Forte FutureInFinance Print Update Pass
Forte FutureInFinance Print Update Pass
RISING
STARS
FINANCE
More Women Leading
One of the wonderful things about working in the You are in luck. Many firms have targeted efforts to
finance industry is that it enables you to build a broad recruit and retain women. With that in mind, let’s get
skill set that you can draw on throughout your career. started demystifying the finance industry!
For example, you might spend two years honing your
skills at an investment bank, move on to a private equity
firm for two years, take a break to obtain your MBA, and
from there move into a corporate finance position and
progress to the C-suite. Or you can start as an analyst
in investment banking and become an expert in an
industry group, like healthcare, then advance to the
level of Managing Director as you increase your level of
Finance is defined as the management, creation, It is easiest to view the financial services industry in two main
areas: the sell-side and the buy-side. The sell-side of the finance
and study of money, banking, credit, investment,
industry sells advice, services, and products to the buy-side of
assets and liabilities. It is the study of how money the industry, which uses the services, advice, and products to
is acquired and managed in order to create growth. invest in companies on behalf of clients. Sell-side firms act as
advisors, agents, or intermediaries. The buy-side firms commit
Finance and economics are interdependent. For
capital (their own money or money they manage on behalf of
example, if the government decreases the corporate others) to organizations through public or private investments.
tax rate, it is an economic policy that encourages
The sell-side of the industry is represented by investment
companies to expand. Those companies may go
banks. Investment banks are financial institutions that assist
to the finance industry and raise capital to grow, individuals, corporations, and governments in raising financial
thereby creating jobs and more disposable income capital. In many cases they act as trusted advisors to their
clients when making big decisions that impact the future of
for families that then helps the overall economy
organizations. They facilitate the buying and selling of stocks,
grow. Choosing a career in finance is exciting bonds, and other investments. They help companies “go public”
because it allows you to have a direct impact on the with an Initial Public Offering or raise additional capital through
issuing debt or additional equity. They serve as advisors to help
economy and the lives of many.
companies acquire or merge with
other companies or to divest of
In its simplest form, finance is the movement of capital from divisions or the company as a whole.
those who have it (e.g., pensions, endowments, foundations) Investment banks may be part of
to those who need it (e.g., corporations). The finance industry large, universal banks such as Bank
engages investors and facilitates the movement of money of America and J.P. Morgan Chase;
through capital markets transactions, private investments, and they may be large independent
products/services to the companies and individuals seeking investment banks such as Morgan
resources. As you can see, the finance industry has many players, Stanley and Lazard; or they may be
but at its core, it is simply the movement of capital. Let’s focus on boutique investment advisory firms
Financial Services first. such as Evercore and Guggenheim.
The sell-side of the industry has
many career paths that we’ll explore
later in this guide.
SELL-SIDE VS BUY-SIDE
Corporate Sales & Investment Private Private Wealth Real
Research Insurance
Investment Bank Trading Management Equity Management Estate
First, let’s look at the sell side, and specifically at banking, as it INVESTMENT BANKS are financial institutions that, acting
is one of the largest employers of undergraduate women in the as an intermediary, facilitate capital flows between investors and
finance industry. Banking provides myriad career paths, typically companies, as well as provide strategic and financial advice. They
has formal training programs with built-in networking, and leads help individuals, corporations, and governments raise capital
to a wide range of opportunities. through public offerings in equity and debt; advise on mergers
and acquisitions; and facilitate the buying and selling of stocks,
When looking at the banking landscape through the lens of bonds, and other investments. Examples of investment banks
finance, it is important to distinguish between the types of banks: include Morgan Stanley, Evercore, and Lazard.
commercial banks, investment banks, and universal banks.
UNIVERSAL BANKS have both commercial banks and
COMMERCIAL/RETAIL BANKS aggregate deposits, lend to investment banks. They provide all the above-mentioned products
businesses and consumers, and primarily deal in products such and services under an umbrella organization and are typically
as depository services (checking/savings accounts, certificates global institutions. Examples of universal banks include Bank of
of deposits), loans (mortgages, business loans), and treasury America, Citigroup, and Wells Fargo.
services. Examples of commercial banks include PNC Financial
Group and M & T Bank.
Business Model
Business Model • Intermediating capital flows
• Aggregating deposits
between issuers and investors
• Provide strategic and financial advice
• Portfolio lending to businesses
and consumers
Primary Products
Primary Products • Public Debt & Equity
• Leveraged Finance
• Senior Debt
• Structured Products
• Treasury Services
• Mergers & Acquisitions
• Depository Services
COMPETITIVE LANDSCAPE
(ONE PERSPECTIVE)
Investment banks deal directly with corporations, governments, municipalities, and individuals
to provide an advisory service. Remember, investment banks are INTERMEDIARIES between the
providers of capital and the users of capital. An Investment Bank provides information and services
(sales & trading and research) that are available to the public while also providing specific services
and guidances that are “private” and available only to the parties involved (investment and corporate
advisory services). Some of their services are mergers and acquisitions (M&A), restructuring including
divestitures, and capital raising through debt or equity issuances. Investment bankers will provide
advisory services on the private side, and then will help execute a transaction in the markets and keep
the flow of capital moving on the public side (a.k.a., global markets). Below is a short list of some
services that an investment bank will provide on the private and public sides.
PRODUCT BANKERS are experts in a particular financial WHAT DOES AN INVESTMENT BANKER DO?
product such as debt, equity, or M&A. They are subject matter College graduates enter investment banking as analysts and
experts. Product bankers might provide expertise in the may be promoted to associate after two years. MBAs enter
capital raising function and help clients issue debt, they may investment banks as associates. When you join, you will be
complete an Initial Public Offering or an equity follow-on, part of deal teams that range in size from 3 to 10 people.
they may have in-depth knowledge on how to complete an The deal team is a matrix of people: it will be comprised
M&A transaction. If you choose this route, you will collaborate of corporate/coverage bankers and product bankers and it
with the corporate/industry bankers to bring the right product will include and it will include bankers at different levels.
to the client to meet the client’s needs. Product groups offer Investment banking transactions are a team effort and
guidance on particular types of transactions including: require collaboration, innovative thinking, intelligence, and
lots of hard work, culminating
• Mergers and Acquisitions (“M&A”) are transactions in
in many hours to make a
which the ownership of companies or their operating units transaction happen.
are transferred or combined. M&A allows enterprises to
grow, shrink, and/or change the nature of their business, Analysts (a.k.a., “junior
usually to bolster a competitive position. Some banks have bankers”) perform a variety
M&A practice areas while others allow an industry group to of functions. They conduct
do their own M&A. industry/product research,
assess the financial health of
• Equity Capital Markets (“ECM”) are equity and equity-
companies, perform financial
derived products including IPOs, secondary offerings/ analysis and modeling
follow-ons, and capital raises. (e.g., Discounted Cash Flow
Model), develop and prepare
• Debt Capital Markets (“DCM”) are transactions that
client presentation materials
raise and structure debt to finance acquisitions and other (PowerPoint presentations,
Initial Public Offering (IPO) the potential for investment. If the value arrived
or stock market launch is a process by which at through DCF analysis is higher than the
a private company transforms into a public current cost of the investment, the opportunity
company. Shares of a company are initially sold may be a good one.
to institutional investors, who then sell them to
the general public, on a securities exchange, for Due Diligence
the first time. is an investigation or audit of a potential
investment or product, and its purpose is
Mergers & Acquisitions (M&A) to verify facts, such as financial records and
are transactions in which the ownership of anything else deemed material. Due diligence
companies or their operating units is transferred may include analysis of the total value or
or combined. M&A allows enterprises to grow, capitalization of the company; an examination
shrink and/or change the nature of their of revenue, profit, and margin trends; a review
business, usually to bolster a competitive of competitors and the industry; and analysis of
position. Some banks have M&A practice the company’s management, share ownership,
areas, while others allow an IB division to do stock price history, and balance sheet.
their own M&A work. If you are looking for an
IB internship or full-time job, make sure you Valuation Analysis
understand where within a particular bank the is a process to estimate the approximate value
M&A work is done. or worth of an asset, whether it’s a business,
equity or fixed income security, commodity, real
Pitch Books estate, or other type of asset. The analyst may
Investment banking junior professionals spend use different approaches to valuation analysis
a good deal of time working on pitch books: for different types of assets, but always looks at
documents that are used to “pitch” potential the underlying fundamentals of the asset.
clients. The book contains the main attributes
of the company, potential returns, and the
qualifications of the bank making the pitch.
FOR EXAMPLE, a research analyst might cover Amazon and Wal-Mart and will have a deep knowledge of the companies and the
competitive landscape, create valuations, and provide a recommendation to buy stock in the company. Sales traders will use the
research reports generated by analysts to talk to their buy-side institutional clients such as State Street. The institutional client
reviews the information (more on this later) and sends a trade order to the sales person who, in turn, gives the trade order to the
trader. The trader monitors the market and executes the trade on the stock exchange. This trade will then flow through the middle
and back offices of an investment bank to be settled and placed in State Street’s custodial account and recorded in its portfolio.
RESEARCH Clients
ANALYST (Institutions,
HNWI)
Companies Research
(by sector) Trade Ideas
Execution Order
TRADER
Trade
Research
Reports Execute in
SALES TRADER Market
CREATING AND
SELLING IDEAS
TO CLIENTS
(a.k.a., “Commissions” or “Fees”) for the bank. Investors who Do you like
want to buy or sell a certain stock or bond will place an order with
working on
a broker or sales representative who “writes” the ticket for the
order. The trader makes the trade in the public market.
group projects,
taking tests,
WHAT DOES A SALES their clients. Through developed relationships, or writing
TRADER DO? they will receive and execute the orders
and help clients build their portfolios of
papers?
Sales traders sit between clients and traders.
They maintain relationships with institutional investments, generating a strong reputation
Investment banking work
investors and are known as the distribution for themselves and the bank.
is a team sport. You’ll
pipeline. When a client calls in an order, work with a team for long
the sales person either gives a quote or WHAT DOES A TRADER DO? hours to complete a paper
asks the traders for a quote and provides Traders develop in-depth knowledge about
or presentation. It takes
intelligent market data to the clients (e.g., certain markets, companies, and industries.
autonomous work to do your
research reports). They bring orders to trading At an investment bank they typically have one
part of the group project and
desks and manage client relationships by of two roles: (1) “Making a market” by buying
collaboration to bring the
connecting clients to all the resources that or selling securities for a client’s account
group together to make the
a firm provides. Sales traders develop and and at the client’s request, or (2) proprietary
presentation a success. Sales
cultivate client relationships through sharing trading by buying and selling securities for
& trading is like taking a test –
tactical trade ideas or research and giving the investment bank’s own account. This is
intense pressure over a shorter
market intelligence based on what they and necessary so that the firm can hedge out its risk
period of time, and each day is
the traders are seeing in the markets. They when it is trying to make the best markets for
a fresh start. Research analysts
often have to negotiate between their clients its clients. They may trade higher volumes than
love writing papers; they dig
and traders when clients want to get the lowest what the client needs in order to get a lower
deep into all the details and
price for what they are buying and the highest price and then hedge out the additional share
understand the nuances, and
price for what they are selling. Sales traders purchases to make sure the firm is not exposed
then they write substantiated,
also work with investment bankers who have and/or is making a bit of profit themselves.
30- to 50-page papers to fully
IPOs, equity follow-ons, or debt issuances sell explain their position.
in the market. Most traders specialize in one type of security
or market such as equities, fixed income
Sales people have strong communication skills (bonds or cash equivalents), foreign currencies
and have the ability to cultivate relationships (Forex, FX), or derivatives. Equity traders spend
and understand their clients so that they time persuading other traders why their offer
can bring the right trade ideas and right is a good trade for their firm. Fixed income
transactions at the right time to add value for traders use their analytical skills to price and
may try to determine if a student has “fire in the belly” its value from another
and a passion for the markets. Bid
security. The price at which
Summer interns in sales & trading generally rotate someone wants to
among different areas such as equity, fixed income, Futures buy something.
commodities, and derivatives and “shadow” traders A futures agreement
and salespeople, since they don’t have the licensing or is a contract that locks Ask
experience required to execute trades. in a price for some The price at which
financial asset in the someone wants to sell
Students looking to enter sales & trading careers should future. something
be prepared for a fast-paced, high-pressure environment.
Sales & trading analysts and professionals work an Options Hedge
average of 60 to 70 hours a week. Their day starts around A contract that gives A way to minimize risk
6:30 a.m., looking at market data before the markets the buyer the right,
open, and it ends one or two hours after the markets on a trade by going
but not the obligation, into another trade
close. They are “tied to their desks” meaning they eat
lunch at the desk and have very few opportunities to to buy or sell a that tends to move in
step off the trade desk - not even for rest room breaks. financial asset at a the opposite direction.
However, unlike investment bankers, they rarely work given price. This is
weekends or evenings other than the occasional social
event to build and cultivate their client relationships.
WHAT DOES A RESEARCH ANALYST DO? of global and domestic news and economic indicators.
Research analysts are financial professionals who have Quantitative analysts typically develop computer models to
expertise in evaluating investments. They are detectives on value securities and structure portfolios that are used by sales
the companies and industries they cover; they dig deep to traders, portfolio managers in the investment management
understand the products, services, competitive landscape, division, or program trading. The position usually requires
and the financial stability of the company, and then provide programming skills such as C++, Python, or Java, in addition
a buy, sell, or hold recommendation in the form of a research to superior analytical skills. All the research positions require
report. They look at financial statements and public filings strong communications skills because you have to meet with
(e.g., 10-Ks and 10-Qs), listen in on company shareholder clients as well.
meetings, and talk to the C-suite of the company as well as its
competitors. They take all this information and run financial
valuation analysis to compare what they think the company is
worth to the market trading value. They write 30- to 50-page
research reports and then synthesize that information to two Research analysts can work 60 to 80 hours per
to four pages for sales traders to use when talking to clients. week, and the work is heavily quantitative. They
Sometimes, research analysts talk to clients at the request of have the ability to focus on one subject in depth
the sales trader, as they are the firm’s expert on that company and be a “master of one idea.” They have an
and/or industry. analytical mindset combined with a high level of
intellectual curiosity as well as strong written and
If you decide to be a research analyst, you’ll need to further verbal communication skills. They work on longer
decide if you want to do equity research or credit research. projects and work longer hours during earnings
Both equity and credit research analysts impart their expertise seasons in order to incorporate new information
to clients and provide an analysis of US and world economies provided by companies into their models. If you
and the potential effects on their universe of companies. The like writing research reports and digging deep
difference is nuanced. Equity researchers also compare and to understand every nuance, then being a
contrast companies in their sector to form views of future research analyst could be the right career
path for you.
T HE IN S IDE S CO O P
In many research departments (and sometimes in the In comparison to the investment banking
investment management division of a bank), there are and sales & trading internships at banks,
additional positions for economists and quantitative analysts. there are far fewer research internships.
Economists provide an opinion on the future of the market Interns in research departments will be
and general economy based on models that they develop assigned two to four companies to follow
and maintain, third-party models and analyses, and analyses and will likely have one or two stock pitches
during the summer to present ideas and
analysis to senior analysts.
VOCA B C HEAT S HEET
Financial
Statements
for businesses usually include
statement of operations
(income statement), balance
sheet statements, statement
of stockholders equity
including retained earnings,
Now that we’ve explored the sell-side of the discuss some key opportunities on the buy-side
industry and its products and services, it is time including investment management, private
to turn to the buy-side. As a reminder, the buy- equity, private wealth management, insurance,
side of the industry engages with those who and real estate. Many women want to start on
have capital to deploy (e.g., pension plans, the buy-side or aspire to go to the buy-side due
foundations, etc.) and allow others to the perceived work-life balances, but also
(e.g., corporations) to use it in return for interest because it’s rewarding to see your investment
or dividends. The buy-side of the industry has ideas put to work.
many career paths. Some are a great place
to start upon completing your
undergraduate studies, and others
are best to pursue after several
years of experience on the sell-
side or in other areas of finance.
In the next few pages, we’ll
ASSET MANAGEMENT
The goal of investment management firms is to make money This is not a transaction-oriented business like the sell-side.
from money. They research, invest in, and hold stocks and bonds
for institutional and retail clients. Investment management firms Each investment management firm will have an investment
have an overall investment thesis and philosophy and may have philosophy that can include fundamental and technical analyses.
several portfolios representing different investment strategies to The firms sets an investment policy to outline its investment
offer the most customized options for their investors. Investment objectives, perform security analyses, construct a portfolio, and
managers have a FIDUCIARY duty to their clients and must revise and re-evaluate the portfolio. They follow the investment
ensure that their investment strategy is suitable for their clients. philosophy and create risk-adjusted returns for their investors.
Asset Allocation
The implementation of an investment strategy that attempts to balance risk versus reward by adjusting
the percentage of each asset in an investment portfolio according to the investor’s risk tolerance, goals,
and investment time frame is called asset allocation.
Investment Strategies
There are numerous strategies that investment managers employ to provide optimal returns for their
investors, including:
• Index investing – purchasing the same weights and types of securities in an index (a.k.a.,
passive investing)
• Value investing – selecting stocks that trade for less than their intrinsic value (undervalued)
• Global investing – building a diversified portfolio of securities from countries all over the globe
• Arbitrage – simultaneous purchasing and selling of an asset to profit from the price difference
Hedge Funds haven’t helped their image, and Hollywood has perpetuated
Hedge funds are a sub-set of the Investment the perception that hedge fund managers subscribe to a
“Greed is Good” philosophy. The more infamous hedge fund
Management Industry. A hedge fund is a lightly blow-ups include Long Term Capital Management, which in
regulated, pooled investment vehicle that may 1998 lost $4bn triggered by the Russia market crisis; Madoff
use a variety of investment techniques and invest Investment Securities, where in 1999 Madoff stole millions
through his Ponzi scheme; and Bill Ackman’s Pershing Square,
in a vast array of assets to generate higher returns who devastated investors because of his strong convictions
for a certain level of risk when compared to typical on one stock, Valeant. As in all industries, there are some bad
investment management firms. These funds have apples. However, the hedge fund industry has grown over many
decades and is a strong, viable career path.
a different legal structure and operate under
regulations that allow them to invest in a wider Hedge funds differ from investment management firms in four
variety of assets and use a different investment main ways:
1
philosophy. INVESTORS: To invest in a hedge fund, you must be
an accredited investor (those with $1mm of assets
There are many myths about hedge funds. Many people
and annual income of $200,000 over the last two years) or
outside the finance industry believe that hedge funds and their
a qualified purchaser ($5mm in assets and $1mm in annual
managers are all looking to make money through the riskiest
income). Most investors in hedge funds are institutional
strategies and that they are a “secret society” in which only the
investors like pensions, endowments, and foundations who are
elite can participate. High profile scandals
seeking a portion of alternative investing to boost their returns.
There are now close to 10,000 hedge funds, managing Hedge funds have many of the same career path opportunities
approximately $3trillion on assets. Hedge funds employ many found in investment firms, including analyst, trader, operations,
different investment philosophies and strategies. The four major IT, and a portfolio manager (PM) who is most often the founder.
hedge funds strategies are: The PM likely held a similar position at a sell-side bank or
large investment management firm and decided to start his/
• Equity Hedged: These funds will invest in securities both her own firm. Although hedge funds used to be able to start
long and short as well as use derivatives. They typically consist with as little as $1mm and become successful, in today’s world
of a core holding of particular equity securities, hedged with of sophisticated institutional investors, hedge funds need to
The analyst role at a hedge fund is similar to the investment VOCAB CHEAT SHEET
manager analyst role, conducting fundamental analysis on
AUM
the company, industry, and economy to help the PM and
Assets under Management is the amount of pooled
others make investment decisions about what to include in the
capital being managed.
portfolio. One of the key differences in the analyst position at
a hedge fund is the need to understand how selling short, use
CFA®
of leverage, and placing derivative trades in a portfolio impact
The CFA Charter is a certification, achieved through
the risk and returns being generated.
several levels of examinations, often sought by
Investment Management Professionals.
CFP Certification
Individuals can seek certifications such as the
Although some hedge funds hire directly from Certified Financial Planner designation to continue
undergraduate programs, it is very rare. Most
their education and increase their skills in financial
people who aspire to work at a hedge fund
planning.
will first need to work at a sell-side bank as an
investment banker or research analyst, or in
Leverage
their investment management division.
Leverage is using borrowed capital or equity for an
They may also go first to a large investment
TH E I N SI D E SCOOP
Prime Brokers
Many aspire to work at a hedge fund
These brokers are part of the global markets
because of the work-life balance, laid-back
division of sell-side investment banks. They provide
culture, and high compensation potential.
centralized custody, clearing, and settlement of
Because hedge funds take more risks, they
trades for hedge funds. They also provide the
can make a lot of money and share their
financing (leverage and short positions), record
wealth in a true meritocracy. Occasionally,
keeping, accounting, and reporting for the fund’s
they can be impacted by a risky investment
investors. Prime brokers will cultivate relationships
strategy and be less stable than larger, more
to encourage hedge funds to execute trades through
established firms. The key to finding the right
the sell-side sales and trading functions.
hedge fund for you is cultural fit. Although there
are some very large hedge funds with 200 to 300
Fund Administrators
people, many funds manage billions of dollars
Hedge funds hire fund administrators to exercise
with fewer than 30 employees. There may be fewer
financial controls over the firm. They will calculate
positions available for transfer and promotion
Net Asset Values (NAVs), maintain the capital
in the smaller hedge funds as compared to the
accounts for investors in the fund, facilitate the
larger ones, however. The key is to find a firm with
payment of fees from the investors to the general
a culture that best aligns with your personality,
partner, and provide audit and tax preparation work.
philosophy, and career aspirations.
equity (taking it private). The capital is used to fund sought by early stage companies with substantial growth
potential. They are likely pre-revenue and pre-earnings.
new technologies, expand working capital within a
There is a long incubation period before an investor will
company, assist in growth aspirations of a company see any returns on investment, and there is a high loss rate,
or help strengthen a company’s balance sheet. but “winners” can see 10x, 20x or even 100x their initial
investment.
Private equity firms will typically raise capital for a new fund
every four to seven years, and their investors will commit • Growth Capital: Investments made directly in growing
capital to the fund. The fund will have a finite life that includes companies is called growth capital. The companies are
an investing period (about six years) and a harvesting period typically making money but may require funds to add capital
(about four years). During the investing period, private equity equipment or to expand. The growth capital firms typically do
firms will search for companies that fit their investment thesis not take a controlling position in the company.
and complete due diligence on those companies. When they
find the right investment, the fund will have a capital call to • Mezzanine Capital: This is typically the middle spectrum
draw down a portion of the committed capital and invest in that of a private equity investment and usually provides debt
company. The fund may invest in the company through any part instruments to companies to add capital. These types of
of the company’s capital structure (debt or equity). Once bought, investments are priced to yield returns below equity but above
the company becomes part of the private equity fund’s portfolio. senior debt in a company’s capital structure and may provide
The private equity firm will then work to increase the value some equity participation for the investing firm.
of the portfolio company in order to exit from the company
during the harvesting period. Funds will typically exit from the • Distressed Investments: A private equity firm may make
investment either through an IPO, a sale to another private an investment in a struggling company (those about to go
equity firm, or a sale to a strategic buyer. bankrupt) and may invest in debt or assets of the company.
These investments might be made in a good company that
Similar to hedge funds, private equity firms charge a just has too much debt, in a bad company with or without debt
The hours at private equity firms are similar to investment Portfolio Company
banking: 80 to 100 hours per week. You will also do some This is a term for a company in
traveling to meet with potential companies. You’ll spend which a firm has invested and is
time with investment bankers who are bringing deals to part of the fund.
the firm or you’ll make cold calls to companies that aren’t
for sale but you believe show potential opportunity. For
many, looking for a company and then investing to help
that company grow is one of the most rewarding parts of
a career in private equity.
Insurance
Insurance is one of the largest investors
on the buy side of the finance industry. As an undergraduate,
you can work in the However, this analyst
The insurance industry is a form of insurance industry as position tends to have a
more consistent work-life
risk management in which people pay a risk management
analyst, actuary, or balance and less stress.
premiums to an insurance company to
investment analyst. The
transfer the risk of loss from themselves risk management analyst Other undergraduates
may love dealing with
to the company. It is an industry that spends her time looking
at market risks, portfolio statistics and probability
exists to provide security in times of loss. and choose to become an
risks, credit risks, and
country risk; monitors actuary at an insurance
firm. Actuaries take
Insurance companies invest customer and then reports on
portfolio performance 10-12 exams in order to
premiums in the markets so that the become certified.
and risks; and ensures
returns generated by the investments management is aware
The work-life balance at
can be used to pay out claims. This of scenarios that can
impact the firm’s ability insurance companies
takes a lot of statistical analysis done by is one of the best
to have funds available
actuaries to determine the probability for payouts. in finance. Most
investment analysts, risk
of loss occurring (e.g., probability of
You could also join the management analysts,
fires or hurricanes), prudent investing in and even actuaries work
investment management
the public markets to generate returns, division of an insurance approximately 50 hours
per week.
and risk management of the portfolio to company and perform
analyses on investing
ensure that funds are available.
ideas in the public
markets (equity or fixed
income). This position is
similar to the research
analyst position in an
investment management
firm or hedge fund
discussed above.
Private Wealth Management positions can be found at sell-side banks in their investment
management division (see above) as well as in franchises such as Edward Jones, insurance companies
(e.g., Northwestern Mutual), or independent firms.
As we discussed in the beginning, finance is the analysis, modeling, forecasting, and strategic planning. They
also determine financing needs, analyze capital budgeting
movement of capital from those who have it
projects, do long-range financial planning, and consider
to those who need it. We want to spend a little possible acquisitions and asset values. The corporate finance
time talking about the two bookends of the team becomes a valuable partner in running and growing
the business.
finance industry and the career opportunities
there. At one end, you have companies and their
corporate finance departments (those who need
capital) and on the other end are institutional
Institutional Investors
Institutional investor are those who have the capital that
investors (those who have the capital). funds the entire industry. They are typically non-bank persons
or organizations that trade and invest. Below is a short
discussion of some of the different types of institutional
investors that funnel capital into the buy side of the