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Careers in Investments - IB

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Jobs in the Investments Industry I: Investment Banking

Bryan Sudweeks Fall 2008 1

 

Jobs in the Investments Industry 

I. Investment Banking • Investment banking, banking, Sales and Trading, Research



II. Investment Management • Asset Management



III. Financial Planning • Investment advising, Insurance, and Estate planning





IV. Corporate Finance • Pension Fund Administration and Management V. Financial Consulting • Pension Fund Consulting 2

 

I. Investment Banking 

Objectives • A. Understand the purpose purpose of Investment Banking • B. Understand the the structure of an Investment Bank • C. Understand the the interaction interaction between divisions of Investment Banking groups (and the recent  problems) • D. Know where the potential jobs are in Investment Banking • E. Know how how to prepare prepare for a career in Investment Investment Banking

3

 

A. Purpose of Investment Banking 

An intermediary between the capital markets (investors) and corporations (borrowers)



Offers strategic advice and financial analysis on Mergers & Acquisitions, Divestitures, and Capital Structure



Offers Equity and Fixed Income Underwriting (e.g.. IPO’s, High Yield Offerings)  Offerings) 



Provides asset management advice to high net worth individuals and institutions



Provides Sales and Trading of Equity (Stocks), Fixed Income Securities (Bonds), Derivatives (Options).



Offers research and advice on publicly listed stocks and bonds to institutional and individual investors investors

4

 

B. Str truc uctu turre of of Inv Inves esttme ment nt Banks  

Major investment banking divisions include: • Investment Banking • Intermediary between the capital markets • Advice and analysis on M&A and Capital Structure • Equity and Fixed Income Underwriting • Asset Management • Provide asset management services to investors and institutions • Sales and Trading • Sales and Trading of Equity (Stocks), (Stocks ), Fixed Income Securities (Bonds), Derivatives (Options). • Research • Provide research on public stocks and bonds

5

 

Structure of Investment Banks (continued) Investment Bank

I-Banking

Asset

Sales &

Division (IBD)

Management

Trading

Industry Groups Private Client Corporate Finance Services Product Groups • Work with High M&A  Net Worth Worth Individuals High Yield Debt Capital Markets Equity Capital Markets

Buy and Sell Financial Securities and Derivatives

Research

Analyze all Public information in order to give advice to investors and sales and trading group

6

 

Structure of Investment Banks (continued) Investment Bank

I-Banking

Asset

Sales &

Division

Management

Trading

Industry Group (Corp Finance)

Product Group

Equity Capital Markets

Debt Capital Markets

High Yield Debt

Manage funds for institutions and individuals

Private Client Services

M&A

Equity

Consumer Products Technology Telecommunications Real Estate Utilities Health Care Retail

Research

Fixed Income

Derivatives

Economic

Equity

Consumer Products Technology Telecommunications Real Estate Utilities Health Care Retail

Fixed Income

7

 

C. What is is th the In Interaction be between Investment Banking Divisions?  Investment

banking meets the needs of different clientele • Companies wanting to list equity/debt • Individuals/institutions wanting unbiased research for investing • Strategic and asset management advice for companies/individuals

 How

should it be structured to maintain no semblance of “conflict of interest”?  interest”?  • A “Chinese wall” was proposed and instituted  instituted  • Certain divisions are “inside” and others “outside” the wall

8

 

Interaction Between Divisions (continued) “Inside the Wall”  Corporate Finance

IBD

“Outside the Wall”  Wall” 

Corporate Finance

Sales & Trading, Research, and Asset Management

Corporate Finance

9

 

D. Po Pote tent ntia iall Jo Jobs bs in In Inve vest stme ment nt Ba Bank nkin ing g  Where

are the jobs in Investment Banking?

• Most investment banking jobs are in analysis • Equity market analyst • Debt market analyst • High Yield analyst • Mergers and Acquisitions • Industry Analyst • Consumer products, telecommu telecommunications, nications, real estate, finance, etc. 10

 

Jobs in Investment Banking (continued) I-Banking Division

Asset Management Division

Research Analyst

Industry Group (Corp Finance)

Product Group

Analyst Senior Analyst Portfolio Manager

Equity Capital Markets

Debt Capital Markets

High Yield Debt

Mergers & Acquisitions

Assistant Analyst Research Analyst Research Analyst Analyst

Analyst

Senior Analyst

Senior Analyst

Consumer Products Technology Telecommunications Real Estate Utilities Assistant Analyst Health Care Retail Research Analyst

Analyst 11

Senior Analyst

Senior Analyst  

Jobs in Investment Banking (continued)  





What are the different types of analyst positions? • Analysts position vary depending on who they are doing research for, i.e., sell-side versus buy-side research What are sell-side analysts? • Analysts whose work is used for selling securities to investors, i.e. Research, Research, Sales and Trading, Trading, etc. Analysts  prepare the research for potential investors in the hope that investors will buy and sell companies through the I-bank What are buy-side analysts? • Analysts whose work is used in the process of buying securities for specific portfolios, i.e. Asset Management, Private Wealth Management, etc. Analysts prepare the research and then act on that research to buy companies. 12

 

The Analyst Position (continued)  Why

are Investment Banking analyst positions so hard to get? • They provide instant exposure to senior management teams of the largest companies in the world • They have the highest exposure, learning potential, and salary of any job in the Financial Services Industry (out of college) • They give opportunity to work in small teams, with learning from senior partners • After you have built experience in the field, it offers o ffers wonderful opportunities at top business schools and companies

13

 

The Analyst Position (continued)  What

are the skills gained as an analyst?

• Financial modeling and strong quantitative work • Solid Understanding of Corporate Capital Structure & Capital Markets • Solid understanding of companies and industry composition and structure • Professional presentation analysis

14

 

The Analyst Position (continued)  What

are the responsibilities of an analyst?

• Financial Analysis and Modeling • Discounted cash flow and Free cash flow analysis, • Comparable company • Precedent transactions, and • Leveraged buyout • Client Exhibits and Presentations • Market research and competitive analysis • Client interaction • Roadshow execution management 15

 

The Analyst Position (continued)   What

type of work do Analysts do?

• Company Analysis (both buy and sell side) • Financial forecasting • Strategic analysis • Industry Analysis (both buy and sell side) • Strategic analysis • Portfolio implementation, construction, and reporting and attribution • Investment policy statement • Portfolio construction and management • Portfolio reporting and attribution • Whatever is needed to attain company goals and objectives

16

 

The Analyst Position (continued)   What

are the criteria used to select analysts?

• There is a record of achievement • A strong academic record • A balanced individual with extracurricular activities • A good employment history

• Strong communication skills • Evidence of being a team player • A tireless work ethic • Attention to detail • A strong analytical capability (with examples) 17

 

E. How to Prep epaare for a Career in Investmentt Banking Investmen 

Understand the industry, the positions, and the lifestyle • This is a wonderful but crazy industry very long hours • Are you suited for the lifestyle — very





Start building your contacts • Meet with as many of the visiting speakers as possible

Do well in your classes • A strong GPA is important • Have a good financial analysis project to leave with  potential employers as an example of your best work work



Look to beginning your CFA program • It is looked on highly in the industry 18

 

A Career in Investment Banking 







Don’t get discouraged  discouraged  • Understand yourself and your goals • Work hard and be patient —   — Faith Faith precedes the miracle Keep your priorities in order • Obedience is the first law of Heaven--do what you should • He will help take care of the rest Follow the Spirit • Stay worthy of the Spirit • He is your competitive advantage--stay advantage--stay worthy of His help Remember the Lord’s hand in your blessings  blessings  • Always be appreciative of his blessings • Remember to share them with others

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