Why Are Investment Bankers Paid So Much?

I’m sure we’ve all heard about how lucrative investment banking is. Maybe you had a friend or classmate go into investment banking or you know someone in the neighborhood. There’s no doubt that they’re pulling in the big bucks, but what exactly do they even do in the first place? Well, investment banks are basically the private banks of corporations and billionaires, and they help them with loads of financing operations. For example, if a company needs to raise money, an investment bank can help them issue corporate bonds or complete a share offering. Aside from running the entire financing process, many investment banks will give the companies the desired capital upfront and take on the risk of raising the money themselves. This way, companies can focus on running their business instead of completing the financing. Investment banks also help companies complete mergers and acquisitions and source out private deals. Despite all these positive functions, there’s a lot of speculation that investment banks leverage inside information to their advantage and that there may be a collaboration between trading divisions and investment banking divisions at large banks. This video explains the main purposes of investment banking and why investment bankers are paid so much.

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Timestamps:
0:00 - What Is Investment Banking?
1:17 - Bond Financing
3:08 - Equity FInancing
5:17 - Underwriting
7:09 - Private Deals
8:21 - The Ugly
10:23 - Investment Banking

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Disclaimer:
This video is not a solicitation or personal financial advice. All investing involves risk. Please do your own research.
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