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财务/金融行业系列知识
future(2009/1/30 6:49:46) 点击:83777 回复:29 IP:212.* * *
future(2009/1/30 6:49:46) 点击:83777 回复:29 IP:212.* * *
投资银行的职业背景
概述
投资银行帮助企业和政府发行证券,帮助投资者购买证券,管理金融资产,进行证券交易,提供金融咨询服务。处于领先地位的投资银行包括Merrill Lynch（美林）, Salomon Smith Barney, Morgan Stanley Dean Witter（摩根·斯坦利） 和Goldman Sachs（高盛）。这些投行公司在庞大的市场中运作。.其他的一些投资银行只在一个地区营业，或处于中等规模的市场中。(如 Piper Jaffray)。还有一些规模小的专业公司被成为“精品店”。它们很可能只侧重于股票交易，并购咨询，技术分析或项目交易。这些公司对某种证券有深刻的了解。公司内部由不同的部门组成。在大多数的公司中，证券持有者进行交易，证券发行者（公司和政府）从事投资银行业务。
值得注意的是由于受去年发生的事件（如：巴西贬值和俄罗斯丧失偿还能力）的影响，从1999年的春天开始，投资银行市场一直疲软。失业情况非常普遍，并很可能持续下去。尽管如此，仍有不少人认为就业机会很多, 特别是在电信行业, 在欧洲市场和电子贸易领域中。实际上，只要人们能够重视自身的技能培养，不断学习，多做一些信息咨询和实际调查，问题就容易解决了。如果你看准了98/99年投资银行市场，就会有人告诫你，在这个行业里找工作，一定要做好充分准备，并要有持之以衡的精神。也许明年最好的工作是在Corporate American 或是其它领域中，比如市场研究。规模较大的公司的员工一直很多，并且流动性强。
注：目前市场恶化造成的冲击很可能加快投资银行部门的稳定性。引用Bloomberg在1998年11月发表的讲话：“ Allen Wheat, Credit Suisse第一波士顿主席和总经理，Credit Suisse 集团的投资银行总裁在接受意大利商务日报 Sole/24 Ore的采访中说，‘金融市场恶化的程度已经加快了银行产业的变化，特别是加快了其逐步形成稳定过程。那些有潜力在国际市场中发展的银行，除了Credit Suisse外，只有欧洲的银行是UBS AG。’但是他们在开展投资银行业务方面已经放慢了速度。Deutsche 银行可能会“通过购买美国银行重新回到游戏中来”。（次处为报纸引用他的话）。一些机构，如Lehman, Bankers Trust ,甚至是J.P. Morgan也要注定要被兼并。9月3日，在谈到CSFB（Credit Suisse 第一波士顿）对俄罗斯的策略时说，银行的外汇收支差总值达21.5亿美元。Wheat 说， 银行的策略是非常清楚的，但不幸的是，结果不尽人意。
能力和要求
投资银行希望员工有很强的分析和社交能力。一些工作更偏重于某一项技能。（如，经纪人主要是销售者。）一份资产分析家的工作要求有分析和社交的能力。要求的能力包括：
社交能力： 强销售能力：一般 交流能力： 强分析能力： 强
综合能力： 强 创造性： 强 革新性： 一般 工作时间： 50-90/周
说明投资银行业务是一个高层次、高风险、高回报的行业。当你进入这个行业时，你的工作时间一般会加长，但是这项工作确很令人兴奋。因此要做好心理准备，接受当你过度疲劳时会产生的挫败感和工作情况顺利时的喜悦感。
开拓投资银行业务相对来说是比较难的事情。因此你要准备好，在你自身条件全面满足后，要不断寻找可能有机会合作的公司。
投资银行家在电影中一般是社会蔑视的对象。他们真的是一群贪婪的自恋狂吗？他们也许是，但是不要忘记，由于他们将资本引入公司，使得人们的生活质量在不断改变。在这个过程中，他们起到了决定性的社会作用。
许多大学毕业生在刚刚进入投资银行时，都是从分析员作起。要想成功地做好这个工作，你必须具有特别的技能，要有很好的处理电子表格的技能并且能思路清晰地分析问题。接下来，你有可能会成为合作伙伴。这需要同样的技能，只是要求更高一些。 在你事业的中期，一般情况下，你的成功取决于你能否和客户交流并顺利做成生意的能力。同时，你还要了解市场情况，政治和宏观经济情况以及运作机制。投资银行的一些工作要求很强的数学功底。如果你的数学很好，你可以考虑在理工类学科中再拿一个更高的学位（如随机演算和微分方程学）。然后继续在价格学和股票评估等学科中选修几门更深的金融课程。最后在华尔街申请一个研发部门。（Carnegir-Mellon 的FAST 课程是培养适合在华尔街工作的数学和物理人材的最好的课程之一。）
在大多数分析员的工作中，正确地分析财务数字是非常重要的。如果你想成为一个证券分析员，你必须努力获得CFA（注册金融会计师）职称。如果有一天，你有志成从事“融资”的业务, 并成为公司的金融分析家，你最好再考虑一下考取CMA（注册管理会计师）。
很难说什么样的人就是一个优秀的交易者。但至少你必须能充分了解市场，反映迅速，做出准确分析。建议你读一读Michael Lewis 的Liars Poker一书，你会学到很多有关交易方面的东西。
大多数公司的办公地点不在纽約。尽管你想在其它地方工作，但你主要的寻找工作的地点仍可能集中在纽約。其它一些值得你注意的地方还包括：香港，东京，伦敦，莫斯科和新加坡。如果你想找一个投资银行的工作，你应该多去几次纽約。
在投资银行中获得成功的关键是团体协作。能够将每一个人团结起来，共同为客户服务是一个巨大的挑战，并且回报很可能是非常高的。毫无疑问，有科学和法律背景的人对投资银行来说价值是非常高的。科学家可以从事任何类型的工作，从计算金融衍生品到生物工程学。律师可以协助设计新的证券，进行租赁经营并用他们杰出的分析问题的本领与客户交流。这就是说，有必要学会推销你自己。重新回到著名的学府读MBA不是件坏事。然后再重新在考虑投资银行中寻找工作。
进入投资银行这个行业的关键是关系网。也许你早已被这种关系网吸引住了，但如果你没有,就应迅速建立你自己的关系网。多参加一些产业会议，在你的同学通讯录里找一些从事商业的朋友。记住，你的关系网不一定马上就能起到作用。如果你还年轻，但还没有取得MBA学位，你应该努力进最好的学校学习。
投入到投资银行这个行业以后，通常情况下，你应负责把你接受的每一个项目即时地做好，无论是写报告、绘制电子表格、谈生意、做研发还是制定工作计划。然后，一旦你有机会接触客户并参与创造利润，并且只要这时，你能为公司谈成生意，你的回报会是相当丰厚的。如果你已经成为高管（通常为董事，管理董事以及更高层管理人员）你必须要承担更多的风险。在这种职务上，不能很好地胜任工作的人，就要被迫离职。
工作描述
公司理财：
如果你担任合作金融这个职务，你应该帮助公司为新的项目和以后可能有的项目集资。你应该能够做到通过资产、负债、可转换证券、优先证券、或衍生品证券等方式确定客户所需的资金数量和构成。作为合作金融的一名新的分析员，通常你应该更多的和客户打交道。Merrill Lynch, Paine Webber和 Salomon/ SmithBarney是公认的合作金融行业中的权威。在合作金融中的一些工作是指投资银行中的一些职务。如果你听到有人被称为IBD 或IBK，他们都在从事合作金融。
并购：
使一个公司购买另一个公司的交易是许多投资银行资金收入的一个重要来源。这种做法在1995年华尔街上是十分流行的。并且在90年代的剩下的时间里会继续持续下去。如果你从事这类工作，你应该成为客户的咨询者，为交易估值、创造性地确定买卖结构、并协商对自己有利的条款。Goldman Sachs Morgan Stanley/Dean Witter 是世界公认的并购领域里的领先者。投资银行经常自己承担投资风险，不断直接参与LBO，母公司收回子公司全部股本使之脱离，附带利益和过渡贷款。你的任务是分析适当的参与形式。
项目融资：
项目融资的范围正在迅速扩大。一般来说，项目融资包括为公司或政府主要的资产负债表上提到的基础设施和石油资产项目筹资。有些银行如 CSFB 或Deuttsche 在这些方面非常活跃。项目融资交易已经成为将外资引入一些国家的最主要的渠道之一，如引入中国、也门和印度尼西亚。当其它借款枯竭时，一般来说项目融资仍然存在。
交易：
投资银行中一些最令人羡慕的工作往往是交易。你的责任是在商业银行、投资银行和大型的机构投资者中进行资产、股票、货币（指 Forex 或FX），选择权或期货的买卖。交易是一件复杂的工作，因此要求你具有全面的市场知识、金融工具和心理直觉。资本交易的工作经常包括给其他交易者“讲一个故事”，告诉他们买你的股票的原因。固定收入交易的工作要求有很强的分析问题的能力并具备必要的资金来管理交易比较少的市场中大量盘存。衍生品交易者需要很强的分析能力（你最好具备工科学位）。外汇交易更主要的是要求交易者对市场、政治和宏观经济方面有直觉感。除此之外，还有其它类型的交易工作。
结构化融资：
结构化融资的工作包括金融工具的创新，以便重新将资金流入投资者中（作为有资产支持的证券）。普通的有资产支持的证券会将应收信用卡，自动应收贷款或抵押贷款证券化。这种市场在1998-1999年非常火暴，并很可能变成期货市场。其它也在不断变化的领域有资产支持的证券商业票据、有抵押的债券债务(CBOs)和重新包装的资产工具。如果你能同时具有绘制电子表格、会计和法律的技能是非常有利的。
衍生品:
衍生品的价值来自原始证券。选择权、换汇和期货都属于衍生品。衍生品市场是巨大的，并且越来越规范。衍生品业务是一项高利润的业务。它对华尔街上的从事这项工作的人员的要求很高。衍生品市场将来很可能在换汇交易的形式上以及外来选择权方面进行改革。这将会创造出专业性更强的工作。如果你对这类工作感兴趣，可以先学习数学。除了销售技能非常重要外，你将听到的另一个词是“结构化票据”。一个结构化票据可以是根据客户的需求在选择权中出现的外汇借贷，远期或期货合同。
咨询服务：
投资银行为大众或私人提供并购和金融方面的咨询服务。许多投资银行都设有风险管理的咨询服务。
资本和固定收入研究:
一般来说，证券分析员会被指定做某个企业或地区的分析研究。你的任务可能是向投资者推荐股票和债券的情况。你要不断与公司和机构投资者联系。投资银行经常雇用那些有在企业工作经验的人做分析员（相反却不是刚毕业的MBA或本科生）。比如，你是某个餐馆的经理，你可能就会成为餐馆行业的分析员。了解业务、能够和客户交流并有良好的预见性是做好这项工作的重点。分析员主要指电脑分析人员和基础研究人员。基础研究人员会根据公司的发展状况，CEO的状况提供一些建议。相反，电脑分析员要通过计算机程序来确认贬值的证券、市场甚至是整个国家。这类工作不多，但由于个工作要求的专业技能很高，其收入也很高。
国际交易和新兴市场：
尽管亚洲出现经济危机，但投资者对证券发行的需求仍然很旺。公司会派出很多专业的交易人员和专家来满足这个要求。另一个有高需求的领域是新兴市场，如泰国或墨西哥的市场。公司需要雇用一些既精通外语，又愿意常出差，并了解新兴市场的员工。
财政：
市政公债市场巨大并需要分析学家、市政咨询专家和商人来研究它。搞财政的工作很难争取到，但是这行的报酬却很高。曾在市政行政部门工作过的人会对投资银行业务有很强的吸引力。市政方面的主要增长点是项目融资这一块。比如Tucker Anthony 的财政高级VP在1995年8月发表讲话说，以前他从事的投资银行业务中，项目融资占15%，而现在增加到了60%。
证券交易经纪人：
证券交易经纪人的工作是为个人卖股票、债券、和其它投资服务。有些经纪人只为收入高的客户服务，而有些经纪人则不加以区分地为所有客户服务。尽管这个行业开始做时很难（尤其是你的年龄要比客户小的多），但只要你具有相当水平的交易技能，你的回报是很高的。据证券行业协会报道，1993年证券交易经纪人的平均年收入为128,553美元。有些经纪人的年收入甚至达到了500,000美元。因此，最好能进入象Merrill Lynch这样的公司，接受良好的培训。
机构销售
机构销售的工作主要是负责将有关特殊证券的信息传递给机构投资者。你很可能与你公司里的分析专家和销售人员有频繁的接触。销售技巧和掌握产品知识是至关重要的。它关系到你是否有能力说服繁忙的机构投资者。投资银行中的销售的工作（卖方）经常是在为转向买方（保险公司和共同基金会）做准备。两种工作都可将你置身于受谴责的境地。华尔街上常流传这样的笑话：买者和卖者有什么区别呢？答案：如果你是卖方，他们只会在挂掉电话后诅咒你。诅咒可以创造财富。据证券行业协会报道，1995年，机构销售人员的平均年收入超过300,000美元。
计算机专家
在华尔街上可以找到有关计算机和信息系统方面最好的工作。一个公司如果有几套好的销售软件或办公软件就非常有优势。1994年和1995年，华尔街上许多大公司都在全国寻找能开发UNIX 的工作站软件和金融主机应用程序。对优秀的计算机人才来说，6位数的工资也不算奇怪。
资信评估分析员：
进入投资银行的一种方法就是从资信评估分析员做起。这个工作的薪金不是很高，升职的机会也不是很多。干投资银行的人对这种情况非常清楚，因此经常以资信评估机构的名义吸引新的资信评估分析员。Moody的资信为50亿美元证券和560名分析员。Standard and Poor的资信为20亿美元证券和800名分析员。资信评估机构是获利高的机构，它的任务是对公司和独立实体进行信贷能量评估定级。这一行对人员的能力和专业要求都很高。
薪金
一个本科生，他最开始从事投资银行业务的薪金标准大概是25000美元到50000美元，其中包括奖金（一般担任助理或普通分析员职务）。有MBA学历的毕业生薪金标准大约是60000美元到135000美元。不同的公司，不同的地区，薪金标准也不相同。一般刚开始的时候，奖金占薪金的10%到50%，然后慢慢增加到1到3倍。目前的趋势是薪金中包括所有者权益，至少三年以上不能流动。如果你是一名分析员，你可能不会遇到这种情况。这样做对银行有利，因为它减缓了人才的流动性。
建议：有些公司付给你的薪金比别的公司少，其实这都无关紧要。重要的是你自己不要泄气。刚一开始，你所获得的经验和你接触的人的价值要比你目前挣的钱重要的多。你要最大限度地扩大你目前的价值，并为以后的发展做好准备。你目前的薪金会很低，但如果你幸运的话，也许会碰到很高的。
趋势
向投资银行发送个人简历的最佳时间是在11月和12月。招聘一般是在1月和2月进行。但就算到了2月份你也不要停止发简历，因为你还没有找到你的目标。Salomon Smith Barney的分析员说：“能够做到持之以恒是非常重要的。实际上这是一种数字游戏。和许多人打交道。但同时，你要根据你所接触的不同行业的人和不同类型的银行来修改你自己的简历。这意味着找工作是件非常花时间的事情。”
别忘了发完简历后要确认以下。通常，招聘工作结束的时间是在4月份。也有很多人在3月到7月份之间换工作。这就是说，很多银行在7月份仍会招聘，挖到更合适的人才。令人觉得奇怪的是，寻找全职工作的最佳时间是在春夏两季的季末。
投资银行是世界上最全球化的行业之一。投资银行家花许多时间在Peoria和Seattle寻找合作伙伴。但他们却很可能只和世界另一端的投资者和证券发行者合作——也许是香港、Bulgaria甚至是非洲。
电子投资银行刚刚发展起来，并朝着正规的方向发展。有些公司如E-Trade 可提供网上股票交易。其它机构如DLJ和Deutsche 银行可提供网上股票和债券的电子交易。
概述
投资银行帮助企业和政府发行证券,帮助投资者购买证券,管理金融资产,进行证券交易,提供金融咨询服务。处于领先地位的投资银行包括Merrill Lynch（美林）, Salomon Smith Barney, Morgan Stanley Dean Witter（摩根·斯坦利） 和Goldman Sachs（高盛）。这些投行公司在庞大的市场中运作。.其他的一些投资银行只在一个地区营业，或处于中等规模的市场中。(如 Piper Jaffray)。还有一些规模小的专业公司被成为“精品店”。它们很可能只侧重于股票交易，并购咨询，技术分析或项目交易。这些公司对某种证券有深刻的了解。公司内部由不同的部门组成。在大多数的公司中，证券持有者进行交易，证券发行者（公司和政府）从事投资银行业务。
值得注意的是由于受去年发生的事件（如：巴西贬值和俄罗斯丧失偿还能力）的影响，从1999年的春天开始，投资银行市场一直疲软。失业情况非常普遍，并很可能持续下去。尽管如此，仍有不少人认为就业机会很多, 特别是在电信行业, 在欧洲市场和电子贸易领域中。实际上，只要人们能够重视自身的技能培养，不断学习，多做一些信息咨询和实际调查，问题就容易解决了。如果你看准了98/99年投资银行市场，就会有人告诫你，在这个行业里找工作，一定要做好充分准备，并要有持之以衡的精神。也许明年最好的工作是在Corporate American 或是其它领域中，比如市场研究。规模较大的公司的员工一直很多，并且流动性强。
注：目前市场恶化造成的冲击很可能加快投资银行部门的稳定性。引用Bloomberg在1998年11月发表的讲话：“ Allen Wheat, Credit Suisse第一波士顿主席和总经理，Credit Suisse 集团的投资银行总裁在接受意大利商务日报 Sole/24 Ore的采访中说，‘金融市场恶化的程度已经加快了银行产业的变化，特别是加快了其逐步形成稳定过程。那些有潜力在国际市场中发展的银行，除了Credit Suisse外，只有欧洲的银行是UBS AG。’但是他们在开展投资银行业务方面已经放慢了速度。Deutsche 银行可能会“通过购买美国银行重新回到游戏中来”。（次处为报纸引用他的话）。一些机构，如Lehman, Bankers Trust ,甚至是J.P. Morgan也要注定要被兼并。9月3日，在谈到CSFB（Credit Suisse 第一波士顿）对俄罗斯的策略时说，银行的外汇收支差总值达21.5亿美元。Wheat 说， 银行的策略是非常清楚的，但不幸的是，结果不尽人意。
能力和要求
投资银行希望员工有很强的分析和社交能力。一些工作更偏重于某一项技能。（如，经纪人主要是销售者。）一份资产分析家的工作要求有分析和社交的能力。要求的能力包括：
社交能力： 强销售能力：一般 交流能力： 强分析能力： 强
综合能力： 强 创造性： 强 革新性： 一般 工作时间： 50-90/周
说明投资银行业务是一个高层次、高风险、高回报的行业。当你进入这个行业时，你的工作时间一般会加长，但是这项工作确很令人兴奋。因此要做好心理准备，接受当你过度疲劳时会产生的挫败感和工作情况顺利时的喜悦感。
开拓投资银行业务相对来说是比较难的事情。因此你要准备好，在你自身条件全面满足后，要不断寻找可能有机会合作的公司。
投资银行家在电影中一般是社会蔑视的对象。他们真的是一群贪婪的自恋狂吗？他们也许是，但是不要忘记，由于他们将资本引入公司，使得人们的生活质量在不断改变。在这个过程中，他们起到了决定性的社会作用。
许多大学毕业生在刚刚进入投资银行时，都是从分析员作起。要想成功地做好这个工作，你必须具有特别的技能，要有很好的处理电子表格的技能并且能思路清晰地分析问题。接下来，你有可能会成为合作伙伴。这需要同样的技能，只是要求更高一些。 在你事业的中期，一般情况下，你的成功取决于你能否和客户交流并顺利做成生意的能力。同时，你还要了解市场情况，政治和宏观经济情况以及运作机制。投资银行的一些工作要求很强的数学功底。如果你的数学很好，你可以考虑在理工类学科中再拿一个更高的学位（如随机演算和微分方程学）。然后继续在价格学和股票评估等学科中选修几门更深的金融课程。最后在华尔街申请一个研发部门。（Carnegir-Mellon 的FAST 课程是培养适合在华尔街工作的数学和物理人材的最好的课程之一。）
在大多数分析员的工作中，正确地分析财务数字是非常重要的。如果你想成为一个证券分析员，你必须努力获得CFA（注册金融会计师）职称。如果有一天，你有志成从事“融资”的业务, 并成为公司的金融分析家，你最好再考虑一下考取CMA（注册管理会计师）。
很难说什么样的人就是一个优秀的交易者。但至少你必须能充分了解市场，反映迅速，做出准确分析。建议你读一读Michael Lewis 的Liars Poker一书，你会学到很多有关交易方面的东西。
大多数公司的办公地点不在纽約。尽管你想在其它地方工作，但你主要的寻找工作的地点仍可能集中在纽約。其它一些值得你注意的地方还包括：香港，东京，伦敦，莫斯科和新加坡。如果你想找一个投资银行的工作，你应该多去几次纽約。
在投资银行中获得成功的关键是团体协作。能够将每一个人团结起来，共同为客户服务是一个巨大的挑战，并且回报很可能是非常高的。毫无疑问，有科学和法律背景的人对投资银行来说价值是非常高的。科学家可以从事任何类型的工作，从计算金融衍生品到生物工程学。律师可以协助设计新的证券，进行租赁经营并用他们杰出的分析问题的本领与客户交流。这就是说，有必要学会推销你自己。重新回到著名的学府读MBA不是件坏事。然后再重新在考虑投资银行中寻找工作。
进入投资银行这个行业的关键是关系网。也许你早已被这种关系网吸引住了，但如果你没有,就应迅速建立你自己的关系网。多参加一些产业会议，在你的同学通讯录里找一些从事商业的朋友。记住，你的关系网不一定马上就能起到作用。如果你还年轻，但还没有取得MBA学位，你应该努力进最好的学校学习。
投入到投资银行这个行业以后，通常情况下，你应负责把你接受的每一个项目即时地做好，无论是写报告、绘制电子表格、谈生意、做研发还是制定工作计划。然后，一旦你有机会接触客户并参与创造利润，并且只要这时，你能为公司谈成生意，你的回报会是相当丰厚的。如果你已经成为高管（通常为董事，管理董事以及更高层管理人员）你必须要承担更多的风险。在这种职务上，不能很好地胜任工作的人，就要被迫离职。
工作描述
公司理财：
如果你担任合作金融这个职务，你应该帮助公司为新的项目和以后可能有的项目集资。你应该能够做到通过资产、负债、可转换证券、优先证券、或衍生品证券等方式确定客户所需的资金数量和构成。作为合作金融的一名新的分析员，通常你应该更多的和客户打交道。Merrill Lynch, Paine Webber和 Salomon/ SmithBarney是公认的合作金融行业中的权威。在合作金融中的一些工作是指投资银行中的一些职务。如果你听到有人被称为IBD 或IBK，他们都在从事合作金融。
并购：
使一个公司购买另一个公司的交易是许多投资银行资金收入的一个重要来源。这种做法在1995年华尔街上是十分流行的。并且在90年代的剩下的时间里会继续持续下去。如果你从事这类工作，你应该成为客户的咨询者，为交易估值、创造性地确定买卖结构、并协商对自己有利的条款。Goldman Sachs Morgan Stanley/Dean Witter 是世界公认的并购领域里的领先者。投资银行经常自己承担投资风险，不断直接参与LBO，母公司收回子公司全部股本使之脱离，附带利益和过渡贷款。你的任务是分析适当的参与形式。
项目融资：
项目融资的范围正在迅速扩大。一般来说，项目融资包括为公司或政府主要的资产负债表上提到的基础设施和石油资产项目筹资。有些银行如 CSFB 或Deuttsche 在这些方面非常活跃。项目融资交易已经成为将外资引入一些国家的最主要的渠道之一，如引入中国、也门和印度尼西亚。当其它借款枯竭时，一般来说项目融资仍然存在。
交易：
投资银行中一些最令人羡慕的工作往往是交易。你的责任是在商业银行、投资银行和大型的机构投资者中进行资产、股票、货币（指 Forex 或FX），选择权或期货的买卖。交易是一件复杂的工作，因此要求你具有全面的市场知识、金融工具和心理直觉。资本交易的工作经常包括给其他交易者“讲一个故事”，告诉他们买你的股票的原因。固定收入交易的工作要求有很强的分析问题的能力并具备必要的资金来管理交易比较少的市场中大量盘存。衍生品交易者需要很强的分析能力（你最好具备工科学位）。外汇交易更主要的是要求交易者对市场、政治和宏观经济方面有直觉感。除此之外，还有其它类型的交易工作。
结构化融资：
结构化融资的工作包括金融工具的创新，以便重新将资金流入投资者中（作为有资产支持的证券）。普通的有资产支持的证券会将应收信用卡，自动应收贷款或抵押贷款证券化。这种市场在1998-1999年非常火暴，并很可能变成期货市场。其它也在不断变化的领域有资产支持的证券商业票据、有抵押的债券债务(CBOs)和重新包装的资产工具。如果你能同时具有绘制电子表格、会计和法律的技能是非常有利的。
衍生品:
衍生品的价值来自原始证券。选择权、换汇和期货都属于衍生品。衍生品市场是巨大的，并且越来越规范。衍生品业务是一项高利润的业务。它对华尔街上的从事这项工作的人员的要求很高。衍生品市场将来很可能在换汇交易的形式上以及外来选择权方面进行改革。这将会创造出专业性更强的工作。如果你对这类工作感兴趣，可以先学习数学。除了销售技能非常重要外，你将听到的另一个词是“结构化票据”。一个结构化票据可以是根据客户的需求在选择权中出现的外汇借贷，远期或期货合同。
咨询服务：
投资银行为大众或私人提供并购和金融方面的咨询服务。许多投资银行都设有风险管理的咨询服务。
资本和固定收入研究:
一般来说，证券分析员会被指定做某个企业或地区的分析研究。你的任务可能是向投资者推荐股票和债券的情况。你要不断与公司和机构投资者联系。投资银行经常雇用那些有在企业工作经验的人做分析员（相反却不是刚毕业的MBA或本科生）。比如，你是某个餐馆的经理，你可能就会成为餐馆行业的分析员。了解业务、能够和客户交流并有良好的预见性是做好这项工作的重点。分析员主要指电脑分析人员和基础研究人员。基础研究人员会根据公司的发展状况，CEO的状况提供一些建议。相反，电脑分析员要通过计算机程序来确认贬值的证券、市场甚至是整个国家。这类工作不多，但由于个工作要求的专业技能很高，其收入也很高。
国际交易和新兴市场：
尽管亚洲出现经济危机，但投资者对证券发行的需求仍然很旺。公司会派出很多专业的交易人员和专家来满足这个要求。另一个有高需求的领域是新兴市场，如泰国或墨西哥的市场。公司需要雇用一些既精通外语，又愿意常出差，并了解新兴市场的员工。
财政：
市政公债市场巨大并需要分析学家、市政咨询专家和商人来研究它。搞财政的工作很难争取到，但是这行的报酬却很高。曾在市政行政部门工作过的人会对投资银行业务有很强的吸引力。市政方面的主要增长点是项目融资这一块。比如Tucker Anthony 的财政高级VP在1995年8月发表讲话说，以前他从事的投资银行业务中，项目融资占15%，而现在增加到了60%。
证券交易经纪人：
证券交易经纪人的工作是为个人卖股票、债券、和其它投资服务。有些经纪人只为收入高的客户服务，而有些经纪人则不加以区分地为所有客户服务。尽管这个行业开始做时很难（尤其是你的年龄要比客户小的多），但只要你具有相当水平的交易技能，你的回报是很高的。据证券行业协会报道，1993年证券交易经纪人的平均年收入为128,553美元。有些经纪人的年收入甚至达到了500,000美元。因此，最好能进入象Merrill Lynch这样的公司，接受良好的培训。
机构销售
机构销售的工作主要是负责将有关特殊证券的信息传递给机构投资者。你很可能与你公司里的分析专家和销售人员有频繁的接触。销售技巧和掌握产品知识是至关重要的。它关系到你是否有能力说服繁忙的机构投资者。投资银行中的销售的工作（卖方）经常是在为转向买方（保险公司和共同基金会）做准备。两种工作都可将你置身于受谴责的境地。华尔街上常流传这样的笑话：买者和卖者有什么区别呢？答案：如果你是卖方，他们只会在挂掉电话后诅咒你。诅咒可以创造财富。据证券行业协会报道，1995年，机构销售人员的平均年收入超过300,000美元。
计算机专家
在华尔街上可以找到有关计算机和信息系统方面最好的工作。一个公司如果有几套好的销售软件或办公软件就非常有优势。1994年和1995年，华尔街上许多大公司都在全国寻找能开发UNIX 的工作站软件和金融主机应用程序。对优秀的计算机人才来说，6位数的工资也不算奇怪。
资信评估分析员：
进入投资银行的一种方法就是从资信评估分析员做起。这个工作的薪金不是很高，升职的机会也不是很多。干投资银行的人对这种情况非常清楚，因此经常以资信评估机构的名义吸引新的资信评估分析员。Moody的资信为50亿美元证券和560名分析员。Standard and Poor的资信为20亿美元证券和800名分析员。资信评估机构是获利高的机构，它的任务是对公司和独立实体进行信贷能量评估定级。这一行对人员的能力和专业要求都很高。
薪金
一个本科生，他最开始从事投资银行业务的薪金标准大概是25000美元到50000美元，其中包括奖金（一般担任助理或普通分析员职务）。有MBA学历的毕业生薪金标准大约是60000美元到135000美元。不同的公司，不同的地区，薪金标准也不相同。一般刚开始的时候，奖金占薪金的10%到50%，然后慢慢增加到1到3倍。目前的趋势是薪金中包括所有者权益，至少三年以上不能流动。如果你是一名分析员，你可能不会遇到这种情况。这样做对银行有利，因为它减缓了人才的流动性。
建议：有些公司付给你的薪金比别的公司少，其实这都无关紧要。重要的是你自己不要泄气。刚一开始，你所获得的经验和你接触的人的价值要比你目前挣的钱重要的多。你要最大限度地扩大你目前的价值，并为以后的发展做好准备。你目前的薪金会很低，但如果你幸运的话，也许会碰到很高的。
趋势
向投资银行发送个人简历的最佳时间是在11月和12月。招聘一般是在1月和2月进行。但就算到了2月份你也不要停止发简历，因为你还没有找到你的目标。Salomon Smith Barney的分析员说：“能够做到持之以恒是非常重要的。实际上这是一种数字游戏。和许多人打交道。但同时，你要根据你所接触的不同行业的人和不同类型的银行来修改你自己的简历。这意味着找工作是件非常花时间的事情。”
别忘了发完简历后要确认以下。通常，招聘工作结束的时间是在4月份。也有很多人在3月到7月份之间换工作。这就是说，很多银行在7月份仍会招聘，挖到更合适的人才。令人觉得奇怪的是，寻找全职工作的最佳时间是在春夏两季的季末。
投资银行是世界上最全球化的行业之一。投资银行家花许多时间在Peoria和Seattle寻找合作伙伴。但他们却很可能只和世界另一端的投资者和证券发行者合作——也许是香港、Bulgaria甚至是非洲。
电子投资银行刚刚发展起来，并朝着正规的方向发展。有些公司如E-Trade 可提供网上股票交易。其它机构如DLJ和Deutsche 银行可提供网上股票和债券的电子交易。
Corporate Finance
In a corporate finance position you would work to help companies raise capital needed for new projects and ongoing operations. You would work to determine the amount and structure of fund needs of a client through equity, debt, convertibles, preferred, asset-backs, or derivative securities. As a starting analyst in corporate finance you would usually work on a client team and would have responsibilities to prepare registration statements, attend road shows where investors are sold on securities etc. Merrill Lynch, PaineWebberand Salomon/SmithBarneyare acknowledged powers in corporate finance. Sometimes jobs in corporate finance are referred to as investment banking positions. When you hear phrases such as IBD or IBK people are referring to corporate finance.
Mergers and Acquisitions
Setting up deals where one company buys another is an important source of fee income for many investment banks. This has been a hot area on Wall Street in the 1990s and is likely to continue hopping through the next century. If you go to work in this area you would help out with a team which acts as an advisor to a client, values transactions, creatively structures deals and negotiates favorable terms. Worldwide, Goldman Sachsand Morgan Stanley/Dean Witterare the recognized leaders in M&A advisory. Investment banks have increasingly participated directly in LBOs, spinoffs and bridge loans, often by taking their own investment stake (known as merchant banking). Your duties could involve analyzing the appropriate form of participation. Expect to start running lots of valuation models on spreadsheets and gradually get more client focus as you progress.
Project Finance
The field of project finance is booming. Typically project finance involves funding infrastructure and oil capital projects off of a company or government's main balance sheet. Banks like CSFBand Deutsche Bankare active in this area. Project financed deals have been some of the first significant conduits of foreign capital into countries such as China, Yemen and Indonesia. When other sources of borrowing dry up, project finance is generally still there.
Trading
Some of the most desirable jobs in investment banking are in sales and trading. Your responsibilities would involve undertaking transactions in equities, bonds, currencies (referred to as Forex or FX), options or futures with traders at commercial banks, investment banks and large institutional investors. Trading can be tumultuous and requires a thorough knowledge of markets, financial instruments and an intuition for human psychology. Equities trading positions often involve "telling a story" to other traders about why they should purchase your stock. Fixed income trading positions call for strong analytical know-how and the wherewithal to manage large amounts of inventory in an often-thin market. Derivatives traders need very strong analytical know-how (perhaps even an engineering degree). Foreign exchange trading is based more on your instincts about markets, politics and macroeconomics. There are a variety of other types of trading jobs in agency securities, commercial paper, repos etc.
Structured Finance
Positions in structured finance involve the creation of financing vehicles to redirect cash flows to investors (known as asset-backed securities). Typical asset-backs securitize credit card receivables, auto loan receivables or mortgages. This market is red hot in 1998-9 and is likely to grow considerably into the future. Other growth areas include asset-backed commercial paper, collateralized bond obligations (CBOs), and repackaged asset vehicles. It would be beneficial to have a solid combination of spreadsheet, accounting and legal skills. Most students coming out of school know very little about this area; so you can get an edge by educating yourself by reading articles in the area from publications like Standard and Poors CreditWeekand picking up lingo like "early-am risk" from talking to market participants on informational interviews.
Derivatives
Derivatives derive their value from another primitive security. Options, swaps and futures are examples of derivatives. The market for derivatives is gigantic and subject to increasing scrutiny. The derivatives business is highly profitable and the demand on Wall Street for skilled derivatives practitioners has been very high. This market is likely to see further innovation in the forms which swaps take and in the area of exotic options. This will create further specialized job areas. If this area interests you, start studying math (especially stochastic differential equations and derivation of common models like Black-Scholes). Questions about models are likely to come up in interviews. Sales skills are also important in this area. Another related word you will hear is "structured notes." A structured note might be a foreign exchange loan, forward or futures contract with built in options structured to a client's need. So, for example, a client that will no longer be worried about their position once the Yen falls below 85 to the dollar could buy a "knock-out" option on a forward that will not be active once the yen/dollar rate falls below a floor. A related and popular area is credit derivatives which might involve selling an option which pays off when a defaults on one of its debt obligations.
Advisory
Advisory services are often provided by investment banks to public and private clients involved in M&A and financings. The area of risk management advisory has been popular at many investment banks. Often work will be done to determine a client's value, options for creating value or on a client's industry conditions.
Equity and Fixed Income Research
Security analysts are usually assigned to an industry or region. You could be responsible for making buy or sell recommendations to investors about a stock or bond. Your duties would involve visiting companies and heavy telephone contact with institutional investors. Investment banks often like to hire people with industry experience into analyst positions (as opposed to fresh MBAs or undergrads). For example, if you were a restaurant executive you could probably get hired as a restaurant industry analyst with a healthy pay raise. Knowing the business, being able to talk to clients well and having good forecasts are key in this position. You want to help your firm avoid the dreaded Worst Analysts list. Analysts are often referred to as either quants or fundamentalists. Fundamentalists make recommendations based on what's going on at a company--how's the CEO, what are the earnings etc? In contrast, quants look at computer programs that identify undervaluated securities, markets or even whole countries. There are fewer quant jobs, but they often pay more because the required skills are greater.
International Sales/Emerging Markets
A rapidly growing area is in international sales. Despite the Asia crisis, investor demand for securities issued in emerging markets is strong. Firms are meeting this demand by providing sales personnel and analysts specialized in these markets. Another area of high demand is in emerging markets such as Thailand or Mexico. Firms are looking for people with specific language skills, a willingness to travel and knowledge of these emerging markets. You can often rise very quickly in this area, even if you are quite young. With volatility in emerging market bonds in 1998, be sure to do your research carefully--the Russia crisis has triggered layoffs at a number of firms. A great place to track goings on is through Bloomberg'sweb site.
Public Finance
The market for municipal bonds is very large and calls for analysts, municipal advisors and traders. Positions in public finance are usually difficult to obtain but offer high rewards. Persons with previous experience in public administration would be attractive to investment banks in this capacity. A major growth area in municipals is in the project finance area. For example, Senior VP of public finance at Tucker Anthony, stated in August 1995 that his area has moved from 15% project finance before to 60% today (Bond Buyer, 8/15/95).
Retail Brokerage (Stockbroker)
Stockbrokers are in the business of selling stocks, bonds, insurance and other investments to individuals. Some brokers specialize in high net worth individuals while others span a variety of clients. This is a tough business to get started in (especially if you are much younger than your clients), but the rewards to a good people person with great sales skills are high. The Securities Industry Association reports that the average retail broker earned $128,553 in 1993. And many brokers earn upwards of $500,000. Try to start with a firm like Merrill Lynchthat has a good training program. A good web page to look at if you are interested in being a broker is the Syndicate.
Institutional Sales
In institutional sales you would be responsible for conveying information about particular securities to institutional investors. You would be likely to have heavy contact with portfolio managers and your own firm's analysts and traders. Sales skills and product knowledge are crucial in this area as is the ability to get through to busy institutional investors. Working in sales for an investment bank (on the sell side) is often good preparation to move over to the buy side (insurance companies and mutual funds). Both types of jobs can be brutal and subject you to abuse. A common Wall Street Joke: What's the difference between a sell side and a buy side player? Answer: On the sell side they curse you only after they hang up the telephone. Taking abuse can be lucrative. The average salaries in institutional sales in 1995 exceeded $300,000 according to the Securities Industry Association.
Computer Guru
Some of the best jobs in computers and information systems are on Wall Street. A firm with good trading software, pricing software, or back office software can get a strong competitive advantage. In 1999 the big headhunters and firms on the Street have been scouring the country for people who can develop UNIX-based workstation software and financial mainframe applications. Six figure salaries are not uncommon for really good systems people.
Ratings Analyst:
One way to break into investment banking is to start as a ratings agency analyst. The pay is relatively low and advancement opportunities aren't great, and the investment banks know it and use the agencies as hunting grounds for new analysts. Moody's rates $5 trillion worth of securities and has 560 analysts. Standard and Poors rates $2 trillion worth of securities and has 800 analysts. These agencies are highly profitable and grade the credit quality of companies and sovereign entities accessing the markets. Most revenue comes from issuer fees. There is high demand for persons who can rate structured finance and corporate bonds intelligently. "We are not auditors and we don't use lie detectors, so it's up to our analysts to be smart enough to ask the right questions," says Edward Emmer, executive managing director and head of S&P's corporate ratings department.
In a corporate finance position you would work to help companies raise capital needed for new projects and ongoing operations. You would work to determine the amount and structure of fund needs of a client through equity, debt, convertibles, preferred, asset-backs, or derivative securities. As a starting analyst in corporate finance you would usually work on a client team and would have responsibilities to prepare registration statements, attend road shows where investors are sold on securities etc. Merrill Lynch, PaineWebberand Salomon/SmithBarneyare acknowledged powers in corporate finance. Sometimes jobs in corporate finance are referred to as investment banking positions. When you hear phrases such as IBD or IBK people are referring to corporate finance.
Mergers and Acquisitions
Setting up deals where one company buys another is an important source of fee income for many investment banks. This has been a hot area on Wall Street in the 1990s and is likely to continue hopping through the next century. If you go to work in this area you would help out with a team which acts as an advisor to a client, values transactions, creatively structures deals and negotiates favorable terms. Worldwide, Goldman Sachsand Morgan Stanley/Dean Witterare the recognized leaders in M&A advisory. Investment banks have increasingly participated directly in LBOs, spinoffs and bridge loans, often by taking their own investment stake (known as merchant banking). Your duties could involve analyzing the appropriate form of participation. Expect to start running lots of valuation models on spreadsheets and gradually get more client focus as you progress.
Project Finance
The field of project finance is booming. Typically project finance involves funding infrastructure and oil capital projects off of a company or government's main balance sheet. Banks like CSFBand Deutsche Bankare active in this area. Project financed deals have been some of the first significant conduits of foreign capital into countries such as China, Yemen and Indonesia. When other sources of borrowing dry up, project finance is generally still there.
Trading
Some of the most desirable jobs in investment banking are in sales and trading. Your responsibilities would involve undertaking transactions in equities, bonds, currencies (referred to as Forex or FX), options or futures with traders at commercial banks, investment banks and large institutional investors. Trading can be tumultuous and requires a thorough knowledge of markets, financial instruments and an intuition for human psychology. Equities trading positions often involve "telling a story" to other traders about why they should purchase your stock. Fixed income trading positions call for strong analytical know-how and the wherewithal to manage large amounts of inventory in an often-thin market. Derivatives traders need very strong analytical know-how (perhaps even an engineering degree). Foreign exchange trading is based more on your instincts about markets, politics and macroeconomics. There are a variety of other types of trading jobs in agency securities, commercial paper, repos etc.
Structured Finance
Positions in structured finance involve the creation of financing vehicles to redirect cash flows to investors (known as asset-backed securities). Typical asset-backs securitize credit card receivables, auto loan receivables or mortgages. This market is red hot in 1998-9 and is likely to grow considerably into the future. Other growth areas include asset-backed commercial paper, collateralized bond obligations (CBOs), and repackaged asset vehicles. It would be beneficial to have a solid combination of spreadsheet, accounting and legal skills. Most students coming out of school know very little about this area; so you can get an edge by educating yourself by reading articles in the area from publications like Standard and Poors CreditWeekand picking up lingo like "early-am risk" from talking to market participants on informational interviews.
Derivatives
Derivatives derive their value from another primitive security. Options, swaps and futures are examples of derivatives. The market for derivatives is gigantic and subject to increasing scrutiny. The derivatives business is highly profitable and the demand on Wall Street for skilled derivatives practitioners has been very high. This market is likely to see further innovation in the forms which swaps take and in the area of exotic options. This will create further specialized job areas. If this area interests you, start studying math (especially stochastic differential equations and derivation of common models like Black-Scholes). Questions about models are likely to come up in interviews. Sales skills are also important in this area. Another related word you will hear is "structured notes." A structured note might be a foreign exchange loan, forward or futures contract with built in options structured to a client's need. So, for example, a client that will no longer be worried about their position once the Yen falls below 85 to the dollar could buy a "knock-out" option on a forward that will not be active once the yen/dollar rate falls below a floor. A related and popular area is credit derivatives which might involve selling an option which pays off when a defaults on one of its debt obligations.
Advisory
Advisory services are often provided by investment banks to public and private clients involved in M&A and financings. The area of risk management advisory has been popular at many investment banks. Often work will be done to determine a client's value, options for creating value or on a client's industry conditions.
Equity and Fixed Income Research
Security analysts are usually assigned to an industry or region. You could be responsible for making buy or sell recommendations to investors about a stock or bond. Your duties would involve visiting companies and heavy telephone contact with institutional investors. Investment banks often like to hire people with industry experience into analyst positions (as opposed to fresh MBAs or undergrads). For example, if you were a restaurant executive you could probably get hired as a restaurant industry analyst with a healthy pay raise. Knowing the business, being able to talk to clients well and having good forecasts are key in this position. You want to help your firm avoid the dreaded Worst Analysts list. Analysts are often referred to as either quants or fundamentalists. Fundamentalists make recommendations based on what's going on at a company--how's the CEO, what are the earnings etc? In contrast, quants look at computer programs that identify undervaluated securities, markets or even whole countries. There are fewer quant jobs, but they often pay more because the required skills are greater.
International Sales/Emerging Markets
A rapidly growing area is in international sales. Despite the Asia crisis, investor demand for securities issued in emerging markets is strong. Firms are meeting this demand by providing sales personnel and analysts specialized in these markets. Another area of high demand is in emerging markets such as Thailand or Mexico. Firms are looking for people with specific language skills, a willingness to travel and knowledge of these emerging markets. You can often rise very quickly in this area, even if you are quite young. With volatility in emerging market bonds in 1998, be sure to do your research carefully--the Russia crisis has triggered layoffs at a number of firms. A great place to track goings on is through Bloomberg'sweb site.
Public Finance
The market for municipal bonds is very large and calls for analysts, municipal advisors and traders. Positions in public finance are usually difficult to obtain but offer high rewards. Persons with previous experience in public administration would be attractive to investment banks in this capacity. A major growth area in municipals is in the project finance area. For example, Senior VP of public finance at Tucker Anthony, stated in August 1995 that his area has moved from 15% project finance before to 60% today (Bond Buyer, 8/15/95).
Retail Brokerage (Stockbroker)
Stockbrokers are in the business of selling stocks, bonds, insurance and other investments to individuals. Some brokers specialize in high net worth individuals while others span a variety of clients. This is a tough business to get started in (especially if you are much younger than your clients), but the rewards to a good people person with great sales skills are high. The Securities Industry Association reports that the average retail broker earned $128,553 in 1993. And many brokers earn upwards of $500,000. Try to start with a firm like Merrill Lynchthat has a good training program. A good web page to look at if you are interested in being a broker is the Syndicate.
Institutional Sales
In institutional sales you would be responsible for conveying information about particular securities to institutional investors. You would be likely to have heavy contact with portfolio managers and your own firm's analysts and traders. Sales skills and product knowledge are crucial in this area as is the ability to get through to busy institutional investors. Working in sales for an investment bank (on the sell side) is often good preparation to move over to the buy side (insurance companies and mutual funds). Both types of jobs can be brutal and subject you to abuse. A common Wall Street Joke: What's the difference between a sell side and a buy side player? Answer: On the sell side they curse you only after they hang up the telephone. Taking abuse can be lucrative. The average salaries in institutional sales in 1995 exceeded $300,000 according to the Securities Industry Association.
Computer Guru
Some of the best jobs in computers and information systems are on Wall Street. A firm with good trading software, pricing software, or back office software can get a strong competitive advantage. In 1999 the big headhunters and firms on the Street have been scouring the country for people who can develop UNIX-based workstation software and financial mainframe applications. Six figure salaries are not uncommon for really good systems people.
Ratings Analyst:
One way to break into investment banking is to start as a ratings agency analyst. The pay is relatively low and advancement opportunities aren't great, and the investment banks know it and use the agencies as hunting grounds for new analysts. Moody's rates $5 trillion worth of securities and has 560 analysts. Standard and Poors rates $2 trillion worth of securities and has 800 analysts. These agencies are highly profitable and grade the credit quality of companies and sovereign entities accessing the markets. Most revenue comes from issuer fees. There is high demand for persons who can rate structured finance and corporate bonds intelligently. "We are not auditors and we don't use lie detectors, so it's up to our analysts to be smart enough to ask the right questions," says Edward Emmer, executive managing director and head of S&P's corporate ratings department.
Commercial Banking: Job Options
Credit Analyst This is a common entry level job which requires that you evaluate business and consumer loan applications made to your bank. Your duties include projecting a company's future cash flow, evaluating its current financial soundness, visiting and interacting with financial people at businesses and dealing with lenders. You will learn a lot about business in this job. Your success in this job will depend on how detail-oriented you are, your knowledge of accounting and your ability to communicate.
Loan Officer This is a highly desirable job in banking which involves making loans to businesses and consumers. Being a loan officer requires that you have good selling skills, an ability to understand a business and a solid understanding of how banking works. Most people in upper management at banks were once loan officers.
Branch Manager You would be responsible for overseeing all activities at your branch including opening new accounts, loan origination, solving customer problems, foreign exchange and safe deposit boxes. Most importantly, you are responsible for establishing relatio s with customers. This job can be very satisfying, is never boring and requires you to be hands-on. Many bank managers start as tellers or customer service representatives. Key things go have for this position are customer service skills, empathy, quanti ative ability, strong work ethic, organization and and a solid understanding of banking. Can move up to be a market manager and oversee branches in a market.
Trust Officer In this job you would deliver trust services, financial products and advice to bank customers (often more upscale ones). This work will give you knowledge of business, investing, estate planning, taxes, probate law and will involve a lot of counselin .
Mortgage Banker Your job will be to make mortgage loans to homebuyers and businesses. This involves heavy contact with real estate professionals, credit checks, and dealing with new buyers. Today, many loans are sold to other investors in the mortgage backed securit es market. This job has a good future because an increasing fraction of the population is likely to buy a house in the future.
Other jobs in banking involve accounting, marketing and advertising, commercial card operations, securities transfer, wire operations, private banking, cash management services, installment loans, loan servicing, corresponent banking, personnel, operations and commmunications.
Credit Analyst This is a common entry level job which requires that you evaluate business and consumer loan applications made to your bank. Your duties include projecting a company's future cash flow, evaluating its current financial soundness, visiting and interacting with financial people at businesses and dealing with lenders. You will learn a lot about business in this job. Your success in this job will depend on how detail-oriented you are, your knowledge of accounting and your ability to communicate.
Loan Officer This is a highly desirable job in banking which involves making loans to businesses and consumers. Being a loan officer requires that you have good selling skills, an ability to understand a business and a solid understanding of how banking works. Most people in upper management at banks were once loan officers.
Branch Manager You would be responsible for overseeing all activities at your branch including opening new accounts, loan origination, solving customer problems, foreign exchange and safe deposit boxes. Most importantly, you are responsible for establishing relatio s with customers. This job can be very satisfying, is never boring and requires you to be hands-on. Many bank managers start as tellers or customer service representatives. Key things go have for this position are customer service skills, empathy, quanti ative ability, strong work ethic, organization and and a solid understanding of banking. Can move up to be a market manager and oversee branches in a market.
Trust Officer In this job you would deliver trust services, financial products and advice to bank customers (often more upscale ones). This work will give you knowledge of business, investing, estate planning, taxes, probate law and will involve a lot of counselin .
Mortgage Banker Your job will be to make mortgage loans to homebuyers and businesses. This involves heavy contact with real estate professionals, credit checks, and dealing with new buyers. Today, many loans are sold to other investors in the mortgage backed securit es market. This job has a good future because an increasing fraction of the population is likely to buy a house in the future.
Other jobs in banking involve accounting, marketing and advertising, commercial card operations, securities transfer, wire operations, private banking, cash management services, installment loans, loan servicing, corresponent banking, personnel, operations and commmunications.
Commercial Banking: Overview
Commercial banks are in the business of providing banking services to individuals, small businesses and large organizations. While the banking sector has been consolidating, it is worth noting that far more people are employed in the commercial banking sector than any other part of the financial services industry. Jobs in banking can be exciting and offer excellent opportunities to learn about business, interact with people and build up a clientele.
Today's commercial banks are more diverse than ever. You'll find a tremendous range of opportunities in commercial banking, starting at the branch level where you might start out as a teller to a wide variety of other services such as leasing, credit card banking, international finance and trade credit.
If you are well-prepared and enthusiastic about entering the field, you are likely to find a wide variety of opportunities open to you. Carefully, read through the material below as you decide whether you've got what it takes to pursue a career in commercial banking.
Commercial banks are in the business of providing banking services to individuals, small businesses and large organizations. While the banking sector has been consolidating, it is worth noting that far more people are employed in the commercial banking sector than any other part of the financial services industry. Jobs in banking can be exciting and offer excellent opportunities to learn about business, interact with people and build up a clientele.
Today's commercial banks are more diverse than ever. You'll find a tremendous range of opportunities in commercial banking, starting at the branch level where you might start out as a teller to a wide variety of other services such as leasing, credit card banking, international finance and trade credit.
If you are well-prepared and enthusiastic about entering the field, you are likely to find a wide variety of opportunities open to you. Carefully, read through the material below as you decide whether you've got what it takes to pursue a career in commercial banking.
Commercial Banking: Facts and Trends
Banking is Satisfying In 1992, Money magazine surveyed 100 jobs in the United States. The job of banker was listed as the second most satisfying. Bankers love their jobs!
Banking is in a Period of Consolidation Banking is going through a period of tremendous consolidation with frequent mergers and layoffs. Mergers abound such as those of Citibank and Travelers into Citigroup or NationsBank and BankAmerica. Customers don't go to branches like they used to an increasingly rely on ATM's and electronic transactions. And many now direct their savings into mutual funds like Vanguard and Fidelity. At the same time business increasingly raise money using commercial paper and medium-term notes instead of bank loans This means jobs are getting tighter. Fortune, 10/30/95 p. 45: "Few industries have experienced as intense a spasm of consolidation and corporate restructuring as has banking in the past decade. New mergers-and job cuts-are announced practically every we k..."
Think Online David Taylor of the Bank Administration Institute notes that "PCs and modems are reaching a 40% penetration level for households with annual incomes over $50,000, banks' best customers." Home banking offers tremendous convenience to these customers a d will grow enormously in the next decade. "Before doing the Saturday morning shopping, you can check the status of your checking account, pay any outstanding bills, and, with the advent of smart cards, some day download credit onto your card to pay for he shopping."
Don't Forget Government Job Opportunities in Banking State governments and the U.S. government actively recruit banking regulators. Interesting places to look include The Office of Thrift Supervision, the Federal Financial Institutions Examination Council and the Federal Reserve Banking System.
Branch Out Jobs in bank branches could be risky. According to a recent study by Deloitte & Touche about 30% of bank employees (850,000 people) work in branches. However, productivity improvements are expected to replace 151,200 of them, and electronic delivery f services is projected to eliminate an additional 344,400 jobs. When new jobs created by electronic delivery services are factored in, the study shows a net loss of 450,000 jobs by the year 2000.
Banks are Getting Aggressive The competitive environment is changing too. USA Today writes on Aug 29, 1995: "Behind the bank deals: The easy times are over for bank earnings. Banks have posted record profits since 1991, thanks to falling interest rates and their efforts to slash costs. But interest rates aren't falling anymore, loan demand has slowed and bankers can't cost-cut their way to continued prosperity. They must grow and sell their services aggressively in new markets to keep earnings up and investors happy."
US Banks Aren't That Big The largest banks in the world are outside of the United States. In 1999, the world's largest bank was Japanese with $1,270 billion in assets. [See table below]. That is two times as big as the largest US bank: Citigroup.
Banking is Shrinking The business of banking is changing dramatically as traditional demand deposit and CD business shrinks. The U.S. banking system's share of financial assets in the economy has sunk to 25%, the lowest in the last 130 years. It is forecasted that half t e nation's retail branches will close in 10 years and that as many as 450,000 bank jobs may disappear (Orlando Sentinel, 9/1/95).
The Future is in New Areas Because traditional banking is in decline the future of the industry lies in services and new areas. Many banks are now starting to compete against investment banks, for example. One in five banks owns a full-service brokerage firm today. Half of ban s own a discount broker. Expect these numbers to rise.
Specialized Banks are Doing Best Banks which specialize in a niche such a retail lending, credit card operations, cash management or global retail appear to be doing better than more diversified banks. Expect focused banks to continue to succeed and create more jobs. Players like Associates, MBNA and Providian are doing well at present.
You May be Traveling New regulations permit interstate banking. Historically, you might not have been asked to travel much as a banker or deal with businesses in other states. That is changing rapidly.
Middle-Managers Are In Demand The shake-up in banking has left a shortage of good middle-managers, especially at smaller banks which find it more difficult to hire well-trained managers away from well-staffed larger banks. Other hot areas include loan review officers, technology pecialists and auditors.
Banking is Satisfying In 1992, Money magazine surveyed 100 jobs in the United States. The job of banker was listed as the second most satisfying. Bankers love their jobs!
Banking is in a Period of Consolidation Banking is going through a period of tremendous consolidation with frequent mergers and layoffs. Mergers abound such as those of Citibank and Travelers into Citigroup or NationsBank and BankAmerica. Customers don't go to branches like they used to an increasingly rely on ATM's and electronic transactions. And many now direct their savings into mutual funds like Vanguard and Fidelity. At the same time business increasingly raise money using commercial paper and medium-term notes instead of bank loans This means jobs are getting tighter. Fortune, 10/30/95 p. 45: "Few industries have experienced as intense a spasm of consolidation and corporate restructuring as has banking in the past decade. New mergers-and job cuts-are announced practically every we k..."
Think Online David Taylor of the Bank Administration Institute notes that "PCs and modems are reaching a 40% penetration level for households with annual incomes over $50,000, banks' best customers." Home banking offers tremendous convenience to these customers a d will grow enormously in the next decade. "Before doing the Saturday morning shopping, you can check the status of your checking account, pay any outstanding bills, and, with the advent of smart cards, some day download credit onto your card to pay for he shopping."
Don't Forget Government Job Opportunities in Banking State governments and the U.S. government actively recruit banking regulators. Interesting places to look include The Office of Thrift Supervision, the Federal Financial Institutions Examination Council and the Federal Reserve Banking System.
Branch Out Jobs in bank branches could be risky. According to a recent study by Deloitte & Touche about 30% of bank employees (850,000 people) work in branches. However, productivity improvements are expected to replace 151,200 of them, and electronic delivery f services is projected to eliminate an additional 344,400 jobs. When new jobs created by electronic delivery services are factored in, the study shows a net loss of 450,000 jobs by the year 2000.
Banks are Getting Aggressive The competitive environment is changing too. USA Today writes on Aug 29, 1995: "Behind the bank deals: The easy times are over for bank earnings. Banks have posted record profits since 1991, thanks to falling interest rates and their efforts to slash costs. But interest rates aren't falling anymore, loan demand has slowed and bankers can't cost-cut their way to continued prosperity. They must grow and sell their services aggressively in new markets to keep earnings up and investors happy."
US Banks Aren't That Big The largest banks in the world are outside of the United States. In 1999, the world's largest bank was Japanese with $1,270 billion in assets. [See table below]. That is two times as big as the largest US bank: Citigroup.
Banking is Shrinking The business of banking is changing dramatically as traditional demand deposit and CD business shrinks. The U.S. banking system's share of financial assets in the economy has sunk to 25%, the lowest in the last 130 years. It is forecasted that half t e nation's retail branches will close in 10 years and that as many as 450,000 bank jobs may disappear (Orlando Sentinel, 9/1/95).
The Future is in New Areas Because traditional banking is in decline the future of the industry lies in services and new areas. Many banks are now starting to compete against investment banks, for example. One in five banks owns a full-service brokerage firm today. Half of ban s own a discount broker. Expect these numbers to rise.
Specialized Banks are Doing Best Banks which specialize in a niche such a retail lending, credit card operations, cash management or global retail appear to be doing better than more diversified banks. Expect focused banks to continue to succeed and create more jobs. Players like Associates, MBNA and Providian are doing well at present.
You May be Traveling New regulations permit interstate banking. Historically, you might not have been asked to travel much as a banker or deal with businesses in other states. That is changing rapidly.
Middle-Managers Are In Demand The shake-up in banking has left a shortage of good middle-managers, especially at smaller banks which find it more difficult to hire well-trained managers away from well-staffed larger banks. Other hot areas include loan review officers, technology pecialists and auditors.
Commercial Banking: Skills & Talents
Broad Business Understanding and People Skills Needed To be good in banking you need a broad understanding of business because your job will most likely involve interacting with businesses. People skills are essential because you will be helping people get the loans and investments that they want.
Accounting and Writing Skills are Crucial The most common jobs in commercial banking are as a credit analyst and as a lending officer. These jobs require a strong understanding of accounting. Because banking often requires that you document loans and justify credit analyses you've written communication skills are extremely important.
High Grades less important than work ethic Banking attracts a diverse group of people. You don't have to be a superstar student with a phenomenal GPA to make it. You do have to be detail oriented, unafraid to sell and conscientious.
International talent is in high demand at money-center banks. According to Hoyle Jones, Head of recruiting at Citicorp: The firm is "aggressively in the hiring market. "We're looking for U.S.-educated Asians and Latin Americans to go back home and grow businesses."
Marketing Types Wanted A new business model which is spreading into banking is that of the marketing-oriented consumer products company. Banks are trying to build valuable brand images with consumer-oriented advertising and distinct product lines. According to Richard Kovacevich, CEO of Norwest: "I believe we all must be salespeople; and we should be proud of it... We can no longer be ordertakers, which is still the characteristic of the old banking industry. In fact, we must be great as salespeo le. We must be customer-oriented, we must be needs-based and we must be aggressive." In light of this demand, if you have good marketing skills and have taken a number of marketing courses, you will be well-suited to this new environment. Because of the increasing marketing orientation, many banks have also been paying big bucks to lure product managers away from consumer products companies. Pros with skills in product design and market segmentation wanted (American Banker, January 5, 19 5).
Wall Street Types Will Find a Home Because commercial banks remain profitable and are more involved than ever in the financial markets, they are competing with Wall Street for "high-tech finance jocks" involved in foreign exchange derivatives and financial engineering.
Corporate Investment Products in High Demand There is also high demand for finance professionals who can develop products for the corporate market. According to Windle Priem of Korn/Ferry International, a top recruiter in banking: "Half of the [recruiting activity in banking] has been in the capital markets and corporate finance arena of these banks. The other part of the commercial banking practice that's booming is investment products and mutual funds. That's been very, very strong. ...Most of those people have been hired from other investment firms, other mutual fund companies. The traditional corporate lending people continue to be downsized and terminated." (American Banker, 1/5/95).
MBA Optional It is generally not necessary to get an MBA in commercial banking although it wouldn't hurt you. Many of the execs at the very top do have MBAs from prestigious schools. And others have attended summertime masters programs at places like the Southwestern Graduate School of Banking (Dallas, TX) or the Stonier School of Banking (Madison, WI).
Days of Easy Hours Long Gone Banking is reputed to be a low hours/workload position. This is possible, especially in smaller markets, but increasingly bankers are working longer hours as their jobs become more oriented towards general marketing of financial services. Consumers are increasingly banking from home using online services and the Internet. If you are Internet savvy and familiar with computers you will have an edge in banking. "Banks are at the point now where they have to seriously start moving into an on line environment, or risk losing some of their best customers, potentially forever. It's a very crucial and very perilous time for banks," said David Taylor, executive vice president at the Bank Administration Institute, in December 1995.
A typical job in banking in the lending or branch management area would require the following skills:
Key Skill Area Requirement
People skills: High
Sales skills: High
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Medium
Creative ability: Medium
Initiative: Medium
Work hours: 40-60/week
Broad Business Understanding and People Skills Needed To be good in banking you need a broad understanding of business because your job will most likely involve interacting with businesses. People skills are essential because you will be helping people get the loans and investments that they want.
Accounting and Writing Skills are Crucial The most common jobs in commercial banking are as a credit analyst and as a lending officer. These jobs require a strong understanding of accounting. Because banking often requires that you document loans and justify credit analyses you've written communication skills are extremely important.
High Grades less important than work ethic Banking attracts a diverse group of people. You don't have to be a superstar student with a phenomenal GPA to make it. You do have to be detail oriented, unafraid to sell and conscientious.
International talent is in high demand at money-center banks. According to Hoyle Jones, Head of recruiting at Citicorp: The firm is "aggressively in the hiring market. "We're looking for U.S.-educated Asians and Latin Americans to go back home and grow businesses."
Marketing Types Wanted A new business model which is spreading into banking is that of the marketing-oriented consumer products company. Banks are trying to build valuable brand images with consumer-oriented advertising and distinct product lines. According to Richard Kovacevich, CEO of Norwest: "I believe we all must be salespeople; and we should be proud of it... We can no longer be ordertakers, which is still the characteristic of the old banking industry. In fact, we must be great as salespeo le. We must be customer-oriented, we must be needs-based and we must be aggressive." In light of this demand, if you have good marketing skills and have taken a number of marketing courses, you will be well-suited to this new environment. Because of the increasing marketing orientation, many banks have also been paying big bucks to lure product managers away from consumer products companies. Pros with skills in product design and market segmentation wanted (American Banker, January 5, 19 5).
Wall Street Types Will Find a Home Because commercial banks remain profitable and are more involved than ever in the financial markets, they are competing with Wall Street for "high-tech finance jocks" involved in foreign exchange derivatives and financial engineering.
Corporate Investment Products in High Demand There is also high demand for finance professionals who can develop products for the corporate market. According to Windle Priem of Korn/Ferry International, a top recruiter in banking: "Half of the [recruiting activity in banking] has been in the capital markets and corporate finance arena of these banks. The other part of the commercial banking practice that's booming is investment products and mutual funds. That's been very, very strong. ...Most of those people have been hired from other investment firms, other mutual fund companies. The traditional corporate lending people continue to be downsized and terminated." (American Banker, 1/5/95).
MBA Optional It is generally not necessary to get an MBA in commercial banking although it wouldn't hurt you. Many of the execs at the very top do have MBAs from prestigious schools. And others have attended summertime masters programs at places like the Southwestern Graduate School of Banking (Dallas, TX) or the Stonier School of Banking (Madison, WI).
Days of Easy Hours Long Gone Banking is reputed to be a low hours/workload position. This is possible, especially in smaller markets, but increasingly bankers are working longer hours as their jobs become more oriented towards general marketing of financial services. Consumers are increasingly banking from home using online services and the Internet. If you are Internet savvy and familiar with computers you will have an edge in banking. "Banks are at the point now where they have to seriously start moving into an on line environment, or risk losing some of their best customers, potentially forever. It's a very crucial and very perilous time for banks," said David Taylor, executive vice president at the Bank Administration Institute, in December 1995.
A typical job in banking in the lending or branch management area would require the following skills:
Key Skill Area Requirement
People skills: High
Sales skills: High
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Medium
Creative ability: Medium
Initiative: Medium
Work hours: 40-60/week
Money Management: Overview
Do you like to look behind the numbers? Do you like to analyze market trends? Do you get an adrenaline rush when a stock takes off? If so, then money management may be the career for you. Money managers hold stocks and bonds for institutional clients and are on the buy side of Wall Street. Some money managers use the latest sophisticated quantitative techniques while others do very well using simple intuition.
Each money manager has their own unique style. The key to being successful is to have discipline, be broad-minded and be willing to admit defeat if an investment goes against you. Many money managers buy and hold fixed income securities including mortgaged-backs, corporate bonds, munis, agency securities and asset-backed securities. Others focus on equities, including small stocks, large caps and emerging market stocks.
Unfortunately, it is hard to get started in money management. It is particularly hard to start working for the best money managers or a top mutual fund. Good places to start are in bank trust departments, state and local pension funds and in insurance companies. Many people cross over into money management after getting years of experience on the sell side of the business in investment banks. Perhaps one of the best ways to break in is on the marketing side.
If you have the social skills and intelligence required to market money management services, there will be many companies interested in hiring you. To get started today, be sure to study portfolio theory, learn fixed income investments, take the CFA exam and, above all, learn the industry. And then, with a little luck, you will enjoy one of the most personally rewarding careers in the world of business: Money Management.
Do you like to look behind the numbers? Do you like to analyze market trends? Do you get an adrenaline rush when a stock takes off? If so, then money management may be the career for you. Money managers hold stocks and bonds for institutional clients and are on the buy side of Wall Street. Some money managers use the latest sophisticated quantitative techniques while others do very well using simple intuition.
Each money manager has their own unique style. The key to being successful is to have discipline, be broad-minded and be willing to admit defeat if an investment goes against you. Many money managers buy and hold fixed income securities including mortgaged-backs, corporate bonds, munis, agency securities and asset-backed securities. Others focus on equities, including small stocks, large caps and emerging market stocks.
Unfortunately, it is hard to get started in money management. It is particularly hard to start working for the best money managers or a top mutual fund. Good places to start are in bank trust departments, state and local pension funds and in insurance companies. Many people cross over into money management after getting years of experience on the sell side of the business in investment banks. Perhaps one of the best ways to break in is on the marketing side.
If you have the social skills and intelligence required to market money management services, there will be many companies interested in hiring you. To get started today, be sure to study portfolio theory, learn fixed income investments, take the CFA exam and, above all, learn the industry. And then, with a little luck, you will enjoy one of the most personally rewarding careers in the world of business: Money Management.
Money Management: Top Firms
Top Money Managers Globally
Name Assets in billions ($)
Citigroup / Travelers 1360
Merrill Lynch Asset Management 1352
UBS 1093
Fidelity 941
Barclays Global Investors 564
Vanguard Group 500
Mellon Bank / Dreyfus 460
State Street Global Advisors 459
Charles Schwab 400
Morgan Stanley Dean Witter 374
Note: Included in each firm's total are institutional assets, brokerage accounts, mutual funds, variable annuities, and private banking accounts (no retail banking deposits). Only includes U.S. companies (UBS because UBS Brinson is in Chicago).
Source:CareerSelector Research, August 1999.
Top Money Managers Globally
Name Assets in billions ($)
Citigroup / Travelers 1360
Merrill Lynch Asset Management 1352
UBS 1093
Fidelity 941
Barclays Global Investors 564
Vanguard Group 500
Mellon Bank / Dreyfus 460
State Street Global Advisors 459
Charles Schwab 400
Morgan Stanley Dean Witter 374
Note: Included in each firm's total are institutional assets, brokerage accounts, mutual funds, variable annuities, and private banking accounts (no retail banking deposits). Only includes U.S. companies (UBS because UBS Brinson is in Chicago).
Source:CareerSelector Research, August 1999.
Money Management: Facts & Trends
Educate Yourself If you are thinking of going into money management be sure to train yourself well in fixed-income analysis and strategies. You are most likely to be employed in a job analyzing bonds so be sure that you are familiar with measures of bond price volat lity, factors which affect bond prices, valuation of bonds (especially with embedded options), yield curve strategies and institutional details of the Treasury, agency, corporate, municipal, euro, mortgage-backed and asset-backed markets.
Succeeding as a Money Manager is Challenging The job requires a combination of intelligence, effort, intuition and discipline to succeed in the long run. Most people lack the proper combination of these traits.
Breaking in Tough It is hard to break into the business of money management. A good place to start is at a commercial bank in its trust department or at a state-run pension fund. Insurance companies can also be a good starting point if you are a strong student.
Indexing is Gaining Momentum Faced with poor results from active management, it is becoming more common for large pension funds to index their investments. Indexing is the practice of passively mimicking an equity index such as the S&P 500. Some of the largest fund groups including Barclays Global Investors, Vanguard and TIAA-CREF are promoting indexing. The result has been explosive growth, albeit with much lower fees than is being charged by active managers.
Hedge Funds are a Growth Area Despite some well-publicized problems, the area has tremendous potential. Hedge funds are opportunistic, private funds which invest in stocks, bonds, currencies and derivatives often using significant amounts of leverage. Hedge funds management approximately $50 billion in assets according to MAR Hedge. But because they use extensive leverage, they manage positions in excess of $250 billion.
Mutual Funds are Enormous Mutual funds are pools of financial resources managed by a professional money manager. The Investment Company Institute reports over 20 types of funds ranging from growth funds to precious metals funds. Key mutual funds activities fall into trading and order execution, investment analysis, marketing, record keeping and customer services.
Professional Managers are Big Sanford Bernstein and Co. estimates that over $9 trillion is entrusted to professional money managers. The business of money management is enormous.
Pay for Performance Expanding A new trend in money management is towards pay for performance. This means your pay will be high when times are good, but barebones in bad years.
Money Management is Going Global Another growth area in money management is global investing. According to Pensions and Investments [1/24/94], the fraction of international investments by the Top 200 US pension funds increased by over 25 percent.
The Mutual Fund Business is Facing Ferocious Competition. There are now over 6,000 mutual funds in business. However, no-load funds (which do not charge customers an up-front fee) are growing very rapidly.
On the Whole, Money Managers Don't Beat the Market In the last ten years, 74% of equity managers did not beat the S&P 500 index after fees. The old efficient market theory seems to work just like the textbooks say. If you go into this business, then, it is essential to be aware of the difficulties of building a good record and beating the market.
Educate Yourself If you are thinking of going into money management be sure to train yourself well in fixed-income analysis and strategies. You are most likely to be employed in a job analyzing bonds so be sure that you are familiar with measures of bond price volat lity, factors which affect bond prices, valuation of bonds (especially with embedded options), yield curve strategies and institutional details of the Treasury, agency, corporate, municipal, euro, mortgage-backed and asset-backed markets.
Succeeding as a Money Manager is Challenging The job requires a combination of intelligence, effort, intuition and discipline to succeed in the long run. Most people lack the proper combination of these traits.
Breaking in Tough It is hard to break into the business of money management. A good place to start is at a commercial bank in its trust department or at a state-run pension fund. Insurance companies can also be a good starting point if you are a strong student.
Indexing is Gaining Momentum Faced with poor results from active management, it is becoming more common for large pension funds to index their investments. Indexing is the practice of passively mimicking an equity index such as the S&P 500. Some of the largest fund groups including Barclays Global Investors, Vanguard and TIAA-CREF are promoting indexing. The result has been explosive growth, albeit with much lower fees than is being charged by active managers.
Hedge Funds are a Growth Area Despite some well-publicized problems, the area has tremendous potential. Hedge funds are opportunistic, private funds which invest in stocks, bonds, currencies and derivatives often using significant amounts of leverage. Hedge funds management approximately $50 billion in assets according to MAR Hedge. But because they use extensive leverage, they manage positions in excess of $250 billion.
Mutual Funds are Enormous Mutual funds are pools of financial resources managed by a professional money manager. The Investment Company Institute reports over 20 types of funds ranging from growth funds to precious metals funds. Key mutual funds activities fall into trading and order execution, investment analysis, marketing, record keeping and customer services.
Professional Managers are Big Sanford Bernstein and Co. estimates that over $9 trillion is entrusted to professional money managers. The business of money management is enormous.
Pay for Performance Expanding A new trend in money management is towards pay for performance. This means your pay will be high when times are good, but barebones in bad years.
Money Management is Going Global Another growth area in money management is global investing. According to Pensions and Investments [1/24/94], the fraction of international investments by the Top 200 US pension funds increased by over 25 percent.
The Mutual Fund Business is Facing Ferocious Competition. There are now over 6,000 mutual funds in business. However, no-load funds (which do not charge customers an up-front fee) are growing very rapidly.
On the Whole, Money Managers Don't Beat the Market In the last ten years, 74% of equity managers did not beat the S&P 500 index after fees. The old efficient market theory seems to work just like the textbooks say. If you go into this business, then, it is essential to be aware of the difficulties of building a good record and beating the market.
Money Management: Job Options
Portfolio Manager Portfolio managers will usually work for a money management firm or pension fund to select and manage investments which meet the goals of a group of investors. Many managers now work in specialized commodity funds or hedge funds. Portfolio managers have different styles ranging from a bargain-hunting approach (value investing) to a growth stock selection approach. This work requires patience, discipline and a strong understanding of financial markets and companies.
Portfolio Management Marketing If you are outgoing and knowledgeable, then you might consider a sales position in portfolio management. This means that you will spend a lot of time putting together presentations for clients (working with the portfolio manager). Each presentation needs to be put together very well and calls for hours of work and strong knowledge of the firm. Firms often are looking for seasoned professionals in this position. People who command respect and trust when making recommendations about ways to invest large sums of money. Expect heavy travel and good pay.
Investment Advisory There is a large industry of firms which provide investment advice, performance evaluation and quantitative analysis to the money management sector. This business consists of firms such as Wilshire Associates in Los Angeles, CA which provide customized reports to pension funds and the like. This work requires strong quantitative skills and deep appreciation of finance.
Mutual Fund Analyst Many mutual funds and large pension funds require analysts to do the analytical work required before an investment is made. Is a particular municipal bond safe? What is its interest rate risk as measured by duration and convexity? What other features of the security are important to understand before purchase? This work is analytical and requires a working knowledge of computers, perhaps in the programming dimension. Most mutual fund analysts truly enjoy their jobs because of the sleuthing involved and the fact that the work is different every day.
Hedge Fund Principal/Trader Hedge funds are opportunistic, private funds which invest in stocks, bonds, currencies and derivatives often using significant amounts of leverage. These funds hire analysts and traders and have exhibited rapid growth in recent years.
Portfolio Manager Portfolio managers will usually work for a money management firm or pension fund to select and manage investments which meet the goals of a group of investors. Many managers now work in specialized commodity funds or hedge funds. Portfolio managers have different styles ranging from a bargain-hunting approach (value investing) to a growth stock selection approach. This work requires patience, discipline and a strong understanding of financial markets and companies.
Portfolio Management Marketing If you are outgoing and knowledgeable, then you might consider a sales position in portfolio management. This means that you will spend a lot of time putting together presentations for clients (working with the portfolio manager). Each presentation needs to be put together very well and calls for hours of work and strong knowledge of the firm. Firms often are looking for seasoned professionals in this position. People who command respect and trust when making recommendations about ways to invest large sums of money. Expect heavy travel and good pay.
Investment Advisory There is a large industry of firms which provide investment advice, performance evaluation and quantitative analysis to the money management sector. This business consists of firms such as Wilshire Associates in Los Angeles, CA which provide customized reports to pension funds and the like. This work requires strong quantitative skills and deep appreciation of finance.
Mutual Fund Analyst Many mutual funds and large pension funds require analysts to do the analytical work required before an investment is made. Is a particular municipal bond safe? What is its interest rate risk as measured by duration and convexity? What other features of the security are important to understand before purchase? This work is analytical and requires a working knowledge of computers, perhaps in the programming dimension. Most mutual fund analysts truly enjoy their jobs because of the sleuthing involved and the fact that the work is different every day.
Hedge Fund Principal/Trader Hedge funds are opportunistic, private funds which invest in stocks, bonds, currencies and derivatives often using significant amounts of leverage. These funds hire analysts and traders and have exhibited rapid growth in recent years.
Money Management: Skills & Talents
The money management industry is booming and offers a variety of career options. This field deals with the largest markets of any kind in the world and call on the following skills:
Key Skill Area Requirement
People skills: Medium
Sales skills: Medium
Communication skills: Medium
Analytical skills: High
Ability to synthesize: High
Creative ability: Medium
Initiative: Medium
Work hours: 55-75/week
On the Buy Side The field of money management involves working on the other side of the fence from the investment banks. That is why this field is known as the "buy side."
More Humane than Investment Banking Many investment bankers are "Type A personalities whereas money managers aren't as hard-charging. The job calls for a mix of Type A and Type B.
Must be Able to Take Risk Money managers get to face the challenges of investing. If you like the excitement of selecting investments and can deal with the uncertainty of waiting for the payoff this field is for you.
It's Important to Have a Broad Understanding of Business One of the exciting things about investing is that you get rewarded for knowing how business works. People who understand and enjoy business are among the most likely to succeed in this arena.
You Gotta Hang In There You need to be a tenacious person to succeed in money management. It's tough to break into the business but once you have experience, the rewards can be high. Be prepared to hang in there through some tough times.
Approaches are Diverse There are many styles and approaches to investing. You can approach the field in a very technical way with heavy reliance on computers or, instead, resort to a common sense, low-tech approach. One of the leading investors of our time, Warren Buffett, employs a small staff and spends little time with quantitative models when making investment decisions.
Think About How You Are Going to Get Started Because it is so hard to break into money management it is advisable to think carefully about your entry strategy. You have to bring something to the table in an interview that others can't. This will either be superior knowledge and understanding or experience. A good place to start is to get experience in investing by working for a public pension fund, a bank trust department or for a mutual fund.
The money management industry is booming and offers a variety of career options. This field deals with the largest markets of any kind in the world and call on the following skills:
Key Skill Area Requirement
People skills: Medium
Sales skills: Medium
Communication skills: Medium
Analytical skills: High
Ability to synthesize: High
Creative ability: Medium
Initiative: Medium
Work hours: 55-75/week
On the Buy Side The field of money management involves working on the other side of the fence from the investment banks. That is why this field is known as the "buy side."
More Humane than Investment Banking Many investment bankers are "Type A personalities whereas money managers aren't as hard-charging. The job calls for a mix of Type A and Type B.
Must be Able to Take Risk Money managers get to face the challenges of investing. If you like the excitement of selecting investments and can deal with the uncertainty of waiting for the payoff this field is for you.
It's Important to Have a Broad Understanding of Business One of the exciting things about investing is that you get rewarded for knowing how business works. People who understand and enjoy business are among the most likely to succeed in this arena.
You Gotta Hang In There You need to be a tenacious person to succeed in money management. It's tough to break into the business but once you have experience, the rewards can be high. Be prepared to hang in there through some tough times.
Approaches are Diverse There are many styles and approaches to investing. You can approach the field in a very technical way with heavy reliance on computers or, instead, resort to a common sense, low-tech approach. One of the leading investors of our time, Warren Buffett, employs a small staff and spends little time with quantitative models when making investment decisions.
Think About How You Are Going to Get Started Because it is so hard to break into money management it is advisable to think carefully about your entry strategy. You have to bring something to the table in an interview that others can't. This will either be superior knowledge and understanding or experience. A good place to start is to get experience in investing by working for a public pension fund, a bank trust department or for a mutual fund.
Corporate Finance: Overview
A career in corporate finance means you would work for a company to help it find money to run the business, grow the business, make acquistions, plan for it's financial future and manage any cash on hand. You might work for a large multinational company or a smaller player with high growth prospects. Responsibility can come fast and your problem-solving skills will get put to work quickly in corporate finance.
The job of the financial officer is to create value for a company. For example, the finance group at American Electric Power of Columbus, Ohio has four main areas of concentration: liquidity, flexibility, compliance with laws and regulatory support. The goals of the objective are met through four main activities carried out by AEP's Finance Department: 1) designing, implementing and monitoring financial policies, 2) planning and executing the financing program, 3) managing cash resources, and 4) interfacing with the financial community and investors.
Jobs in corporate finance are also relatively stable while performance in these jobs count. But it's not like your job is going to depend on whether you're selling enough this week or getting good deals finished this quarter. Rather the key to performing well in corporate finance is to work with a long view of what going to make your company successful. Many would argue that corporate finance jobs are the most desirable in the entire field of finance.
Some of the benefits of working in corporate finance are:
1. You generally work in teams which help you work with people
2. It's alot of fun to tackle business problems that really matter
3. You'll have many opportunities to travel and meet people and
4. The pay in corporate finance is generally quite good.
A career in corporate finance means you would work for a company to help it find money to run the business, grow the business, make acquistions, plan for it's financial future and manage any cash on hand. You might work for a large multinational company or a smaller player with high growth prospects. Responsibility can come fast and your problem-solving skills will get put to work quickly in corporate finance.
The job of the financial officer is to create value for a company. For example, the finance group at American Electric Power of Columbus, Ohio has four main areas of concentration: liquidity, flexibility, compliance with laws and regulatory support. The goals of the objective are met through four main activities carried out by AEP's Finance Department: 1) designing, implementing and monitoring financial policies, 2) planning and executing the financing program, 3) managing cash resources, and 4) interfacing with the financial community and investors.
Jobs in corporate finance are also relatively stable while performance in these jobs count. But it's not like your job is going to depend on whether you're selling enough this week or getting good deals finished this quarter. Rather the key to performing well in corporate finance is to work with a long view of what going to make your company successful. Many would argue that corporate finance jobs are the most desirable in the entire field of finance.
Some of the benefits of working in corporate finance are:
1. You generally work in teams which help you work with people
2. It's alot of fun to tackle business problems that really matter
3. You'll have many opportunities to travel and meet people and
4. The pay in corporate finance is generally quite good.
Corporate Finance: Facts and Trends
The job outlook in corporate finance is bright. Recent surveys by Arthur Andersen and Robert Half have found a very strong occupational outlook in this field. Shortages in a variety of job categories are taking place. Hot job categories include international and operationally-oriented positions. Hot industries include financial services, manufacturing, high-technology, environmental management services and distribution.
Strategic and Global Thinkers Wanted "Asked to name the qualities that finance executives should have, CEOs top their list with strategic thinking, fresh perspective, and candor. The demand for finance executives who can formulate strategies and foment change on a global scale will only increase in a world where trade barriers are crumbling." CFO Magazine.
Team Players Thrive It is crucial that a financial officer be a team player, whether at the bottom or the top of a company. At the top, relationships are especially important. For a CEO, the chief financial officer is financial whiz, strategist and partner. The relationship needs to be tight. Consider the role played by Marcus Bennett at Lockheed Martin, the largest defense firm in the United States: "As a key member of [CEO] Augustine's inner circle, [Bennett] is intimately involved in hashing out the company's strategic plans. And when the group decides on a major acquisition or merger, such as the recent linkup with Lockheed, Bennett serves as the primary negotiator. Once a deal is done, he oversees the melding of the balance sheets of the two companies, the combining of employee benefits programs, the squeezing out of cost savings and the overall financial operation of the five current major operating units -- aeronautics, electronics, energy and environment, and space and strategic missiles." ("Stealth CFO", Institutional Investor)
Make a Difference A good financial officer can create enormous value. For example, when Jerome York switched from being the CFO of IBM to being the CFO of Chrysler, Chrysler's stock gained $1.3 billion the next day, while IBM's stock fell sharply.
Door Wide Open to Women While still largely a male world, women are making rapid inroads in corporate finance positions around the United States. According to the Detroit News: "Finance has become the first field of opportunity for women because promotions are based on merit - not the old-boy network. Experts say accounting and its natural offspring - finance, treasury, budgeting - are less obstructed by the macho cultures more prevalent in manufacturing and engineering, other traditional paths to the corporate pinnacle." There a wide variety of examples of women who have succeeded in corporate finance. For example, Heidi Kunz engineered General Motor's turnaround plan in 1992 and jumped to become CFO of a new ITT spinoff in 1995. And Judy Lewent is widely credited with creating large amounts of value at Merck as a thinking CFO and strong leader. Mina Brown, CFO at Aviall notes that it is very important for women who want to rise far to get management positions in line divisions.
value-Based Management is a Huge Trend Corporate finance professionals are increasingly getting involved in value based management--the practice of figuring out if shareholder value is being created in each of a company's activities. Look for this practice to get hotter and hotter over time. Some of the most innovative companies in the world are now using value management.
Integrated Risk Management Growing in Importance There is growing interest in integrated methods of risk and liability management. Many companies have decentralized risk management activities where each division or plant can hedge away price and interest rate risk. Companies are increasingly permitting this, but aggregating positions into a book at the corporate level and adding controls.
Quantitative Skills Trade at a Premium Many corporations are looking for quantitative analysts in their finance group. Merck now employs dozens of rigorous finance professionals who use techniques like Monte Carlo simulation to assess new R&D projects. There will be more and more firms who quantitatively make financial and operating choice. For example, choosing a capital structure by balancing off the expected costs and benefits of debt.
Pay is Rising Pay throughout corporate finance areas is up. In particular, Chief Financial Officer (CFO) pay is rising. Average annual pay of 200 CFOs from about 1,500 of the largest revenue-producing companies in the US surveyed by Investors' Fiduciary Services was close to $1 million. The compensation includes salary, bonus, 'other' income, stock options exercised, and restricted stock. Superstars, like Stephen Bollenbach, CFO of Disney, have especially high salaries. Bollenbach was hired as Disney with a package worthmore than $20 million.
Carry the Torch for Shareholder value A company's finance group is the bridge between the investment community and the shop floor. In a day and age, when institutional investors are increasingly active, it's crucial that managers get the message that their job is to create shareholder value. The job of the finance group is to make sure that happens.
A Benefits Focus Can Help Twenty to forty percent of employee costs now come in the form of benefits. Managing benefits cost-effectively has now become a major challenge for financial officers.
Be Sure to Develop Negotiation Skills A key skill for financial professionals is negotiating ability. Persons who can put the other side at ease at the negotiating table, while still getting a good price are invaluable. Many firms are actively engaged in acquisitions strategies and require employees who can evaluate possible partners and then negotiate transactions.
Get Ready for Challenge Being a financial officer can sometimes be more challenging than usual. For example, Barry Weintrob, CFO of the Port Authority of New York and New Jersey had to deal with the aftermath of the World Trade Center bombing on February 26, 1993. From a World Trade Center command center Weintrob and others put together an immediate cost estimate for rebuilding, made sure insurance carriers were notified and kept on paying all bills despite a massive disruption.
Leadership Skills are Highly valued Company's want more and more leadership ability in their financial officers. The financial leader of the future will have more and more experience with the dynamics of the financial markets and be innovators in that market as well. She must be a strategic planner, a problem solver and an innovative leader.
Some Companies are Centralizing Corporate Finance Function Leading-edge companies such as General Eletric are centralizing their finance functions under a system known as shared services. Instead of each business unit having its own CFO and accounting operations, the businesses become customers of a centralized finance function.
Corporate Finance isn't Bean Counting The oftentimes derogatory view of finance professionals as "bean counters" is changing fast. Technology means the computers count the beans. This frees up time of executives to interpret the results of bean counting. In the words of Roberto Goizueta, the late CEO of Coca-Cola: "The secret isn't counting the beans. It's growing more beans." Ultimately, this means that the demand for smart, communicative and thoughtful people in finance positions will increase even more in the future.
The job outlook in corporate finance is bright. Recent surveys by Arthur Andersen and Robert Half have found a very strong occupational outlook in this field. Shortages in a variety of job categories are taking place. Hot job categories include international and operationally-oriented positions. Hot industries include financial services, manufacturing, high-technology, environmental management services and distribution.
Strategic and Global Thinkers Wanted "Asked to name the qualities that finance executives should have, CEOs top their list with strategic thinking, fresh perspective, and candor. The demand for finance executives who can formulate strategies and foment change on a global scale will only increase in a world where trade barriers are crumbling." CFO Magazine.
Team Players Thrive It is crucial that a financial officer be a team player, whether at the bottom or the top of a company. At the top, relationships are especially important. For a CEO, the chief financial officer is financial whiz, strategist and partner. The relationship needs to be tight. Consider the role played by Marcus Bennett at Lockheed Martin, the largest defense firm in the United States: "As a key member of [CEO] Augustine's inner circle, [Bennett] is intimately involved in hashing out the company's strategic plans. And when the group decides on a major acquisition or merger, such as the recent linkup with Lockheed, Bennett serves as the primary negotiator. Once a deal is done, he oversees the melding of the balance sheets of the two companies, the combining of employee benefits programs, the squeezing out of cost savings and the overall financial operation of the five current major operating units -- aeronautics, electronics, energy and environment, and space and strategic missiles." ("Stealth CFO", Institutional Investor)
Make a Difference A good financial officer can create enormous value. For example, when Jerome York switched from being the CFO of IBM to being the CFO of Chrysler, Chrysler's stock gained $1.3 billion the next day, while IBM's stock fell sharply.
Door Wide Open to Women While still largely a male world, women are making rapid inroads in corporate finance positions around the United States. According to the Detroit News: "Finance has become the first field of opportunity for women because promotions are based on merit - not the old-boy network. Experts say accounting and its natural offspring - finance, treasury, budgeting - are less obstructed by the macho cultures more prevalent in manufacturing and engineering, other traditional paths to the corporate pinnacle." There a wide variety of examples of women who have succeeded in corporate finance. For example, Heidi Kunz engineered General Motor's turnaround plan in 1992 and jumped to become CFO of a new ITT spinoff in 1995. And Judy Lewent is widely credited with creating large amounts of value at Merck as a thinking CFO and strong leader. Mina Brown, CFO at Aviall notes that it is very important for women who want to rise far to get management positions in line divisions.
value-Based Management is a Huge Trend Corporate finance professionals are increasingly getting involved in value based management--the practice of figuring out if shareholder value is being created in each of a company's activities. Look for this practice to get hotter and hotter over time. Some of the most innovative companies in the world are now using value management.
Integrated Risk Management Growing in Importance There is growing interest in integrated methods of risk and liability management. Many companies have decentralized risk management activities where each division or plant can hedge away price and interest rate risk. Companies are increasingly permitting this, but aggregating positions into a book at the corporate level and adding controls.
Quantitative Skills Trade at a Premium Many corporations are looking for quantitative analysts in their finance group. Merck now employs dozens of rigorous finance professionals who use techniques like Monte Carlo simulation to assess new R&D projects. There will be more and more firms who quantitatively make financial and operating choice. For example, choosing a capital structure by balancing off the expected costs and benefits of debt.
Pay is Rising Pay throughout corporate finance areas is up. In particular, Chief Financial Officer (CFO) pay is rising. Average annual pay of 200 CFOs from about 1,500 of the largest revenue-producing companies in the US surveyed by Investors' Fiduciary Services was close to $1 million. The compensation includes salary, bonus, 'other' income, stock options exercised, and restricted stock. Superstars, like Stephen Bollenbach, CFO of Disney, have especially high salaries. Bollenbach was hired as Disney with a package worthmore than $20 million.
Carry the Torch for Shareholder value A company's finance group is the bridge between the investment community and the shop floor. In a day and age, when institutional investors are increasingly active, it's crucial that managers get the message that their job is to create shareholder value. The job of the finance group is to make sure that happens.
A Benefits Focus Can Help Twenty to forty percent of employee costs now come in the form of benefits. Managing benefits cost-effectively has now become a major challenge for financial officers.
Be Sure to Develop Negotiation Skills A key skill for financial professionals is negotiating ability. Persons who can put the other side at ease at the negotiating table, while still getting a good price are invaluable. Many firms are actively engaged in acquisitions strategies and require employees who can evaluate possible partners and then negotiate transactions.
Get Ready for Challenge Being a financial officer can sometimes be more challenging than usual. For example, Barry Weintrob, CFO of the Port Authority of New York and New Jersey had to deal with the aftermath of the World Trade Center bombing on February 26, 1993. From a World Trade Center command center Weintrob and others put together an immediate cost estimate for rebuilding, made sure insurance carriers were notified and kept on paying all bills despite a massive disruption.
Leadership Skills are Highly valued Company's want more and more leadership ability in their financial officers. The financial leader of the future will have more and more experience with the dynamics of the financial markets and be innovators in that market as well. She must be a strategic planner, a problem solver and an innovative leader.
Some Companies are Centralizing Corporate Finance Function Leading-edge companies such as General Eletric are centralizing their finance functions under a system known as shared services. Instead of each business unit having its own CFO and accounting operations, the businesses become customers of a centralized finance function.
Corporate Finance isn't Bean Counting The oftentimes derogatory view of finance professionals as "bean counters" is changing fast. Technology means the computers count the beans. This frees up time of executives to interpret the results of bean counting. In the words of Roberto Goizueta, the late CEO of Coca-Cola: "The secret isn't counting the beans. It's growing more beans." Ultimately, this means that the demand for smart, communicative and thoughtful people in finance positions will increase even more in the future.
Corporate Finance: Job Options
Treasurer
Duties involve supervision of Treasury department which is involved in financial planning, raising funds, cash management and acquiring and disposing of assets. This is an upper management job which requires both analytical skill and the ability to manage and motivate people.
Financial Analyst
Duties involve determining financing needs, analyzing capital budgeting projects, long-range financial planning, analyzing possible acquisitions and asset sales, visiting credit agencies to explain firm's position, working on budgets, analyzing competitors, implementing financial plans, monitoring the the market price of your firm's securities analyzing of leasing agreements and determining needs and methods of dealing with derivatives. Often you will be assigned to a specific area such as revenue, planning, capital budgeting or project finance. This challenging job requires good analytical skills, computer skills and a broad understanding of finance.
Credit Manager Duties include establishing policies for granting credit to suppliers, setting guidelines for collecting on credit and considering whether to securitize receivables. This job requires knowledge of the customer and ability to analyze accounting statements.
Cash Manager Duties involve establishing relationships with banks, managing short-term credit needs, ensuring that sufficient cash is on hand to meet daily needs, putting excess cash into a concentration account bearing interest and handling international transfers of funds. This job is detail-oriented and requires good ability to negotiate.
Benefits Officer Duties involve managing pension fund assets, setting up employee 401(k) plans, determining health care benefits policies and working with human resources to set up cost-effective employee benefits. This job requires a combination of finance knowledge, knowledge of human resources management and understanding of organizational behavior.
Real Estate Officer This job involves finding real estate locations for a company, negotiation of lease agreements, acquisition of real estate and valuation of properties. This job requires a thorough understanding of finance and real estate.
Investor Relations Officer Duties involve dealing with the investing public by disseminating financial information, responding to queries from institutional investors, issuing press releases to explain corporate events and organizing teleconferences with investors. This challenging job involves contacts with top-level executives and requires understanding of finance and public relations. Many who hold this job have backgrounds in PR or advertising.
Controller Duties involve financial planning, accounting, financial reporting and cost analysis. Will get involved in property, revenue, benefits, derivatives, lease and joint interest accounting. May need to develop forecasting models to project revenues and costs. May be called on to implement or work with a complex costing system, efforts at financial reengineering, transfer pricing issues or interface with auditors. This job requires extensive accounting experience. Often holders of this position enter a company from a Big Six accounting firm.
Treasurer
Duties involve supervision of Treasury department which is involved in financial planning, raising funds, cash management and acquiring and disposing of assets. This is an upper management job which requires both analytical skill and the ability to manage and motivate people.
Financial Analyst
Duties involve determining financing needs, analyzing capital budgeting projects, long-range financial planning, analyzing possible acquisitions and asset sales, visiting credit agencies to explain firm's position, working on budgets, analyzing competitors, implementing financial plans, monitoring the the market price of your firm's securities analyzing of leasing agreements and determining needs and methods of dealing with derivatives. Often you will be assigned to a specific area such as revenue, planning, capital budgeting or project finance. This challenging job requires good analytical skills, computer skills and a broad understanding of finance.
Credit Manager Duties include establishing policies for granting credit to suppliers, setting guidelines for collecting on credit and considering whether to securitize receivables. This job requires knowledge of the customer and ability to analyze accounting statements.
Cash Manager Duties involve establishing relationships with banks, managing short-term credit needs, ensuring that sufficient cash is on hand to meet daily needs, putting excess cash into a concentration account bearing interest and handling international transfers of funds. This job is detail-oriented and requires good ability to negotiate.
Benefits Officer Duties involve managing pension fund assets, setting up employee 401(k) plans, determining health care benefits policies and working with human resources to set up cost-effective employee benefits. This job requires a combination of finance knowledge, knowledge of human resources management and understanding of organizational behavior.
Real Estate Officer This job involves finding real estate locations for a company, negotiation of lease agreements, acquisition of real estate and valuation of properties. This job requires a thorough understanding of finance and real estate.
Investor Relations Officer Duties involve dealing with the investing public by disseminating financial information, responding to queries from institutional investors, issuing press releases to explain corporate events and organizing teleconferences with investors. This challenging job involves contacts with top-level executives and requires understanding of finance and public relations. Many who hold this job have backgrounds in PR or advertising.
Controller Duties involve financial planning, accounting, financial reporting and cost analysis. Will get involved in property, revenue, benefits, derivatives, lease and joint interest accounting. May need to develop forecasting models to project revenues and costs. May be called on to implement or work with a complex costing system, efforts at financial reengineering, transfer pricing issues or interface with auditors. This job requires extensive accounting experience. Often holders of this position enter a company from a Big Six accounting firm.
Corporate Finance: Skills and Talents
Different jobs and companies call on different skills from the corporate finance professional. A typical job in corporate finance would call for the following skills:
Puzzle-lovers Wanted Most corporate finance jobs involve solving problems using a combination of intuition and analytics. If you are good at problem-solving, this may well be the job area for you.
Are You a Forrest Gump Type? Many of us imagine working in a corporation as a boring, routine experience designed for dim-witted, persnickety pencil-pushers in short-sleeved pastel plaid shirts. Not so pal. Rather, you need to be comfortable with ambiguity and rapidly changing environment where tasks change from day to day, maybe hour to hour.
Geek of the Week? Not Really, But... Lets not avoid the obvious. You have to be computer literate with spreadsheets, word processors, presentation packages and mainframes in corporate finance. This is especially true for entry level positions where you will need to crunch numbers as you get involved in the details of corporate financial planning, accounting and capital-raising. Execs love to talk about strategy, quality and vision. Funny, but when they interview you expect to be asked "Have you ever written a VBA macro in Excel?" or "Have you used a Reuters or Bloomberg station before?"
Are You An Impatient, Entrepreneurial Type? One of the most common complaints among new entrants in corporate finance jobs is that they are surprised by the low level of the work. "I didn't go to school to do this..." is a common refrain. Keep in mind that corporate environments reward longevity and loyalty. Be patient, learn from mentors and invest in yourself along the way. If you complain early on you may never get the break you want that comes from doing a minor task particularly well.
Why Do Nice People Get the Good Jobs? The movies portray "killer" operators in corporate environments, getting ahead by manipulation and chicanery. This isn't exactly how it works. People who like people, can communicate their ideas, build deep networks and are passionate about their work get ahead.
Leader or Follower? The number one attribute most corporate employers are looking for is initiative. If you can give examples in interviews of situations where you did something plain useful even though no one asked you to, you will be a hot commodity. Have you ever started a business? Or put together a social event that brought people together? Or started a new organization?
Speak a Foreign Language? Large corporations in the U.S., Europe and Asia are more globalized than ever and jobs will often take you across borders. You will obviously be more desirable to a company if you have a command of at least one foreign language and knowledge of international corporate finance. Would you be comfortable managing a bank relationship for your company in Argentina? Or costing new plants in China?
Risky Business The last decade has seen a dramatic increase in the sophistication of corporate risk management strategies. How are we going to hedge against fluctuations in the cost of our inputs? And what should we do to protect against foreign currency fluctuations? If you are familiar with models, techniques and derivatives which can be used to manage risk, you will be in high demand.
Did You Ever Build Something? Manufacturing firms often hire corporate finance types with a background in engineering. Ford, for example, wants people in the factory who can understand complex manufacturing processes, communicate well with engineers and enjoy complex costing work. Jerome York, the former Chrysler CFO, did a stint running Dodge, and once worked designing engine parts for GM.
How Are You With People? The best financial professionals are good with people. According to Fortune, (11/18/95): "Their biggest weakness is a lack of people skills," says John Dasburg, CEO of Northwest Airlines. "Finance types are often curt and colorless. By contrast, the best CFOs are master persuaders with a streak of the sales person. They read people as surely as balance sheets."
Different jobs and companies call on different skills from the corporate finance professional. A typical job in corporate finance would call for the following skills:
Puzzle-lovers Wanted Most corporate finance jobs involve solving problems using a combination of intuition and analytics. If you are good at problem-solving, this may well be the job area for you.
Are You a Forrest Gump Type? Many of us imagine working in a corporation as a boring, routine experience designed for dim-witted, persnickety pencil-pushers in short-sleeved pastel plaid shirts. Not so pal. Rather, you need to be comfortable with ambiguity and rapidly changing environment where tasks change from day to day, maybe hour to hour.
Geek of the Week? Not Really, But... Lets not avoid the obvious. You have to be computer literate with spreadsheets, word processors, presentation packages and mainframes in corporate finance. This is especially true for entry level positions where you will need to crunch numbers as you get involved in the details of corporate financial planning, accounting and capital-raising. Execs love to talk about strategy, quality and vision. Funny, but when they interview you expect to be asked "Have you ever written a VBA macro in Excel?" or "Have you used a Reuters or Bloomberg station before?"
Are You An Impatient, Entrepreneurial Type? One of the most common complaints among new entrants in corporate finance jobs is that they are surprised by the low level of the work. "I didn't go to school to do this..." is a common refrain. Keep in mind that corporate environments reward longevity and loyalty. Be patient, learn from mentors and invest in yourself along the way. If you complain early on you may never get the break you want that comes from doing a minor task particularly well.
Why Do Nice People Get the Good Jobs? The movies portray "killer" operators in corporate environments, getting ahead by manipulation and chicanery. This isn't exactly how it works. People who like people, can communicate their ideas, build deep networks and are passionate about their work get ahead.
Leader or Follower? The number one attribute most corporate employers are looking for is initiative. If you can give examples in interviews of situations where you did something plain useful even though no one asked you to, you will be a hot commodity. Have you ever started a business? Or put together a social event that brought people together? Or started a new organization?
Speak a Foreign Language? Large corporations in the U.S., Europe and Asia are more globalized than ever and jobs will often take you across borders. You will obviously be more desirable to a company if you have a command of at least one foreign language and knowledge of international corporate finance. Would you be comfortable managing a bank relationship for your company in Argentina? Or costing new plants in China?
Risky Business The last decade has seen a dramatic increase in the sophistication of corporate risk management strategies. How are we going to hedge against fluctuations in the cost of our inputs? And what should we do to protect against foreign currency fluctuations? If you are familiar with models, techniques and derivatives which can be used to manage risk, you will be in high demand.
Did You Ever Build Something? Manufacturing firms often hire corporate finance types with a background in engineering. Ford, for example, wants people in the factory who can understand complex manufacturing processes, communicate well with engineers and enjoy complex costing work. Jerome York, the former Chrysler CFO, did a stint running Dodge, and once worked designing engine parts for GM.
How Are You With People? The best financial professionals are good with people. According to Fortune, (11/18/95): "Their biggest weakness is a lack of people skills," says John Dasburg, CEO of Northwest Airlines. "Finance types are often curt and colorless. By contrast, the best CFOs are master persuaders with a streak of the sales person. They read people as surely as balance sheets."
Financial Planning: Overview
Financial planners help individuals plan their financial futures. How are you going to cover your retirement needs? What do you have to do today to put your children through college? This work can be personally and financially rewarding and requires excellent interpersonal skills. A good financial planner understands investments, taxes, estate planning issues and knows how to listen. This work can be done within a company such as IDS Financial Services or by yourself, as a sole proprietorship. Most planners go solo or work within smaller practices. It's essential then that you have a certain amount of entrepreneurship given that you will be running your own business. The work pays well and is rewarding if you like to help people. Increasingly, it pays to obtain the Certified Financial Planner (CFP) designation.
Financial planners help individuals plan their financial futures. How are you going to cover your retirement needs? What do you have to do today to put your children through college? This work can be personally and financially rewarding and requires excellent interpersonal skills. A good financial planner understands investments, taxes, estate planning issues and knows how to listen. This work can be done within a company such as IDS Financial Services or by yourself, as a sole proprietorship. Most planners go solo or work within smaller practices. It's essential then that you have a certain amount of entrepreneurship given that you will be running your own business. The work pays well and is rewarding if you like to help people. Increasingly, it pays to obtain the Certified Financial Planner (CFP) designation.
Financial Planning: Facts and Trends
Financial Planning is Hot U. S. News and World Report listed the position of financial planner as one of the twenty hottest professions for the future. They note that the entry of baby-boomers into middle age with a bewildering array of investment choices will make financially planning a really hot profession in the future. This said, financial planners interviewed recently point out that getting a solo practice going as a financial planner today can be difficult and highly competitive.
Pay Attention to the Details To make it in financial planning you need to know the details of various investments, tax law, estate planning strategies and you need to be good at marketing yourself and listening to your customers.
High Growth Expected in Financial Planning The field of financial planning is expected to experience substantial future growth, but it's a hard field to start in because most financial planners work in entrepreneurial one or two person shops and have difficulty affording new hires. Getting that crucial starting experience is the hardest part.
Quite a Few Financial Planners Already According to the Consumer Federation of America there are over 250,000 financial planners. The largest company in the field is IDS Financial Services, a division of American Express.
CFP Can Help as a Financial Planner Financial planners are increasingly called on to have the CFP (Certified Financial Planner) designation. To become a CFP, you must past an exam approved by the CFP Board of Standards which covers over 175 topics in investing and financial planning. Today, there are approximately 23,000 CFP's. For more information contact the Certified Financial Planners Board at 1660 Lincoln, Suite 3050, Denver, CO 80264 or call (303) 830-7543.
Get Involved If you are interested in breaking into financial planning (even as a student) you would benefit by attending local chapter meetings of financial planner organizations. The best way to find out the identity of a local chapter is through any of the three national financial planner organizations: (1) Institute for Certified Financial Planners (303) 751-7600, (2) International Association for Financial Planning (404) 395-1605 or (3) National Association of Personal Financial Advisors (708) 537-7723.
High Net Worth Individuals are a Key Target A growth area in financial planning and money management is targeting the high net worth individual. PSI, a financial services consultant, estimates that over 4 million US households have a net worth in excess of $1 million.
Financial Planning is Hot U. S. News and World Report listed the position of financial planner as one of the twenty hottest professions for the future. They note that the entry of baby-boomers into middle age with a bewildering array of investment choices will make financially planning a really hot profession in the future. This said, financial planners interviewed recently point out that getting a solo practice going as a financial planner today can be difficult and highly competitive.
Pay Attention to the Details To make it in financial planning you need to know the details of various investments, tax law, estate planning strategies and you need to be good at marketing yourself and listening to your customers.
High Growth Expected in Financial Planning The field of financial planning is expected to experience substantial future growth, but it's a hard field to start in because most financial planners work in entrepreneurial one or two person shops and have difficulty affording new hires. Getting that crucial starting experience is the hardest part.
Quite a Few Financial Planners Already According to the Consumer Federation of America there are over 250,000 financial planners. The largest company in the field is IDS Financial Services, a division of American Express.
CFP Can Help as a Financial Planner Financial planners are increasingly called on to have the CFP (Certified Financial Planner) designation. To become a CFP, you must past an exam approved by the CFP Board of Standards which covers over 175 topics in investing and financial planning. Today, there are approximately 23,000 CFP's. For more information contact the Certified Financial Planners Board at 1660 Lincoln, Suite 3050, Denver, CO 80264 or call (303) 830-7543.
Get Involved If you are interested in breaking into financial planning (even as a student) you would benefit by attending local chapter meetings of financial planner organizations. The best way to find out the identity of a local chapter is through any of the three national financial planner organizations: (1) Institute for Certified Financial Planners (303) 751-7600, (2) International Association for Financial Planning (404) 395-1605 or (3) National Association of Personal Financial Advisors (708) 537-7723.
High Net Worth Individuals are a Key Target A growth area in financial planning and money management is targeting the high net worth individual. PSI, a financial services consultant, estimates that over 4 million US households have a net worth in excess of $1 million.
Insurance: Overview
Did you know that some of the hottest jobs in finance aren't on Wall Street at all? These are jobs in insurance. Insurance is a trillion dollar business that employs more than 2.5 million people in the United States alone. As the population ages and wealth grows, the demand for insurance professionals will increase dramatically. This is great news for you if your thinking of going in to insurance. Jobs in insurance involve helping individuals and business manage risk to protect themselves from catastrophic losses and to anticipate potential risk problems. Work in this area is not only personally rewarding, but can be financially rewarding as well. You will help clients understand their insurance needs, explain their options to them and hopefully help them purchase appropriate insurance policies. You could work in a variety of areas in insurance including as an underwriter, a sales representative, an asset manager, a customer service rep or an actuary. A theme that is constantly emphasized by insurance professionals is that the industry is ultimately about helping people when they need it the most. The stereotype of a slick, sleazy, fast-talking insurance salesman is largely a figment of the past.
Did you know that some of the hottest jobs in finance aren't on Wall Street at all? These are jobs in insurance. Insurance is a trillion dollar business that employs more than 2.5 million people in the United States alone. As the population ages and wealth grows, the demand for insurance professionals will increase dramatically. This is great news for you if your thinking of going in to insurance. Jobs in insurance involve helping individuals and business manage risk to protect themselves from catastrophic losses and to anticipate potential risk problems. Work in this area is not only personally rewarding, but can be financially rewarding as well. You will help clients understand their insurance needs, explain their options to them and hopefully help them purchase appropriate insurance policies. You could work in a variety of areas in insurance including as an underwriter, a sales representative, an asset manager, a customer service rep or an actuary. A theme that is constantly emphasized by insurance professionals is that the industry is ultimately about helping people when they need it the most. The stereotype of a slick, sleazy, fast-talking insurance salesman is largely a figment of the past.
Insurance: Facts & Trends
Build a Framework It is helpful to have a mental framework of what functions financial services firms do when looking at job possibilities in this area. Professors Zvi Bodie and Robert Merton of Harvard Business School argue that financial service institutions, systems and products can be understood by providing the following functions: a payments system for exchange of services; a mechanism for the pooling of funds to undertake large-scale enterprises; a way to transfer resources; a way of managing uncertainty and controlling risk; a body of price information to help coordinate decentralized decision-making; and a way of dealing with agency problems created by asymmetric information.
Huge Part of the Economy The insurance industry is a powerful part of the U.S. economy. In 1998, policy premiums exceed $700 billion dollars.
Banks Becoming More Important Life insurance is increasingly sold through banks. Today, 32% of all annuities were sold through banks.
A Big Employer Over two million people work in the insurance industry. Insurance is one of the biggest employers in the United States.
Hiring is Red Hot Hiring is hot in 1999. The National Insurance Recruiters Association is seeing "phenomenal activity" in hiring. Last year, the association averaged 25 new job listings per week; this year it is averaging between 35 and 45. Employers are selective, however, and are looking for unusual experience and specialty talents.
Demand for Insurance Products Rising Most analysts expect the demand for insurance to rise as risks become more complex and abundant in the economy. The growth in the industry, according to the Bureau of Labor Statistics is expected to be within 20 to 40 percent over the next fifteen years. There is also an expanding set of employee benefits including child care, employee savings accounts, payroll deduction property and casualty that will expand opportunities in the insurance industry.
Malpractice Insurance a Growth Area A huge growth area is physicians malpractice insurance. Companies like MICOA are aggressively hiring and have built a strong niche servicing physicians with malpractice insurance, risk reduction advice and other financial services.
Fewer and Fewer Life Insurance Agents Coming Online The number of persons becoming life insurance agents is down dramatically. There were 23,000 new agents in 1994 vs. 56,000 in 1975. It's tough to make it as an agent these days with competition from employer-provided insurance, banks and stock brokerages. It's now estimated that four in five persons making less than $50,000 a year will never see an actual life insurance agent in their lifetimes.
Not All Companies Will Survive It's important to know the stability of the insurance company you go to work for. In the 1980s four large insurance companies failed including Executive Life and Mutual Benefit.
Lloyds a Centerpiece Lloyds of London is one of the most important financial institutions in the world. Lloyds provides liquidity to the reinsurance market throughout the world by providing a venue for insurance companies to share risks with other large investors.
Securitization a Possibility There is increasing speculation that many insurance companies will get out of the business of bearing risk altogether and will reinsure all contracts, perhaps through securitization or derivative contracts. Thus far, however, the idea hasn't gone far. The few catastrophe bonds underwritten haven't found investors.
IT Types in High Demand There are tremendous opportunities in the management of information in insurance with all the different state rules and products. It is increasingly the case that companies are hiring information services professionals because of the high demands for automation caused by insurance paid for by payroll deduction.
Health Insurance Area Hot The aging of the population has been dramatically increasing the demand for health insurance. Despite recent regulatory reexamination, the health insurance business is likely to see tremendous future growth, even if health care reform takes place.
Banks Playing Important Role A sector in life insurance which is seeing tremendous growth is insurance sold through banks. People are increasingly relying on their bankers to sell them a variety of financial services. Banks charge much lower commissions and benefit by helping their customers become financially secure in retirement. Think of specialty players in this business like Lifestyle Financial Investments at (800) 843-3818.
Build a Framework It is helpful to have a mental framework of what functions financial services firms do when looking at job possibilities in this area. Professors Zvi Bodie and Robert Merton of Harvard Business School argue that financial service institutions, systems and products can be understood by providing the following functions: a payments system for exchange of services; a mechanism for the pooling of funds to undertake large-scale enterprises; a way to transfer resources; a way of managing uncertainty and controlling risk; a body of price information to help coordinate decentralized decision-making; and a way of dealing with agency problems created by asymmetric information.
Huge Part of the Economy The insurance industry is a powerful part of the U.S. economy. In 1998, policy premiums exceed $700 billion dollars.
Banks Becoming More Important Life insurance is increasingly sold through banks. Today, 32% of all annuities were sold through banks.
A Big Employer Over two million people work in the insurance industry. Insurance is one of the biggest employers in the United States.
Hiring is Red Hot Hiring is hot in 1999. The National Insurance Recruiters Association is seeing "phenomenal activity" in hiring. Last year, the association averaged 25 new job listings per week; this year it is averaging between 35 and 45. Employers are selective, however, and are looking for unusual experience and specialty talents.
Demand for Insurance Products Rising Most analysts expect the demand for insurance to rise as risks become more complex and abundant in the economy. The growth in the industry, according to the Bureau of Labor Statistics is expected to be within 20 to 40 percent over the next fifteen years. There is also an expanding set of employee benefits including child care, employee savings accounts, payroll deduction property and casualty that will expand opportunities in the insurance industry.
Malpractice Insurance a Growth Area A huge growth area is physicians malpractice insurance. Companies like MICOA are aggressively hiring and have built a strong niche servicing physicians with malpractice insurance, risk reduction advice and other financial services.
Fewer and Fewer Life Insurance Agents Coming Online The number of persons becoming life insurance agents is down dramatically. There were 23,000 new agents in 1994 vs. 56,000 in 1975. It's tough to make it as an agent these days with competition from employer-provided insurance, banks and stock brokerages. It's now estimated that four in five persons making less than $50,000 a year will never see an actual life insurance agent in their lifetimes.
Not All Companies Will Survive It's important to know the stability of the insurance company you go to work for. In the 1980s four large insurance companies failed including Executive Life and Mutual Benefit.
Lloyds a Centerpiece Lloyds of London is one of the most important financial institutions in the world. Lloyds provides liquidity to the reinsurance market throughout the world by providing a venue for insurance companies to share risks with other large investors.
Securitization a Possibility There is increasing speculation that many insurance companies will get out of the business of bearing risk altogether and will reinsure all contracts, perhaps through securitization or derivative contracts. Thus far, however, the idea hasn't gone far. The few catastrophe bonds underwritten haven't found investors.
IT Types in High Demand There are tremendous opportunities in the management of information in insurance with all the different state rules and products. It is increasingly the case that companies are hiring information services professionals because of the high demands for automation caused by insurance paid for by payroll deduction.
Health Insurance Area Hot The aging of the population has been dramatically increasing the demand for health insurance. Despite recent regulatory reexamination, the health insurance business is likely to see tremendous future growth, even if health care reform takes place.
Banks Playing Important Role A sector in life insurance which is seeing tremendous growth is insurance sold through banks. People are increasingly relying on their bankers to sell them a variety of financial services. Banks charge much lower commissions and benefit by helping their customers become financially secure in retirement. Think of specialty players in this business like Lifestyle Financial Investments at (800) 843-3818.
Insurance: Job Options
Actuary Actuaries use their analytical skills to predict the risk of writing insurance policies on property, businesses and people's lives and health. Why does automobile cost so much more if you under the age of 25? Because an actuary somewhere found that the risk of insuring automobiles is highly age-dependent. Actuaries are a crucial part of the insurance process because they use statistical and mathematical analysis to determine the risk of providing coverage. To perform effectively, actuaries must be informed about general societal trends and legislative developments which may affect risk. Actuaries can work either within insurance companies or for government, pension planning org anizations or third-party advisors.
Agent and Broker Agents and brokers advise people and organizations on how to protect things they value by selling customers insurance contracts. You will be the first person contacted after an accident, fire or injury. An understanding of insurance contracts is essential to this type of occupation. A career as an agent or broker can be financially rewarding. This work is highly time-flexible, requires some background in business and is best if you enjoy interacting with people.
Claims Adjuster Adjusters negotiate insurance claims with people have experienced a loss. The adjuster is responsible for reaching a claim settlement that is fair to all parties. Doing well in this job requires a person who is resourceful, tactful and good with people. Some adjusters work in the field, while others work out of an office.
Service Representatives Service representatives are the link in the field between agents who sell policies and insurance companies who write the policies. Field representatives must be good listeners and communicators. This position requires knowledge of your companies products and ability to establish good rapport with those working for your companies. A background in liberal arts can be a great preparation for this type of position.
Loss Control Specialist As a loss control specialist your job is to help keep accident and losses to a minimum. You will visit factories, shop floors and businesses to identify potential hazards and help to eliminate them. In the health insurance area you might work with an organization to promote preventive health care in the workplace or to limit exposure to certain types of ailments. This work requires an understanding of safety management or engineering. A combination of a technical major and a business major would be outstanding preparation for this job.
Risk Manager A risk manager is employed by an organization to help identify the risks that it faces and to make recommendations for dealing with these risks. The recommendations may include the purchase of insurance, adoption of precautionary measures and presentations to upper management. Risk managers are involved in the management of employee benefit plans. Valuable skills include knowledge of the insurance industry and of business practice as well as skill in making presentations to upper management.
Underwriter Underwriters decide whether to provide insurance to applicants seeking coverage. An underwriter evaluates an applicant's exposure to risk and decides whether an applicant meets an insurer's standards. An underwriter may also become involved in setting prices for insurance applicants.
Actuary Actuaries use their analytical skills to predict the risk of writing insurance policies on property, businesses and people's lives and health. Why does automobile cost so much more if you under the age of 25? Because an actuary somewhere found that the risk of insuring automobiles is highly age-dependent. Actuaries are a crucial part of the insurance process because they use statistical and mathematical analysis to determine the risk of providing coverage. To perform effectively, actuaries must be informed about general societal trends and legislative developments which may affect risk. Actuaries can work either within insurance companies or for government, pension planning org anizations or third-party advisors.
Agent and Broker Agents and brokers advise people and organizations on how to protect things they value by selling customers insurance contracts. You will be the first person contacted after an accident, fire or injury. An understanding of insurance contracts is essential to this type of occupation. A career as an agent or broker can be financially rewarding. This work is highly time-flexible, requires some background in business and is best if you enjoy interacting with people.
Claims Adjuster Adjusters negotiate insurance claims with people have experienced a loss. The adjuster is responsible for reaching a claim settlement that is fair to all parties. Doing well in this job requires a person who is resourceful, tactful and good with people. Some adjusters work in the field, while others work out of an office.
Service Representatives Service representatives are the link in the field between agents who sell policies and insurance companies who write the policies. Field representatives must be good listeners and communicators. This position requires knowledge of your companies products and ability to establish good rapport with those working for your companies. A background in liberal arts can be a great preparation for this type of position.
Loss Control Specialist As a loss control specialist your job is to help keep accident and losses to a minimum. You will visit factories, shop floors and businesses to identify potential hazards and help to eliminate them. In the health insurance area you might work with an organization to promote preventive health care in the workplace or to limit exposure to certain types of ailments. This work requires an understanding of safety management or engineering. A combination of a technical major and a business major would be outstanding preparation for this job.
Risk Manager A risk manager is employed by an organization to help identify the risks that it faces and to make recommendations for dealing with these risks. The recommendations may include the purchase of insurance, adoption of precautionary measures and presentations to upper management. Risk managers are involved in the management of employee benefit plans. Valuable skills include knowledge of the insurance industry and of business practice as well as skill in making presentations to upper management.
Underwriter Underwriters decide whether to provide insurance to applicants seeking coverage. An underwriter evaluates an applicant's exposure to risk and decides whether an applicant meets an insurer's standards. An underwriter may also become involved in setting prices for insurance applicants.
Insurance: Skills & Talents
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: Medium
Work hours: 35-55/week
Commentary
The Business is About Risk Transfer Insurance companies are in the business of assuming risk by writing policies which transfer risks from customers to themselves. This work is challenging, complex and likely to continue to prosper.
There are a Variety of Key Business Areas Insurance companies are in the business either of providing property and casualty insurance (protect owners of cars, business and homes against loss and injury); life insurance or health insurance.
Insurance is one of Finance's Best Kept Secrets Insurance may be one of the best kept secrets in the field of finance. Most students do not realize the high growth and enormous potential for personal development and advancement that this field offers.
People-oriented Types Who Can Listen Do Well The field of insurance and risk management is well-suited for those who are good listeners, who enjoy people and are comfortable with quantitative analysis of risks.
Most People in Insurance Don't Sell Many people avoid insurance careers because they perceive that the business is about selling and slickness. Certainly, part of the business involves selling but keep in mind that insurance policies help people, especially in times of need. Moreover, most jobs in the field do not involve direct selling.
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: Medium
Work hours: 35-55/week
Commentary
The Business is About Risk Transfer Insurance companies are in the business of assuming risk by writing policies which transfer risks from customers to themselves. This work is challenging, complex and likely to continue to prosper.
There are a Variety of Key Business Areas Insurance companies are in the business either of providing property and casualty insurance (protect owners of cars, business and homes against loss and injury); life insurance or health insurance.
Insurance is one of Finance's Best Kept Secrets Insurance may be one of the best kept secrets in the field of finance. Most students do not realize the high growth and enormous potential for personal development and advancement that this field offers.
People-oriented Types Who Can Listen Do Well The field of insurance and risk management is well-suited for those who are good listeners, who enjoy people and are comfortable with quantitative analysis of risks.
Most People in Insurance Don't Sell Many people avoid insurance careers because they perceive that the business is about selling and slickness. Certainly, part of the business involves selling but keep in mind that insurance policies help people, especially in times of need. Moreover, most jobs in the field do not involve direct selling.
Real Estate: Overview
As you read this, there are more than five million people in the United States employed in identifiable real estate fields such as title insurance, construction, mortgage banking, property management, real estate appraisals, brokerage and leasing, and real estate development. In addition, many were engaged in corporate real estate and in real estate lending in commercial banks, savings and loans, and insurance companies where their jobs are not included in the real estate sector. Over a third of the world's wealth is tied up in real estate. Real estate is collateral for mortgages and a large amount of financial assets. As important as the field of real estate might be, it is also worth recognizing how interesting the work in this field is. Real estate professionals are tied to the development of our society in a very direct way and participate in decisions that will shape the way we live for centuries. Work in real estate is personally rewarding, ever-changing and challenging. Take some time and consider your potential in the field of real estate.
As you read this, there are more than five million people in the United States employed in identifiable real estate fields such as title insurance, construction, mortgage banking, property management, real estate appraisals, brokerage and leasing, and real estate development. In addition, many were engaged in corporate real estate and in real estate lending in commercial banks, savings and loans, and insurance companies where their jobs are not included in the real estate sector. Over a third of the world's wealth is tied up in real estate. Real estate is collateral for mortgages and a large amount of financial assets. As important as the field of real estate might be, it is also worth recognizing how interesting the work in this field is. Real estate professionals are tied to the development of our society in a very direct way and participate in decisions that will shape the way we live for centuries. Work in real estate is personally rewarding, ever-changing and challenging. Take some time and consider your potential in the field of real estate.
Real Estate: Facts and Trends
Bright Future The Occupational Outlook Handbook sees a bright future for property managers and says that the market will increasingly call for persons with a degree in business. The office building market, in particular, is expected to boom through 2005 due to growth in the service sector of the economy.
Experience in real estate is key. Do everything you can to obtain investing and property management background, whether it be by taking an unpaid internship, managing some properties or making a few small investments of your own.
REITs are hot. The 1990s have seen a large rise in real estate financings to the public through Real Estate Investment Trusts (REITs). These trusts work like mutual funds and hold property. The REIT boom is unlikely to continue over the next decade but this sector hould continue to offer good job opportunities for real estate analysts.
Negotiation Skills are Crucial. A key skill in real estate is the ability to negotiate win-win contracts. Develop negotiating skills now and you will definitely see a pay off later.
Technology is becoming much more important in real estate. Those who know how to develop products which use digitized photographs and video will have an advantage in the future because they can take properties to the customer as opposed to having to take the customer to the properties.
Get Certified. Certification is important, and often required, of real estate professionals. Contact the National Association of Realtors at (312) 329-8449 for more information. Key designations include Certified Commerical Investment Member (CCIM), Certified International Property Specialist (CIPS), Certified Property Manager (CPM), Certified Real Estate Brokerage Manager (CRB), Certified Resid ential Specialist (CRS). Resident al Accredited Appraiser (RAA).
Bright Future The Occupational Outlook Handbook sees a bright future for property managers and says that the market will increasingly call for persons with a degree in business. The office building market, in particular, is expected to boom through 2005 due to growth in the service sector of the economy.
Experience in real estate is key. Do everything you can to obtain investing and property management background, whether it be by taking an unpaid internship, managing some properties or making a few small investments of your own.
REITs are hot. The 1990s have seen a large rise in real estate financings to the public through Real Estate Investment Trusts (REITs). These trusts work like mutual funds and hold property. The REIT boom is unlikely to continue over the next decade but this sector hould continue to offer good job opportunities for real estate analysts.
Negotiation Skills are Crucial. A key skill in real estate is the ability to negotiate win-win contracts. Develop negotiating skills now and you will definitely see a pay off later.
Technology is becoming much more important in real estate. Those who know how to develop products which use digitized photographs and video will have an advantage in the future because they can take properties to the customer as opposed to having to take the customer to the properties.
Get Certified. Certification is important, and often required, of real estate professionals. Contact the National Association of Realtors at (312) 329-8449 for more information. Key designations include Certified Commerical Investment Member (CCIM), Certified International Property Specialist (CIPS), Certified Property Manager (CPM), Certified Real Estate Brokerage Manager (CRB), Certified Resid ential Specialist (CRS). Resident al Accredited Appraiser (RAA).
Real Estate: Job Options
Residential Real Estate Agent/Broker
Real estate agents and brokers are usually independent sales professionals who contract their services to real estate brokers in exchanges for a commission-sharing agreement (normally six percent). There are over 400,000 real estate brokers and agents in the United States. To become a broker you must be at least 18 years old, a high school graduate and have passed a written test on property laws and real estate transactions. Most states also require 30-90 hours of classroom training. You can visit the National Association of Realtor's web page at http://www.realtor.com/ to find out more about this career area.
Commercial Real Estate Sales
Commercial property brokerage offices use sales associates who market office buildings, hotels and many other types of commercial real estate for brokers. Commercial real estate sales people usually specialize in a particular property type such as apartments, retail, office, hospitality, shopping centers and industrial plants. Most of the large commercial brokerage companies in the United States provide a great deal of local market data and research in order to be able to service a cadre of sophisticated clients who are making multi-million dollar investment decisions. Several trade organizations represent the various commercial real estate subspecialties including the American Industrial Real Estate Association, the Hotel and Motel Brokers of America, the National Association of Industrial and Office Properties, the Real Estate Exchange-a forum for women in commercial real estate, the International Council of Shopping Centers, and the Society of Industrial and Office Realtors. Additionally, the Commercial Investment Real Estate Institute (CIREI), through its education program, has been conferring the Certified Commercial Investment Member (CCIM) designation since 1969.
Real Estate Appraisal
Real estate appraisers provide unbiased estimates of a property's value and quality. Appraisers usually work for banks or for appraiser firms and will normally value properties by finding comparable sales in an area or by es timating the discounted value of cash flows expected from a property. This profession is less cyclical than real estate brokerage because appraisers are required when homes are refinanced-a time historically when the real estate market has been slow. You can learn more about this area from the Appraisal Foundation.
Property Management
Leading real estate owners require professional property managers. Managers are responsible for negotiating leases, ensuring that tenants are satisfied, that rent is paid and that rents reflect market conditions. The career of property manager requires good interpersonal and analytical skills and a fair amount of negotiating prowess. This job is personally rewarding and allows you to really learn the real estate markets should you wish to embark in business on your own. The Institute of Real Estate Management (IREM) is the trade association representing property managers. Their training programs include the Certified Property Manager (CPM) and Accredited Residential Manager (ARM) designations.
Real Estate Advisory
Institutional investors are purchasing real estate more and more. But real estate is not like a stock or bond that you can buy and put in a vault. Real estate advisors help investors care for property and, more importantly, se lect property in the first place by suggesting areas and property types that are likely to experience price appreciation in the future. This job is fun and one that you can get into after getting experience in investing or property management. People who are good with statistics and excel at client contact do well in this job.
Investment Banking
Many investment banks have groups dedicated to real estate, particularly the repackaging of mortgages into residential mortgage-backed securities (MBS), collateralized mortgage obligations (CMOs) and commercial mortgage-backed securities (CMBS). Big players include CSFB, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and PaineWebber. Other popular areas include the REIT stock, bond and preferred stock origination business, lodging investment banking, principal investing in real estate and synthetic lease origination. If you have an interest in both real estate and investment banking, why not go for both areas at once?
Development and Construction
Are you willing to work hard and take risks to develop new properties? Then a career in real estate development may be for you. You can enter this business working for another developer, moving up to construction manager, or you can strike out on your own, starting with some smaller transactions. Good developers are results-oriented and know how to get work on time which involves managing labor, establishing time estimates, getting appropriate equipment operators and construction crews.
Real Estate Entrepreneur
Real estate is one of the last bastions of the free-enterprising entrepreneur who buys properties in hope that they will rise in value because of improvement in market conditions or renovations. Since WWII some of the weal thiest persons in the world have been real estate entrepreneurs. To make it in this career you need to be savvy, hard-working, willing to take risks and fortunate. Remember, their are others who would also like to become wealthy in real estate who will be bidding on the same deals and properties that you will. It is important, then, to think carefully of how you can succeed in this market through better wits, a superior management approach or a unique niche strategy.
Residential Real Estate Agent/Broker
Real estate agents and brokers are usually independent sales professionals who contract their services to real estate brokers in exchanges for a commission-sharing agreement (normally six percent). There are over 400,000 real estate brokers and agents in the United States. To become a broker you must be at least 18 years old, a high school graduate and have passed a written test on property laws and real estate transactions. Most states also require 30-90 hours of classroom training. You can visit the National Association of Realtor's web page at http://www.realtor.com/ to find out more about this career area.
Commercial Real Estate Sales
Commercial property brokerage offices use sales associates who market office buildings, hotels and many other types of commercial real estate for brokers. Commercial real estate sales people usually specialize in a particular property type such as apartments, retail, office, hospitality, shopping centers and industrial plants. Most of the large commercial brokerage companies in the United States provide a great deal of local market data and research in order to be able to service a cadre of sophisticated clients who are making multi-million dollar investment decisions. Several trade organizations represent the various commercial real estate subspecialties including the American Industrial Real Estate Association, the Hotel and Motel Brokers of America, the National Association of Industrial and Office Properties, the Real Estate Exchange-a forum for women in commercial real estate, the International Council of Shopping Centers, and the Society of Industrial and Office Realtors. Additionally, the Commercial Investment Real Estate Institute (CIREI), through its education program, has been conferring the Certified Commercial Investment Member (CCIM) designation since 1969.
Real Estate Appraisal
Real estate appraisers provide unbiased estimates of a property's value and quality. Appraisers usually work for banks or for appraiser firms and will normally value properties by finding comparable sales in an area or by es timating the discounted value of cash flows expected from a property. This profession is less cyclical than real estate brokerage because appraisers are required when homes are refinanced-a time historically when the real estate market has been slow. You can learn more about this area from the Appraisal Foundation.
Property Management
Leading real estate owners require professional property managers. Managers are responsible for negotiating leases, ensuring that tenants are satisfied, that rent is paid and that rents reflect market conditions. The career of property manager requires good interpersonal and analytical skills and a fair amount of negotiating prowess. This job is personally rewarding and allows you to really learn the real estate markets should you wish to embark in business on your own. The Institute of Real Estate Management (IREM) is the trade association representing property managers. Their training programs include the Certified Property Manager (CPM) and Accredited Residential Manager (ARM) designations.
Real Estate Advisory
Institutional investors are purchasing real estate more and more. But real estate is not like a stock or bond that you can buy and put in a vault. Real estate advisors help investors care for property and, more importantly, se lect property in the first place by suggesting areas and property types that are likely to experience price appreciation in the future. This job is fun and one that you can get into after getting experience in investing or property management. People who are good with statistics and excel at client contact do well in this job.
Investment Banking
Many investment banks have groups dedicated to real estate, particularly the repackaging of mortgages into residential mortgage-backed securities (MBS), collateralized mortgage obligations (CMOs) and commercial mortgage-backed securities (CMBS). Big players include CSFB, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and PaineWebber. Other popular areas include the REIT stock, bond and preferred stock origination business, lodging investment banking, principal investing in real estate and synthetic lease origination. If you have an interest in both real estate and investment banking, why not go for both areas at once?
Development and Construction
Are you willing to work hard and take risks to develop new properties? Then a career in real estate development may be for you. You can enter this business working for another developer, moving up to construction manager, or you can strike out on your own, starting with some smaller transactions. Good developers are results-oriented and know how to get work on time which involves managing labor, establishing time estimates, getting appropriate equipment operators and construction crews.
Real Estate Entrepreneur
Real estate is one of the last bastions of the free-enterprising entrepreneur who buys properties in hope that they will rise in value because of improvement in market conditions or renovations. Since WWII some of the weal thiest persons in the world have been real estate entrepreneurs. To make it in this career you need to be savvy, hard-working, willing to take risks and fortunate. Remember, their are others who would also like to become wealthy in real estate who will be bidding on the same deals and properties that you will. It is important, then, to think carefully of how you can succeed in this market through better wits, a superior management approach or a unique niche strategy.
Real Estate: Skills and Talents
Real estate employers are looking for people with a combination of strong deal-making and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Very High
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: High
Work hours: 20-70/week
Excellent Job Opportunities The field of real estate involves the sale, management and analysis of land and properties. This is one of the largest parts of the economy and offers excellent job opportunities.
Tough to Break In It's relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
The Field is Highly Entrepreneurial Real estate jobs tend to be more entrepreneurial and create opportunities to become wealthy if you have the right mix of analytical skills and entrepreneurial drive.
There are Many Ways to Play the Field One of the exciting things about real estate is that it can be approached from so many different ways. You can be a white-collar worker projecting and analyzing cash flows from new developments with spreadsheets; an agent in the field with heavy contact with customers on a day to day basis; or an ent repreneurial property owner/manager looking for undervalued real estate buys and strategies for creating value.
Multiple Entry Points Available There are a variety of ways to break into real estate. If you are interested in the sales side you need to get licensed and should go to work for a commercial or residential broker. If you would like to get involved in property acquisition and analysis you should get a higher degree with a specialization in real estate and go to work for a major property management company. There are also many other ways to enter including through corporate site selection departments, governmental entities and banks.
Real estate employers are looking for people with a combination of strong deal-making and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Very High
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: High
Work hours: 20-70/week
Excellent Job Opportunities The field of real estate involves the sale, management and analysis of land and properties. This is one of the largest parts of the economy and offers excellent job opportunities.
Tough to Break In It's relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
The Field is Highly Entrepreneurial Real estate jobs tend to be more entrepreneurial and create opportunities to become wealthy if you have the right mix of analytical skills and entrepreneurial drive.
There are Many Ways to Play the Field One of the exciting things about real estate is that it can be approached from so many different ways. You can be a white-collar worker projecting and analyzing cash flows from new developments with spreadsheets; an agent in the field with heavy contact with customers on a day to day basis; or an ent repreneurial property owner/manager looking for undervalued real estate buys and strategies for creating value.
Multiple Entry Points Available There are a variety of ways to break into real estate. If you are interested in the sales side you need to get licensed and should go to work for a commercial or residential broker. If you would like to get involved in property acquisition and analysis you should get a higher degree with a specialization in real estate and go to work for a major property management company. There are also many other ways to enter including through corporate site selection departments, governmental entities and banks.
Investment Banking: Life as an Associate
An associate is typically a recently graduated MBA or an analyst who gets promoted after three or four years. You will usually stay an associate for three years or so. An associate still has to do a lot of grunt work and may even have an analyst to call on. Your hours will still be miserable and you haven't really become a human being yet. Like a good analyst, your job is to make your boss look good and to understand what's going on. Your boss may abuse you from time to time and you aren't supposed to complain really. This is a job where you can really start to shine. If you add value to transactions or help get things done in some other meaningful way, you can expect to be paid a reasonable bonus and have a shot a promotion to AVP.
Associate level pay in New York firms runs roughly $90,000 in your first year (including bonus). If you are good and stay awhile, expect to go up to roughly $130,000 to $150,000 before you hop up another level. In London expect a salary of roughly 60,000 to 80,000 Sterling (all-in).
Key Skills
In investment banking / corporate finance / M&A, key associate skills include:
* the ability to do DCF valuations
* the ability to use Excel in your sleep
* the ability to arrange client meetings and get the logistics right
* the ability to deal with horrendous egos
* the ability to find comparable companies
* the ability to network within the firm and befriend key people like librarians, IT gurus, messengers, lawyers, compliance etc.
In debt and equity capital markets positions, key associate skills include:
* the ability to massage league tables
* the ability to price up new deals (e.g. bonds, convertibles, preferreds)
* pretend that you know what's going when clients call in and the boss is not around
* the ability to track past deals and pricing to sense where the market is going
* check and generate weekly newsletters (weeklies)
* the ability to fill in silences in meetings with insightful comments (while making sure your boss controls things)
* coordinate due diligence
* prepare document on debt and equity deals
* make sure analysts get burgers from the right place
* generate pitch books with your eyes closed while talking to clients and screaming at syndicate
In sales and trading positions, key associate skills include:
* the ability to watch your bosses blotter
* the ability to know where prices are
* the ability to work options pricing models
* the ability to bluff a little when needed
* the ability to eat endless fattening food without getting fat
* the ability to golf, play tennis, drink and joke around with clients
* the ability to make clients feel comfortable with you
Success Factors
Key success factors include (i) getting your job done well, (ii) getting many things done in a chaotic environment, (iii) dressing well, (iv) having a beer and a good time every once in awhile, (v) always making your boss look good, (vi) being a total whiz with computers, (vii) being able to spin bad news into ok news and (viii) network within the firm. Other good things to do include figuring out when a job could be done better and going out and doing it. For example, create a database to track the results of an equity tender offer. Initiative is key. Also, getting to know clients is very important since you will be using those relationships later on.
Assessment
As an associate you are in. Your job now is to prove you have what it takes to make in investment banking. You may not always like the environment and culture you are in, but your job is to survive and eventually excel. You are only a few years away from getting your own clients, initiating your own deals and making some good money.
Play your cards right and you'll be happy you did the time. Big time.
Recommended Books
* Applied Corporate Finance: A User's Manual, by Aswath Damodaran. Walks you through how to do corporate finance in detail with extensive examples. Read this for an investment banking job.
* Barbarians at the Gate: The Fall of RJR Nabisco, Bryan Burrough and John Helyar, Harper Collins Books, 1993. Describes the rather crazy life of one corporate executive. Lots of juicy personality conflict. If you liked the movie you will definitely enjoy the book. Good background for an M&A job.
* Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford Job and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Handbook of Fixed Income, Frank Fabozzi (editor). This is the bible for any job involving fixed income sales, trading, underwriting or derivatives. Should be required reading in every MBA program.
* Tim Crack's Guide to Quantitative Questions from Wall Street Job Interviewers. If you are interviewing for a job in derivatives or other relatively quantiative area you should get this book. This is not so important to go through for a plain vanilla i-banking job, although it couldn't hurt.
* Valuation: Measuring and Managing the value of Companies, by Tom Copeland, Tim Koller and Jack Murrin. Valuation delivers more potent strategies for measuring and enhancing the bottom-line value of any company. Also walks you through how to do a valuation. The diskette is also quite valuable given that you get a ton of spreadsheets to play with. Great background for any job involving M&A or investment banking.
An associate is typically a recently graduated MBA or an analyst who gets promoted after three or four years. You will usually stay an associate for three years or so. An associate still has to do a lot of grunt work and may even have an analyst to call on. Your hours will still be miserable and you haven't really become a human being yet. Like a good analyst, your job is to make your boss look good and to understand what's going on. Your boss may abuse you from time to time and you aren't supposed to complain really. This is a job where you can really start to shine. If you add value to transactions or help get things done in some other meaningful way, you can expect to be paid a reasonable bonus and have a shot a promotion to AVP.
Associate level pay in New York firms runs roughly $90,000 in your first year (including bonus). If you are good and stay awhile, expect to go up to roughly $130,000 to $150,000 before you hop up another level. In London expect a salary of roughly 60,000 to 80,000 Sterling (all-in).
Key Skills
In investment banking / corporate finance / M&A, key associate skills include:
* the ability to do DCF valuations
* the ability to use Excel in your sleep
* the ability to arrange client meetings and get the logistics right
* the ability to deal with horrendous egos
* the ability to find comparable companies
* the ability to network within the firm and befriend key people like librarians, IT gurus, messengers, lawyers, compliance etc.
In debt and equity capital markets positions, key associate skills include:
* the ability to massage league tables
* the ability to price up new deals (e.g. bonds, convertibles, preferreds)
* pretend that you know what's going when clients call in and the boss is not around
* the ability to track past deals and pricing to sense where the market is going
* check and generate weekly newsletters (weeklies)
* the ability to fill in silences in meetings with insightful comments (while making sure your boss controls things)
* coordinate due diligence
* prepare document on debt and equity deals
* make sure analysts get burgers from the right place
* generate pitch books with your eyes closed while talking to clients and screaming at syndicate
In sales and trading positions, key associate skills include:
* the ability to watch your bosses blotter
* the ability to know where prices are
* the ability to work options pricing models
* the ability to bluff a little when needed
* the ability to eat endless fattening food without getting fat
* the ability to golf, play tennis, drink and joke around with clients
* the ability to make clients feel comfortable with you
Success Factors
Key success factors include (i) getting your job done well, (ii) getting many things done in a chaotic environment, (iii) dressing well, (iv) having a beer and a good time every once in awhile, (v) always making your boss look good, (vi) being a total whiz with computers, (vii) being able to spin bad news into ok news and (viii) network within the firm. Other good things to do include figuring out when a job could be done better and going out and doing it. For example, create a database to track the results of an equity tender offer. Initiative is key. Also, getting to know clients is very important since you will be using those relationships later on.
Assessment
As an associate you are in. Your job now is to prove you have what it takes to make in investment banking. You may not always like the environment and culture you are in, but your job is to survive and eventually excel. You are only a few years away from getting your own clients, initiating your own deals and making some good money.
Play your cards right and you'll be happy you did the time. Big time.
Recommended Books
* Applied Corporate Finance: A User's Manual, by Aswath Damodaran. Walks you through how to do corporate finance in detail with extensive examples. Read this for an investment banking job.
* Barbarians at the Gate: The Fall of RJR Nabisco, Bryan Burrough and John Helyar, Harper Collins Books, 1993. Describes the rather crazy life of one corporate executive. Lots of juicy personality conflict. If you liked the movie you will definitely enjoy the book. Good background for an M&A job.
* Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford Job and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Handbook of Fixed Income, Frank Fabozzi (editor). This is the bible for any job involving fixed income sales, trading, underwriting or derivatives. Should be required reading in every MBA program.
* Tim Crack's Guide to Quantitative Questions from Wall Street Job Interviewers. If you are interviewing for a job in derivatives or other relatively quantiative area you should get this book. This is not so important to go through for a plain vanilla i-banking job, although it couldn't hurt.
* Valuation: Measuring and Managing the value of Companies, by Tom Copeland, Tim Koller and Jack Murrin. Valuation delivers more potent strategies for measuring and enhancing the bottom-line value of any company. Also walks you through how to do a valuation. The diskette is also quite valuable given that you get a ton of spreadsheets to play with. Great background for any job involving M&A or investment banking.
Investment Banking: Life as an Analyst
Analysts are typically recent undergraduates who work long hours and do a fair bit of grunt work. A good analyst helps his or her boss get their job done and done well. Analysts are not normally expected to contribute in meetings but often can. Many analysts return to the business. Others choose to try other opportunities. During recruiting out of an MBA program, former analysts will be at a significant advantage over others without experience. A good pay number after bonus is $38,000 for the first year. Expect to go up roughly $5,000 a year until you hit associate.
Key analyst skills include:
* the ability to work with Excel spreadsheets,
* write macros in VBA,
* track and generate weekly newsletters (weeklies),
* keep schedules,
* generate prospectuses,
* get burgers
* put in and retrieve pitch books from the copy center
* and answer client phone calls.
Success Factors
Key success factors include (i) getting your job done well and without friction, (ii) getting things done on time, (iii) asking for help when you need it, (iv) dressing neatly, (v) not complaining, gossiping or whining, (vi) learning to use the library and the web to do research, (vii) become a whiz-kid with Bloomberg, Excel, Word and Powerpoint, (viii) always give your boss credit, (ix) know when to cheer up your boss and (x) know when to stay out of the way.
A good analyst also networks, observes and thinks. You want to be genuine yet make it clear that you like your boss. Excessive posterior kissing is a negative. It's always good to have a little hobby as well like following stocks, playing Liars Poker or following currencies. You can do this when things get quiet in August.
Assessment
It's a tiring life but gives you a good chance to learn the investment banking field and bond with people whom you will work with later. Being an analyst is one of the best ways to break into a very good field. The return on investment from being a good analyst can be over 50 times what they actually pay you.
After two years, most analysts leave to get their MBA or pursue other positions. It all depends on the firm. Some places have a pretty strict policy of getting rid of you. Others are more mellow. It makes sense, after all, to try to keep very good people who can get a job done. If you don't go back and get an MBA you might benefit from going out and getting a CFA.
Recommended Books
* Corporate Financial Management, Douglas Emery and John Finnerty, Prentice-Hall. An excellent, detailed book on topics in corporate finance. If you want to study what the field is about, this is a good book to start with. More "real world" than Brealey & Myers and Ross.
* The Economist. A great source for info on what's happening in the world.
* Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford MBA and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Wall Street Journal. Should read this every day.
Analysts are typically recent undergraduates who work long hours and do a fair bit of grunt work. A good analyst helps his or her boss get their job done and done well. Analysts are not normally expected to contribute in meetings but often can. Many analysts return to the business. Others choose to try other opportunities. During recruiting out of an MBA program, former analysts will be at a significant advantage over others without experience. A good pay number after bonus is $38,000 for the first year. Expect to go up roughly $5,000 a year until you hit associate.
Key analyst skills include:
* the ability to work with Excel spreadsheets,
* write macros in VBA,
* track and generate weekly newsletters (weeklies),
* keep schedules,
* generate prospectuses,
* get burgers
* put in and retrieve pitch books from the copy center
* and answer client phone calls.
Success Factors
Key success factors include (i) getting your job done well and without friction, (ii) getting things done on time, (iii) asking for help when you need it, (iv) dressing neatly, (v) not complaining, gossiping or whining, (vi) learning to use the library and the web to do research, (vii) become a whiz-kid with Bloomberg, Excel, Word and Powerpoint, (viii) always give your boss credit, (ix) know when to cheer up your boss and (x) know when to stay out of the way.
A good analyst also networks, observes and thinks. You want to be genuine yet make it clear that you like your boss. Excessive posterior kissing is a negative. It's always good to have a little hobby as well like following stocks, playing Liars Poker or following currencies. You can do this when things get quiet in August.
Assessment
It's a tiring life but gives you a good chance to learn the investment banking field and bond with people whom you will work with later. Being an analyst is one of the best ways to break into a very good field. The return on investment from being a good analyst can be over 50 times what they actually pay you.
After two years, most analysts leave to get their MBA or pursue other positions. It all depends on the firm. Some places have a pretty strict policy of getting rid of you. Others are more mellow. It makes sense, after all, to try to keep very good people who can get a job done. If you don't go back and get an MBA you might benefit from going out and getting a CFA.
Recommended Books
* Corporate Financial Management, Douglas Emery and John Finnerty, Prentice-Hall. An excellent, detailed book on topics in corporate finance. If you want to study what the field is about, this is a good book to start with. More "real world" than Brealey & Myers and Ross.
* The Economist. A great source for info on what's happening in the world.
* Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford MBA and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Wall Street Journal. Should read this every day.
Investment Banking: Recruiting Outlook
We're now seeing a bright recruiting season in investment banking shape up. If the market holds up, hiring this Fall and in 2000 will be spectacular. If.
Overall: Hiring volumes in i-banking this year was even to up. Salaries held and in some cases jumped nicely. It's no longer a head-turner to hear of an MBA package (all-in) at a top bank in the 130K region. There are still plenty of highly stressed twenty-six year olds pulling down $300K+ salaries.
Environment: Financial intermediation in debt and equity capital markets (investment banking) plus the side businesses (M&A, project finance, operations) are all hot in 1999. Securities underwriting volumes this year have been the largest in history. At the same time, we are seeing the hottest M&A year in history. Monster M&A deals like BP/Arco/Amoco and AT&T/Media One are the play of the day.
The stock market in the U.S. is booming; however, Asia is still in "recovery" mode.
Who Did the Hiring in the U.S. Bulge?: Among the U.S. bulge bracket we saw increases in MBA recruiting at Morgan Stanley, Goldman Sachs, Salomon/Citi and Bear Stearns. Merrill and CSFB even to down. Lehman steady for quant and banking types.
Recruiting Climate in the U.S.: Average. New York real estate is still mightily expensive, reflecting strong bonuses and steady recruiting into the financial services sector. (To say nothing of a banner year in corporate, consulting, media and publishing).
Who Did the Hiring in the European Bulge?: Europe is red hot at the moment (esp. in the City of London). Big recruiters were Warburg Dillon Read, Deutsche Bank, ABN-Amro, Barclays, Dresdner (more in Germany) and CSFB. Other smaller players such Den Danske, BBV and Paribas have also been recruiting selectively. Japanese banks have quietly pulled out.
Recruiting Climate in Europe: Europe is the best place in the world at moment to be looking at investment banking career opportunities. The Financial Times jobs section is absolutely jammed with adverts for analysts/associates and specialists (you have to get the paper in the UK; web version doesn't have the ads). London is THE place to be. Technology market (programmers) softening a bit. Eastern Europe is very mixed. Russia and Ukraine not good. Places like Poland and Hungary doing well.
Germans still ambitious for Frankfurt. Commerzbank, Deutsche, Dresdner all recruiting (but usually through apprenticeship programs). HypoVereinsbank is a new player, looking to grow.
France is a mess at the moment with the BNP, SocGen and Paribas tangle. Expect this to get worked out. Doesn't bode well, but keep in mind that Paribas is a decent bank that will have to keep adding to its staff in time.
Recruiting Climate in Asia: Generally lousy. A recent job advertisement on Bloomberg for an entry level job in Tokyo generated nearly a thousand resume submissions. Disaster at Nikko, Nomura and Sakura. HSBC is very strong and is selectively recruiting. Places like ING/Barings are maintaining and growing presence in markets like the Phillipines. Asia is an unfortunate market in 1999. But hope springs eternal!
Recruiting Climate in Australia/NZ: Very good. The Financial Review carries quite a few investment banking recruiting advertisements. The big U.S. players such as Morgan Stanley and Merrills are growing their presence. The local banks such as NAB and ANZ are looking to strengthen. Deutsche Bank is selling the newly acquired BT Australia which should also cause jockeying and consequent recruiting amongst major players.
Recruiting Climate in Africa: Hoped for growth in places like Egypt and Nigeria still not happening. However, the South Africa market is alive and well. South African players like TD and Hambros are healthy. This market will grow in time, but high rates and a shaky fiscal situation may hamper the market.
Hot Jobs in the U.S.
1. Technology investment banking. Anyone involved in the tech equity and M&A area is absolutely frazzled this year. High deal flow with outstanding market reaction to priceline.com, ebay etc. Places like Morgan Stanley, ML, CSFB, BT Alex Brown are absolutely booming and are recruiting like mad. Now.
2. Structured finance. CBOs, CLOs and synthetic structures are booming. Associated area of credit derivatives is also very strong. Get an internship doing this because they wont teach you much about this area in business school these days.
3. Equity research. The quantity and quality of equity research is ever-improving. There has been high growth in this area with particular demand for MBA-types with interesting industry experience.
4. Operations and Risk Management. There is a stronger focus on risk management everywhere and operational back office people are in strong demand. This is a great entry point for folks who aren't coming out of a top 20 business school.
5. Electronic Trading. A very cool area. It's a lot more than eTrade, Ameritrade etc. Places like DLJ and Merrill are going into electronic debt and equity trading in a big way.
6. Government Bond Trading. Govvies have been the nightmare job area for the last decade. But suddenly it's a hot area again. For one, there's a lot more interest in value in the sector given liquidity differentials that have arisen lately. And, prop trading in governments has been a good business in the last year.
7. Private Client Services: Banking to high net worth individuals is growing in the US. Big players include Goldman, JP Morgan and Brown Brothers Harriman. UBS is looking to grow. A May report in Institutional Investor reads: "UBS is setting the stage for a major U.S. expansion. The push to grow across the States includes forming a dedicated wealth management group in New York and opening four private banking offices by the end of the year, with additional office openings slated for the year 2000. UBS also is looking into a strategic acquisition once it grows the private banking business further, says a senior UBS banker. In addition, UBS, which through its merger with Swiss Bank acquired trust powers, is now equipped to move forward and put those powers into use."
Hot Jobs in Europe
1. Credit Research. There's a huge shortage of people in credit research at the moment as there hasn't been much of a corporate bond market.
2. Bond underwriting. The Euro capital markets are booming with volumes double those of the U.S. Jobs in Debt Capital Markets are widely available.
3. M&A. There's been huge turnover as players like Lehman and Deutsche have been building their advisory sectors in Europe. With emerging hostile takeovers and megadeals like Telecom Italia look for this to continue.
4. High Yield. The high yield market didn't exist in Europe five years ago. It exists today and is growing big time. Lots of jobs there.
Who's Going to be Recruiting in the Next Year in the US?
* Merrill Lynch (comeback time, although there is lots of merger talk)
* Chase (serious about growing investment banking and continuing to recruit in size)
* Goldman Sachs (post-IPO glow will help grow)
* Morgan Stanley (expanding everywhere)
* NationsbancMontgomery/BankAmerica (they are VERY serious this time. Heavy recruiting in New York, San Francisco and Charlotte)
* DLJ (a very profitable high yield operation is basis for growth elsewhere)
* ING Furman Selz (smaller player with huge American ambitions)
* ABN Amro (in Chicago going after middle market clients. good strategy with growth potential).
Who's Going to be Recruiting in the Next Year in Europe?
* ABN Amro (wants to grow throughout Europe, esp. Eastern Europe).
* Deutsche (currently #1 in Euro bond underwriting by a mile and hot in derivatives). Has sustainable platform for growth.
* Morgan Stanley (wants to grow faster in Europe)
* JP Morgan (looking for selective growth, esp. M&A)
* Warburg Dillon Read (a leading player that is getting done with a big merger)
* Merrill Lynch (putting a nice new building across from Ropemaker Place)
We're now seeing a bright recruiting season in investment banking shape up. If the market holds up, hiring this Fall and in 2000 will be spectacular. If.
Overall: Hiring volumes in i-banking this year was even to up. Salaries held and in some cases jumped nicely. It's no longer a head-turner to hear of an MBA package (all-in) at a top bank in the 130K region. There are still plenty of highly stressed twenty-six year olds pulling down $300K+ salaries.
Environment: Financial intermediation in debt and equity capital markets (investment banking) plus the side businesses (M&A, project finance, operations) are all hot in 1999. Securities underwriting volumes this year have been the largest in history. At the same time, we are seeing the hottest M&A year in history. Monster M&A deals like BP/Arco/Amoco and AT&T/Media One are the play of the day.
The stock market in the U.S. is booming; however, Asia is still in "recovery" mode.
Who Did the Hiring in the U.S. Bulge?: Among the U.S. bulge bracket we saw increases in MBA recruiting at Morgan Stanley, Goldman Sachs, Salomon/Citi and Bear Stearns. Merrill and CSFB even to down. Lehman steady for quant and banking types.
Recruiting Climate in the U.S.: Average. New York real estate is still mightily expensive, reflecting strong bonuses and steady recruiting into the financial services sector. (To say nothing of a banner year in corporate, consulting, media and publishing).
Who Did the Hiring in the European Bulge?: Europe is red hot at the moment (esp. in the City of London). Big recruiters were Warburg Dillon Read, Deutsche Bank, ABN-Amro, Barclays, Dresdner (more in Germany) and CSFB. Other smaller players such Den Danske, BBV and Paribas have also been recruiting selectively. Japanese banks have quietly pulled out.
Recruiting Climate in Europe: Europe is the best place in the world at moment to be looking at investment banking career opportunities. The Financial Times jobs section is absolutely jammed with adverts for analysts/associates and specialists (you have to get the paper in the UK; web version doesn't have the ads). London is THE place to be. Technology market (programmers) softening a bit. Eastern Europe is very mixed. Russia and Ukraine not good. Places like Poland and Hungary doing well.
Germans still ambitious for Frankfurt. Commerzbank, Deutsche, Dresdner all recruiting (but usually through apprenticeship programs). HypoVereinsbank is a new player, looking to grow.
France is a mess at the moment with the BNP, SocGen and Paribas tangle. Expect this to get worked out. Doesn't bode well, but keep in mind that Paribas is a decent bank that will have to keep adding to its staff in time.
Recruiting Climate in Asia: Generally lousy. A recent job advertisement on Bloomberg for an entry level job in Tokyo generated nearly a thousand resume submissions. Disaster at Nikko, Nomura and Sakura. HSBC is very strong and is selectively recruiting. Places like ING/Barings are maintaining and growing presence in markets like the Phillipines. Asia is an unfortunate market in 1999. But hope springs eternal!
Recruiting Climate in Australia/NZ: Very good. The Financial Review carries quite a few investment banking recruiting advertisements. The big U.S. players such as Morgan Stanley and Merrills are growing their presence. The local banks such as NAB and ANZ are looking to strengthen. Deutsche Bank is selling the newly acquired BT Australia which should also cause jockeying and consequent recruiting amongst major players.
Recruiting Climate in Africa: Hoped for growth in places like Egypt and Nigeria still not happening. However, the South Africa market is alive and well. South African players like TD and Hambros are healthy. This market will grow in time, but high rates and a shaky fiscal situation may hamper the market.
Hot Jobs in the U.S.
1. Technology investment banking. Anyone involved in the tech equity and M&A area is absolutely frazzled this year. High deal flow with outstanding market reaction to priceline.com, ebay etc. Places like Morgan Stanley, ML, CSFB, BT Alex Brown are absolutely booming and are recruiting like mad. Now.
2. Structured finance. CBOs, CLOs and synthetic structures are booming. Associated area of credit derivatives is also very strong. Get an internship doing this because they wont teach you much about this area in business school these days.
3. Equity research. The quantity and quality of equity research is ever-improving. There has been high growth in this area with particular demand for MBA-types with interesting industry experience.
4. Operations and Risk Management. There is a stronger focus on risk management everywhere and operational back office people are in strong demand. This is a great entry point for folks who aren't coming out of a top 20 business school.
5. Electronic Trading. A very cool area. It's a lot more than eTrade, Ameritrade etc. Places like DLJ and Merrill are going into electronic debt and equity trading in a big way.
6. Government Bond Trading. Govvies have been the nightmare job area for the last decade. But suddenly it's a hot area again. For one, there's a lot more interest in value in the sector given liquidity differentials that have arisen lately. And, prop trading in governments has been a good business in the last year.
7. Private Client Services: Banking to high net worth individuals is growing in the US. Big players include Goldman, JP Morgan and Brown Brothers Harriman. UBS is looking to grow. A May report in Institutional Investor reads: "UBS is setting the stage for a major U.S. expansion. The push to grow across the States includes forming a dedicated wealth management group in New York and opening four private banking offices by the end of the year, with additional office openings slated for the year 2000. UBS also is looking into a strategic acquisition once it grows the private banking business further, says a senior UBS banker. In addition, UBS, which through its merger with Swiss Bank acquired trust powers, is now equipped to move forward and put those powers into use."
Hot Jobs in Europe
1. Credit Research. There's a huge shortage of people in credit research at the moment as there hasn't been much of a corporate bond market.
2. Bond underwriting. The Euro capital markets are booming with volumes double those of the U.S. Jobs in Debt Capital Markets are widely available.
3. M&A. There's been huge turnover as players like Lehman and Deutsche have been building their advisory sectors in Europe. With emerging hostile takeovers and megadeals like Telecom Italia look for this to continue.
4. High Yield. The high yield market didn't exist in Europe five years ago. It exists today and is growing big time. Lots of jobs there.
Who's Going to be Recruiting in the Next Year in the US?
* Merrill Lynch (comeback time, although there is lots of merger talk)
* Chase (serious about growing investment banking and continuing to recruit in size)
* Goldman Sachs (post-IPO glow will help grow)
* Morgan Stanley (expanding everywhere)
* NationsbancMontgomery/BankAmerica (they are VERY serious this time. Heavy recruiting in New York, San Francisco and Charlotte)
* DLJ (a very profitable high yield operation is basis for growth elsewhere)
* ING Furman Selz (smaller player with huge American ambitions)
* ABN Amro (in Chicago going after middle market clients. good strategy with growth potential).
Who's Going to be Recruiting in the Next Year in Europe?
* ABN Amro (wants to grow throughout Europe, esp. Eastern Europe).
* Deutsche (currently #1 in Euro bond underwriting by a mile and hot in derivatives). Has sustainable platform for growth.
* Morgan Stanley (wants to grow faster in Europe)
* JP Morgan (looking for selective growth, esp. M&A)
* Warburg Dillon Read (a leading player that is getting done with a big merger)
* Merrill Lynch (putting a nice new building across from Ropemaker Place)
Investment Banking: Facts and Advice
A good time to send your resume to an investment bank is in November and December. Hires are usually made around January and February. But don't stop in Feb. just because you haven't hit your target. According to an analyst at Salomon Smith Barney "it's really crucial to be persistent. It's basically a numbers game. Contact lots of people. But at the same time, customize your approach to each person and bank. That means it's going to be pretty much a full-time job."
Don't forget to check back. Traditional recruiting is done by April. Lots of people also change jobs in the March to July period. This means that many banks are scrambling for personnel in July, long after the resumes have been thrown away. Somewhat surprisingly, the best time to find a full-time job is by screening your contacts in late Spring and Summer.
Investment banking is one of the most global businesses on earth. Investment bankers spend plenty of time tracking down corporations in Peoria and Seattle. But they are just as likely to be working with investors and issuers on the other side of the world--perhaps Hong Kong, Bulgaria or even Africa.
Electronic investment banking is emerging in a serious way. Companies like E-Trade offer online stock trading. Other organizations like DLJ and Deutsche Bank are offering electronic trading of stocks and bonds. Electronic origination of securities is being led by W.R. Hambrecht and Wit Capital. There are tremendous opportunities for growth in this area.
Investment banking is seeing massive consolidation. Today,firms merge at unprecedented speed. The mid-1990s have seen mergers of Citibank, Smith Barney and Salomon, Bankers Trust, Dean Witter and Morgan Stanley, Bank of America and Montgomery Securities and SBC, UBS, Warburg and Dillon Read. Expect this to continue. The big players, particularly, Merrill and Goldman, are not done yet.
Investment banks had a great year in 1999 with a strong market. Unfortunately, problems in the emerging markets have crimped hiring lately. Areas that are worth looking into in tough environments include investment grade debt, firm risk control and certain types of M&A. Also keep in mind that if you can't find a job due to the lousy environment, investment banks often hire from corporate treasuries when times improve. Thus, pursuing a corporate finance job isn't such a bad alternative. It beats driving a taxi.
Investment banks have experienced rapid salary escalation as firms fight to try to keep good people. According to a recent McKinsey study, the average salary at a top ten US investment bank in 1980 was a little over $50,000. By 1998 it had more than tripled.
The investment banking business is notoriusly competitive. A recent Goldman Sachs research report finds that five large European investment banks (headed by commercial bank parents) have committed almost $17 billion in capital to the industry. Firms like CSFB, Warburg Dillon Read, Santander and ING are attempting to expand rapidly in the US and are putting salary pressure on other firms as they go after talent and business. In Fall 1998 a lot hiring was coming from Dresdner Kleinwort Benson. A recent McKinsey study argued that many firms in the business will not be able to survive long-term (overcapacity situation). This argues that you should try to get on with one of the stronger players in the industry if you have a choice.
The Asia crisis has put the dampers on much investment banking activity in places like Indonesia, Hong Kong, China and Thailand. Yet hiring is happening because so many have quit in 1997 and 1998. The market declines and losses on emerging market bonds that book place in late 1998 will continue to drive personnel changes.
Investment banks are facing declining margins on bread and butter business. Margins are falling in underwriting of investment grade debt, vanilla foreign exchange and many areas of OTC derivatives. Treasury bond trading is fast becoming one of Wall Street's least profitable areas. This is putting downward pressure on salaries in places. Expect more pressure on salaries in time for traders as electronic trading becomes more prevalent.
Sometimes you will find yourself working for an egotistical jerk. What do you do? First, don't take the job in the first place. If someone mistreats you in an interview, get up and walk out (funny... you may actually get offered the job). Second, be sure to communicate your needs very clearly when it matters when dealing with an ego-creep. It might just be that someone is so busy and overwhelmed that they get abusive. Laying it out in a nice way may help. Finally, if you find yourself in a truly pathological environment working with dysfunctional people, bail out. Life is too short and the money isn't worth it.
Pick the first firm you work for carefully. People who jump from firm to firm too much are less likely to get hired into a great job because your loyalty will be in doubt. One leading global investment bank has a practice of minimizing hiring from outside to avoid "career jumpers."
Investment banking is seeing entry from traditional banks. The Glass-Steagall Act which restricts commercial bank activity in underwriting equity and debt is being relaxed. The following U.S. banks, for example, have entered securities underwriting in a serious way:
* BankAmerica
* JP Morgan
* Chase
The 1998 merger of Travelers, Citibank and Salomon into Citigroup will only accelerate this.
Investment banking is generally transaction driven. In this environment a single individual with good client contact can make an enormous difference for a firm. This is part of the reason that star investment bankers ("rainmakers") take home high bonuses.
A good time to send your resume to an investment bank is in November and December. Hires are usually made around January and February. But don't stop in Feb. just because you haven't hit your target. According to an analyst at Salomon Smith Barney "it's really crucial to be persistent. It's basically a numbers game. Contact lots of people. But at the same time, customize your approach to each person and bank. That means it's going to be pretty much a full-time job."
Don't forget to check back. Traditional recruiting is done by April. Lots of people also change jobs in the March to July period. This means that many banks are scrambling for personnel in July, long after the resumes have been thrown away. Somewhat surprisingly, the best time to find a full-time job is by screening your contacts in late Spring and Summer.
Investment banking is one of the most global businesses on earth. Investment bankers spend plenty of time tracking down corporations in Peoria and Seattle. But they are just as likely to be working with investors and issuers on the other side of the world--perhaps Hong Kong, Bulgaria or even Africa.
Electronic investment banking is emerging in a serious way. Companies like E-Trade offer online stock trading. Other organizations like DLJ and Deutsche Bank are offering electronic trading of stocks and bonds. Electronic origination of securities is being led by W.R. Hambrecht and Wit Capital. There are tremendous opportunities for growth in this area.
Investment banking is seeing massive consolidation. Today,firms merge at unprecedented speed. The mid-1990s have seen mergers of Citibank, Smith Barney and Salomon, Bankers Trust, Dean Witter and Morgan Stanley, Bank of America and Montgomery Securities and SBC, UBS, Warburg and Dillon Read. Expect this to continue. The big players, particularly, Merrill and Goldman, are not done yet.
Investment banks had a great year in 1999 with a strong market. Unfortunately, problems in the emerging markets have crimped hiring lately. Areas that are worth looking into in tough environments include investment grade debt, firm risk control and certain types of M&A. Also keep in mind that if you can't find a job due to the lousy environment, investment banks often hire from corporate treasuries when times improve. Thus, pursuing a corporate finance job isn't such a bad alternative. It beats driving a taxi.
Investment banks have experienced rapid salary escalation as firms fight to try to keep good people. According to a recent McKinsey study, the average salary at a top ten US investment bank in 1980 was a little over $50,000. By 1998 it had more than tripled.
The investment banking business is notoriusly competitive. A recent Goldman Sachs research report finds that five large European investment banks (headed by commercial bank parents) have committed almost $17 billion in capital to the industry. Firms like CSFB, Warburg Dillon Read, Santander and ING are attempting to expand rapidly in the US and are putting salary pressure on other firms as they go after talent and business. In Fall 1998 a lot hiring was coming from Dresdner Kleinwort Benson. A recent McKinsey study argued that many firms in the business will not be able to survive long-term (overcapacity situation). This argues that you should try to get on with one of the stronger players in the industry if you have a choice.
The Asia crisis has put the dampers on much investment banking activity in places like Indonesia, Hong Kong, China and Thailand. Yet hiring is happening because so many have quit in 1997 and 1998. The market declines and losses on emerging market bonds that book place in late 1998 will continue to drive personnel changes.
Investment banks are facing declining margins on bread and butter business. Margins are falling in underwriting of investment grade debt, vanilla foreign exchange and many areas of OTC derivatives. Treasury bond trading is fast becoming one of Wall Street's least profitable areas. This is putting downward pressure on salaries in places. Expect more pressure on salaries in time for traders as electronic trading becomes more prevalent.
Sometimes you will find yourself working for an egotistical jerk. What do you do? First, don't take the job in the first place. If someone mistreats you in an interview, get up and walk out (funny... you may actually get offered the job). Second, be sure to communicate your needs very clearly when it matters when dealing with an ego-creep. It might just be that someone is so busy and overwhelmed that they get abusive. Laying it out in a nice way may help. Finally, if you find yourself in a truly pathological environment working with dysfunctional people, bail out. Life is too short and the money isn't worth it.
Pick the first firm you work for carefully. People who jump from firm to firm too much are less likely to get hired into a great job because your loyalty will be in doubt. One leading global investment bank has a practice of minimizing hiring from outside to avoid "career jumpers."
Investment banking is seeing entry from traditional banks. The Glass-Steagall Act which restricts commercial bank activity in underwriting equity and debt is being relaxed. The following U.S. banks, for example, have entered securities underwriting in a serious way:
* BankAmerica
* JP Morgan
* Chase
The 1998 merger of Travelers, Citibank and Salomon into Citigroup will only accelerate this.
Investment banking is generally transaction driven. In this environment a single individual with good client contact can make an enormous difference for a firm. This is part of the reason that star investment bankers ("rainmakers") take home high bonuses.
Investment Banking: Skill and Talent Requirements
Investment banks want employees with a combination of strong analytical and interpersonal skills. Some jobs lean more towards one skill set than another (e.g. brokers need to be mainly sales people). A typical job of an equities analyst requires both analytic and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: High
Ability to synthesize: High
Creative ability: High
Initiative: Medium
Work hours: 50-120/week
Hard Work Expected and Respected Investment banking is a high work, high risk, high reward profession. When you start your hours will typically be long but the work can be exciting. Be prepared for moments of frustration where you are stretched too thin and moments of exhiliration where everything clicks.
Tough to Break In It's relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
Believe it or Not, Bankers Have Social value Investment bankers are often the subject of social scorn in movies like Bonfire of the Vanities. Are investment bankers really greedy narcissistic scum? Some probably are. But keep in mind that they play a crucial social role of helping to direct capital to companies with great ideas that make people better off.
Analyst Jobs Are the Best Entry Point Many college graduates start in investment banking in an analyst position. To succeed in these positions you need to be extremely dedicated, have good spreadsheet skills and be analytically fluent. Your next step will be to become an associate. Same skills, just raise the volume.
Communication and Completion Abilities Key In mid-career, your success usually will depend on your ability to communicate with clients and get deals done. At this level it is also important to have a good understanding of market trends, the political and macroeconomic environment and deal mechanics.
Math Skills Can Help Some jobs in investment banking call for very strong mathematical ability. If you are good at math think about getting an advanced degree in a technical field (studying areas such as stochastic calculus and differential equations), then take some advanced finance courses in options pricing or bond valuation and apply to a research department on Wall Street (Carnegie-Mellon's FAST program is a leading in training mathematicians and physicists for Wall Street jobs).
Accounting Skills Valuable The ability to analyze accounting numbers critically is important in most analyst positions. Ultimately, you should aim for the CFA designation if you would like to be a securities analyst. The CFA helps you become much more mobile over time. If you have ambitions too "bail out" some day and become a corporate financial analyst you might also want to consider the CMA (Certified Management Accountant) designation.
Traders are Multi-Talented It's hard to define what makes a good trader. A good understanding of the market, quick reactions, analytical skills and the ability to bluff help. Read Liars Poker by Michael Lewis to learn more about sales and trading.
Get Used to New York Most large firms operate out of New York. Even if you are interested in working in another location, your general interviewing activities are likely to be centered there. Other places you should look at include Hong Kong, Tokyo, London, Moscow and Singapore. If you go looking for a job in investment banking using informational interviews in the U.S. it is crucial that you make several trips to New York.
Teamwork Crucial A crucial success factor in investment banking is teamwork. Being able to pull together persons with large egos to get a presentation together for a client is a challenge and is likely to be rewarded highly.
Scientists and Lawyers Wanted There's definitely an interest in people with backgrounds in science and law. Scientist types can work on everything from derivatives algorithms to biotech banking. Lawyers can help design new securities, sell leasing business and use their analytical prowess to talk to clients. This said, you have to sell yourself. It often doesn't hurt to go back and get an MBA from a top school, and then try to repurpose your career into investment banking.
Contacts are Everything The key to breaking into investment banking is a good network of contacts. You may already be blessed with such a network, but if you don't have one, you can start to develop one by going on informational interviews, attending industry conferences, finding alumni from your school in the business etc. Keep in mind that your network might not really "pay off" for some time. If you are young and haven't gone for an MBA degree, try to get into the best possible school and then go for quantitative and analytical coursework.
Getting Things Done is Important Starting off in an investment bank, you are usually responsible for getting projects done well and on-time, whether it be writing reports, running spreadsheets, trading, doing research or coding programs. Later, once you get involved with clients and ideas for generating revenue, you will be rewarded greatly if you can bring in business. At higher levels (usually Director, Managing Director and up) you are exposed to much greater risk. At this level, people are often fired for non-performance, whereas at lower levels you may not be scrutinized as closely.
Investment banks want employees with a combination of strong analytical and interpersonal skills. Some jobs lean more towards one skill set than another (e.g. brokers need to be mainly sales people). A typical job of an equities analyst requires both analytic and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: High
Ability to synthesize: High
Creative ability: High
Initiative: Medium
Work hours: 50-120/week
Hard Work Expected and Respected Investment banking is a high work, high risk, high reward profession. When you start your hours will typically be long but the work can be exciting. Be prepared for moments of frustration where you are stretched too thin and moments of exhiliration where everything clicks.
Tough to Break In It's relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
Believe it or Not, Bankers Have Social value Investment bankers are often the subject of social scorn in movies like Bonfire of the Vanities. Are investment bankers really greedy narcissistic scum? Some probably are. But keep in mind that they play a crucial social role of helping to direct capital to companies with great ideas that make people better off.
Analyst Jobs Are the Best Entry Point Many college graduates start in investment banking in an analyst position. To succeed in these positions you need to be extremely dedicated, have good spreadsheet skills and be analytically fluent. Your next step will be to become an associate. Same skills, just raise the volume.
Communication and Completion Abilities Key In mid-career, your success usually will depend on your ability to communicate with clients and get deals done. At this level it is also important to have a good understanding of market trends, the political and macroeconomic environment and deal mechanics.
Math Skills Can Help Some jobs in investment banking call for very strong mathematical ability. If you are good at math think about getting an advanced degree in a technical field (studying areas such as stochastic calculus and differential equations), then take some advanced finance courses in options pricing or bond valuation and apply to a research department on Wall Street (Carnegie-Mellon's FAST program is a leading in training mathematicians and physicists for Wall Street jobs).
Accounting Skills Valuable The ability to analyze accounting numbers critically is important in most analyst positions. Ultimately, you should aim for the CFA designation if you would like to be a securities analyst. The CFA helps you become much more mobile over time. If you have ambitions too "bail out" some day and become a corporate financial analyst you might also want to consider the CMA (Certified Management Accountant) designation.
Traders are Multi-Talented It's hard to define what makes a good trader. A good understanding of the market, quick reactions, analytical skills and the ability to bluff help. Read Liars Poker by Michael Lewis to learn more about sales and trading.
Get Used to New York Most large firms operate out of New York. Even if you are interested in working in another location, your general interviewing activities are likely to be centered there. Other places you should look at include Hong Kong, Tokyo, London, Moscow and Singapore. If you go looking for a job in investment banking using informational interviews in the U.S. it is crucial that you make several trips to New York.
Teamwork Crucial A crucial success factor in investment banking is teamwork. Being able to pull together persons with large egos to get a presentation together for a client is a challenge and is likely to be rewarded highly.
Scientists and Lawyers Wanted There's definitely an interest in people with backgrounds in science and law. Scientist types can work on everything from derivatives algorithms to biotech banking. Lawyers can help design new securities, sell leasing business and use their analytical prowess to talk to clients. This said, you have to sell yourself. It often doesn't hurt to go back and get an MBA from a top school, and then try to repurpose your career into investment banking.
Contacts are Everything The key to breaking into investment banking is a good network of contacts. You may already be blessed with such a network, but if you don't have one, you can start to develop one by going on informational interviews, attending industry conferences, finding alumni from your school in the business etc. Keep in mind that your network might not really "pay off" for some time. If you are young and haven't gone for an MBA degree, try to get into the best possible school and then go for quantitative and analytical coursework.
Getting Things Done is Important Starting off in an investment bank, you are usually responsible for getting projects done well and on-time, whether it be writing reports, running spreadsheets, trading, doing research or coding programs. Later, once you get involved with clients and ideas for generating revenue, you will be rewarded greatly if you can bring in business. At higher levels (usually Director, Managing Director and up) you are exposed to much greater risk. At this level, people are often fired for non-performance, whereas at lower levels you may not be scrutinized as closely.
