are rotation programs where graduates are given 4 month internships in three different groups, once they land in a full-time role, they are quickly given access to a client book to support the existing team. My personal experience was like that, I didnt go through a rotation program, I landed direct on a lending desk ($1MM-25MM term loans), my first 3-4 months I underwrote credits and learned to sell alongside senior RMs, by month five I was out meeting COIs and focused on bringing in business.
@@financekid3163 Interesting. Thanks for commenting back! 👍🏻
Wish I would have had as fast a track as you.
I currently work as an RM in SME ($2-10MM) for a large CB and it honestly took me a few years to get there. All my colleague RM’s are in their late 30’s and 40’s+. I might be the youngest at 31 lol (in our group at least). Though I’ve covered this space few years now.
Am considering trying to move upstream at a smaller bank where I’d have more flexibility and autonomy. I feel it’s such a slog to get deals through at a large CB.
What are your thoughts on that?
*Note: I don’t have desire to exit the industry completely any time soon - and generally like CB)
Recently landed a job in CB. Thanks for all your help
Great job! Congrats.
This video is great
Thanks for watching!
Hey! Hopefully you can answer.
What are the differences when it comes to actual modeling in the job. I like the blend of technical and social work (hence, I studied finance). I did investment banking for a while, I was an associate, so I had some client interaction. I like the job, I just really couldn’t take the hours (as most people), so I was wondering if I could sorta emulate the experience in corporate banking but with less hours.
Thank you for your amazing well made video!!
Hope I'm lucky enough to get your advice regarding my career.
I just joined a corporate banking team at a commercial bank as RM after spending 7 years at a Fintech company as a sales. I don't have any finance related background(no degree in finance). I don't have much money to use for MBA or Master unfortunately.
In this situation, is there any certificate such as CFA that would be very helpful for my next job at bank?
I do wanna prepare myself for my next job but going for MBA or Master isn't really suitable for my situation..
Your advice is really appreciated 🙏
In your specific situation, if you are looking to tune up your finance skills, yes i would recommend you get a CFA certificate. However for most people that come from finance/have studied it in school, that should be enough for a career in commercial banking (ie. I typically say if you dont need the CFA, why spend the time on it). Because you came from outside the industry/finance field, going through the CFA process will be helpful to learn finance.
Great Video I am a CB Client Service Associate at a BB Firm. Looking to move internally to IBD.
Could you make a video on how to ace an IB interviews as a transfer from commercial banking
Ok I will add it to the list! Thanks.
How did u get into commercial banking?
If you are an introvert, could you move more into the credit side of commercial banking? What would the compensation be on that side of commercial banking and the responsibilities?
Good question, on the front office side, you could work in a credit underwriting support function (lower paid than the RMs/writing the credits for the RMs) or you could move into credit/risk management (approval of deals). Most credit/risk officers usually do around 2-3 years in the front office to understand that side of the business so its unavoidable but over the long term yes this role is better for those that dont like sales. Regarding compensation it depends on the bank. For my bank, credit was a really tough job to retain people so they ultimately received similar compensation to the average RM with a lower overall bonus. Also, with less people going into credit, if you stay with it, promotions tend to come quicker than in the front office. Hopefully this helps!
@@financekid3163 is too old too to immigrate to Canada 🍁 after getting a much easier certificate like the CMA ?
Nice video man ! Can you make another video on Corporate banking? Corporate banking in capital markets
I will add it to the list!
Ditto. Was actually hoping he’d cover that more in this video.
In my eyes it’s probably easier to move upstream from business/commercial rm to middle-market or corporate rm than go over to IB. Though I realize you did it @FinanceKid
Same, great video! - would be great to even see something on Corporate Banking as everyone just usually says it is just higher $ value deals compared to Commercial Banking, but nothing more in depth out there is explained. Thank you!
Could age be a major barrier for a senior commercial banker looking to join investment banking at the age of 45 ?
Commercial Banking pay makes no sense. If you do 40 hours per week corporate jobs in whatever finance roles you make more than in commercial banking where you need to know a ton more, be great at sales, and get charters/MBA, and do financial analysis. It’s a great training ground for businesses who are wide to hire commercial bankers but they aren’t. Commercial bankers are the most slept on workers in terms of compensation vs output for the bank , skills vs exit opportunities to work for clients. The winners in this equation are whoever are wise enough to hire commercial bankers. They typically are more well rounded for finance/accounting roles and B2B sales than Big 4 accountants and pure sales people.
What was your pathway to get into commercial banking into IB? And why didnt you chase private credit? I heard private credit can be lucrative
I had a client in my loan book that wanted to sell so I left and went out on my own to get into the M&A world. Definitely not a traditional path nor would I recommend it to others! Private credit is a great place to be, I think the Canadian market (where I am based) is more saturated so it never excited me as much as sell-side advisory work, I love what I do now.
Nice Vid. In my second week in my commercial banking internship. It’s been really fun. What are your thoughts about exiting into fixed income trading at a private investment firm?
Very exciting, good luck with your internship. I have not seen any of my colleagues move from CB to FI trading, fixed income trading is more a sales & trading role whereas commercial lending is a private business to business role. Very different skill sets/lifestyle. I dont think a CB role will give you a major leg up in this area of the bank. You can probably rotate into that division once you are hired full time but you will probably start as a junior in this division.
How did u get into commercial banking? What certifications and credentials did u have?
@@quiz9317 Got an internship with the SBA where i helped people forecast their financials and apply for funding from banks and private lenders. this got my foot in the door with commercial banks. interviewed for all of them and took the best offer. got rejected by 3/5 commercial banks i interviewed with and had offers from a couple hedge funds and corp finance companies. Liked lending most of all. No certs other than really good GPA and genuine passion/interest in the industry
@@quiz9317 I also still have a year left in college really use your classes as an opportunity to learn and not just pass tests. work on projects you find interesting and network with other students and professors
@@tylermerker8447 i never got an internship during my university and graduated with economics. im currently working as a teller in the bank and wants to move into commercial banking but i guess teller experience isnt good enough to get innto commercial bank thats why i was asking about certs :( thanks for the reply appreciate it
I am 44 years old . I was a senior CB RM for 8 years. Before that I was in retail branches as a teller, sales and customer service for 4 years. Now I am a Senior Remedial Manager in SME restructuring but I do manage a team of retail cards and loans collection sometimes as it’s under the same department. I still wish to do the CFA and aim for a career in investment banking in Canada. I am in final stages to get my PR. Is it too ambitious unachievable plan at my age ?
1. 44 yrs old is too old for career change to investment banking
2. CFA means nothing to IBD
@@troyw8016 thanks for caring. Dint you think 🤔 clearing CFA level 1 at least opens many opportunities even at this age (perquisite for some top masters, and some of corporate banking jobs)
@@Romio666 I assume your experiences in CB are oversea experiences? Which is fine as Canada becomes more receptive to oversea experience. But you're not likely to hold the same title at the get go, probably need to accept a demotion in order to get in CB here. With that being said, do I see value in doing CFA lv1? Yeah sure, if you have the free time, but don't think it is as a game changer, no employer is going to offer you an interview just because you passed CFA lv1. Spend your time on networking or getting a excellent GMAT for your master/mba (if that is sth you still want to pursue at the age of 44). I myself is a charterholder btw and I work in Corp Banking.
@@troyw8016 many thanks. Sounds very logical. I guess people accept a demotion in Canada to get the passport then try for a better job anywhere else in the world 🌎. I might do the masters in Canada as I can’t afford a top university in Dubai. Just thinking 🤔 if I still have time to move on with my career after getting the passport.
How much could I earn as an assistant relationship manager in commercial banking?
Also is the role of an assistant relationship manager much different to the role of a relationship manager?
Tough question regarding compensation, it all depends on the bank and region you are working in. Refer to online job sites like Glassdoor or Indeed for salary information to better understand the difference. In Canada for example it could range from $10-20K difference including bonus. Usually the assistant RM role is more credit underwriting support vs an RM who is focused on generating new deals and more sales oriented.
Will the CFA provide a competitive edge for me pursuing entry level IB positions?
Yes, CFA designations hold more weight in the IB interview process so it should help. Good luck.
Is CFA important for Commerical banking or can i get job after BBA in banking specialisation ?
While not required to get a commercial banking role, a CFA is a nice differentiator when applying for commercial banking roles. In general the minimum requirement for entry level jobs is a BCom/BBA.
Does an assistant relationship manager qualify to earn a bonus?
In most instances they do. Most banks have bonus programs even for junior roles.
Come Back please 🙏
LOL I will! Just busy with my M&A business, lots of deals right now, not enough time to record videos :) Soon.
Just got offered RM Commercial position, is it too hard of a job for management graduate? My finance knowledge is not as strong as finance graduate
Nothing is too hard so long as you have a good environment where your employer can train you and also you have confidence and focus!
@@financekid3163 thanks, do you think pivoting from RM to Business Analyst is a good path?
I'm finding it super hard to get into commercial banking at the moment.
It seems impossible to get into commercial banking without getting onto a graduate scheme.
I've applied for assistant rm roles but have been rejected from all of them.
Any tips for breaking into commercial banking?
I was fast tracked and just interviewed for rm. I would say start at a small business banker role first. If you perform well and or have good networking skills you can get promoted to commercial banking role which is typically the next tier after small business.
Or you can apply for support roles in commercial banking to learn the business or at least get your foot in the door.
@@Hvspecter1 I've tried applying for business banking roles but haven't had much luck. Could retail banking be a way to help me get into commercial banking?
@@Hvspecter1 Also if you don't mind me asking, how were you fast tracked to an rm role? Did you get on a graduate program?
@@galaticoera7022 Retail banking has a lot of connections to commercial banking because they trade businesses with each other. I was fast tracked because of this and I’ve built a good network around me. Also I spoke fluent Korean so that helped stand out. Easier route would be to apply for associate roles in commercial banking stead of straight RM role. But if you dont have any relevant experience, go through retail route for sure. BofA is expanding both commercial and small business departments next year.
@@Hvspecter1 what roles did you do in retail banking before moving into commercial banking?
Also what networking tips would you give me that I can use once I'm in retail banking in order to get into commercial banking?