Investment Banking vs Investment Management: What’s the Difference ?

Investment banking vs investment management has always been a popular topic among finance professionals and aspirants. Both investment management and investment banking are highly competitive fields in the finance industry. Individuals with majors in finance or an MBA degree can easily make a career in investment banking or management. A professional course like CFA or CMA also qualifies candidates to build a rewarding career in the finance and investment industry. 

Learn more about CFA and CMA career paths.

Let us understand investment banking vs investment management in detail with the educational skills, career scope, salary and other aspects of the professions. 

Before we go on to the details of investment banking vs investment management, let us understand what these terms mean. 

What is Investment Banking?

Investment banking primarily deals with corporate finance needs. These include raising capital or funds and facilitating complex financial transactions such as the following:

• Mergers and acquisitions
• Debt issuance like bond offerings
• Initial public offerings (IPOs)
• New securities underwriting
• Corporate restructuring 

The Investment banking profession also includes security and equity research, making recommendations, and making buying and selling decisions. Another major role of investment banking firms is providing liquidity or connecting sellers and buyers to ‘create’ the market. For funding and finance, corporates look forward to Investment Bankers for executing major transactions. 

What is Investment Management?

Investment management is known by various names like portfolio management, asset management and fund management. Investment Managers use their investment and money management skills to help clients reach investment goals. Both individual and institutional investors form the client base of Investment Managers.

An Investment Manager assists individual and institutional investors in finding the most suitable investment avenues for achieving growth objectives. These managers assist clients in investing in real estate, equities, fixed-income securities and hedge funds, and other financial instruments.

There are other roles and responsibilities of Investment Managers. These are:

• Equity research with buying and selling recommendations
• Financial statement analysis
• Financial advice and planning
• Portfolio allocation 
• Asset and estate distribution with retirement planning

Investment Banking vs Investment Management – Qualification and skills

It is only possible to make a mark in investment banking and management with the right educational background and skills. Let us take a look at these in detail. 

Investment Banking

To make a career in investment banking, professionals must have proficiency in finance and finance-related subjects, strong networking abilities, and excellent business skills. Finance-oriented programmes or certifications like CFA and CMA are perfect for this sector. MBA graduates are also a popular choice for investment banking firms.

Undergraduates with investment and finance backgrounds can make a career in this domain. Investment banking internships help in getting a firm foothold in this industry. Investment Bankers usually start their careers as Investment Banking Associates or Investment Analysts. 

Here are some skills that all investment banking professionals must have:

• Financial modelling, MS Excel, valuations, Powerpoint presentations
• Excellent analytical skills with close attention detail
• Client management skills
• Proficiency in mathematical skills

Investment Management

A degree in economics, business, finance or investment analysis is apt for a career in investment management. Employers in this field show a high preference for technically proficient candidates. Relevant professional certifications can also boost career prospects, such as a CFA course. 

With a CFA degree, you will gain expertise in portfolio management, accounting and security analysis and make a great career as an Asset Manager. Another certification that helps in investment management is the CIMA. 

Let us take a look at the skills that investment management professionals must have:

• Planning and meeting long-term financial objectives
• Making simplified investment decisions with a macro view
• Knowledge of investment instruments
• Mathematical skills

Investment Banking vs Investment Management – Career opportunities and Salary

Employment opportunities in the financial industry for Investment Bankers, Investment Managers, Financial Analysts and Investment Banking Associates are increasing. There is a projection of a 9% growth in the employment of Financial Analysts from 2021 to 2031. 

In the highly competitive investment banking and investment management fields, employers look for duly certified, professionally trained and experienced candidates to add expertise and credibility to the job role. 

The average base salary of an Investment Banker in India is approximately Rs. 9,80,887 LPA. 

On the other hand, the average base salary of an Investment Manager in India is approximately Rs. 1,200,000 LPA. 

These job profiles have lucrative incentives, perks, and handsome salary figures. 

Investment Banking vs Investment Management – Work-life balance

Before finalising a career, we consider various aspects like salary, perks, incentives, bonuses, growth prospects and so on. But we often neglect an important aspect: work-life balance. 

Let us see the work-life balance scenario for investment banking and investment management professionals.

Investment Banking 

Professionals in the investment banking sector usually have long and intense working hours with little time for relaxation. Investment banking professionals work almost 75 to 100 hours per week. Making lifestyle changes becomes mandatory for these professionals so that work pressure doesn’t take a toll on their health. 

Investment Management 

Investment management is a slightly less stressful career option compared to investment banking. Along with improving job prospects, work hours seem balanced for most job profiles in investment management. If you want to give give ample time to your work and personal life, a career in investment management may be best for you.  

Investment Banking vs Investment Management – Making the right choice

Deciding between investment banking and investment management can be tricky since both have pros and cons. Career prospects are diverse and growing for both. Before you make a choice, compare the salary structures, job roles, work schedules, qualifications and skills required to excel in these fields.

Zell Education offers globally-recognised certifications with programmes like CFA and CMA. With such credentials, job aspirants can make a rewarding career in the finance industry in various roles. Along with imparting high-quality professional training, Zell works towards skill upgradation of candidates to gain the required industry expertise.

FAQ

What’s the difference between investment management and investment banking?
Investment banking primarily deals with corporate finance requirements like capital or fundraising. On the other hand, investment management deals with financial analysis, financial advice and planning, asset allocation, investment decisions and so on.

Which is better, investment banking or management consulting?
Both investment banking and management consulting have pros and cons. While investment banking is specialised, management consulting is dynamic and covers various companies/sectors. The hiring rate is higher for management consulting firms compared to investment banking.

What is the difference between investment banking and wealth management?
Investment banking deals with corporate finance requirements like capital or fundraising. Wealth management is mainly focused on high-net-worth individuals. Wealth management is closely related to financial services, mainly the personal service of individuals.

What is the difference between banking and investing?
Banking is the business offering protection for the money of others. Banks lend money to customers at interest rates and gain profits. They also offer various kinds of financial services to customers.
On the other hand, investing deals with purchasing assets that are expected to increase in value over time and provide returns in the form of capital gains or income payments.