An investment banker is a professional who assists individuals, corporations, and government agencies to raise capital by underwriting or helping the issuance of securities. An investment banker can provide services for mergers, acquisitions, market making, derivative trading, and commodities.
Investment bankers are very different from commercial or retail bankers, who take deposits from clients and function as a safe place to hold cash or other funds. Instead, the investment banker focuses more on providing services in regards to the establishment and maintenance of securities. In the United States, investment bankers and retail bankers were required by law to be separated by the Glass-Steagall Act of 1933. However, a recent shift in policy in 1999 eliminated this separation.
Investment bankers will usually specialize in one of two areas of investment banking.
1. Some investment bankers focus on facilitating transactions between stockholders and corporations through public or private stock exchanges.
2. Other investment bankers focus on promoting securities, which requires the use of pension funds, mutual funds, hedge funds, and public investors.
When seeking the services of an investment banker, you must look for the following characteristics:
1. First, ensure that the investment banker is properly licensed as a broker-dealer, subject to the rules of the SEC and FINRA regulations.
2. Select an investment banker who specializes with similar clients as you. Some investment bankers will work primarily with large market cap corporations, while some work solely with small start-ups or individual investors.
3. Choose an investment banker who typically works on either the buy side or sell side of investment transactions, depending on the services you are seeking.
Finding an investment banker that is right for you will require some research and work in order to assure your investment banker is qualified to handle your investment banking needs. Investment bankers are often listed in banking directories or listings available through small business resources or even the internet.
Seek recommendations from others in your line of work. Typically, an investment banker will specialize in a certain area of business, so you can check with other similarly situated business people to determine what investment bankers they use and which they would recommend.
While investment bankers can work for investment firms both small and large, most business is conducted through the major global investment firms. The following is a list of the world’s top five largest investment banks:
1. J.P. Morgan
2. Bank of America
3. Goldman Sachs
4. Morgan Stanley
5. Credit Suisse
The above investment banks provide all types of investment banking services that are sought by both individuals and companies. While recent economic troubles have had a large effect on these banking institutions, their services are still needed through the financial world. These firms employ thousands of investment bankers, who are often on multi-member teams aimed at helping both large and small companies.