For anyone looking to break into the investment banking industry, Corporate Finance, and Investment Banking both offer opportunities to do so. Both careers in finance have perks as well as downsides to think about before making a decision. Investment banking and corporate finance have quite a bit in common. Each field involves career options that take you from analyst all the way up to CFO.
For finance students, the two top employment options are corporate finance and investment banking. Both industries provide well compensated, competitive work roles with promising futures. You can choose the professional path you want to take by understanding the jobs in these two industries.
Here is a guide explaining various aspects regarding Investment Banking vs. corporate finance to help you decide which is the right career for you.
Investment Banking vs. Corporate Finance: An Overview
In investment banking, the focus is on providing financial and legal advice to clients in the securities industry. Working for an investment bank means that you will be dealing with a lot of money as your clients are constantly transferring and investing in stocks, bonds, and real estate. In investment banking, your focus will be on the financial aspect of the deal and you would work with the client to find out their financial needs and make them a proposal.
In corporate finance, the goal is to increase the value of the company while managing financial risks. Corporate finance focuses on the strategic, financial, and legal aspects of a company. Your role in corporate finance will vary depending on what type of company you are working with. You will generally focus on the financial and legal aspects of the company as this is what helps to create value for the company.
Investment Banking is broken into three main divisions: mergers and acquisitions, equity research, and trading. Investment Banking Firms involve financial investment, which would mean following up on mergers and acquisitions, raising capital for companies to grow, and investing in a company that needs funds for growth.
Corporate Finance is broken into three divisions: mergers and acquisitions, investments in private companies, and fundraising for startups. Corporate Finance firms can provide a variety of services, including loan and investment advice, financial planning, and more.
What Is Corporate Finance?
In business, corporate finance is the financial management of a company. It includes the analysis of financial statements, long-term planning, and the allocation of capital. Corporate finance works to strengthen a company by keeping it financially sound, increasing its growth potential, and protecting it from the risks of its business.
As the importance of corporate finance has increased in recent years, it has become a branch of finance. Corporate finance covers many different topics, such as corporate governance, capital structure, risk management, and internal controls.
What Is Investment Banking?
An investment financial institution is an economic institution that assists clients in raising capital by way of underwriting and issuing securities. Investment banks also provide a variety of other services, such as market-making, mergers and acquisitions advice, and trading.
An investment bank can be a subsidiary of a large commercial bank. They operate alongside broker-dealers, though their business practices differ significantly from those of broker-dealers. They are regulated by the SEC and by each state’s securities regulators. In addition to the public companies, they raise capital for, they also advise and work with private companies raising capital.
Key Differences Between Investment Banking and Corporate Finance:
Below enlisted are the Differences between Investment Banking vs. corporate finance.
- The main key difference is that investment banking is focused on providing financial and legal advice to clients in the securities industry, while corporate finance is focused on providing financial and legal advice to clients who are not in the securities industry.
- The conceptual difference between investment banking and corporate banking is Investment banking is the process of underwriting and issuing securities, while corporate finance is the process of managing a company’s financial resources.
- The purpose of investment banking is to help companies raise money by underwriting and selling securities. The purpose of corporate finance is to provide organizations with the financial resources they need to achieve their strategic objectives.
- The diversity of job roles available in Corporate finance is greater than in Investment Banking.
- An investment banking analyst is responsible for providing research and analysis on potential investments to clients. They also work with investment bankers to come up with new investment ideas. Whereas a corporate finance analyst is responsible for the financial planning and management of a company.
- An analyst who specializes in corporate finance is responsible for both the short-term and long-term goals of a company, as well as its day-to-day operations. An investment banking analyst, on the other hand, is focused on raising money for businesses, providing underwriting services, and helping with mergers and acquisitions.
- While investment banking jobs are demanding and require individuals to always be on the go, corporate financing jobs are much easier and professionals will only need to dedicate a set amount of time each week.
Employment Outlook: Investment Banking vs. Corporate Finance
The investment banking industry has a notoriously high turnover rate. Many workers in the industry leave after only a few years to pursue other opportunities. As a result, the unemployment rate in investment banking is high.
The employment rate in corporate finance is currently on the rise, with many companies looking to fill vacant positions. The field offers a number of opportunities for those with the right skills, and the current market conditions make now a good time to pursue a career in corporate finance.
Both investment banking and corporate finance are exciting and challenging career paths with a lot of potential for growth. However, there are some key differences between the two fields that you should consider before making a decision. Here is the Compassion table for the same:
|Parameter||Investment Banking||Corporate Finance|
|Type of Work||Both front-end and back-end||Backend work|
|Preparation of Documents||pitchbooks, investment memorandum||financial reports of a company|
|Goal||The goal of investment banking is to help clients increase their equity by issuing securities, merging, acquiring businesses, and other measures.||The goal of corporate financing is to help the management of a company thrive.|
|How rewarding it is to
find fulfilling jobs in
their respective fields
|There are fewer investment banking job varieties available, making it difficult for professionals to find a career in this field.||There are many different types of corporate finance jobs available, so finding the right one for you should be easy.|
|Competitive||The competition for investment banking jobs is fierce.||Financing jobs in the corporate world are less competitive than most other career paths.|
|Work Lifestyle||Investment banking is highly erratic in nature.||Compared to investment banking, this field is less erratic in nature|
Careers In Investment Banking vs. Corporate Finance:
Career Paths available in Investment Banking:
- Financial Analyst:
Primary Responsibilities: A financial analyst is responsible for analyzing a company’s financial situation and making recommendations to management. They must be able to understand complex financial data and make sound judgments based on that information.
- Business Analyst:
Primary Responsibilities: A business analyst is responsible for providing analytical and technical support to a company by investigating business problems and recommending solutions. They must be able to identify and understand the company’s needs in order to provide accurate and useful recommendations.
Primary Responsibilities: A treasurer’s main duty is to ensure the financial security of their organization. They do this by managing budgets, investments, and other financial resources. Additionally, treasurers may be responsible for tax filings and other financial paperwork.
Career Paths available in Corporate Financing:
- Account Manager:
Primary Responsibilities: The duty of an account manager is to ensure that the client is satisfied with the services that they are receiving. They act as a liaison between the client and the company and work to resolve any issues that may arise.
Primary Responsibilities: An accountant has a duty, to be honest, and accurate in the preparation of financial statements. They must also have an understanding of Generally Accepted Accounting Principles (GAAP) and be able to apply them in a competent and ethical manner.
- Chief Financial Officer(CFO):
Primary Responsibilities: The role of a CFO is to maintain the financial health of a company. This includes preparing financial reports, overseeing accounting and financial operations, and managing risk.
Investment Banking vs. Corporate Finance Salary:
According to recent studies, the average salary for those working in investment banking is quite high. In fact, it is one of the most lucrative career paths available today. This is especially true for those who work in the higher echelons of the field, such as those who are in charge of major deals or who are partners at top firms.
The average salary for a fresher in investment banking can vary depending on the level of experience and education the individual has. However, typically, a fresher can expect to earn an annual salary of is $68,000 in the United States.
In the United States, the average salary for a senior in investment banking is $172,000.
The average salary in corporate finance is $72,000. This is a field that is in high demand, and those with the skills and experience can make a very good living. The work can be demanding, but it can also be very rewarding.
A fresher in corporate finance in the United States can expect to earn an annual salary of around $50,00 whereas a senior in corporate finance can expect to earn around $101,000.
In the next section of the Investment Banking vs. corporate finance article, we will discuss the Pros and cons
Pros And Cons:
Investment Banking Pros And Cons :
- First, investment bankers are typically well-paid. They also have the chance to work with some of the world’s reputed and largest companies.
- Investment bankers have access to exclusive information and deals.
- Investment banking is not for every person. You must be very self-motivated and ambitious to thrive in investment banking.
- The hours are long and work-life balance is not always ideal. In addition, the job market for investment bankers is tight and the competition can be fierce.
- An investment bank that handles these clients effectively invests its money in other companies to create more value for itself and its clients.
Corporate Finance Pros And Cons:
- There is a variety of jobs found in corporate finance.
- It can help a company raise money to grow or expand. Additionally, it can help a company better manage its cash flow and keep track of its financial performance. Corporate finance can also help a company make better decisions about its future.
- It can be difficult to get accurate information, as companies may be less than forthcoming about their financial status. Additionally, there is always the potential for fraud or other unethical behavior.
- Finally, corporate finance can be quite complex and difficult to understand, which can lead to confusion and poor decision-making.
In conclusion to Investment banking vs corporate finance, the two career paths are more alike. They both require individuals who can handle high-stress environments, multitask, and make quick decisions. Overall, investment banking is more focused on quantitatively analyzing stocks, whereas corporate finance focuses more on qualitative analysis of a company’s financials.
Also read, CFI Reviews and Free CFI Courses.
Here are the faqs related to Investment banking vs corporate finance,
1. What is the average salary of an account manager?
The average salary of an Account manager is $50,744.
2. What is the average salary of a Chief Financial Officer?
The average salary of a chief financial officer is $167,000.
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