What is Difference Between Investment Banking and Corporate Finance

July 16, 2019

Both investment banking and corporate finance deal with financial transactions and banking with some key differences. While investment banking deals with growing a company through raising its capital base the corporate finance division deals with managing the company and its daily operations and its goals for business both long and short term in nature. IB operates in raising capital for the company in the form of securities in the equity and debt markets. The IB also helps advice clients in acquisitions, mergers, placing investments, and executing financial research and analyses.

Another glaring difference between the two pertains to the experience and academic qualifications required to be in investment banking being higher, more demanding and expensive when compared to those required for the corporate finance banker.

However, there is a lot of overlap in the two areas in terms of educational qualifications and job-skills required for both areas. Thus one can expect the IB requisite skills to also apply for the corporate finance FAs.

Pay Packages:

In the US the financial analyst in IB had an average salary of 84,300 USD as reported in 2017 by the BLS. The CFO salary had an average monthly pay package of 104,700 USD. According to Wall Street Oasis, the starting career step of a junior IB analyst was in the range of 70,000 to 150,000 USD annually with negotiated bonuses and performance incentives added in. The BLS predicts 11 percent growth in FA positions between the decade starting 2016. This is better than the 8% anticipated growth for the corporate FAs.
Payscale reports the investment banker salary is an average salary of 508, 855 Rs for a fresher. The salary components can vary between 177,560 to 1,545, 630 Rs while the bonuses can vary with contract negotiation from 2,517 to 524, 023 Rs depending on your skills and performance. In the US this is between 75-90k pa and an average total of 140k pa for a fresher.
Thus the total payouts can be much higher depending on performance and bonuses. Doing the investment banking course helps you earn a global measurable certification which validates your skills and knowledge and is acceptable as real-life experience of the financial and investment banking experience requirements preferred by most employees.

Difference Between Investment Banking and Corporate Finance

The major difference in the two segments pertains to salary or payouts and work-loads.
Burnout occurs with long working hours and much work. More than one-half of the banking job aspirants, especially in IB, quit in the first three years! The IB teams are generally small and lean with one analyst, two associates and a VP reporting to the Lead Director. And the working is inverted bottom up, meaning they bear all the workload. An 80 to 100 hour week with working Sundays is not uncommon and social life grinds to a complete halt.

In contrast, FAs in corporate finance jobs benefit from the corporate culture and the working hours are definitely not as punishing. The FAs in IB though receive a flat percentage of their business meaning their take-home pays are way higher and performance-based.
There is a lot of prestige in IB jobs, and in the same breath, corporate finance jobs are not so easy to get and are still a good career choice. Aspirants for the allure and prestige of the IB job need to work harder, with more work-loads and long hours when compared to the FAs of Corporate Finance. That’s why they get paid higher and ascend the ladder quicker.
The ladder to climb in IB starts with the junior position, to an Associate role in 3 years leading to the VP role and then the Lead/ Managing Director etc. Corporate finance offers many opportunities as advisors, accountants, account managers, treasurers, analysts, business analysts etc.

Conclusions:

The prestigious investment banking job allows you to either start as a Junior Analyst with an under graduation or as an Associate with experience by doing your Banking and financial course with a reputed institute like Imarticus Learning. The requirements are no different for the corporate finance sector. However, specialization and certification in the area or vertical you are interested in help. The prestigious Investment Banking jobs are generally filled with ivy-league business school graduates especially in reputed companies like Morgan and Stanley or Goldman Sachs etc.
Doing the Investment Banking Course at Imarticus is the short cut to a great Investment Banking career. Why wait then?

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