I am trying to understand how do investment bankers have such stable jobs. It is my understanding that most trades are done by computers these days. So are investment banker0s…. just the male equivalents of pretty female receptionists?
If they are not, how do they have job security. No one knows how stocks will move. So …how?
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Investment banking is a broad industry with different ways to make money. But to make it simple you can break it down into two areas: buy-side and sell-side.
**Buy-side** is represented by your funds. These can be mutual funds, hedge funds, ETFs, etc. The investment bankers (aka advisors) running these funds are making the decisions on what is bought with the individual investors’ money. Buy-side bankers generate revenue for themselves through fees typically based on a % of the assets under their management. The individual bankers earn their spot and bonuses for doing two things: 1) Bringing in more investors and 2) Choosing investments that perform well against the market. Lots of hands-on client servicing for the former thing, tons of technical modeling and advanced finance for the latter thing.
**Sell-side** are your big investment banks like JP Morgan (JP Morgan also has buy-side funds within it) as well as advisory firms. These bankers work with corporations or anyone else trying to raise financing and thus need to sell corporate debt/equity. These bankers make their living by successfully facilitating these sales and taking fees as a result.
>It is my understanding that most trades are done by computers these days.
Trades are just the facilitation of a deal. The strategies being devised and employed, deal-structure, and advisory stuff is still all a human process.
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