A merchant banker, also known as an investment banker, helps businesses secure capital through the sale of stock shares, bonds and other securities. These individuals combine extensive knowledge of investment tools with research and sales skills to broker deals between businesses and investors. While merchant bankers face long hours and high levels of stress, many are rewarded with high salaries and bonuses based on their success.
According to the U.S. Bureau of Labor Statistics (BLS), the average salary for merchant bankers was £45,292 per year as of May 2008. Top investment bankers also receive significant bonuses each year, many of which are substantially higher than their annual salary.
Connecticut-based bankers enjoy the highest wages in the U.S. with an average salary of £102,466. Investment bankers in New York earn an average of £84,253, followed by Washington D.C. at £72,624.
The true payoff for investment bankers comes when they are appointed as a partner at a major firm. Brad Hintz of Fordham University estimates that merchant banking partners earn £1.3 million per year. Unfortunately, most employees never make it to this level. Investment bankers with an undergraduate degree have just a 1 per cent chance of ever making partner while those with an MBA increase their chances to just over 5 per cent. An MBA who is lucky enough to make partner takes 9 to 13 years to reach this position. Many are terminated or quit due to burnout long before this point.
Training and Education
Merchant bankers traditionally hold bachelor's degrees in business, finance, economics or a related field. Some pursue an MBA in an effort to advance within the industry or increase earning power. Much of the training for investment bankers comes on the job, often through entry level analyst or associate positions.
All banking professionals in the securities market are required by law to pass the FINRA Series 7 exam, and many states also require the Series 63 or 66 exams. These exams cover securities trading laws and record keeping requirements in the U.S.
While prospective merchant bankers may be attracted to this field due to the high earning potential, candidates should also be aware of the conditions they'll face on the job. Investment bankers work notoriously long hours, often 70 to 90 hours a week or even more. Those in entry level positions face extreme stress, frequent travel and little downtime. These negative conditions persist for two to three years, when only the very best investment bankers will be offered permanent positions. The rest will be terminated and replaced with new graduates. Even experienced bankers deal with high stress and frequent travel combined with long work hours and six- or seven-day workweeks.