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Investment Banking (Corporate Finance)


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  • Personal introduction Book recommendation – interesting find…very secretive community in nature humorous recap of their years spent in the Investment Banking industry similar in spirit to Liar's Poker
  • - Universal platform banks (combining commercial banking/investment banking operations) have only been around since 1999 (Gramm-Leach-Bliley Act) - Also, independent banks -M&A advisors and underwriters of securities that are not affiliated with commercial banks - Often maintain special partnerships: i.e. Lazard Capital Markets - Generally formed around star bankers from full-service domain (relationship based) - Broker-dealer, capital markets focused banks also exist - In the spirit of the climate on Wall Street, can anyone name the six banks listed in the full-service category that are no longer around?
  • Currency exchange, merchant banking (equity-based financing to regional/local businesses) These are the banks most individuals come in contact with their entire lives
  • - For Acquiring Companies, Expansion and the Development of New Products Matches people who have money to those that need money Increased complexity => higher profits/returns The sell side of banking includes any firm which structures transactions or issues instruments The buy side describes the firms which buy (i.e. invest in) such issues, like insurance companies, pension funds, asset management firms, and hedge funds
  • Industry groups run transactions for a specific industry; they manage all product offerings Product groups focus on a transaction type; cover all industries On many deals, industry and product teams interface expertise to service the client
  • Responsible for client relationships and product execution Interact with clients, and manage the deal team Coordinate with senior bankers to develop presentation materials and perform subsequent analyses (generally hired out of MBA, unless direct promote) Hired out of undergrad program and perform all necessary work for successful implementation of analyses; focused on processing rather than development Assigned everything that Analyst doesn’t want to do Word processing – formatting, creation of presentation materials (cool diagrams, charts, tables, etc.); Research – Help with gathering information for respective deal – Wall Street Research, news, industry knowledge, shareholder information, etc.; Lazard India – Designed to support Analyst execution process – comparables, business profiles, etc.
  • with usually at least one weekend day constant pressure to perform, competitive environment, and demanding superiors running with 6 projects at once, minimal tolerance for errors before you’re trusted to operate without oversight catching up with your real work after 5PM not for the faint of heart in front of the computer
  • Interviews conducted in the fall (Oct. and Nov.) Interviews conducted in Feb. and March
  • Why do it? Challenging, fast paced Great experience, unparalleled industry and market knowledge: 3 years of experience @ 80 hours/week = 6 years of full-time knowledge Interaction with senior management from a variety of firms/industries Feeling of doing something noteworthy: your work “makes the papers” Experience looks great on the resume, opens doors to more humane jobs
  • - test social acumen and fit - wide gamut of people (from analysts up through MDs) - Convey your eagerness to learn and desire to work hard - NEVER try to BS your way through a question you can’t answer - Try to seem like the kind of person they could be around 12-15 hours a day; adopt the corporate culture they project
  • Interviewers take carte blanche with questions: ranging from the standard technical stuff into complete obscurity
  • Capital Expenditures would decrease on the Statement of Cash Flows, Increase cash on the Balance Sheet, going forward, but decrease PP&E respectively. Depreciation decreases on the Income Statement, so in subsequent years, Net Income would be higher, increasing shareholders’ equity in the future. DCF, Multiples (transaction, trading), LBO, Break-Up Public – More oversight, liquidity premium - Especially being part of an Investing club, you should have a stock pitch on hand at all times - Most states have 1 or 2 large airports. Average of 1.2/ state. One Northwest plane departs every 10 minutes. Times 50 states => 360 planes/hour - Rhetorical inquiries
  • - the more accounting the better
  • Limited direct-client interaction But you do have to be willing to work harder and sacrifice more than the average person Positive personality is key, due to the hours involved Like anything else in life, the right connections can provide necessary leverage Bottle service and a six-figure salary your first year out of college
  • adds substance to your resume and may result in an offer CFA, CPA, GMAT etc. They were in your shoes and will usually help if they can Associations like the SIA, honor societies, fraternities/sororities, family friends, etc. There are no shy i-bankers - call people, ask to meet them, ask for their advice and if they have any contacts
  • Be willing to make sacrifices - you can and will become wealthy in the business provided you can last If interested, you must utilize all available methods Despite some unpleasant experiences Patience & persistence will pay off
  • Michael Lewis, in Liar's Poker, his classic portrait of Wall Street in the 1980s, described how he invented "logical lies" as a trader to explain otherwise inexplicable events to nervous clients. Asked why the dollar fell, he would confidently say: "Several Arabs had sold massive holdings of gold for which they received dollars. They were selling those dollars for marks and driving the dollar lower." In his words: "Most of the time when markets move, no one has any idea why. A man who can tell a good story can make a good living as a broker. And it's amazing what people will believe... selling out of the Middle East was an old standby. Since no one ever had any clue what the Arabs were doing with their money or why, no story involving Arabs could ever be refuted."
  • In this clip from the film Boiler Room, Seth Davis, played by Giovanni Ribisi is at his best when dealing with matters of money, and the powerful scenes of Davis learning to be a “closer” can be taken as a lesson by prospective Sales & Trading Analysts.
  • Lets start with the basics: Efficient Markets Hypothesis EMH basically states that markets are perfectly efficient, and therefore recognize and reflect any relevant information immediately (inside/outside info). If this was actually true, then it would be impossible for anyone to consistently outperform the market. The reason I have these men up here (Warren Buffett, George Soros, Peter Lynch) is because these are men who have consistently beat the market. So in a way, they are living proof who challenge the validity of EMH. They don’t believe in EMH, If you believe in it, then you should not be considering a career in sales and trading.
  • 1.) …a wide range of securities and derivatives in markets globally across many asset classes. 2.) To do this they work closely with research teams to extract and analyze relevant market information and then with trading to relay market sentiment and finalize deals. 3.) On a daily basis a trader will: make bids and offers for securities, structure trade ideas, manage and hedge his/her portfolio of risk. (Taking in mind: credit spreads, interest rates, etc.) Any given macro-economic report can shape the market on any given day, a lot of it is market psychology
  • To sum up: Sales develop their own client base (“buy-side”) and are responsible for developing long-term relationships, developing investment ideas, selling and cross-selling the firm's products, and for representing the firm with clients on important business issues Work with institutional buyers (pension, hedge funds, endowments, etc.), private investors, and corporations
  • 4.) Who’s buying and selling what, how much are they buying and selling, how often are they doing it? 5.) Based on market dynamics, they must have a spur of the moment thesis on how changes affect the securities they are responsible for To sum up: Trading Generate trading ideas and analysis, and support all aspects of the market making trade execution process.
  • Two kinds of trading, flow v prop. Flow trading is more client driven where the majority of your trades and decisions are based off the sales-clients. – Bid $95: what the trader will buy the security at – Ask $96: what the trader will sell the security at - Last $96: what the last transaction was made at – The spread: the difference between the bid and the ask (– Bid/ask spread will depend on the liquidity and complexity of products) — The Investment Bank will employ its own capital to build trading positions which express the firm’s view on the markets and individual securities, which is what proprietary (or prop) trading is, when the firm makes trading decisions based on its own view of movement in the market. Prop trading is often much more profitable than Flow trading. The Investment Bank markets, allocates and stabilizes capital markets transactions originated by investment banking
  • 1.) Emphasis on being current with market movements and developments 2.) As a junior member on a S&T desk you play a critical role in servicing clients 3.) No day is ever the same- from learning new products to structuring trades, the S&T environment is constantly changing 4.) Create innovative solutions to address client needs, execute “BIG” trades, P&L 5.) Speaking of your P&L, unlike many hierarchical professions, S&T is one the few that is almost entirely performance based. Your movements up and down the firm are almost solely determined by how much you bring into the firm. 6.) Lifestyle: Sales and trading professionals are the first-in-and-out in the investment bank. To get a jumpstart on the trading day, salespeople and traders normally get to the desk by 6:30am and often leave shortly after the markets close. NO WEEKENDS!
  • 1.) To help clients manage risk, enhance yield and solve complex problems regarding risk/return 1.) Everyday you are in the trenches trying to understand client needs, and how best to meet them
  • ECNs: electronic communication networks, trades are made 24/7, it’s basically computer system that facilitates trading of financial products outside of listed stock exchanges , or OTC (over-the-counter) trading. Its cheaper (low transaction fees) and allows trades to be matched past traditional hours. Mention after-hour trading Indications: basically advertisements that post to the buy-side to solicit interest in a firm’s stocks. These indications (buy or sell) are based on prior day's customer activity, and the firm’s general proprietary view on the stock. So an example: A buy-side customer who wants to sell microsoft notices the buy indication, and the trade volumes that’s been advertising. It's very possible that he then calls the firm and negotiates a bid for some portion of the stock that they have for sale, and this generates an order that traders are able to work throughout the day. Unlocked and uncrossed: dealers jostling for position, sellers move to the ask side (driving ask prices down) while buyers move to the bid side (driving bids up). This often causes markets to be crossed (bid higher than ask) or locked (bid = ask). By 9:29, markets need to be uncrossed and unlocked.
  • 1.) curriculum features extensive financial product and market-knowledge training, product talks and professional development classes, bond math, and credit modeling. 2.) The sales team interacts daily with the trading desks, but they also work with the banking team that does the securitization of the assets. For example, as a junior salesperson you will work with more senior salespeople and help to cover their clients. That includes understanding the structures and cash flows of the products you are selling, creating your own sales style to build relationships, and executing trades and pitching trade ideas.
  • 1.) Must have a desire to work in an exciting environment 2.) Quick reaction time to ever-changing events and market conditions S&T is like a sprint, whereas investment banking is a marathon I know this is a very wordy slide, and this is by no means a comprehensive list of the qualities associated with a S&T Analyst, but just to give you an idea of what it takes to get the job done.
  • 1.) This means joining other financial clubs and student organizations on campus 2.) For example, the FT is free- read it when you have a few minutes to spare between classes 3.) As a S&T Analyst you don’t necessarily need to be engulfed in Finance coursework- you need to be smart, and quick on your feet (it helps to be good with numbers) – Accounting – Calculus – Finance – Statistics/Regression course – Macro/Micro Economics – Game Theory 4.) Start reaching out to alumni in the financial markets- many say it’s WHO you know, not WHAT you know (Just because you CAN succeed doesn’t mean you WILL if you never get that interview- this industry is one of the hardest to break into- it’s very old fashioned in its recruiting methods) – Coming out of the Midwest, you have to set yourself apart
  • Thank you for your time.
  • Speak with client about retirement goals, risk tolerances, return goals, etc. and construct a portfolio that fits -Assist client in obtaining financing for purchases of homes, personal aircraft, appraise art collections, personal security, etc. -Place trades on behalf of the client. The client typically will speak with advisor when they want changes in their portfolio or advisor will contact client when they think changes need to be made. Advisor consults client on
  • -Must be able to convince prospective clients to trust you with managing their money. Have to sell yourself as the “real deal” , success in this business requires a confidence level that borders cockiness. Mingling with clients, making them feel good about themselves, remembering small details about them, checking up on them all very important -The only way to establish yourself in this business is to pound the pavement through cold calls, attending conferences where large concentration of potential clients could be, meeting with clients, etc. Helps to start out by taking over a book of business or being very well connected. Not typical career out of undergrad because it takes time to build up a network -Clients often panic when things are bad and want to sell or rush to buy sub-par assets when things are good.
  • -Success can be dependent on events outside of your control. Clients expect you to meet their goals. You have to treat each client as if they are the most important, never drop the ball on following up with clients, forgetting personal information, etc. -Increases in assets under management can disappear quickly if the market drops significantly, losing a portion of invested money. This is often compounded by angry clients who will blame you and withdraw their money. -Tough to get clients to trust you with their savings, especially if you are young. Have to be persistent, growth is slow at first an accelerates as you expand, typically salaried for first 2 years in order to have some time to build a book of business, if you don’t meet firm’s quotas you are fired -Other advisors from the same firm or even in your own office may be competing for the same client
  • -Size of book of business (and salary) can be very high, limited mainly by how hard you work and ability -Hours are not typically longer than 14 hours, especially once you are established in the business -Business is based on relationship building and interpersonal interaction. -Private wealth management firm’s and offices are located all over the globe, not just in New York, Chicago -As population increases and ages there will be an increasing demand for wealth management services
  • -Speak with people in the business -Stay up to date on the markets and current events -Build resume with classes, activities, grades, internships -What you know AND who you know
  • Transcript

    • 1.  
    • 2. Wednesday, October 7th Justin Van Vleck Co-President of Operations Jeff Smith Head of Educational Series Ruoting Sun Stock Selection Committee Felix Popescu VP of Analyst Program Educational Series Careers on Wall St.
    • 3. Investment Banking (Corporate Finance) Student Investment Association Wednesday, October 8 th , 2008 Presenter: Felix Popescu
    • 4. Climate on Wall Street
      • Colbert Report - Formidable Opponent
    • 5. Abridged List of Investment Banks Full Service Independent Moelis & Company
    • 6. Main Street America’s Perception of Banking
      • Offer depository services such as checking, savings and CDs
      • Financing in the form of credit cards, auto loans, student loans, and home mortgages
      • Well-known brands like Bank One, Wells Fargo, Bank of America, Chase and Citibank
    • 7. Today’s Agenda
      • What is Investment Banking?
      • Investment Banking Structure
      • Investment Banking Hierarchy
      • Where Do You Fit In?
      • Why Investment Banking?
      • Recruiting
      • The Interview
      • Helpful Notions
    • 8. Overview of Investment Banking
      • Assists Corporate Clients to raise capital
      • Sell side vs. Buy side
    • 9. Structure of Investment Banking Division
      • Industry Groups
        • Consumer and Retail
        • Energy and Power
        • Technology
        • Health Care
        • Real Estate
        • Media and Telecom
        • Financial Institutions
        • Financial Sponsors
      • Product Groups
        • Mergers and Acquisitions
        • Leveraged Finance
        • Equity Capital Markets
        • Debt Capital Markets
        • Restructuring
    • 10. Hierarchy
      • Director and Managing Director
      • Vice President
      • Associate
      • Analyst
      • Intern
      • Word Processing, Research Support and Other Secondary-Support Divisions
    • 11. Analyst Responsibilities
      • Financial analysis
      • Industry and company research
      • Developing client presentations
      • Valuation (Financial Modeling)
      • Marketing materials, management presentations and road show involvement
    • 12. What You Should Expect
      • 12-15 hour days
      • Very high stress
      • Multi-tasking
      • Lots of menial grunt work and micromanagement
      • Meetings and conference calls throughout the day
      • Sacrifice your personal life and health for this career
      • 3 meals/day at work
      • Very common to be forced to cancel vacations and miss holidays/birthdays when needs arise
    • 13. Typical Day
      • 9:00 A.M.: Arrive in office, Check e-mail, start work on valuation model
      • 11:00 A.M.: Finish up pitchbook for upcoming presentation
      • 1:00 P.M.: Conference call with deal team, which may include people from other product and industry groups who work in conjunction on a project with you
      • 3:00 P.M.: Put together a set of trading/transaction comparables
    • 14. Typical Day (Continued)
      • 5:00 P.M.: Gather industry reports and put together a working group list for a deal team on transaction
      • 7:00 P.M.: Put together a few public information books and balance out discounted cash flow model
      • 9:00 P.M.: Make changes to pitchbook before sending it to Managing Director
      • 11:00 P.M.: Go Home
    • 15. Recruiting
      • Recruiting Timeline
      • For Full-Time Positions
      • For Summer Analyst (Intern) Positions
    • 16. Benefits of Investment Banking Analyst Program
      • Significant Learning Opportunities
      • Learn all elements of corporate finance
      • Wide variety of industries and transaction types
      • Significant impact early in your career
      • Integral part of the transaction team
      • Dynamic and exciting environment
      • Entrepreneurial environment rewards excellence
      • Culture of Teamwork and Partnership
    • 17. Getting In
      • Most banks recruit analysts exclusively from ivy league colleges and select masters programs
      • Unless you’re exceptional or have a connection in the business, getting in from MSU will be extremely difficult
    • 18. Interviews
      • Interviews usually consist of:
        • Two first-round interviews
          • Either phone or in-person
        • Superday interview
          • Consists of 8-10; 30 minute interviews
          • Usually on a Saturday
    • 19. Sample Questions
      • General
        • Walk me through your resume
        • Why did you choose Michigan State/ your major?
        • What do Investment Bankers do?
        • What is the most striking thing you’ve read today in the WSJ?
        • You don’t seem like a very driven person. How will you handle a job in banking?
        • Say you are supposed to meet your girlfriend for dinner, but the MD asks you to stay late. What do you do?
    • 20. Sample Questions
      • Technical
        • What happens to the three financial statements when you change capital expenditures?
        • In what ways can you value a company?
          • Walk me through a DCF
        • All else equal, should a public or private company garner a higher valuation?
      • Other
        • What stocks do you like?
        • How many Northwest planes will take off in the next hour in the United States?
        • If I shrunk you down to the size of a nickel and placed you in a blender, what would you do?
    • 21. Useful Courses/ Resources
      • Classes
        • FI 311- building block of Corporate Finance
        • FI 414- case studies and modeling skills
        • FI 455- Excel skills and financial modeling
        • ACC 201, 300, 301, 305
      • Resources
        • Vault Guide for Finance Interviews
        • Wall Street Journal/ Financial Times
        • New York Times DealBook
    • 22. Fact vs. Fiction
      • NOT like Wall Street & Boiler Room
        • Not spending evenings on the yacht & weekends in the Hamptons
      • Rarely traveling to meet clients
      • Yes, the hours are just as bad as you’ve heard…but the compensation is just as high as you’ve heard, too
      • You don’t have to be a genius to be a good i-banker…
      • Connections matter
    • 23. Things To Do Now
      • Solid precedent internships with known firms
      • Accreditations/standardized test scores help open doors
      • Reach out to MSU alumni
      • Leverage all personal connections you may have
      • Be willing to jump on a plane to interview/ network
      • East Coast undergrads have Wall Street in their backyard
    • 24. Summary
      • Investment banking is an intense, life-absorbing career path that’s not for everyone
      • Potential rewards attract the brightest and most competitive individuals from the strongest backgrounds, so getting in is difficult
      • It’s definitely worth doing if you get the chance
      • Decide if it’s for you:
        • Work/life balance
        • Family vs. career
        • Geography
      • Life will go on even if you don’t land a Wall Street job!
    • 25. Fun Resources:
      • Wall Street Oasis
      • Dealbreaker
      • BankersBall
    • 26. Sales & Trading Presenter: Ruoting Sun Student Investment Association October 9th, 2008 “ Wages make you a living, Profits make you a fortune.”
    • 27. And the story goes…
    • 28. Mantra
      • EMH and Sales & Trading
    • 29. Agenda
      • What is Sales & Trading?
      • Why Sales & Trading?
      • A day in the life of a S&T Analyst
      • Becoming a Sales & Trading Analyst
      • Personal Experience and Advice
    • 30. What does the position entail?
      • S&T Team originates and transacts
      • Sales: distribution arm for the Investment Bank’s products
        • Sales force's prime responsibility is to build and maintain effective relationships with institutional investors.
      • Trading: handles the risk management of the firm’s positions in various financial instruments
        • Make markets for buying and selling securities
    • 31. Sales
      • Client coverage and relationship management
      • Knowledge of client asset or liability needs, as well as industry trends
      • Knowledge of current economic environment and market conditions
      • Knowledge of market opportunities and firm’s product capabilities
      • Promotion of the firm’s products and capabilities
      • Pricing and execution
    • 32. Trading
      • Providing liquidity to firm’s clients
      • Portfolio management (hedging)
      • Knowledge of current economic environment and market conditions
      • Knowledge of flows being executed in the market
      • Maintaining views on potential movement of underlying instruments
      • Pricing and execution
    • 33. How is money made?
      • Client driven (Flow Trading) — bid/ask spread, or market making
      • Proprietary trading
      • New security issuances
    • 34. Why Sales & Trading?
      • Global market driven job
      • BIG firm, SMALL teams
      • Steep learning curve
      • Fast-paced, intense atmosphere
      • Instant gratification
      • Performance-Based Pay
      • Work/life balance
    • 35. Day in the life
      • S&T Analysts help engineer innovative and sophisticated financial products
      • As an Analyst you will work closely with senior members on your team to attain these goals by:
      • – Creating client presentations
      • – Participating in client calls/meetings
      • – Assisting in trade execution
      • – Disseminating weekly marketing material to internal/external clients
      • As you work to support senior members on the team you will develop market and product expertise
    • 36. Schedule of a Junior Trader
      • 6:30 am: get into the office, confirm all previous day’s trades and cross-check with the details generated by back office
      • 7 am: confirm starting positions, be informed of any news regarding held positions; plot strategy
      • 7 am – 8:30 am: relay noteworthy trades on ECN’s made throughout the night to sales-force; morning meeting
      • 8:30 am – 9:30: economic statistics are released, breakfast, post indications
      • 9:30 am: markets open; must be uncrossed and unlocked
      • 9:30 am – 4 pm: open market hours; take orders, work the orders, build relationship with sales-force, make good prices
      • 4:30 pm: head home
    • 37. Sales & Trading Analyst Program
      • Comprehensive training
      • Organized by sector (equity derivatives, high-yield bonds, etc.)
      • Example: Sales
        • Daily interaction with trading desks’ banking team to relay client needs
    • 38. Important qualities of a S&T Analyst
      • Insightful, creative, quantitative thinker
      • A genuine interest in financial markets and in political and economic developments
      • Strong communication skills
      • Strong teamwork skills
      • Attention to detail
      • Strong academic and professional backgrounds
      • The ability to perform well under pressure
      • A strong stomach
      • Ability to manage risk
      • Ability to perform multi-task
      • Ability to think on the fly
      • Understand that trading is as much an art as it is a science
      • Understand how closely integrated different industries are
    • 39. How to break in?
      • Starting early is key – VSE Competition
      • Read newspaper and business publications to stay current with the markets
      • Choose classes that will expose you to different business disciplines
      • Choose a specific niche market/strategy you can be a specialist in (options, high-yield, vol-trading, bottom-fishing)
      • Network, Network & Network – SIA is a good start
    • 40. Questions?
    • 41. Equity Research Justin Van Vleck
    • 42. Agenda
      • Principles of equity research
      • Equity research products
      • Hierarchy
      • Earnings Season
      • Lifestyle
      • What will it do for you?
      • Formula for success
    • 43. What is Equity Research?
      • Produce research ideas (reports) and distributes it to their clients
        • Buy Side:
          • Money Managers at
            • Hedge Funds
            • Mutual Funds
          • Individual Stock/Bond buyers
        • Sell Side
          • Internal salespeople (sales and trading desks)
          • Proprietary trading desk
    • 44. Hedge Funds/MM Equity Research Department Sales & Trading Desk = Think Tank
    • 45. Equity Research Products
      • Industry research reports
      • Company-specific reports
      • Notes on importance events
        • Industry and company related
    • 46. Industry Research Reports
      • Overview summary of the industry
        • Market trend/conditions
          • Past and future outlooks
        • Current industry leaders and lagers
      • Quality of the report shows the firm’s and analyst’s expertise within the industry
      • This product will usually be associated with an initiation of a group of companies
    • 47. Company-Specific RR
      • Company-specific RR fall into three categories
        • Initiation of coverage
          • Company information, forecast model, and risk factors
        • Update
          • Explain movement in the stock, change/confirm earnings estimate, news from management
        • Change in rating
    • 48. Company Specific Notes
      • Deal with short term events
        • Earnings release
          • Update the forecast for model, qualitative trends
        • News item
          • Could deal with lawsuit, legislation, spinoff, stock repurchase plan, etc.
        • Short-term trade recommendation
          • Increasingly becoming popular due to HF client demand
          • Will often times differ from long term rating on company
    • 49. Ratings
      • Downgrade (Underperform)
        • Lower expected earnings power, diminished growth, turnaround plan suspect
      • Hold (Neutral)
        • Do not expect much growth, potential problems, analyst and market is wary, perform in line with group
      • Upgrade (Outperform)
        • Better expected earnings, smart acquisition, beneficial long term trends starting to develop
    • 50. Hierarchy
      • Basic Structure
        • Associate is junior to Analyst
        • Who gets their name on reports?
        • Analyst runs the group
          • Is the one in charge of making investment recommendations
      • Within the Equity Research Department
        • Structure looks similar to banking
        • Not all analysts are MD’s
        • Most regarded talent sits on SSC
    • 51. Earning Season
    • 52. Lifestyle
      • Travel for research analysts
        • Meet w/ buy side clients, comp. management teams, assist with road shows
        • On average, work less than CF I-Banking
        • Initiations, earnings season are long hours
      • Associate Salary (est.):
        • $60K (more if MBA perhaps) + 10-15K signing bonus + 35-75K year end bonus
    • 53. What a Career in Equity Research Will Do for You
      • Strong training programs provide
        • Terrific Excel, Powerpoint skills
        • What the important information is
        • Writing to grab investors’ attention
      • Modeling
        • Building initiation reports from scratch
        • IPO Model from scratch
        • Updating models
      • Most importantly, you’ll learn how very smart people think about stocks and the market
    • 54. Formula for success
      • Work hard & learn quickly
      • Comp skills (Word, Excel, PP)
      • Good writing skills are mandatory
      • Good communication skills
      • Good listeners and ask good questions
      • MBA is not mandatory to advance
      • Enjoy analyzing companies and trying to outsmart other people
    • 55. Questions?
    • 56. Private Wealth Management Simon Yu and Jeff Smith
    • 57. What do financial advisors do?
      • Assist client in constructing investment portfolio strategy
      • Assist Clients in obtaining financing, selling assets, tax efficiencies
      • Recommend and place trades on behalf of client
      • Estate and retirement planning
      • Helping clients obtain financial goals
    • 58. Sales and Interpersonal Aspect
      • Success is heavily dependent on interpersonal and sales skills
      • Client meetings, phone calls, conferences, networking generate business
      • Talking clients out of making bad decisions just as important
    • 59. Downside
      • One of the most stressful jobs available
      • Market takes away gains, hurts your pay and angers clients
      • Very hard to get established, high rate of failure
      • Highly competitive work environment, competitors in same office
    • 60. Upside
      • Very entrepreneurial business with nearly unlimited upside
      • Work/Life balance, especially once established
      • Relationship focused
      • Geographic flexibility
      • High demand for wealth management services
    • 61. Day in the Life 7:30am: Arrive at office and read up on the markets, WSJ, etc. 8:30am: Enter in tasks for the day, adjust some asset allocation models, conduct Monte Carlo analysis for a client’s portfolio 10:00am: Make some client calls, buy and sell securities on clients behalf 11:30am: Meet with new potential client to discuss financial goals, risk tolerance
    • 62. Day in the Life Cont. 1:00pm: Watch a wholesaler (Vanguard, Fidelity, etc.) present over their complimentary lunch 2:00pm: Meet with potential referral partner at their office 5:00pm: Analyze client portfolios after market close, touch base with a few clients 6:00pm: Team meeting to discuss day’s activities and prepare for the next day, administrative tasks
    • 63. Day in the Life 7:00pm: Grab a drink with a client and head home
    • 64. How to Get In
      • Network
      • Speak to regional office
      • Read the WSJ regularly
      • Take a lot of finance/accounting
      • Getting Involved (SIA, FMI, SCNO)
      • Pursue an internship
      • Build connections by starting in another career and switch to PWM
    • 65.
      • UBS - $1.6 trillion
      • Citigroup - $1.43 trillion
      • Merrill Lynch - $1.2 trillion
      • Credit Suisse - $642 billion
      • JP Morgan Chase - $465 billion
      • Morgan Stanley - $450 billion
      • HSBC - $408 billion
      • Deutsche Bank - $249 billion
      League Tables
    • 66. How Money is Made
      • Clients give assets to wealth management expert
      • Managers are paid commissions and fees for selling certain products, achieving gains, etc.
      • More assets under management and gains results in more fees
      • Portion of fees goes to parent firm
    • 67. Questions?