Visit our partner https://trymintmobile.com/galbraith to get premium wireless starting at $15/mo. SEE TERMS AND CONDITIONS BELOW. $45 upfront payment for 3-mo 5GB plan ($15/mo equiv.) required. New customer offer for rst 3 mos only. Taxes & fees extra. See https://trymintmobile.com/galbraith for mo...

Visit our partner https://trymintmobile.com/galbraith to get premium wireless starting at $15/mo. SEE TERMS AND CONDITIONS BELOW. $45 upfront payment for 3-mo 5GB plan ($15/mo equiv.) required. New customer offer for rst 3 mos only. Taxes & fees extra. See https://trymintmobile.com/galbraith for more details. The book that changed my life: https://amzn.to/3ZvZyyF  If you have any questions, connect with me on LinkedIn: https://www.linkedin.com/in/cameronjgalbraith/  Email me at: cameron@cjgventures.co  In this video, I discuss how investment banks actually make money! Disclaimer: The views in this video are strictly my own, and are not those of my employer. #wallstreet #finance #financecareers #banking #investmentbanking Chapters: 00:00 Introduction 00:42 What are Investment Banks? 01:57 Mint Mobile 03:21 Sales & Trading 03:53 Asset Management 04:32 Total Revenue 04:59 Conclusion Tags: how investment banks make money, how investment banks make revenue, investment banking revenue, investment banking profits, how investment banks get paid, how do investment banks make money?, how do investment banks get paid?, how investment banking works, how do ibs make money?, different groups within an investment bank, investment banking functions, investment banking groups, Script: Investment banks – the mysterious, high-powered firms that seem to run the financial world. We all know they rake in billions, but how do they actually make their money? Well in today’s video we’re going to explain just that. — Unlike regular banks, investment banks don’t take deposits or give out mortgages. Instead, they make money by charging massive fees for financial services. Their business is built on three core areas: IB, S&T, and AM. First up: IB. These are the dealmakers – the ones advising CEOs on billion-dollar mergers, acquisitions, and IPOs. Let’s say Company A wants to buy Company B. They don’t just Google “how to buy a company” – they hire an investment bank to handle everything, from valuation to negotiations. And the bank? They charge fees as high as 1-3% of the total deal value. For example, when Microsoft acquired Activision for $69 billion, investment banks made over $1 billion in fees just from that one deal. And get this – even if the deal doesn’t go through, the banks still get paid. Because their fees are based on advice, not just execution. They also make money from underwriting, which is when a company raises money by issuing stock or bonds. The bank acts as a middleman, buying the shares at a discount and selling them to the public at a profit. Take an IPO worth $5 billion – if the bank charges a 7% underwriting fee, then that’s $350 million just from launching a stock! —- Now, let’s talk about Sales & Trading, the heartbeat of Wall Street. This is where investment banks make money by helping big investors trade stocks, bonds, and derivatives. They make money in three key ways: Market Making – Buying and selling assets at slightly different prices to pocket the difference. Proprietary Trading – Using the bank’s own money to make risky bets on stocks, bonds, and currencies. (Though this was scaled back after 2008.) And, Commissions – Charging fees to execute trades for hedge funds, pension funds, and institutions. Before 2008, this division was a cash cow for investment banks. But after the Volcker Rule banned risky bets with the bank’s own money, firms had to shift focus. —- And then we have Asset Management, where investment banks manage money for the ultra-wealthy, pension funds, and institutions. The business model? Charge clients a management fee, typically 0.5% to 2% of total assets under management (AUM). It sounds small, but when a firm manages trillions of dollars, it adds up. UBS, for example, manages around $6 trillion in assets. If they charged just 1% in fees, that’s $60 billion in revenue – every year. And beyond deals and trading, banks also get paid just for giving advice. Whether it’s restructuring a struggling company or consulting on corporate strategy, they charge massive retainer fees regardless of the outcome. —- In 2023, the world’s top investment banks pulled in over $100 billion combined. For Goldman Sachs, here’s how their revenue breaks down: Investment Banking (30%), Sales & Trading (40%), Asset Management (20%) and Other (10%). No matter what happens in the economy, investment banks find a way to get paid. They profit from IPOs in a bull market, bankruptcies in a recession, and everything in between.