Vault Guide To Top Finance Firms
Vault Guide To Top Finance Firms
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FINAN FIRMS
VAULT GUIDE TO THE
Copyright 2001 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and the insider career networkTM are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., P.O. Box 1772, New York, New York 10011-1772, (212) 366-4212. Library of Congress CIP Data is available. ISBN 1-58131-127-3 Printed in the United States of America
ACKNOWLEDGEMENTS
Vault would like to take the time to acknowledge the assistance and support of Matt Doull, Ahmad Al-Khaled, Lee Black, Eric Ober, Hollinger Ventures, Tekbanc, New York City Investment Fund, American Lawyer Media, Globix, Ingram, Hoover's, Glenn Fischer, Mark Hernandez, Ravi Mhatre, Tom Phillips, Carter Weiss, Ken Cron, Ed Somekh, Isidore Mayrock, Zahi Khouri, Sana Sabbagh, Esther Dyson and other Vault investors, as well as our loving families and friends. This book could not have been written without the extraordinary efforts of Ben Adler, Alex Apelbaum, Michael Erman, Jayne Feld, Maggie Geiger, Anita Kapadia, Tom Lott, Corrie Moore, Brook Moshan, Kathleen Pierce, Rob Schipano, Ed Shen, Jake Wallace and Angela Williams. Thanks to Todd Kuhlman and the helpful folks at FIRM (especially Basil Petrov and Per Arne Moi) for providing technical support for the surveys. Thanks also to Tom Petner, Marcy Lerner, Dan Stanco, Kristy Sisko, Jennifer Sloan and Kate Carey for their support. Special thanks to all of the recruiting coordinators and corporate communications representatives who helped with this book. We appreciate your patience with our repeated requests and tight deadlines. The Vault Guide to the Top Finance Firms is dedicated to the finance professionals who took time out of their busy schedules to be interviewed or complete our survey.
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section One: Equity Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Section Two: Debt Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
What's What? Industry Overviews . . . . . . . . . . .21
Section One: Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Section Two: Investment Management . . . . . . . . . . . . . . . . . . . . . . . . .23 Section Three: Commercial Banking . . . . . . . . . . . . . . . . . . . . . . . . . .25
Trends in the Finance Industry . . . . . . . . . . . . . .27
THE JOBS
Investment Banking
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. . . . . . . . . . . . . . . . . . . . . .33
Section One: Corporate Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Section Two: Sales and Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Section Three: Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Section Four: Syndicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Investment Management . . . . . . . . . . . . . . . . . .49
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Section One: Credit Analyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Section Two: Loan Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Section Three: Loan Review Officer/Loan Work-Out Officer . . . . . . . .61
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1 Goldman Sachs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 2 Morgan Stanley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 3 Credit Suisse First Boston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 4 Merrill Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92 5 J.P. Morgan Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 6 Fidelity Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 7 Salomon Smith Barney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 8 Putnam Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122 9 Janus Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 10 Lazard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 11 Lehman Brothers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 12 Vanguard Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 13 Pequot Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 14 T. Rowe Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 15 Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164 16 Deutsche Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172 17 CalPERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 18 UBS Warburg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184 19 Charles Schwab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .190 20 Alliance Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . .198 21 Gabelli Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 22 Robertson Stephens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .206 23 Thomas Weisel Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214 24 Franklin Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .222 25 Bear Stearns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226
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Allen & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .238 American Century Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240 Banc of America Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242 Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244 The Bank of New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .246 BlackRock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .248 Broadview International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .250 The Capital Group Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252 CIBC World Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .254 Dresdner Kleinwort Wasserstein . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256 Federated Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .258 First Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260 FleetBoston Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 Houlihan Lokey Howard & Zukin . . . . . . . . . . . . . . . . . . . . . . . . . . .264 SG Cowen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266 TD Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .268 TIAA-CREF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270 UBS PaineWebber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .272 U.S. Bancorp Piper Jaffray . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274 Waddell & Reed Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . .276 Wells Fargo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .278 Wit Soundview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .280
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APPENDIX
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Alphabetical Listing of Finance Firms . . . . . . . . . . . . . . . . . . . . . . . .288 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .289 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .297
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Introduction
Everyone deals with money, but few people really know what a career in finance entails. Though virtually every adult has some contact with a company in the finance sector perhaps through a checking account, a loan, a brokerage account or a mutual fund investment many people find it difficult to differentiate between the kinds of companies with which they do business. This confusion hasnt stopped careers in the finance industry from being among the most coveted. According to the Bureau of Labor Statistics, commercial banks employed approximately 2 million people in 1998 while securities firms employed close to 650,000 that same year. The BLS projects that the employment in these industries will grow by 3 and 40 percent, respectively, through 2008, as compared to 15 percent for all industries. Thats close to 3 million jobs before the end of this decade. Why the stampede toward finance jobs? For one thing, the finance industry is relatively stable. Though some areas are susceptible to economic slumps (one example is loans, which decrease in times of recession), the finance industry is less likely than, say, manufacturing to see significant layoffs when the economy struggles. Though businesses and individuals may have less cash to put away, the need for both commercial and consumer bank accounts doesnt abate when the economy slows. And more American households than ever are involved in the stock or bond markets, and that number is expected to grow. That means more brokerage accounts, more 401(k)s and more IRAs and, of course, more people to manage them. But the greatest lure of the industry is its generous compensation. In commercial banking, entry-level jobs pay base salaries that start at $45,000 a pretty good haul, by most standards. In investment banking, college graduates at large firms can pull down $55,000 to $65,000 in base salary, plus thousands in signing and relocation bonuses, plus yearly bonuses equal to approximately 60 to 70 percent of the base salary. All together, first-year analysts (as theyre called) at Wall Street firms can make between $75,000 and $90,000. Asset management, another stable and lucrative field, isnt too shabby, either. Junior-level employees at investment management firms can pull down $40,000-$50,000 per year.
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Because of the high demand for jobs in investment banking, asset management and commercial banking, this guide will focus on careers in those industries. Basically, investment banking is the business of raising money for companies through public markets. Commercial banking is the loaning of money to businesses. Asset management, meanwhile, involves handling money and investments for both businesses and individuals. If this is all a little confusing, dont worry. What follows is a basic guide to those industries what they do, what separates them from the others, what it means to work in those industries as well as trends that affect the finance industry in general. Youll also know who the players are in each industry, what their employees think about the firms and what its like to work at these companies. Youll also find the Vault Top 25, which lists the 25 most prestigious finance firms according to Vaults independent survey of finance professionals.
FINAN FIRMS
THE VAULT PRESTIGE RANKINGS
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Vault Guide to the Top Finance Firms The Vault Prestige Rankings
METHODOLOGY
In attempting to compile a ranking of the top 25 finance firms, Vault first decided to focus on three core finance industries investment banking, investment management and commercial banking. Vault chose those sectors because they are the most competitive industries in terms of recruiting in the finance industry. Additionally, because companies in these industries often perform comparable functions, the skills required of employees are often similar. Vault invited 94 companies in these industries to participate in our employees survey. The survey included a prestige rating and questions about life within the firm. We chose 44 investment banks, 25 investment management firms and 25 commercial banks. We chose these firms based on previous Vault surveys that gauged the opinions of industry insiders as well as some factual data, including size in terms of revenues and/or assets and standing in league tables. Employees who took the survey were asked to rank the firms in terms of prestige on a scale of 1 to 10. They were asked to rate only the companies with which they were familiar and were not allowed to rate their employer. Five companies Robertson Stephens, Salomon Smith Barney, TD Securities, Thomas Weisel Partners and Wit Soundview agreed to participate. All surveys were completely anonymous. For those companies who refused our request, Vault sought contacts at the firm through other sources. These finance professionals took the same survey as the employees at firms that participated. All told, 241 finance professionals filled out Vaults 2001 finance employees survey. Vault averaged the prestige scores for each firm and ranked them in order, with the highest average prestige score being our No. 1 firm. That firm was investment bank Goldman Sachs, which received a score of 9.721, far outdistancing competitor Morgan Stanley, which received a 9.264. Six of the top 10 companies were investment banks, three were investment managers and one, J.P. Morgan Chase, has significant operations in both investment banking and commercial banking. For the top 25 as a whole, 12 companies can be classified investment banks, 11 can be called investment managers, one (Citibank) is a commercial bank and one is a hybrid. The highest ranking investment manager is Fidelity Investments at No. 6 (with a 7.690 prestige score) and the highest (and only) commercial bank is Citibank at No. 15 (with a 6.711). Profiles of all firms begin on page 63.
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Vault Guide to the Top Finance Firms The Vault Prestige Rankings
FIRM
SCORE
HEADQUARTERS
9.721 9.264 8.448 7.843 7.725 7.690 7.519 7.270 7.218 7.084 7.054 6.923 6.861 6.800 6.711 6.665 6.225 6.165 6.144 6.118 6.029 6.028 5.990 5.815 5.710
New York, NY New York, NY New York, NY* New York, NY New York, NY Boston, MA New York, NY Boston, MA Denver, CO New York, NY* New York, NY Malverne, PA Westport, CT Balitmore, MD New York, NY New York, NY* Sacramento, CA New York, NY* San Francisco, CA New York, NY Rye, NY San Francisco, CA San Francisco, CA San Mateo, CA New York, NY *U.S. Headquarters
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FINAN FIRMS
OVERVIEW OF THE FINANCE INDUSTRY
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economy companies like retailer Sears and chemical company Union Carbide were unceremoniously kicked to the curb. While the DJIA is widely quoted as an indicator of the overall stock market, there are some flaws in tracking the index too closely. Because the Dow Jones is made up of only 30 stocks, its only a small sample of all the businesses in the world. Additionally, the index only tracks very large companies. When gauging the health of the stock market, analysts often factor in other indexes as well. The Standard & Poors 500 tracks the 500 largest companies in the world (like the Dow, this index has its limitations). The NYSE Composite Index measures the performance of every stock traded on that exchange, a much broader field than the Dow or the S&P 500. Finally, the Russell 2000 tracks 2000 small companies.
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premium to relinquish control over the stock. The large shareholders of the target company typically demand such an extraction. For example, the management of the selling company may require a substantial premium to give up control of their firm. M&A transactions can be roughly divided into either mergers or acquisitions. These terms are often used interchangeably in the press, and the actual legal difference between the two involves minutiae of accounting procedures, but we can still draw a rough difference between the two. Acquisition When a larger company takes over another (smaller) firm and clearly becomes the new owner, the purchase is called an acquisition. Typically, the target company ceases to exist posttransaction (from a legal corporation point of view) and the acquiring corporation swallows the business. The stock of the acquiring company continues to be traded. Merger A merger occurs when two companies, often roughly the same size, combine to create a new company. Such a situation is often called a merger of equals. Both companies stocks are tendered (or given up), and new company stock is issued in its place. For example, both Chrysler and Daimler-Benz ceased to exist when their firms merged, and a new combined company, the euphoniously named DaimlerChrysler, was created.
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Private placements
A private placement, which involves the selling of debt or equity to private investors, resembles both a public offering and a merger. A private placement differs little from a public offering aside from the fact that a private placement involves a firm selling stock or equity to private investors, rather than to public investors. Also, a typical private placement deal is smaller than a public transaction. Despite these differences, the primary reason for a private placement to raise capital is fundamentally the same as a public offering.
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have its stock publicly traded. Such firms make excellent private placement candidates. Often, firms wishing to go public may be advised by investment bankers to first do a private placement, as they need to gain critical mass or size to justify an IPO. Private placements, then, are usually the province of small companies hoping to go public. The process of raising private equity or debt changes only slightly from a public deal. One difference is that private placements do not require any securities to be registered with the SEC, nor do they involve publicly flogging the stock. In place of prospectus, I-banks draft a detailed private placement memorandum (PPM for short), which divulges information similar to a prospectus. Instead of a road show, companies looking to sell private stock or debt will host potential investors as interest arises and give presentations detailing how they will be the greatest thing since sliced bread. The investment bankers work involved in a private placement is quite similar to sell-side M&A representation. The bankers attempt to find a buyer by writing the PPM and then contacting potential strategic or financial buyers of the client.
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called an upward sloping yield curve. (Weve heard of the question What is the long bond? being asked in finance interviews.) Bond Indices As with the stock market, the bond market has some widely watched indexes. One prominent example is the Lehman Government Corporate Bond Index. The LGC index measures the returns on mostly government securities, but also blends in a portion of corporate bonds. The index is adjusted to reflect the percentage of assets in government and corporate bonds. Mortgage bonds are excluded entirely from the LGC index.
Spreads
In the bond world, investors track spreads as carefully as any single index of bond prices or any single bond. The spread is essentially the difference between a bonds yield (the amount of interest, measured in percent, paid to bondholders) and the yield on a U.S. Treasury bond of the same time to maturity. For instance, an investor investigating the 20-year Acme Company bond would compare it to a U.S. Treasury bond that has 20 years remaining until maturity.
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Triple-A ratings represents the highest possible corporate bond designation, and are reserved for the best-managed, largest blue-chip companies. TripleA bonds trade at a yield close to the yield on a risk-free government Treasury. Junk bonds, or bonds with a rating of BB or below, currently trade at yields ranging from 10 to 15 percent, depending on the precise rating, the companys situation and the economic conditions at the time. Companies continue to be monitored by the rating agencies as long as bonds trade in the markets. If a company is put on credit watch, it is possible that the rating agencies are considering raising or lowering the rating on the company. When a bond is actually downgraded by Moodys or S&P, the bonds price drops dramatically (and therefore its yield increases).
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losing money on the loan. The same is true with bonds and other fixed income products. In the late 1970s, interest rates topped 20 percent, as inflation began to spiral out of control (and the market expected continued high inflation). Today, many believe that the Federal Reserve has successfully vanquished inflation and has all but eliminated market concerns of future inflation. This is certainly debatable, but clearly, the sound monetary policies and remarkable price stability in the U.S. have made it the envy of the world.
Bank loans
The most well-known form of debt is the loan. A loan, also called commercial credit when it involves a business, is an arrangement between the lender (for our purposes, a commercial bank) and the borrower to repay the principal amount plus interest over a set period of time. The terms of the arrangement are laid out in the loan commitment, a contract between the lender and borrower. Though loans are the more famous form of debt, companies turn to them only when they have few or no other financing options. Interest rates on loans are usually much higher than bonds. Only companies that have a poor credit rating too poor to sell bonds will seek a bank loan, unless its for the short term.
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Corporate finance
The bread and butter of a traditional investment bank, corporate finance generally performs two different functions: 1) mergers and acquisitions advisory and 2) underwriting. On the mergers and acquisitions (M&A) advising side of corporate finance, bankers assist in negotiating and structuring a merger between two companies. If, for example, a company wants to buy another firm, then an investment bank will help finalize the purchase price, structure the deal and generally ensure a smooth transaction. The underwriting function within corporate finance involves raising capital for a client. In the investment banking world, capital can be raised by selling either stocks or bonds to investors.
Sales
Sales is another core component of the investment bank. Salespeople take the form of: 1) the classic retail broker, 2) the institutional salesperson or 3) the private client service representative. Brokers develop relationships with individual investors and sell stocks and stock advice to the average Joe. Institutional salespeople develop business relationships with large institutional investors. Institutional investors are those who manage large groups of assets, for example pension funds or mutual funds. Private Client Service (PCS) representatives lie somewhere between retail brokers and institutional salespeople, providing brokerage and money management services for extremely wealthy individuals. Salespeople make money through commissions on trades made through their firms.
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Vault Guide to the Top Finance Firms Whats What? Industry Overviews
Trading
Traders also provide a vital role for the investment bank. Traders facilitate the buying and selling of stock, bonds or other securities, such as currencies, either by carrying an inventory of securities for sale or by executing a given trade for a client. Traders deal with transactions large and small and provide liquidity (the ability to buy and sell securities) for the market. (This is often called making a market.) Traders make money by purchasing securities and selling them at a slightly higher price. This price differential is called the bid-ask spread.
Research
Research analysts follow stocks and bonds and make recommendations on whether to buy, sell or hold those securities. Stock analysts (known as equity analysts) typically focus on one industry and will cover up to 20 companies stocks at any given time. Some research analysts work on the fixed-income side and will cover a particular segment, such as high-yield bonds or U.S. Treasury bonds. Salespeople within the I-bank utilize research published by analysts to convince their clients to buy or sell securities through their firm. Corporate finance bankers rely on research analysts to be experts in the industry in which they are working. Reputable research analysts can generate substantial corporate finance business as well as substantial trading activity and thus are an integral part of any investment bank.
Syndicate
The hub of the investment banking wheel, syndicate provides a vital link between salespeople and corporate finance. Syndicate exists to facilitate the placing of securities in a public offering, a knock-down drag-out affair between and among buyers of offerings and the investment banks managing the process. In a corporate or municipal debt deal, syndicate also determines the allocation of bonds.
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Vault Guide to the Top Finance Firms Whats What? Industry Overviews
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Vault Guide to the Top Finance Firms Whats What? Industry Overviews
administrative support staff and marketers who drum up the business and educate clients about their investments. Although asset management firms exist virtually anywhere theres money to invest, New York and Boston are buy-side centers. The largest firms employ several hundred professionals to manage total assets upwards of hundreds of billions of dollars, covering both institutional and individual clients. Smaller mom-and-pop shops may employ three of four professionals to handle $300 to $800 million in institutional money. Firms serving high-wealth clients use about the same number of people to manage slightly less money. Major firms also have roots in Los Angeles, San Francisco and Chicago. Other cities considered up-and-coming include Baltimore, Minneapolis, Atlanta, Denver, Dallas, Fort Worth and San Diego.
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Vault Guide to the Top Finance Firms Whats What? Industry Overviews
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Vault Guide to the Top Finance Firms Whats What? Industry Overviews
banking industry over the past decade have significantly weakened these traditional barriers, however.
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Vault Guide to the Top Finance Firms Trends in the Finance Industry
banks. The conflict of interest argument ran something like this. A bank that made a bad loan might try to reduce its risk of defaulting by underwriting a public offering and selling stock in that company. The proceeds from the IPO would be used to pay off the bad loan. Consequently, the bank would shift risk from its own balance sheet to new investors via the initial public offering. Academic research and common sense, however, have convinced many that this conflict of interest isnt valid. A bank that consistently sells ill-fated stock would quickly lose its reputation and ability to sell IPOs to new investors.
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Vault Guide to the Top Finance Firms Trends in the Finance Industry
In November 1999, President Clinton signed the Gramm-Leach-Bliley Act (also known as the Financial Services Modernization Act of 1999), which repealed restrictions contained in Glass-Steagall that prevent banks from affiliating with securities firms. The new law allows banks, securities firms and insurance companies to affiliate within a financial holding company (FHC) structure. Under the new system, insurance, banking and securities activities are functionally regulated. Incidentally, the players in the Citibank/Travelers merger were active in the passage of the Financial Services Modernization Act. John Reed, former Citibank CEO and Sanford Weill, former Travelers CEO and current head of Citigroup, lobbied President Clinton for change while the merger was being negotiated. According to Crains New York Business, Weill has as a memento the pen Clinton used to sign the Act into law.
The dot-bust
In early 2000, it seemed dot-coms could do no wrong. Professionals at established companies especially analysts and associates at investment
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Vault Guide to the Top Finance Firms Trends in the Finance Industry
banks were rushing to Internet companies for finance and business development positions. Finance companies recruiting at undergraduate and MBA schools faced stiff competition from dot-coms. The Internet crash of April 2000 changed that. As the prices of Internet stock plummeted and dot-coms went dot-gone, jobs at dot-coms looked less and less enticing. Suddenly, banks were having an easier time recruiting on campus. Bankers who had left the industry fled dot-coms and headed back to the finance sector. One positive side effect of the Internet bubble: an improvement in working conditions at finance firms, which raised salaries to compete with the dotcoms and relaxed their dress codes. While dot-coms are no longer fierce competitors for top finance candidates, its safe to say that some Internetinspired perks will remain a permanent fixture at finance firms.
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FINAN FIRMS
THE JOBS
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Investment Banking
By far, investment banking careers are the most coveted in the finance industry. But, Wall Street aside, what is it that investment bankers do? Employees in the four groups corporate finance, sales and trading, research, and syndicate have very different roles.
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advisory are not separated, and bankers typically pitch whatever business they can scout out within their industry sector.
Analysts
Analysts are the grunts in the corporate finance world. They often toil endlessly with little thanks, relatively low pay (when calculated on an hourly basis) and barely enough free time to sleep four hours a night. Typically hired directly out of top undergraduate universities, this crop of bright, highly motivated kids does the financial modeling and basic entry-level duties associated with any corporate finance deal. Modeling every night until 2 a.m. and not having much of a social life proves to be unbearable for many an analyst, and after two years, many analysts leave the industry. Unfortunately, many bankers recognize the transient nature of analysts and work them to the bone. The unfortunate analyst that screws up or talks back too much may find himself subject to particular torture. Such disfavored analysts are seldom called to work on live transactions, and do menial work or just put together pitchbooks all the time. Location has a big influence on first-year associate pay. In New York City, pay for first-year analysts often reaches $45,000 to $60,000 per year, with an annual bonus of approximately $30,000. While this seems to be a lot for a 22-year-old with an undergrad degree, its not a great deal if you consider that analysts routinely work more than 80 hours a week. There are some (albeit slight) advantages to this grueling schedule: Analysts often get free dinner while working late, and the lack of free time to spend money means most analysts can save a fair amount. At regional firms, pay typically is 20 percent less than that of their New York counterparts. At the same time, regional analysts often work shorter hours and live in areas where the cost of living is much lower. Be wary, however, of the occasional small regional firm that pays at the low end of the scale but still demands New York City-style hours. While the salary generally doesnt increase much for second-year analysts, the bonus can double for those second-years with demonstrated high performance. At this level, bonuses depend mostly on an analysts contribution, attitude and work ethic, not the overall performance of the company.
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Associates
Much like analysts, associates work very hard, up to 100 hours a week and rarely less than 80. Associates stress over pitchbooks and models all night and become true experts in financial modeling on Excel. These tasks arent entirely unlike the typical responsibilities of the analyst. Unlike analysts, however, associates gain exposure to clients more quickly. Most importantly, theyre not quite at the bottom of the totem pole. Associates quickly learn to play quarterback and hand off menial modeling work and research projects to analysts. Associates, who typically come straight from top MBA programs, usually only have a summers worth of experience in corporate finance. They must learn the business (almost) from the beginning. The overall level of business sophistication an MBA possesses, however, makes a tremendous difference, and associates quickly earn the luxury of more complicated work and better bonuses. Associates are much better paid than analysts. They typically start in the $80,000 range, and bonuses normally hit $25,000 in the first six months. (At most firms, associates start in August and get whats called a stub bonus in January.) Newly minted MBAs benefit from signing bonuses and forgivable loans as well, especially on Wall Street. These can amount to another $25,000 to $30,000, depending on the firm, providing total compensation of up to $130,000.
Vice presidents
Upon attaining the position of vice president, those in corporate finance enter the realm of real bankers. The lifestyle becomes much more manageable once the associate moves up to VP. On the plus side, weekends free up, allnighters drop off and the general level of responsibility increases VPs are the ones telling analysts to stay late on Friday nights. In the office, VPs manage the financial modeling/ pitchbook production process in the office. On the negative side, the wear and tear of traveling that accompanies banker responsibilities can be difficult. As a VP, one begins to handle client relationships and thus spends much more time on the road than analysts or associates. You can look forward to being on the road at least three to four days per week, usually visiting clients and potential clients. Dont forget about closing dinners (to celebrate completed deals), industry conferences (to drum up potential business and build a solid
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network within their industry) and, of course, roadshows. VPs are perfect candidates to baby-sit company management on roadshows. The formula for paying bankers varies dramatically from firm to firm. Some adhere to rigid formulas based on how much business a banker brings in, while others pay based on a subjective allocation of corporate finance profits. No matter how compensation is structured, however, when business is slow, bonuses taper off rapidly. For most bankers, typical salaries may range from $100,000 to $200,000 per year, but bonuses can be significantly greater. Total packages for VPs on Wall Street often hit over the $500,000 level in the first year and pay can skyrocket from there.
Directors/Managing directors
Directors and managing directors are the major players in corporate finance. Typically, MDs work their own hours, deal with clients at the highest level and disappear whenever a drafting session of a prospectus takes place, leaving this grueling work to others. MDs mostly develop and cultivate relationships with various companies in order to generate corporate finance business for the firm. MDs typically focus on one industry, develop relationships among management teams of companies in the industry and visit these companies on a regular basis. These visits are aptly called sales calls. Top bankers at the MD level might be pulling in bonuses of up to $1 million or more a year, but slow markets (and hence slow business) can cut that number dramatically. It is important to realize that for the most part, MDs act as relationship managers, and are essentially paid on commission. For top performers, compensation can be almost inconceivable. For example, in 1999, Warburg Dillon Read (now UBS Warburg) hired health care banker Benjamin Lorello away from Salomon Smith Barney with a reported package of $70 million over five years.
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The players
The players in the trading game depend on the firm. There are no hard and fast rules regarding whether or not one needs an MBA. The degree itself, though less applicable directly to the trading position, tends to matter beyond the trader level. Managers (heads of desks) and higher-ups are often selected from the MBA ranks. Generally, regional I-banks hire clerks and/or trading assistants (non-MBAs) who are sometimes able to advance to a full-fledged trading job within a few years. Other banks, like Merrill Lynch and others on Wall Street, hire analysts and associates just as they do in investment banking. Thus an analyst job on Wall Street in trading includes a two- to three-year stint before the expectation of going back to business school, and the associate position begins after one earns his or her MBA. The ultimate job in trading is to become a full-fledged trader or a manager over a trading desk. Here we break out the early positions into those more common at regional I-banks and those more common on Wall Street.
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Entry-level positions
Regional Frameworks Traditional Programs Clerks: The bottom rung of the ladder in trading in regional firms, clerks generally balance the books, tracking a desk or a particular traders buy and sell transactions throughout the day. A starting point for an undergrad aiming to move up to an assistant trader role, clerks gain exposure to the trading floor environment, the traders themselves and the markets. However, clerks take messages, make copies, go get coffee and are hardly respected by traders. And at bigger firms, this position can be a dead-end job: clerks may remain in these roles indefinitely, while new MBAs move into full-time trading positions or top undergrads move into real analyst jobs. Trading Assistants: Typically filled by recent graduates of undergraduate universities, the trading assistant position is more involved in trades than the clerk position. Trading assistants move beyond staring at the computer and balancing the books to become more involved with the actual traders. Backing up accounts, relaying messages and reports to and from the floor of the NYSE and actually speaking with some accounts occasionally these responsibilities bring trading assistants much closer to understanding how the whole biz works. Depending on the firm, some undergrads immediately move into a trading assistant position with the hope of moving into a full-time trading job. Clerks and trading assistants at some firms are hired with the possibility of upward advancement, though promoting non-MBAs to full-time trading jobs is becoming more and more uncommon, even at regional firms. Wall Street Analyst and Associate Programs Analysts: Similar to corporate finance analysts, trading analysts at Wall Street firms typically are smart undergraduates with the desire to either become a trader or learn about the trading environment. Quantitative skills are a must for analysts, as much of their time is spent dealing with books of trades and numbers. The ability to crunch numbers in a short time is especially important on the fixed-income side. Traders often demand bond price or yield calculations with only a moments notice, and analysts must be able to produce. After a two- to three-year stint, analysts move on to business school or go to another firm, although promotion to
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the associate level is much more common in trading than it is in corporate finance. (Salaries mirror those paid to corporate finance analysts.) Associates: Trading associates, typically recent business school graduates, begin in either rotational programs or are hired directly to a desk. Rotations can last anywhere from a month to a year, and are designed to both educate new MBAs on various desks and to ensure a good fit prior to placement. As in other areas of investment banks, new MBAs begin at about $80,000 salary with about $25,000 bonus at major Wall Street banks. Second-year associate compensation also tracks closely to that of the second-year corporate finance associate. Associates move to full-fledged trading positions generally in about two to three years, but can move more quickly if they perform well and there are openings (turnover) on the desk.
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Structured product trader: At some of the biggest Wall Street firms, structured product traders deal with derivatives, a.k.a. structured products. (Derivatives are complex securities that derive their value out of, or have their value contingent on, the values of other assets like stocks, bonds, commodity prices or market index values.) Because of their complexity, derivatives typically require substantial time to price and structure and so foster an entirely different environment than that of a block trader who deals with heavy trading flows and intense on-the-spot pressure. Note, however, that common stock options (calls and puts) and even Treasury options trade much like any other liquid security. The pricing is fairly transparent, the securities standardized and the volume high. Low-volume, complex derivatives such as interest rate swaps, structured repurchase agreements and credit derivatives require pricing and typically more legwork prior to trading. Note that in trading, job titles can range from associate to VP to managing director. But the roles as a trader change little. The difference is that MDs typically manage the desks, spending their time dealing with desk issues, risk management issues, personnel issues, etc.
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Salespeople usually focus by region. For example, an institutional equity salesperson will cover all of the buy-side firms in one small region of the country like New England, San Francisco or Chicago. Many salespeople cover New York, as the sheer number of money managers in the city makes for a tremendous volume of work. Salespeople work on specific desks on the trading floor next to traders. Because so much of their work overlaps, sales and trading truly go hand-in-hand.
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Section 3: Research
If you have a brokerage account, you have likely been given research on stocks that you asked about. The intermediaries between companies and the buy side, corporate finance and sales and trading, research analysts form the hub of investment banks. To the outsider, it seems that research analysts spend their time in a quiet room poring over numbers, calling companies and writing research reports. The truth is an entirely different story, involving quite a bit of selling on the phone and on the road. Analysts produce research ideas, hand them to associates and assistants and then man the phone talking to buy-side stock/bond pickers, company managers and internal salespeople. They become the managers of research reports and the experts on their industries to the outside world. Thus, while the lifestyle of the research analyst would initially appear to resemble that of a statistician, it often comes closer to that of a diplomat or salesperson.
The players
Research assistants: The bottom-level number crunchers in research, research assistants generally begin with no industry or market expertise. They come from solid undergraduate schools and performed well in school, but initially perform mundane research tasks, such as digging up information and editing/formatting reports. Research assistants also take over the spreadsheet modeling functions required by the analyst. Travel is limited for the budding research assistant, as it usually does not make sense financially to send more than the research analyst to meetings with company officials or money managers. Research associates: Burdened with numbers and deadlines, the research associate often feels like a cross between a statistician and a corporate finance analyst. Long hours, weekends in the office and number-crunching sum up the routine of the associate. However, compared to analyst and associate analogues in corporate finance, the research associate works fewer hours, often makes it home at a reasonable time and works less on the weekend. Unfortunately, the associate is required to be present and accounted for at 7:30 a.m., when most morning meetings take place.
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Mirroring the corporate finance analyst and associate positions, research associates can be bright, motivated kids directly out of top undergraduate universities; at firms dedicated to hiring MBAs in research, the research associate role is the entry-level position once the MBA has been earned. A talented research associate can earn much in the way of responsibility. For example, the research associate may field phone calls from smaller B accounts (i.e., smaller money managers) and companies less important to the analyst. (The analyst handles the relationships with the biggest buy siders, best clients and top salespeople.) When it comes to writing reports, some analysts give free reign to associates. Also, research associates focus on one industry and typically work for only one full-fledged research analyst. This structure helps research associates delve deeper into the aspects of one industry group and enables them to work closely with a senior-level research analyst. To start, research assistants/associates out of undergrad typically get paid similarly to the corporate finance analyst right out of college. After one or two years, the compensation varies dramatically, depending on performance and the success of the analysts in the industry group, as well as the associates contribution. For the first-year MBA research associate, the compensation is similar to I-banking associates: $80,000 salaries with $30,000 signing bonuses, plus a $30,000 year-end bonus, are typical.
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Section 4: Syndicate
What does the syndicate department at an investment bank do? Syndicate usually sits on the trading floor, but syndicate employees dont trade securities or sell them to clients. Neither do they bring in clients for corporate finance. What syndicate does is provide a vital role in placing stock or bond offerings with buy siders, and truly aim to find the right offering price that satisfies both the company, the salespeople, the investors and the corporate finance bankers working the deal.
Managers
The managers of an IPO get involved from the beginning. These are the Ibanks attending all the meetings and generally slaving away to complete the deal. Managers get paid a substantial portion of the total fee called underwriting discounts and commissions on the cover of a prospectus, and known as the spread in the industry. In an IPO, the spread is usually 7 percent, unless the deal is huge, which often means that the offering company can negotiate a slightly lower rate. For a follow-on offering, typical fees start at 5 percent and again decrease as the deal-size increases. Deals typically have between two and five managers. To further complicate matters, these managers are also often called managing underwriters, as all managers are underwriters, but not all underwriters are managers. Confused? Keep reading.
Underwriters
The underwriters on the deal are so called because they are the ones assuming liability, though they usually have no shares of stock to sell in the deal. They are not necessarily the I-banks that work intimately on the deal; most
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underwriters do nothing other than accept any potential liability for lawsuits against the underwriting group. Underwriters are selected by the lead manager in conjunction with the company. This role is often called participating in the syndicate. In a prospectus, you can always find a section entitled Underwriting that lists the underwriting group. Anywhere from 10 to 30 investment banks typically make up the underwriting group in any securities offering. In the underwriting section, listed next to each participant is a number of shares. While underwriting sections list quite a few investment banks and shares next to each bank, it is important to realize that these banks do not sell shares. Neither do they have anything to do with how the shares in the deal are allocated to investors. They merely assume the percentage of liability indicated by the percentage of deal shares listed in the prospectus. To take on such liability, underwriters are paid a small fee, depending on their level of underwriting involvement (i.e., the number of shares next to their name). The managers in the deal will account for the liability of approximately 50 to 70 percent of the shares, while the underwriters account for the rest.
stocks/bonds for the long term. Those money managers that dont have long term interest are called flippers; they hope to sell the security shortly after opening for a quick profit. Institutional money managers who buy into a deal just to sell their shares on the first day only cause the stock to immediately trade down.
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that diplomacy is one of the most critical elements to success. Successful syndicate pros can read between the lines and figure out the real intentions of buy siders (are they flippers or are they committed to the offering, do they really want 10 percent of the offering, etc.). Also, good syndicate associates are proficient at schmoozing with other investment banks and garnering underwriting business (when the syndicate department is not representing the manager).
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Investment Management
Section 1: Overview
Investment management aspirants must have keen analytical and math skills and a passion for the news. Specifically, youd better love to read The Wall Street Journal and business publications like Barrons and Forbes. The field has typically been a hard one to break into. Once youre in, however, opportunities for advancement and financial gain abound. Some firms will rarely consider someone for the career track from outside the top MBA programs, while at other firms, insiders say having an MBA is not a huge advantage. One potential job-getting credential: Investment management professionals are increasingly sitting for the intensive three-part exam called the Chartered Financial Analyst (CFA) Program, a globally recognized standard for measuring the competence and integrity of financial analysts. The field is still male dominated. For example, 77 percent of the more than 53,000 candidates who sat for CFA exams in 2000 were male. Why the imbalance? I dont think its so much that we chose men, men chose this field, says one female vice president at a large New York firm.
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For experienced investment managers, the financial picture becomes rosier. Senior asset managers are generally paid based upon the amount of money they manage. The average salary for professionals with 10 or more years of experience is $200,000, according to the Association for Investment Management and Research, a non-profit association based in Charlottesville, Va., composed of 45,000 financial analysts, portfolio managers and other investment professionals worldwide. The AIMR based its findings on 1999 compensation data from more than 8,500 members in the United States and Canada. Top performers, including the highest-level portfolio managers, analysts and marketers, pull in salaries between $1 million and $3 million. The rewards can also be exceptional for high-risk managers of hedge funds, which are private pools of capital usually limited to wealthy investors. In this chapter we will provide an overview of the roles and lifestyles of the positions in investment management and paths to upper management positions.
How to break in
As the bull market fueled the popularity of mutual funds over the last few years, freshly minted MBAs were able to score high-paying investment analyst and portfolio management positions. This is a relatively new trend, as investment management is an industry that values experience (read: the more gray hair, the better). Another reason new blood is welcomed: More investment banks have been growing their asset management businesses, and need new employees. Asset management is largely protected against the volatility of the market, unlike investment banking. Many lines of business for investment banks are very sensitive to the economy in general. For example, underwriting of IPOs and other equity issues declines in times of recession. In asset management, firms make money based on a percentage of the entire amount they handle, whether they make or lose money for the client. Despite the current increase in available investment management positions, its still relatively hard to break into the business. Traditionally, someone fresh out of college would work for a few years as a financial analyst in bigmoney corporations, such as a General Electric, to gain experience, says Donald Tuttle, vice president of special projects at the AIMR and a former college business professor. You learn to evaluate your own corporation, how
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a corporation should be financed, how to try to keep costs down, Tuttle says. Then, after acquiring three or four years of experience in a job like that, you go back to school at a top-line MBA program. You will have a lot of opportunities either on the buy side or sell side.
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Undergraduate degrees
At some high-end firms, the typical path is to spend two years in entry-level jobs before moving on to get the MBA. Still, many companies are looking for recent college graduates who havent yet developed bad habits, and whom they think are good candidates to be molded in the firms image. At one firm, new analysts go through a sort of management training program where, at the beginning of the day and the end of the day, theyre working at the reception desk or the mailroom, says one insider. But during the six hours of the day between 10 a.m. to 4 p.m., they rotate a week or two weeks at a time in trading or portfolio management to the marketing area to sales and research. The president of the firm started this way.
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MBA or not?
Many firms recruit out of MBA programs, but not to the degree that I-banking firms do, says one portfolio manager. His firm, he says, brings in a class of four or five MBA graduates each year. Under something of a training program, they are brought in first as researchers. After about a year, they start easing into work as portfolio managers. Generally, they are given fewer clients and fewer assets to manage while they learn the business, he says. Other programs do not seek out MBAs, seeking to groom smart people just out of college. When we bring people in we give them a one month-long training program, he says. Besides, your job is your training. There are no real set milestones If we are happy with people, we encourage them to stay and grow with the firm. Theres no set time period or career path.
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and third-year analysts who are working directly with the portfolio managers on analyzing risk in specific sectors will mentor you. After the first year, analysts typically develop a specialty or jump to equity research. Equity researchers dig for the inside scoop about companies that portfolio managers may be thinking of buying. They may do this by scrutinizing a companys annual reports, press releases, meeting with the companys CFO and seeing what the sell-side analysts say about the company. Some professionals will stay in portfolio analytics, continuing to work on the portfolio support side while moving up the corporate ranks. Some have become managing directors by staying put. There is definitely not a requirement to move out of that position, says one portfolio manager. The entry-level path can also lead to a position on the trading floor. Once the portfolio management team has determined what to buy, the trader comes into play by negotiating the best deals possible. Its not necessarily a job that requires strong analytical skills, but traders do need to understand the market. Its more a high-energy, relationship-oriented job, says one manager.
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Today, he is managing a book of business (industry jargon for a stable of clients) worth about $600 million for about 80 high-wealth clients. In his job, he knows his clients personally. He likes this kind of money managing better than his previous experiences with mutual fund investment, which were more about meeting numbers. This tends to be very relationship oriented, he says. If you had to compare what we do to another profession, its the family doctor. We develop the same kind of rapport and relationship. Knowing clients personally in some ways makes the job more stressful, he says. You really are the one on the line, the one deciding I want to buy this stock and not that stock. Strong ethics and a sense of responsibility are necessary, he says, because the ramifications are great. This is peoples retirement money. Thats a tremendous responsibility. Another advantage, he says, are the hours. He says he works an average of 65 or 70 hours a week, but some slow weeks end after 45 hours. Decembers tend to be bad because you are figuring out taxes, he says. Then again, there have been times when Ive gone home at 4 p.m., which is something I distinctly value. He usually arrives at the work early and can leave when the markets close, but some portfolio managers come in just before the 8:30 a.m. meeting and leave around 7 p.m. Theres flexibility, he says, because he gets to set up client meetings around his life. Client relationships take up about 35 to 40 percent of the time. He crosses the country to visit clients about 10 percent of the time, and sometimes they meet him in Manhattan. Otherwise, hes doing investment research, which sometimes entails attending conferences held by sell-side research firms where he might learn, for example, how a company plans to use the proceeds of a second public offering to acquire another firm. Sometimes, he says, clients are surprised when they meet him because they realize how young he is. Age discrimination goes both ways, he says. Some people seek him out because they think a younger manager is going to have a better understanding of technology. Others dont want someone without 30 years of experience touching their money. I get comments all the time like, Hmmm, how long have you been doing this? he says. Theyre trying to benchmark me in some way without necessarily asking about my age. I find I can address it by simply doing my job well.
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Commercial Banking
Commercial bankers make their living lending money to companies some prosperous, some flailing and sliding down a bloody path to bankruptcy and loan default. Thats why the largest commercial banks have erected towering, multi-tiered bureaucracies in which someone rates the credit-worthiness of prospective borrowers, someone else sells loans to customers and then monitors the continued financial health of these borrowers and yet someone else makes sure everybody follows bank regulations and banking laws. Fortunately for these banks, young commercial bankers recruited into this bottom tier learn skills that can ramp them up to a job at much higher levels. As commercial bankers rise through the strata, they come to supervise those who take over positions they left behind.
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prospective borrowers. After the training, these bankers may rotate through different areas of the bank, such as a branch office or private banking operation. Their training ends when they are chosen to fill a full-time opening. With the experience and skills Ive gained as a credit analyst, I believe that I have many options, says one young analyst. Credit training allows you to understand businesses and companies, rather than just financial products. In the long term I may enter one of the following fields: corporate finance (company side), venture capital, investment banking, money management or equity research. Credit analysts say, The moneys pretty decent when compared to other people in their age group (credit analysts are typically in their early 20s), though they complain the lifestyle sucks.
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Lange spent three years with Bank of America as a credit analyst, but says shes much happier now that she gets to meet the executives to whom she
loans money. Those meetings make credit evaluations much easier, Lange said.
You just become much more familiar with the operation when youve gone out and met them and talked to them, Lange said. Youre much more apt and able if youre talking about their business to ask questions. Something might come up and youll say, I had no idea this was part of your business strategy. Loan officers are also responsible for building up their portfolio with new clients. Sometimes I see things in the newspaper, a developers name or an organization, and think they might be worthwhile calling on, said one assistant vice president at a small regional bank in New Jersey. We do something here called blitzes. We go out and canvas areas where we have our branches. I may meet prospective clients that way.
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with a struggling company, Yancis will try to work out a way for the borrower to make his payments. In the early 1980s, when the oil business began drying up in Texas, Yancis was placed in charge of an effort to recoup a multi-million dollar loan from a wildcat oil driller whose wells had run dry. With an additional $250,000 from the bank, Yancis assembled a syndicate of oil speculators and begged a Dallas oilman to move his rig to some undrilled wells the borrower still owned. Heres what Ill do, Yancis told the Dallas oilman, I aint got the money to pay you, but Ive asked a handful of investors come together. If you put your rig in and hit oil, youll be one of the first investors to get paid. He said okay. It cost $600,000 just to move the rig, but he did it on a handshake. We hit, and we did that eight more times. With what was coming out, in the long run, the bank wound up getting its money.
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FINAN FIRMS
THE VAULT TOP 25 FIRMS
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V A U L T
PRESTIGE RANKING
Goldman Sachs
UPPERS
Excellent support staff Talented co-workers Top-quality name brand
85 Broad Street New York, NY 10004 Phone: (212) 902-1000 Fax: (212) 902-3000 www.gs.com
DEPARTMENTS
Equities Fixed Income, Currency and Commodities Global Investment Research Investment Banking Investment Management Merchant Banking Operations, Finance and Resources Technology
DOWNERS
Grueling hours More bureaucracy since IPO Overbearing culture
EMPLOYMENT CONTACT
Investment Banking Undergraduates: Robyn Lavender Goldman, Sachs & Co. 85 Broad Street 18th Floor New York, NY 10004 Advanced Degrees Sunshine Singer Goldman, Sachs & Co. 85 Broad Street 18th Floor New York, NY 10004 Investment Management Sarah McNamara Goldman, Sachs & Co. 32 Old Slip 19th Floor New York, NY 10005 For more contacts, see www.gs.com/recruiting
THE STATS
Chairman and CEO: Henry Paulson Employer Type: Public Company Ticker Symbol: GS (NYSE) 2000 Revenues: $33 billion 2000 Net Income: $3.1 billion No. of Employees: 20,350 No. of Offices: 42
KEY COMPETITORS
Credit Suisse First Boston J.P. Morgan Chase Merrill Lynch Morgan Stanley Salomon Smith Barney
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THE SCOOP
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Making markets
In September 2000, Goldman put some of the currency from its IPO to use. The firm surprised many Wall Street insiders when it announced it would purchase market maker Spear Leeds & Kellog LP. The move was surprising because Goldman was one of the firms (along with Merrill Lynch and Morgan Stanley Dean Witter) that had lobbied for a central electronic market to take the place of specialists (such as Spear Leeds) on the Nasdaq and New York Stock Exchange.
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The acquisition, which was finalized in the fourth quarter of 2000, cost Goldman $6.5 billion in cash and stock. The deal is expected to dramatically increase Goldmans presence in the stock order execution business. It also enhances Goldmans exposure to the retail investor an area that industry insiders have often cited as a Goldman weak spot. Early reports speculate that Goldman will have difficulty integrating its white shoe culture with the aggressive, secretive culture of Spear Leeds. A number of Wall Street insiders also wondered if perhaps Goldman had paid too high a premium for the company. Such speculation obviously did not bother Goldman. In January 2001, the company announced the purchase of Benjamin Jacobson & Sons, another specialist firm. Goldman reportedly paid $250 million for Jacobson & Sons, whose operations were combined with those of Spear Leads. After building its market-making capabilities, Goldman sought to improve its retail brokerage operations through acquisition. In June 2001, Goldman acquired online investment bank Epoch Partners for an undisclosed sum. Epoch was a joint venture owned by Ameritrade, Charles Schwab, TD Waterhouse and three venture capital firms. Epoch was originally expected to democratize the IPO process, offering shares to individual investors. In practice, Epoch had difficulty getting in on highprofile IPOs and needed a partner of Goldmans stature to survive.
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GETTING HIRED
One of us
Goldman cares a lot about fit a lot. This is the unanimous emphasis of firm insiders, who believe that more than any other Wall Street firm, Goldman weeds out those who will not fit with the firms culture. All candidates are questioned on their willingness and ability to work hard as team players in an intense and demanding work environment. Interviewers say that they look for people with smart personalities who arent afraid to work hard. We especially dont want big egos around the place, so we try and find out how you will be able to work with someone you dont like too much personally. They stress over and over again that anybody graduating from a top MBA program can do what they want them to do, says one source. But they cant change his personality or make him pleasant to work with. They really put a lot of effort into the personality part. In fact, one recent hire reports that he received rapid-fire personal questions: Why did you go to that school? How were your grades? How were you perceived by your peers? Your professors? When screening potential summer associates, Goldman generally conducts two oncampus rounds and a third round at the firms headquarters, which is described as sort of a super day, but a miniature version, with about four 30-minute interviews.
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For summer associates trying out for full-time positions, contacts say, theres very strong attention paid to how well people work together. Play nice!
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Full support
Goldmans support staff wins high marks from employees for being thoroughly efficient and professional. According to insiders, Goldman bankers enjoy support services that are as good as they get on The Street. Analysts have secretaries to answer their calls, although they have to share usually one secretary is assigned to four or five analysts or associates. Goldmans support staff infrastructure ensures that back-up secretaries are always available to fill in any gaps caused by illness or absence among the regular support staff. The highly paid support staff (like other Goldman employees, support staff receive year-end bonuses) not only perform standard administrative and clerical duties such as faxing and filing, but also help associates and analysts with making graphs, setting up databases, and creating charts and tables. Every floor at Goldmans New York headquarters has a word processing
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room staffed with friendly, knowledgeable people. Goldmans data resources and library staff members are also superb, but tend to grumble about last-minute requests. Overall, Goldman employees remark that the top-notch support staff plays an integral role in ensuring the smooth execution of pitchbooks and presentations. Some feel the firm is lacking in training. What training? asks one source. We were all thrown into our jobs pretty much immediately, and the one-week training program was mostly boring lectures. They did schedule an accounting series later on, but Im sure Im not the only one who couldnt attend most of the sessions because of work.
Posh offices
Goldman Sachs New York headquarters is split into two main locations; 85 Broad Street, Goldmans headquarters, houses the investment banking business and Goldmans administrative functions, while the sales and trading business is located across the street at One New York Plaza. (The firm also has a few smaller offices in New York.) Goldmans offices are modern and beautiful, and the lobbies and hallways are bedecked with expensive artwork by renowned artists such as Jasper Johns. All analysts and associates are assigned their own cubicles. Our sources complain that working in cubicles eventually gets tiresome, because they afford very little privacy; one analyst notes that everyone can listen in on all of your personal phone calls. Junior employees are particularly irked that senior people can tell whether you are working or slacking off. One associate complains that its obvious whether youve gone home early, and says he took to leaving his suit jacket on his chair if he left the office before 9 p.m. Another former associate recalls, You cant even read the paper at your desk without the whole floor knowing, so a lot of people take papers to the bathroom and read them in the stalls. However, as employees ascend the corporate hierarchy, the amount of privacy increases considerably. Vice presidents get their own nice but small offices, and managing directors have the luxury of large corner offices.
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remains the same. One source says the IPO has changed compensation: Before people would be paid in all cash now a good portion of your comp will be in stock. That source also notes that the firm has become more bureaucratic since going public.
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Ive seen some people from top schools who came across as a bit arrogant, and they were very unwelcome [at Goldman].
Goldman Sachs insider
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V A U L T
PRESTIGE RANKING
Morgan Stanley
UPPERS
Bulge-bracket prestige Rotation system encourages professional development Stellar clients, co-workers
1585 Broadway New York, NY 10036 Phone: (212) 761-4000 Fax: (212) 762-9242 www.morganstanley.com
DEPARTMENTS
Asset Management (Individual, Institutional) Credit Services Institutional Securities (Institutional Sales and Trading, Investment Banking, Research)
DOWNERS
Brutal hours Bureaucratic structure Red-faced after recent scandals
EMPLOYMENT CONTACT
Firm-wide Recruiting Michael Marich, Director 1221 Avenue of the Americas 44th Floor New York, NY 10020 Attn: Division of Interest
THE STATS
Chairman and CEO: Philip Purcell Employer Type: Public Company Ticker Symbol: MWD (NYSE) 2000 Revenues: $45.4 billion 2000 Net Income: $5.5 billion No. of Employees: 62,700 No. of Offices: 582
KEY COMPETITORS
Credit Suisse First Boston Goldman Sachs Merrill Lynch Salomon Smith Barney
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THE SCOOP
Dodging Glass-Steagall
Morgan Stanley Dean Witter was created in 1997 through the merger of Morgan Stanley and Dean Witter, Discover & Co. Dean Witter was founded in 1924 in San Francisco. Dean Witter milestones include the firms IPO in 1972, its 1978 merger with New York-based securities firm Reynolds & Co. (at the time, the largest securities industry merger), its purchase by Sears Roebuck in 1981, the 1986 launch of Discover Card and the 1992 spin-off of the Dean Witter, Discover Group. Morgan Stanley traces its roots to the former securities operations of J.P. Morgan. In 1933, after the passage of the Glass-Steagall Act, which prohibited firms from operating both commercial and investment banking businesses, two J.P. Morgan partners (Howard Stanley and Harry Morgan, son of J.P. Morgan) and several other employees split from the bank and formed Morgan Stanley. The new firm was created to concentrate on the securities business, while J.P. Morgan remained a commercial bank. Great moments in Morgan Stanley history include its admission to the New York Stock Exchange in 1941 and its 1986 IPO.
Accolades
While many feared the merger with retail-oriented Dean Witter would damage the powerful, white shoe operations of Morgan Stanley, the combined firms results have
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hushed the critics. MSDW posted a bevy of achievements during 1999. The firm was named Best Investment Bank by Euromoney and received four out of a possible 16 Deal of the Year Awards by Investment Dealers Digest in both 1999 and 2000. The new millennium saw more success for the firm as it finished in the top 10 in numerous league tables, including M&A advisory (No. 2), IPO underwriting (No. 3), high-yield debt (No. 4) and U.S. investment-grade debt (No. 4). While continuing to break I-banking records, the firm has also been expanding its retail business. In November 1999, Morgan Stanley jumped headfirst into online trading. Previously, the firms online clients traded on Discover Brokerage Direct. The bank opened Morgan Stanley Dean Witter Online, its new online trading option, in November after months of asserting that its clients werent interested in online alternatives. MS charged $29.95 for trades, gradually moving all Discover Brokerage clients who had been paying $14.95 per trade up to the new scale. While many price-sensitive Discover clients moved their accounts to other online banks, analysts felt the firm made the right move, stating that existing Morgan Stanley clients were clamoring for a high-quality alternative. The company is also reportedly investigating cross-selling opportunities with Discover Card. The firm hopes to develop brokerage relationships with vendors that currently accept the Discover Card, according to a June 2000 report in Financial NetNews.
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and as senior officials from the old Morgan Stanley left the firm. Mack landed on his feet; he was named CEO at Credit Suisse First Boston in July 2001. Morgan Stanley people did win a moral victory in April 2001. The firm announced they were dropping the Dean Witter name for marketing purposes, though Morgan Stanley Dean Witter remains the firms legal moniker. The announcement was hardly a surprise, as the company announced at the time of the merger it would likely drop the Dean Witter name at some point.
Big-time clients
Morgan Stanley remains an unquestioned leader of the investment banking world and has the deals to back it up. The firm led the $1.2 billion IPO of French telecom firm Alcatel in October 2000. In February 2001, Morgan Stanley led KPMG Consultings $2 billion IPO. One month later, the firm led a $3.6 billion offering for Agere Systems. Additionally, the firm was tapped by consulting firm Accenture to co-lead (along with rival Goldman Sachs) its IPO, tentatively slated for late spring 2001. The M&A department cleaned up at Investment Dealers Digests Deal of the Year awards. The firm was presented with the coveted Breakthrough Deal of the Year award for representing Time Warner in its $165 billion merger with America Online. Morgan Stanley also won Energy Deal of the Year for representing Texaco in its merger with Chevron, Media/Telecom Deal of the Year for advising Seagram in its three-way union with Vivendi and Canal Plus and Technology Deal of the Year for advising Seagate on a three-way transaction with Veritas Software and an investor group organized by Silver Lake Partners and Texas Pacific Group.
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meaning they were done on a sealed-bid basis where the [bank offering] the low true interest cost to the city wins. There is no opportunity for influence. According to the report, an unidentified young broker sold the shares to the mayor, independent of the banks relationship with the city, in an attempt to develop a relationship with him. The firm encountered trouble with another regulatory agency in June 2000 when the Equal Opportunity Employment Commission (EEOC) ruled the bank had discriminated against a high-level female broker. Allison Schieffelin, an employee in the firms institutional equity division, alleged in 1998 that she had been subject to discrimination and harassment at Morgan Stanley and that less-qualified male traders were promoted to managing director while she remained a principal. The case took another turn in October 2000 when Morgan Stanley fired Schieffelin. The New York Times reported that the firm had broken off negotiations that would have prevented a lawsuit in late October and Schieffelin was dismissed soon after. She was terminated for insubordination and inappropriate behavior, a company spokesman told The New York Times. But in March 2001, the EEOC determined that Schieffelin was fired in retaliation for her complaint. The agency is contemplating suing the firm. Schieffelins attorney has said she will file a suit regardless of whether the EEOC decides to do so. Morgan Stanley shut the door on another embarrassing incident in September 2000, settling a legal battle with a former employee. Christian Curry was fired in April 1998, after appearing nude in a gay mens magazine; he sued, saying he was the victim of racial and sexual preference discrimination (Curry is African-American). To further his lawsuit, Curry allegedly conspired to plant fake e-mail messages on the firms computers. Curry was arrested in August 1998, but charges were later dropped after it was discovered that Morgan had paid $10,000 to a friend of Currys to turn him in. The resulting embarrassment forced two of the banks top lawyers to resign. In September 2000, Curry and Morgan Stanley dropped lawsuits against each other; Morgan Stanley agreed to pay $1 million to the National Urban League. Still, the firm has been dogged by criticism. Since dropping the lawsuit, Curry has spent large amounts of money, including a $2 million investment in a publishing venture. That led to speculation that the firm had paid off Curry. In a scathing editorial published in February 2001, The Wall Street Journal accused the firm of lying about the payoff and fabricating a false statement on Currys behalf for the press release announcing the settlement. In a statement crafted with Mr. Currys lawyer, Morgan Stanley called the settlement complete vindication while carefully putting the lie in Mr. Currys mouth While I receive no payment, I am pleased with
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the result, the Journal wrote. The firm refuted the papers assertions and continues to deny making a payment to Curry. MS also got off to a rough start in 2001 when former President Bill Clinton spoke at one of the firms conferences shortly after vacating the White House. Irate clients began calling Morgan Stanley, threatening to take their accounts elsewhere. Many considered the invitation to the former Commander-in-Chief an egregious error because of his personal conduct while in office and his pardoning of fugitive financier Marc Rich, not to mention the hefty paycheck rumored to be around $100,000 that Morgan gave Clinton. MS quickly issued an apology to its clients, describing the Clinton speech as a mistake.
GETTING HIRED
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throw questions at me if I was wrong hed correct me, and then just go to the next one. I remember thinking, God, Im glad I know some of this stuff. It was a lot of macroeconomics: inflation, interest rates, currencies. Says that contact: They had me interview with pretty senior people, the head of all treasury trading, and the second in charge of all fixed income. Some recent associate-level hires report undergoing more than one callback round during the business school recruiting process. I had three more rounds, all in New York [after the on-campus round], reports one contact. MBA recruits for investment banking tell a different story. One associate reports a far less grueling interview process. Its all in who you meet here, that source explains. Since its such a large place, you are going to meet people with very different interviewing styles I also think that if they have confidence in your technical skills and coursework, then you wont hit many technical questions at all. Another investment banking contact reports that at his business school, Morgan Stanley holds only two rounds (one on-campus and one at an office) for both summer and full-time associate hires. They make very quick decisions, reports that contact. Thats the difference between Goldman and Morgan Stanley. That insider reports that there was one two-on-one interview (good cop, bad cop), though other people had one-on-ones. The second round was all one-on-ones for this contact.
talk. Another insider complains of Morgan Stanleys extremely rigid organization and heavy-handed culture. That insider says the firm takes pride in the Morgan Stanley way. The firm has this attitude of this is how weve always done things and this is how well continue to do things. However, that insider does concede that the bank puts a lot of time and effort into developing people. Investment banking associates at MS are offered a generalist program with three rotations through industry or product groups. These rotations last four months each. Comparing Morgan Stanley to its chief competitor, Goldman Sachs, one insider comments, Theres an incredible amount of mobility when compared to Goldman. You spend your first year as a total generalist and then after two years, if you want, you can switch groups. Another insider brags, I have a wide latitude to choose my own projects and thus have very interesting projects to do.
Beep!
One of the famed aspects of Morgan Stanleys culture is that bankers are required to wear beepers, which some other banks enjoy pointing out as a MS shortcoming during MBA recruiting season. Depending on how you think about that, [omnipresent beepers are] a good thing or a bad thing, reveals one associate. The bad thing is, everyones got access to your number. But the good side is that if you
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ever want to take a two-hour lunch, you can, because they can page you. If anyone ever complains that you werent in the office, you can just say Why didnt you page me?
360-degree evaluations
Morgan Stanley is also famed for its innovative evaluation system. The 360-degree review evaluation process takes place once a year, but most analysts are reviewed mid-year as well. So everyone you work with, you put on your list, and that list goes to the HR department, explains one insider. The HR department sends an evaluation form to everyone you work with. [Morgan Stanley] takes this very seriously. Everyone you work with will give you a formal evaluation. All the evaluations are collected, and a VP or managing director whos in your group is assigned to collate all the information and pull together what the overall evaluation should be. You not only get feedback from people above you, but you give them evaluations. The downward evaluations are named, upward are anonymous, says one former analyst. So if your associate is being a total pain in the ass, you slam [him or her] in the reviews. They take very seriously the opinions of the junior people when evaluating for bonuses, so associates go out of the way to be helpful. Id say that is a very unique thing about Morgan, says one banker, who points out that the Morgan Stanley evaluation model was actually a case study at his business school.
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V A U L T
PRESTIGE RANKING
11 Madison Avenue New York, NY 10010 Phone: (212) 325-2000 Fax: (212) 325-8249 www.csfb.com
DOWNERS DEPARTMENTS
Equity Fixed Income Investment Banking Private Client Services High burnout rate Uncertain culture after DLJ merger
EMPLOYMENT CONTACT
Investment Banking Rachel Graves, MBA Recruiting (US) Pauline Ma, BA Recruiting (US) Anne Hitchcock, MBA Recruiting (Europe) Fixed Income Cynthia Marrone, MBA Recruiting (US) Lindsay Hobbs, BA Recruiting (US) Hallie Silver, MBA and BA Dedicated Programs (US) Faye Woodhead, MBA Recruiting (Europe) Sarah Russell, BA Recruiting (Europe) Equity Courtney Kirkland, MBA Sales & Trading Recruiting (US) Jennifer Murphy, BA Sales & Trading Recruiting (US) Beth Kramer, MBA and BA Equity Research Recruiting (US) Rachel Denny, MBA and BA (Europe) Private Client Services Eileen Duff (US) For Asia opportunities Michelle Desena For mailing addresses go to careeropportunities.csfb.com.
THE STATS
Chairman: Joe Roby CEO: John Mack Employer Type: Subsidiary of Credit Suisse Group 2000 Revenues: $12.2 billion 2000 Net Income: $1.4 billion No. of Employees: 28,000 No. of Offices: 97
KEY COMPETITORS
Goldman Sachs Merrill Lynch Morgan Stanley
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THE SCOOP
A bulging bracket
Credit Suisse First Boston is one of New Yorks most renowned investment banks and a member of Wall Streets prestigious bulge bracket of top securities firms. Credit Suisse First Boston is the wholly owned investment banking unit of the Credit Suisse Group of Switzerland. Credit Suisse Group (formerly known as CS Holdings) initially invested in First Boston in 1988, renaming the investment bank CS First Boston. Since that infusion of Swiss cash, the firm itself has changed significantly. Credit Suisse First Boston now has a much larger capital base than First Boston ever had. That base got even bigger in August 2000 when Credit Suisse announced the acquisition of Donaldson, Lufkin & Jenrette in a deal worth approximately $12.4 billion. The companies said they would eliminate approximately 2,500 jobs, with most of them coming from back-office functions that overlap. By the end of 2000, CSFB said it had eliminated nearly 2,000 jobs and expected to finish its cuts by mid2001. Lauren Smith, banking analyst at Keefe, Bruyette & Woods, told The New York Times that she had mixed feelings about the deal and predicted the usual culture clashes. DLJ is more conservative and has a partnership-type feel, said Smith. The deal closed in November 2000. (A minor controversy flared up in the spring of 2001 regarding CSFBDirect (formerly DLJDirect), the companys online brokerage. CSFB made a $4 per share offer for the 17 percent of the online unit not covered in the DLJ acquisition. Some DLJDirect shareholders filed a class-action lawsuit, saying the CSFB offer was too low. The suit is pending.) Shortly after announcing the merger, the firm disclosed who would hold the top positions in the investment banking division. According to The Daily Deal, Ken Moelis, DLJs head of corporate finance and Charles Stonehill, head of investment banking at CSFB, were named co-heads of investment banking in the U.S. (Moelis didnt last long in his new role. Shortly after the merger was finalized in November 2000, he jumped ship to UBS Warburg, where he became co-head of I-banking.) In April 2001, The Wall Street Journal announced the resignations of three senior members of the equities division after they found themselves with fewer responsibilities and less authority than they had hoped for following the merger. All three managers had come over from DLJ. Additionally, The Wall Street Journal reported in September 2000 that DLJs president and CEO, Joe Roby, was guaranteed a compensation package more commonly associated with a baseball star. The Journal said Roby would receive $82.4 million over six years to act as chairman of
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CSFB. The deal includes a retention award, guaranteed bonuses and $5 million per year for three years to serve as a consultant starting in 2004. With high-profile bankers exiting and reports of Joe Robys enormous compensation package circulating, morale has been low for the remaining former DLJ employees. At an unofficial gathering of DLJ employees in October 2000, it featured a video that included the DLJ logo getting crushed and a picture of Roby with flashing dollar signs in his eyes.
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whether brokers coerced clients to pay higher commissions and buy aftermarket shares in exchange for larger allocations of future IPOs. In May 2001, NASD determined that six CSFB employees be charged with violating NASD rules; about a week later, the firm concluded in an internal investigation that two brokers had violated firm policy; the two were later dismissed by CSFB.
GETTING HIRED
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into its fixed income division (because of the math-heavy derivatives and risk management products). CSFB conducts a summer analyst program for college students. Students are placed in the investment banking, fixed income or equity divisions. CSFB also offers a summer associate program that gives students finishing their first year of business school a chance to learn about the investment banking industry; the program runs for a minimum of 10 weeks. Summer associates participate in new business presentations and financial advisory assignments and complete transactions. The firm has a flexible sales and trading summer associate program which allows summer associates to focus on fixed income or equity or pursue a rotational program that offers exposure to both. CSFB also has an equity research summer associate program, where summer associates are assigned to work with a research analyst for the summer. According to the firm, all summer associates are assigned mentors and reviewed periodically.
Friendly folks
The level of aggressiveness and tension varies from place to place within CSFB, according to employees. One trader comments that the culture in trading is very macho because its immediate and you can make or lose a lot of money. Its certainly very physical. Im walking around and yelling at people. Trading is definitely a lot more fast-paced than investment banking. The work environment at all divisions of Credit Suisse First Boston is well balanced between entrepreneurial drive and collegial amiability. The company expects its employees to grunt hard and work, but also knows how to let them relax when appropriate. As for the influence of parent Credit Suisse Group, says one insider, theres been more Swiss influence since the beginning of 1997. Its somewhat more conservative, [with] a little more regulation. Credit Suisse First Boston fosters a collegial environment in which new employees enjoy a large degree of interaction with senior management. One former associate reports: We would go out at least once a week. Anytime there was someone new in our group visiting from one of the other CSFB offices, it was basically their duty to take you to a bar. One former analyst notes that the best aspect of working for the firm was definitely the people. Ive made some great friends at the firm, both in my
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analyst class and in my group. I still keep in touch with many of them I was also struck by how genuinely nice people were compared with what I had expected when I went into investment banking. Insiders also rate the firm favorably in terms of diversity. Says one source: CSFB is one of the most diverse banks on Wall Street. That source mentions a downside to diversity, though: I think the diversity does hurt [CSFB] in one respect because the firm lacks a strong sense of firm culture. I dont think [the people] here take as much pride in the firm as counterparts at other firms. However, some contacts say the firm could do more regarding diversity. An associate in one of the international offices, for instance, says he considers the number of women there to be below the industry average. CSFB employees regularly receive free tickets to sporting and cultural events, as well as opportunities to go out for nice dinners in restaurants. The only impediment to enjoying those fancy meals is the amount of time CSFB people spend in the office. CSFB emphasizes teamwork and says its employees must possess quantitative and modeling skills.
salary increases are being implemented and employees are also offered honeymoon and paternity leave in addition to standard vacation packages. For associates, the firm is offering a wealth creation plan in which associates can take advantage of private equity opportunities. Analysts who are promoted to associate are given a onemonth paid leave and the firm has introduced sabbaticals for employees who have been with the organization for a minimum of five years.
Healthy options
Working at CSFB offers other, more basic benefits. [The firm offers] lots of health care options, including one in which you can save money for health care expenses tax-free, says one insider. So say you know that later in the year youll have $2,000 in medical expenses that wont be covered by insurance. You can save for that in a pre-tax account. So if you didnt have that account, you might have to earn $2,800 to pay for the $2,000 in expenses. For those looking to re-energize, theres the firms health club. The monthly fee for the club depends on ones position for people below VP its $30 a month. Perhaps the biggest perk, say New York employees, is that you get to live in Manhattan and earn enough money to enjoy it.
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V A U L T
PRESTIGE RANKING
Merrill Lynch
UPPERS
Bulge-bracket prestige Commitment to diversity
World Financial Center, North Tower 250 Vesey Street New York, NY 10281-1332 Phone: (212) 449-1000 Fax: (212) 236-4384 www.ml.com
DOWNERS
Maddening bureaucracy Wont match competitors pay
DEPARTMENTS
Asset Management Corporate and Institutional Client Group Private Client Group
EMPLOYMENT CONTACT
Investment Banking Carrie Higginbotham Assistant Vice President, BA Recruiting Denise Patton Vice President, MBA Recruiting Sales and Trading Claudine Rippa Vice President Merrill Lynch World Financial Center 250 Vesey Street, 2nd Floor New York, NY 10281-1302 Fax: (212) 449-3130
THE STATS
Chairman and CEO: David H. Komansky Employer Type: Public Company Ticker Symbol: MER (NYSE) 2000 Revenue: $44.9 billion 2000 Net Income: $3.8 billion No. of Employees: 72,000 No. of Offices: 900
KEY COMPETITORS
Credit Suisse First Boston Goldman Sachs Morgan Stanley Salomon Smith Barney
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THE SCOOP
Strong as a bull
In 1914 Charles Merrill formed an underwriting firm, Charles E. Merrill & Co. Merrill took on Edmund Lynch as his partner, and the firm was renamed Merrill, Lynch & Co. in 1915. Following the market crash in 1929, Merrill decided to focus on investment banking and sold off its retail operations to E.A. Pierce, a brokerage firm. A decade later, Merrill recaptured the retail business when Merrill, Lynch & Co. merged with E.A. Pierce. Charles Merrill (who ran Merrill Lynch until his death in 1956) was a true renaissance man. In addition to his activities in the financial world, he founded Family Circle magazine (youve likely seen it at the grocery store checkout line) and even played semi-pro baseball as a young man. He quickly decided his fortune lay not in the hit-and-run, but in sales and trading. In 1971 Merrill Lynch became the second Big Board member to have its shares listed on the New York Stock Exchange (the first was Donaldson, Lufkin & Jenrette, now a part of Credit Suisse First Boston). Later in 1971, the company unleashed its Merrill Lynch is bullish on America ad campaign. For better or worse, the firm has been linked to its bull mascot since then.
Ranking high
Part of the investment banking bulge bracket, Merrill Lynch is a global powerhouse. The firm has a top-notch research staff and private equity group, and employs 1,600 investment banking professionals in 22 countries. Almost all of Merrills departments are at the top of their respective league tables or, at the very least, hover somewhere in the top five. According to Thomson Financial Securities Data, Merrill finished No. 1 in total equity and debt both in the U.S. and internationally in 2000. The firm was No. 5 in IPOs, No. 3 in investment grade debt, tops in convertible securities and No. 4 in common stock underwriting. Merrill couldnt compile those numbers without being in on some big deals. In August 2000, the firm co-led a $4.3 billion IPO for Petroleo Brasileiro. Merrill coled a $476 million IPO for Asia Global Crossing in October 2000. In other international dealings, Merrill was the co-lead manager on Telekom Austrias November 2000, $993 million IPO. Dont let the proliferation of co-leads fool you; the firm can fly solo. For example, Merrill led oil giant Cnoocs $1.2 billion IPO in February 2001.
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The numbers would indicate the firm has slipped a little in M&A advisory. After consistently coming in second to competitor Goldman Sachs in this high-profile, high-fee business, Merrill placed a respectable No. 5 in worldwide M&A in 2000. However, Merrill won Investment Bank of the Year honors for 2000 from Mergers & Acquisitions for its role in the Pfizer/Warner-Lambert (for Pfizer), AT&T/MediaOne (for AT&T) and Tribune/Times Mirror (for Tribune) deals. All of Merrills underwriting prowess would mean little if not for its distribution capabilities. The firm employs more than 19,000 financial consultants and account executives. Brokers commissions consistently contribute the largest chunk to Merrills annual net revenues (commissions represented 29 percent of the firms revenues in 1999 and 26 percent in 2000).
Power lust
The last half of 2001 should be interesting at Merrill Lynch. Chairman and CEO David Komansky, who is scheduled to retire in 2004, is expected to announce his nomination for successor at the end of the year, a choice Merrills board will take very seriously. The race to succeed Komasky already claimed at least one victim. Herb Allison, president and COO, resigned from Merrill Lynch in July 1999 after 28 years. Though the reasons behind Allisons departure arent clear the firm chalked it up to retirement at the time some published reports indicated he left after it was made clear he was not being considered for the top spot. Allisons departure left the question of succession wide open. Komansky himself has muddied the waters, telling CNBC in May 2001 that there are at least three potential successors under consideration. One of the main contenders to fill Komanskys shoes is E. Stanley ONeal, the companys former CFO who was named head of the brokerage division in February 2000. ONeals promotion was viewed as a sure sign he was in line snag the top spot. (If selected, ONeal would be the first African-American to head a major U.S. investment bank.) According to BusinessWeek, however, ONeal has his competition. Jeffrey Peek, who is credited with resurrecting the companys asset-management division, is a strong candidate, as is Thomas Davis, head of investment banking, and Winthrop Smith, Jr., head of global private client services (and son of the firms former chairman).
Getting commercial
Merrill caused a stir in February 2000 by announcing plans to compete with commercial banks for customer deposits. For years, Merrill had provided customers
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2001 Vault Inc.
with cash management accounts (CMA), a combination of brokerage accounts and interest-bearing checking accounts. Under the companys proposed plans, any customer funds in a brokerage account that are not invested in securities will be swept into accounts insured by the Federal Deposit Insurance Corporation (FDIC). Previously, these funds were funneled into a money-market fund that was not FDICinsured. Merrill owns two banks that will hold the accounts and lend the money out. (This is the standard practice with deposits at commercial banks.) Merrill also plans to offer higher rates on deposits than other commercial banks. This move, made possible by the Financial Services Modernization Act, took some of the risk out of investing, but was met with skepticism by the FDIC. The government agency was worried that if other banks followed suit, it would overtax the system by creating too much insured money. In the worst-case scenario (a complete market collapse similar to the one in 1929), the FDIC would have insufficient funds to pay off all insured accounts. The firm further embraced commercial banking activities in April 2000, when it announced a billion-dollar partnership with London-based HSBC Holdings to form an online financial services company for individuals outside the U.S. The alliance will offer investors integrated banking and brokerage services.
Cutting back
With approximately 72,000 employees (as of the end of 2000), Merrill is the largest of the bulge-bracket investment banks. While size has its advantages, Merrill is also a prime target for cutbacks when the industry struggles. In 1998, when the industry struggled after the near-collapse of hedge fund Long Term Capital Management and the Russian financial crisis, Merrill laid off 3,400 employees, or approximately 6 percent of its staff. The firm was later criticized for the wide-scale cutbacks as the industry quickly rebounded and some said Merrill wasnt equipped to handle the upturn. Merrill was slightly more cautious, then, in early 2001. Responding to reduced profits, Merrill announced it was cutting 1,000 jobs in April, including 200 investment bankers.
GETTING HIRED
Resumes submitted to Merrill through college career centers and direct mail are sorted by Merrills recruiting personnel; all qualified applicants are invited for interviews. The first round of interviews is held on the applicants campus, and those
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candidates who make the cut are invited to further rounds at the New York office. Merrill Lynch often gives preference to applicants who have worked as summer associates or analysts at the firm. Who you know is important. Merrill Lynch Investment Banking has a target roster of schools numbering in the dozens, reports one insider. If youre not from one of these schools, and dont happen to know a big wig, getting attention from recruiting is tough. But big wigs arent the only ones with influence, continues that contact. Resume books with hundreds of resumes (i.e., Penn has over 400) are handed out to analysts to comb through. Our selections (mostly people we know with a few others were in some other way impressed by) are then given first-round interviews. From there its all about who you meet and how you do. Insiders also report that Merrills interviews (even the initial oncampus screening interviews) can last a lot longer than the typical half-hour interviews that other firms conduct. Summer hires who receive offers are generally required to respond within 30 days.
No more elephants
Gigantic Merrill is known for having many subcultures, as insiders say that Merrills culture varies from department to department. According to one analyst, the investment-banking division is more laid-back than at most bulge-bracket investment banks, primarily because investment banking at Merrill is relatively new. Says that contact, Historically, you must remember, Merrill was a huge lumbering elephant because that was the culture in the dominant retail side of business. However, things are changing as Merrill becomes one of the top three investment banks, and were becoming more like Goldman or Morgan Stanley day by day. One contact adds, Were different from other places. The people are nicer than at other banks. Another source says Merrill has a Midwestern corporate culture bland, collegial, inoffensive; nobody swears in public. One insider notes, As with any big company, there will be people who are nasty for no particular reason. But there are fewer at Merrill. Merrill Lynch is probably the leading firm on Wall Street that is attempting to improve its diversity, according to Tony Chappelle, publisher of Securities Pro, a New York newsletter for African-Americans in the financial industry. Most recent hires say that they are truly impressed by Merrills efforts to
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diversify. However, one analyst says, Although the company may be making a real effort to get non-whites, you dont see too many of them around yet.
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discounts. Some insiders say they get sick of the food, but a lot of the associates love it. Those who work on Saturday or Sundays get three meals covered. Other perks include free travel and accommodations when you travel with clients. When you travel, one analyst notes, you have it pretty good because you use airlines and hotels that must be up to the standard of your clients. The dress code, as at most bulge-bracket firms, is now all business casual.
Living large
The lifestyle at Merrill certainly doesnt help employees stay in shape. One New York analyst complains: I worked so many hours at the office that I gained a substantial amount of weight. I got fat, to avoid euphemisms. The problem is, you spend so much time sitting at your desk, with no time to exercise, and youre always eating a lot at meetings at night or ordering food from different restaurants. Theres no company gym for easy, during-the-day access to weights or jogging. There is an executive gym in the building for those high up on the ladder; as for the hardworking junior employees, some associates go to the nearby Marriott, some go to another club.
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Were different from other places. The people are nicer than at other banks.
Merrill Lynch insider
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V A U L T
PRESTIGE RANKING
270 Park Avenue New York, NY 10017 Phone: (212) 270-6000 Fax: (212) 270-2613 www.jpmorganchase.com
DEPARTMENTS
Asset Management Commercial Banking Consumer Banking Credit Cards Diversified Consumer Lending Global Markets Investment Banking Private Banking Private Equity Treasury and Securities Services
DOWNERS
Reputation not established Uncertain culture after merger
EMPLOYMENT CONTACT
Human Resources J.P. Morgan Chase & Co. 270 Park Avenue New York, NY 10017
THE STATS
President and CEO: William Harrison Employer Type: Public Company Stock Symbol: JPM (NYSE) 2000 Revenues: $32 billion 2000 Net Income: $5.7 billion No. of Employees: 95,000 No. of Offices: 66
KEY COMPETITORS
Bank of America Citigroup Credit Suisse First Boston Deutsche Bank
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Coming together
J.P. Morgan Chase & Co. (known informally as Morgan Chase) is the product of a merger between two diversified financial institutions, J.P. Morgan and Chase Manhattan. Morgan Chase provides the full slate of investment banking services, as well as commercial banking services such as accepting deposits and issuing loans to consumers and businesses. The merger, which was announced in September 2000 and completed on the first day of 2001, was valued at approximately $38.6 billion. The combined firm instantly became the third-largest financial institution (in terms of assets) in the U.S. (behind Citigroup and Bank of America). The combination resulted in approximately 5,000 layoffs. William Harrison, formerly chairman at Chase Manhattan, was named Morgan Chases president and CEO; J.P. Morgans CEO Douglas Warner was appointed chairman. The two are co-chairing the companys executive committee.
Pistols at dawn
Chase Manhattans history can be traced back to 1799, when The Manhattan Company was chartered to supply water to New York City. Included in the company charter was a provision that capital not needed for the water-supply business could be diverted toward the founding of a bank. Thus, the Bank of The Manhattan Company was formed. Historians are unclear whether Aaron Burr, one of the backers of The Manhattan Companys water business, intentionally inserted the clause so a bank rivaling Alexander Hamiltons could be formed. The two Founding Fathers had a long-running dispute, which came to an abrupt end in 1804 when Burr killed Hamilton in a duel. (The pistols, by the way, have been preserved as part of Chases historical collection.) The bank continued to grow, surviving the Great Depression (with a little assistance from the Rockefeller family) and two World Wars. In 1955 the Bank of The Manhattan Company merged with Chase National, a bank founded in 1877 by currency expert John Thompson and named after former Secretary of the Treasury Salmon Chase. The Chase Manhattan Bank, as it became known, went seeking another commercial merger partner in the mid-1990s, settling on Chemical Bank, then the third-largest bank in the U.S. following its 1992 merger with Manufacturers
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Hanover. The 1996 coupling made Chase Manhattan one of the largest banks in the United States Chase continued its acquisition strategy in late 1999 and early 2000, starting with its purchase of Hambrecht & Quist, a San Francisco-based boutique specializing in the tech sector. The December 1999 purchase cost Chase $1.35 billion. The banks next target was Robert Flemings Holdings, a London-based bank Chase purchased in April 2000 for $7.9 billion, a price many considered too high. However, the purchase added some needed underwriting muscle, especially in Asia. In August 2000, the firm finalized its purchase of The Beacon Group, a New York boutique founded by former Goldman Sachs partner Geoffrey Boisi, who joined the firm as its lead investment banker.
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Unholy alliance?
Management, shareholders and industry pundits have hailed the merger as beneficial to both companies. They say Chase will have access to an established I-banking business and expand its reach in Europe, while J.P. Morgan gains a foothold in the consumer market and greater exposure in Asia. But many employees are not sharing their joy. Since the announcement, there have been rumblings of culture clashes between the two companies. Some question how Morgans traditionally blueblooded, independent environment will fare now that its part of a more laid-back company comprised of workers from a hodgepodge of prior mergers. The most potentially threatening problem may be the perception among some Morgan people that Chase is a third-rate institution whose employees lack both intelligence and ambition. This stems mostly from the fact that Chase is not considered to be in the top echelon of global financial services management companies. During an address to students at Columbia University, president and CEO William Harrison, acknowledged some anxiety about the differing cultures. Im a little bit concerned about that because Morgan is an insular company, he said. But competence overcomes a lot of cultural differences, if there are any. Then there is the fear that accompanies any merger about who will stay and whose jobs will be eliminated. Harrison and Warner attempted to ease some of the tension and speculation by immediately announcing 50 senior executive positions when the merger was announced. The slots for 200 more executive positions were announced shortly thereafter. Increased merger costs and a less than spectacular fourth quarter in 2000 for both companies may have contributed to the employee insecurities and definitely had a negative impact on both stocks. The companies announced in December 2000 that the cost of the merger had increased by $4 million, bringing the total cost to $3.2 billion. Another sore point: Chase, as the acquiring company, has control in terms of board seats (eight from Chases former board to five from Morgan), but some Chase employees seem mystified about Morgan preceding Chase in the new corporate name. Morgan employees point to the name as yet another sign that Chase couldnt go it alone and bought Morgan to enhance its prestige.
The upside
With so many previous acquisitions under its belt, the merger game is obviously old hat for Chase. If Chase can face head on and find some positive way of embracing the cultural differences between it and J.P. Morgan, the transition may be less painful than many anticipate. Peter Eavis, a senior columnist for TheStreet.com, notes that
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by combining five of Morgans business units with Chases investment banking unit, the merged company is likely to see an immediate increase in the contribution to overall profits and revenues from investment banking. One good sign for the merger: GE tapped Chases lead investment banker, Geoffrey Boisi, to advise its planned acquisition of Honeywell. Although the completion of the deal is in question due to regulatory roadblocks, the selection of Chase still has given pause to many who speculated that Chase didnt have the chops to be a major player in M&A, even with Morgan on board.
GETTING HIRED
The process
At least for the time being, hiring of new associates and analysts is being conducted separately by Chase and Morgan staffers in much the same way as prior to the merger. Each company recruits at a number of the top-tier schools such as Harvard, Wharton, Columbia and UCLA, but candidates from other schools are considered. Be prepared to discuss a range of business-related topics and display your knowledge of accounting or finance. For both companies, at least two rounds of interviews are required. The final round is typically conducted in a Super Saturday format, with candidates spending the day at the firm and interviewing with a number of managers at least four to six people. As daunting as the day sounds, it is the final hurdle to landing an offer. While some interviewers will ask complex questions intended to measure an individuals quantitative skills, others may simply engage in a few minutes of small talk for the sake of gathering how well an individual will fit into the organization. After offers are extended, candidates are often invited to a sell day, during which they meet more managers and learn more about the firm before deciding to accept the offer. Undergrads applying to Chase need at least a 3.0 cumulative GPA and, according to the firm, strong quantitative, analytical, and computer skills and excellent oral and written communication skills. The same basic requirements go for MBAs, but theres no minimum GPA requirement. The first step is an on-campus interview. If you pass muster there, its on to Super Saturday. Undergrads have a dinner with analysts the night before, and on Saturday meet with four bankers/managers. The MBA process is pretty much the same, excluding the dinner. For final rounds [for MBAs] there are five two-on-one interviews and all must agree to hire a particular
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candidate, reports one source. Analyst candidates can expect a Super Saturday with four one-on-one interviews. In general, Chase bankers note that interviewers are trying to get a feel for who you are. Says one source, It is really about your personality and vision, which should be clear. Typically, offers are extended the Monday or Tuesday following Super Saturday. Morgans global markets, investment banking, asset management services and consulting divisions recruit at about 50 undergraduate and business schools. The firm typically makes a presentation giving a company-wide overview of Morgans business, and later makes division-specific presentations in association with school clubs. Some of these are social events such as cocktail parties or lunches, and lucky schools like UCLA get beer blasts. Morgan also hosts dinners at the major business schools. The goal is to get to know you, explains one recruiter. First interviews tend to be lengthy and require speaking with several Morgan employees, including VPs, MDs and associates. These are generally conducted on campus unless the candidate applied online and isnt a student at one of the schools where Morgan recruits. These interviews are conducted by phone. Second-round interviews often follow the familiar Super Saturday format. A candidate may interview with anywhere from five to eight people during the second round. A research analyst who did not attend one of the firms target schools says he interviewed with managers from three different industry groups. This source says the questions he was asked ranged from the standard accounting and finance questions to Why J.P. Morgan? Why research? Depending on the position, offers are extended anywhere from a few days to a month after the second interview.
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cohesive unit. Rumors persist that loyalists from both firms are eyeing each other with suspicion, and defections on all levels since the merger was announced have only fueled the talk. But this is not the picture that some insiders paint, especially among those in the lower ranks. I would say that the job is not perfect, but management is committed to making the analyst experience worthwhile. People are always willing to help their coworkers, the lifestyle is great and the pay is quite good, an analyst tells us. A coworker agrees that working here is fulfilling, and even though dealing with the bureaucracy isnt, things are improving. Furthermore, little time is spent on internal or dead-end projects, freeing analysts and associates up to learn more about developing deals. One analyst says hes lucky to work with someone who has delegated responsibility downward, so I can get my hands on as much as I feel comfortable with and sometimes more. Others caution that not all the bosses at Morgan Chase will hand over the reins of responsibility so freely. One insider moans, Analysts are first and foremost data retrievers. However, this contact deems it a necessary function because it forces the analyst to understand the business.
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V A U L T
PRESTIGE RANKING
Fidelity Investments
UPPERS
Numerous and flexible maternity leave options Profit sharing Tuition reimbursement
82 Devonshire Street Boston, MA 02109-3614 Phone: (800) 544-6666 Fax: (617) 476-6150 www.fidelity.com
DEPARTMENTS
Brokerage Corporate Systems and Processing Employer Services Financial Intermediary Services Management and Research Strategic Investments
DOWNERS
Lack of teamwork in equity division Little at-work (or after-work) socialization
EMPLOYMENT CONTACT
Fidelity Investments Resume Central 82 Devonshire Street, Z1F Boston, MA 02109
THE STATS
Chairman and CEO: Edward C. Ned Johnson III Employer Type: Private Company No. of Employees: 33,000
KEY COMPETITORS
Charles Schwab Janus Capital T. Rowe Price Vanguard Group
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$109.8 billion in assets and held positions in 370 stocks) its almost impossible for the fund to beat the market by a significant margin. In fact, many of the companys mutual funds have the same problem. According to Forbes, this represents a shift in Fidelitys strength. Whereas the companys funds were once known for stellar performance for example, during superstar managers Peter Lynchs 13-year tenure as Magellans manager the fund averaged 29 percent returns Fidelity has now shifted to a service-oriented business. The company seems to be in an expansion phase. Robert Reynolds, Fidelitys chief operating officer, told BusinessWeek that the company plans to increase its technology budget by 20 percent over the course of 2001 to $2.3 billion. Internet spending will rise 30 percent to $350 million, and the company will spend the same amount on telephone support staff. The increased spending will lead to more jobs; the company expects to employ 36,000 people by the end of 2001.
Dont bet on it
Fidelity employees would be wise to avoid office pools. The firm fired nine employees and disciplined 16 others in November 1997 for using company e-mail to participate in betting pools. According to The Wall Street Journal, the companys senior vice president of administration, David Weinstein, sent a company-wide email after the incident reminding employees of the companys policy on e-mail and Internet usage. The firm said that no customer accounts or funds were affected.
GETTING HIRED
While Fidelity does not specify educational requirements, it does look for entrepreneurial candidates who can succeed in a fast-paced environment. Most new hires have some financial or business background, but there are also opportunities for those with technology and computer expertise. Fidelitys employment web page, jobs.fidelity.com, discusses the different departments within the company and the skills that they require. The web page also allows applicants to search a job database, build their resumes online and submit resumes via e-mail. Fidelity prefers MBAs for positions such as quantitative equity analysts, regional service representatives, product/service consultants, investment managers, quantitative analysts and performance analysts. For MBAs applying for analyst positions, having a love for the stock market seems to be the most important
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qualification. If you are sending in your resume, insiders recommend attaching a stock report. They love that, says one insider. It will definitely increase your chances of getting an interview.
Flexible culture
Fidelitys corporate culture wins high marks from employees for being enlightened because of its high degree of tolerance in dealing with its people. According to one recent summer associate, Fidelity understands that workers cant always be perfect. They dont have a problem with people being grouchy. Unlike many other companies in the industry, Fidelity assigns a great deal of autonomy, both personally and professionally to its employees.
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A one-man show
Its impossible to talk of Fidelity without mentioning Ned Johnson somewhere, insiders assert. Ultimately, this place is an autocracy, and one man is ruler Ned Johnson, one longtime employee comments, adding ruefully, Ned Johnson has the power to make decisions with no checks on that power. Hes a smart guy, but occasionally he makes a very non-optimal decision. And we have to bear the consequences of his occasional wackiness. Another agrees: This is Neds candy store. He was given this firm by his father. Hell come up with the quirkiest, strangest idea in the middle of the night, and everyone has to deal with it. Its very frustrating.
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Fidelity understands that workers cant always be perfect. They dont have a problem with people being grouchy.
Fidelity Investments insider
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V A U L T
PRESTIGE RANKING
388 Greenwich Street New York, NY 10013 Phone: (212) 816-6000 Fax: (212) 793-9086 www.salomonsmithbarney.com
DOWNERS DEPARTMENTS
Asset Management Equities Fixed Income Global Relationship Bank/Foreign Exchange Investment Banking Public Finance Research Sales and Trading Bureaucracy Long hours
EMPLOYMENT CONTACT
Investment Banking Recruiting Caitlin McLaughlin Director, MBA Recruiting Kate Schwab Assistant Vice President, Undergraduate Recruiting Sales and Trading Recruiting Susan Glendon Director, MBA, Undergraduate Recruiting Equity Research Recruiting Debbie Bertan Vice President, Recruiting Salomon Smith Barney 388 Greenwich Street New York, NY 10013
THE STATS
Chairman and CEO: Michael Carpenter Employer Type: Subsidiary of Citigroup 2000 Revenues: $23.4 billion 2000 Net Income: $2.8 billion No. of Employees: 35,000 No. of Offices: 500+
KEY COMPETITORS
Credit Suisse First Boston Goldman Sachs J.P. Morgan Chase Merrill Lynch Morgan Stanley
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Merger mania
Salomon Smith Barney, now the investment-banking arm of Citigroup, has a long history of mergers. The firm traces its roots back to 1873, when trader Charles Barney founded a securities firm in Philadelphia. In 1892 Edward Smith started his brokerage business in the City of Brotherly Love. The two firms eventually combined to form Smith Barney. Smith Barney was acquired by Primerica, a financial services firm run by Sanford Sandy Weill, in 1987. Primerica was sold to Hartford-based insurance giant Travelers Group in 1993. In December 1997, Travelers bought Salomon Brothers for more than $9 billion, and merged Salomon Brothers with Smith Barney to create Salomon Smith Barney. Travelers then merged with Citicorp, the New York-based commercial bank, creating the merged entity Citigroup in October 1998. As a full-service investment bank, SSB offers sales, research and trading for individuals and institutions; underwriting, advisory and specialty financing for corporations and government entities; mutual fund services; and futures and asset management. SSB is also the second-largest retail brokerage firm in the U.S. The firm employs an army of nearly 11,000 brokers who manage more than 6.2 million client accounts, representing over $816 billion in client assets.
Go to the source
The merger faced another hurdle after board approval. The Glass-Steagall Act, the Depression-era law prohibiting a mix of financial services businesses, threatened to cancel the deal. The companies were able to buy some time under the Bank Holding Company Act of 1956, a rule that allowed financial services partnerships for five years, but Weill and Reed knew that if the merger was to survive, they had to act to
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repeal the Glass-Steagall Act. (Such a move had been discussed in both political and business circles, but no significant progress had been made.) Weill and Reed took the initiative in affecting change, phoning President Bill Clinton the night before the merger announcement to enlist his help in repealing Glass-Steagall. Eventually, their efforts proved successful the Financial Services Modernization Act of 1999 has removed the obstacles to full-service financial institutions. (According to Crains New York Business, Weill has the pen used by President Clinton to sign the Financial Services Modernization Act into law displayed in his office.) The cooperation between Weill and Reed didnt last long. Reed retired in February 2000, reportedly after a power struggle with Weill. Initial results of the Citicorp/Travelers merger were excellent and analysts raved about the companys future. Euromoney named Salomon Smith Barney Most Improved Investment Bank in July 1999. In October 1999, SSB was able to lure former Treasury Secretary Robert Rubin to the firm, making him chair of the executive committee and part of the chairmans office. After his appointment, rumors surfaced that Rubin was under consideration for the CEO post at Citigroup and chairman of the Federal Reserve. Those rumors have been extinguished as Rubin has denied interest in becoming the companys CEO and Alan Greenspan was reappointed Fed chairman.
Inroads in Europe
After SSB secured its place in the U.S. bulge bracket, the firm turned its attention to expansion in Europe. In February 2000, SSB announced it would acquire the investment banking operations of Schroders plc, a London-based firm that was 50 percent family-owned. Weill told The New York Times that the acquisition, valued at $2.2 billion, would put his firm two or three years ahead of where we would have been in investment banking in Europe. In Europe, the firm is known as Schroder Salomon Smith Barney. Schroders U.S. operation, known as Schroder & Co., was folded into Salomon Smith Barney, and the firm laid off Schroders employees who overlapped with existing I-banking personnel. The Schroders family retained the asset management and private banking units. The merger seems to have provided an immediate boost to SSBs European profile. Investment Dealers Digest named the firm Bank of the Year for 2000, partly because of the Schroders acquisition. Part of the successful integration of Schroders may be due to the fact that there was very little bloodletting on the other side of the Atlantic. We retained all of the senior management team, SSB CEO Michael Carpenter told IDD. IDD also honored co-head of global investment banking Michael Klein as
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Banker of the Year for 2000. International Financing Review rounded out SSBs trophy case, naming it Bank of the Year and Loan House of the Year for 2000.
Debt expertise
Salomon Smith Barney is a perennial leader in underwriting fixed income offerings and providing liquidity in those markets. According to TFSD, the firm was tops in U.S. investment-grade debt underwriting, managing 432 deals worth $68.1 billion. SSB was second in high-yield offerings in 2000, underwriting 51 deals worth $6.9 billion. Solly also finished first in U.S. asset-backed debt, raising $51.2 billion in 231 deals. One client of note is Rite Aid; along with J.P. Morgan, Salomon Smith Barney helped Rite Aid restructure $550 million in notes so the drug chain could avoid bankruptcy. The firms fixed-income division scored a coup similar in stature to the AOL deal when they managed the sale of $500 million in global bonds for Dow Chemical in February 2001. Dow originally hired Solly rivals Goldman Sachs and Deutsche Banc Alex. Brown to do the offering but the firms couldnt sell the notes at the price Dow wanted. Though Salomon Smith Barneys equity underwriting practice doesnt match its debt figures, the company is still a top-10 underwriter. SSB ranked fifth among underwriters of all common stock in 2000, lead managing 76 issues with total
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proceeds of $19.1 billion. In the lucrative IPO underwriting business, SSB ranked fourth among domestic lead managers, up from ninth the year before. The firm underwrote 32 deals in 2000 worth $8.9 billion. Recent deals of note include, John Hancock Financial Services $2.0 billion January 2000 IPO, the massive $10.6 billion April 2000 AT&T Wireless IPO and Mosantos $700 million IPO in October 2000.
New blood
The firm also made some key personnel moves in 2000. In September, the firm snagged a director from Donaldson, Lufkin Jenrette and another from J.P. Morgan for its energy group. This was quickly followed by the addition of four executives to the equity research team in London and two executives to the technology M&A group. The biggest coup came in November when the firm grabbed another eight DLJ bankers (right after its merger with Credit Suisse First Boston), including Hal Ritch, who joined SSB as global co-head of M&A. That wasnt the only November surprise DLJ received from Solly: Six people left Donaldsons Dallas branch to run Salomons newly established I-banking office.
A little trouble
Large corporations are vulnerable to public relations disasters, and Salomon Smith Barney is certainly no exception. In December 1999, the treasurers office of San Bernardino County, California accused the firm of yield burning. (Yield burning is the practice of overcharging for U.S. Treasury securities.) Dick Larsen, the current San Bernardino County treasurer, claimed Salomon Smith Barney bilked his predecessor, Tom ODonnell, out of $308,000 in the countys 1997-1998 fiscal year. A few months after the San Bernardino accusations became public, Salomon Smith Barney became embroiled in a conflict-of-interest brouhaha. In March 2000, Dime, a New York-based savings and loan, sued Salomon Smith Barney to prevent the investment bank from representing North Fork, another New York savings and loan, in an attempted hostile takeover of Dime. According to the suit, Salomon Smith Barney had signed a confidentiality agreement with Dime when it represented the commercial bank in a 1997 transaction. A federal judge agreed with Dime in April 2000, barring Salomon from further participation in the deal. Salomon Smith Barney said it would appeal the decision, which will cost the firm $8.4 million in fees.
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GETTING HIRED
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Happy campers
Overall, employees at Solly agree that the firm has a good reputation and that a stint there can do good things for your career. Furthermore, many find the atmosphere refreshing in that its free of the office politics typically associated with the industry. The people are smart, professional and for the most part fun to be with, says one banker. This contact goes on to add, The junior bankers tend to get along well. There isnt a strong sense of competition among them, but rather a sense of teamwork. Another source says one of the best things about the company is working with smart people who want to get things done and who constantly push you to do better. Training is another area where SSB gets high marks. One worker describes the firms training program as the longest program on The Street; very comprehensive. Says another: The 10-week training program for associates is known to be the best on Wall Street. However, this same contact says once the official training ends, the variety of skills learned on the job depend largely on whose group you end up in. In addition to the 10-week program, seminars and training sessions are conducted on a fairly regular basis.
Out of flux?
Much of the sense of instability created by the Travelers/Citibank merger and Schroders acquisition seems to have dissipated. In fact, one respondent notes that now that Citi has integrated its major acquisitions, its fun watching our competitors try to merge to get what we have. Another insider says, Over the past four years, our firm has integrated no less than six major acquisitions. Although this employee acknowledges that the continuous merger activity has caused its share of turnover, he believes we are now reaping the benefits of the integration process meaning the dust has long since settled and I expect to be working with my current colleagues for many years to come.
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a very good job of responding to professionals concerns about salary and total compensation, says one source. Furthermore, senior management has been very forthright in their discussions about the issues and the process. SSB pays for performance, echoes another insider. Those employees that are highly ranked are consistently paid well above other comparable firms. Additionally, insiders report that if you help bag prize recruits theres a little something extra in your paycheck. There is a portion of our bonus that is rumored to be based on our involvement with recruiting, says one contact.
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V A U L T
PRESTIGE RANKING
Putnam Investments
UPPERS
Autonomous work environment Long-standing reputation
One Post Office Square Boston, MA 02109 Phone: (617) 760-8900 Fax: (617) 348-8925 www.putnaminv.com
DOWNERS DEPARTMENTS
Corporate Development Corporate Support Investment Management Investor Services Mutual Funds Decline in firm assets Stuffy, political
EMPLOYMENT CONTACT
Putnam Investments Resume Processing Center 7 Shattuck Road, (C-36-H) Andover, MA 01810 Fax: (617) 760-0613 [email protected]
THE STATS
President and CEO: Lawrence J. Lasser Employer Type: Subsidiary of Marsh & McLennan 2000 Revenues: $3.2 billion 2000 Operating Income: $1 billion No. of Employees: 6,000+ No. of Offices: 5
KEY COMPETITORS
Alliance Capital Fidelity Investments Franklin Resources
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Illustrious beginnings
Putnam began managing money in the 19th century when clipper ship captains hired trustees to handle their financial affairs while they were away at sea. One of those trustees, Justice Samuel Putnam, wrote the following credo for professional investment management: Those with the responsibility to invest money for others should act with prudence, discretion, intelligence and regard for the safety of capital as well as for income. Known as the prudent man rule, this ideology has since become the industry standard for responsible money management, giving Putnam Investments bragging rights for its creation. In 1937 Justice Putnams great-great grandson founded Putnam with The George Putnam Fund of Boston. This balanced mutual fund, a flexible mix of stocks and bonds, marked the beginning of Putnams strength in both those key areas of the investment business. In 2000 Putnam racked up new sales of $14.6 billion through August, second only to Janus Capital over that time frame. Putnams head, Larry Lasser, attributes some of the firms success to the strength of its individual funds. Most of our competitors have one fund thats doing almost all their business, 50 or 60 percent, he told The Boston Globe. Comparatively, Lasser said, 11 of Putnams funds had brought in at least $1 billion each in new business in 2000. That surge in performance did not hold up throughout the year, however. According to Barrons, the firm, which had $422 billion in assets in March 2000, saw that figure tumble to $343 billion by February 2001. As a result, the company laid off 256 employees, including five fund managers, in April 2001. The April reduction of approximately 4 percent of Putnams staff came sharply on the heels of an earlier round in March 2001; that layoff affected 21 employees. On the upside, The Boston
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Globe reported that Putnam has not changed its plans to hire about 20 MBAs sometime in 2001. Despite the huge losses, the company elected to give Lasser a $33 million bonus for 2000.
GETTING HIRED
Minimum qualifications
Putnam looks for people with strong academic backgrounds and utilizes a rigorous screening process. Industry experience in the form of prior jobs or internships is preferred. To find out about open positions, visit the firms web site, www.putnaminv.com, which allows job seekers to search for positions by location (in Massachusetts) and function. Candidates can send resumes via fax, e-mail or regular mail to the firm. Putnam does not accept resumes e-mailed as attachments (they should be sent in text form). Dont expect an easy jaunt into employment at Putnam. Says one insider, It is very competitive, but if you make it through our screening process it can be a very rewarding place to work. Applicants are gained mainly through referrals within the company but are also recruited from six or seven carefully selected schools. This doesnt mean that you cant get a job if you dont attend one of them, but it certainly becomes harder explains one contact. An applicant can expect at least two interviews before being hired.
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Inside info
Putnam strives to provide employees with an autonomous, yet team-based environment in which to work. Contacts describe the approach as one that fosters collaboration, but affords analysts and managers the opportunity to make their own decisions. According to one investment analyst, [Managers] let you do your job and they listen if not agree with your opinions. Additionally, insiders say the firms breadth of financial instruments gives investment managers a wide assortment of products through which they can hone their investment skills. Like on Wall Street, analysts can expect to work long hours 10-12 hours a day is not unusual. Although the firm has been described as a bit political and stuffy, as an investment management firm, Putnam lacks the frenetic pace of investment banking.
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V A U L T
PRESTIGE RANKING
Janus Capital
UPPERS
Comfortable offices Relaxed culture
100 Filmore Street #300 Denver, CO 80206 Phone: (303) 333-3863 Fax: (303) 321-2125 www.janus.com
DOWNERS
History of scandal Layoffs due to poor market
DEPARTMENTS
Asset Management Marketing Research Sales
EMPLOYMENT CONTACT
Human Resources 100 Filmore Street #300 Denver, CO 80206
THE STATS
Chairman, President and CEO: Thomas Bailey Employer Type: Subsidiary of Stilwell Financial No. of Employees: 2,470 No. of Offices: 6
KEY COMPETITORS
Fidelity Investments Franklin Resources Putnam Investments
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THE SCOOP
New beginnings
Janus Capital was founded in 1969 by Tom Bailey in Denver. The company started out in a one-room office in the Mile High City but has grown into one of the largest mutual funds in the world with $265 billion under assets and 2,470 employees in early 2001. Janus is a unit of Stilwell Financial, a Kansas City, Mo.-based holding company that controls several money managers. Bailey named his firm after Janus, the two-faced Roman god of new beginnings. His choice is interesting in that the company represented a new beginning of sorts for him. After getting his MBA from the University of Western Ontario in the late 1960s, Bailey worked odd jobs near Aspen, Colo., to support his skiing habit. Bailey quickly realized his MBA was going to waste on the slopes and took a job in sales in a Denver-area finance firm. After a short stint there, Bailey founded Janus. Richard Goldstein, one of Baileys early partners, fondly recalled the early days to Fortune: Bailey had a pair of Gucci loafers, a Porsche and $2,000 to his name. Janus was basically bankrupt. The business took off in the early 1970s when the original Janus Fund converted to a no-load fund (i.e., no sales charge).
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Cashing out
By 1984 Janus had grown so large that Bailey was looking to sell both to cash out and to relieve the pressure of managing such a large and growing company. Janus sold 80 percent of the company for $18 million to Kansas City Southern Industries (KCSI), a railroad company that had some financial services holdings. Bailey retained approximately 17 percent of the company. Though KCSI might seem like a strange fit for Janus, the pairing was favorable to the company. Janus management retained a great deal of autonomy, making the deal agreeable to Bailey and his partners. Some insiders felt that Bailey enjoyed his newfound freedom too much. According to an article published by Fortune in January 2001, Bailey began handing off many of his management duties to underlings and spending more time away from the office. Furthermore, Fortune charged that Bailey stepped up a drug habit that hed maintained for years. He was into marijuana and cocaine, ex-partner Goldstein not-so-fondly recalled to Fortune. When Bailey did work, he was often out of bounds. Bailey allegedly asked a female job applicant inappropriate questions about her personal status and made an insensitive remark about Adolph Hitler during an employee orientation. (Bailey later apologized.) Janus declined to comment on the magazines coverage of Baileys nightlife. The firm continued to grow in the early 1990s, mostly under the management of fund managers Jim Craig and Tom Marsico and chief operating officer Jack Thompson. According to Fortune, some executives, including Marsico, continued to feel that Baileys leadership was lacking. Marsico reportedly urged Bailey in 1995 to instill a better work ethic at Janus, especially among younger managers. Bailey complied by arranging for monthly meetings of company shareholders. The briefings usually ended in bickering and became known as viper meetings at Janus. When Thompson, the long-time COO, resigned later in 1995, Bailey handed more control to the young managers, which only served to make the meetings worse. Marsico, after a 1997 attempt to take over as CEO was rejected, left the firm to strike out on his own. Marsicos departure may have been a blessing of sorts. His call for discipline among the companys management was, by most accounts, at odds with a culture the company likes to call collegial. An unnamed industry source told Mutual Funds magazine that Marsico was overbearing and that his treatment of junior fund managers was stifling. The source further opined to Mutual Funds that Marsico leaving freed these people up to think more freely; they became emboldened.
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2001 Vault Inc.
Company insiders (fund managers especially) now speak of daily roundtables where ideas are more easily expressed than under the viper-room format.
Spin room
In 1999 Janus managers began actively seeking separation from the companys railroad parent. KCSI obliged by spinning Janus off along with KCSIs other financial units. Janus management lobbied hard against the plan and managed to delay it for several months. KSCI eventually prevailed and the company became part of Stilwell Financial in July 2000. (The company was named after Arthur Stilwell, Kansas City Southerns founder.) The company has had its post-spinoff struggles. Janus funds boomed in 1998 and 1999 as the company aggressively snapped up technology stocks. When those stocks flopped in 2000, the companys funds slumped as well, and investors fled the firm. A month later Jim Craig, who had been elevated to chief investment officer, left Janus. His departure sparked speculation that the firm would start hemorrhaging managers. That speculation accelerated in early 2001 when Bailey and other top employees were allowed to sell their shares of Janus stock to Stilwell. Bailey sold half his stake in Janus for $600 million in January while several portfolio managers filed to sell shares in February 2001. Though the firm insisted the employees were merely trying to cash out some of their holdings, some investors were nervous. Im not sure you want to invest your money with a fund organization that is displaying such uncertainty, Ric Edelman, a financial adviser based in Fairfax, Va., told The Wall Street Journal in February 2001. Stilwell has also been beset by rumors of an impending takeover. When the companys stock slid in December 2000 (shares were down 40 percent from the September high), some speculated that a large financial institution such as American International Group might buy Stilwell and, with it, Janus. In order to boost the flagging shares Janus cut 468 workers in February 2001, then added 45 more layoffs in April 2001. The cuts, approximately 16 percent of the companys workforce, were mainly in the operations division. The company said that a boon in new accounts opened over the Internet rather than over the phone made the positions expendable.
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GETTING HIRED
Janus maintains an employment page on its web site (www.janus.com) where potential employees can search for positions and apply online. The firm only recruits from the top schools, according to one insider. Expect four interviews, including a meeting with human resources and managers and supervisors from your prospective department.
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V A U L T
PRESTIGE RANKING
10 Lazard
UPPERS
International prestige Top-notch pay
30 Rockefeller Plaza New York, NY 10020 Phone: (212) 632-2000 Fax: (212) 632-6060 www.lazard.com
DOWNERS DEPARTMENTS
Asset Management Capital Markets Corporate Advisory Services Principal Investing Killer hours Little support staff
EMPLOYMENT CONTACT
Corporate Advisory Services Basil Bliss Lazard 30 Rockefeller Plaza New York, NY 10020 Capital Markets L. Gregory Rice Managing Director Equities F. Harlan Batrus Managing Director Bonds John Rohs Managing Director Research Michael Weinstock Managing Director High Yield Lazard 30 Rockefeller Plaza New York, NY 10020 Asset Management Amy DeAngelo Lazard Asset Management 30 Rockefeller Plaza New York, NY 10020
THE STATS
Chairman: Michel David-Weill CEO: William Loomis Employer Type: Private Company No. of Offices: 22
KEY COMPETITORS
Allen & Company Dresdner Kleinwort Wasserstein Goldman Sachs Morgan Stanley
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THE SCOOP
A classic
Lazard might be called the classic advisory boutique, specializing primarily in providing mergers and acquisitions advice. The firm also has a small underwriting and trading practice and a respectable asset management arm with approximately $70 billion under management. Despite the firms specialization, Lazards profits and influence are hardly limited. Quite the opposite, in fact: Lazard is known for a superstar culture. Its elite, well-connected bankers are known as the trusted advisers to the princes of business. The firm touts itself as the only private partnership in global investment banking.
French bred
The Lazard familys U.S. business ventures can be traced back to 1848, when the clan immigrated to the United States from France and opened a dry goods enterprise in New Orleans. In 1849 the family moved to San Francisco after a fire destroyed the New Orleans operation. The Lazards arrived just in time for the gold rush and the resulting economic boom caused by arriving prospectors. The company began banking operations in Paris in 1852, adding offices in London in 1877 and New York in 1880. Much of the firms growth is attributed to Alexandre Weill, a cousin of the Lazards who opened the New York office. The company has remained in the hands of the Weill family for more than 120 years. Michel David-Weill (the family hyphenated the family name to David-Weill in the 1920s to add aristocratic luster) took the helm of the company in 1977.
Mr. Congeniality
Michel David-Weill is rumored to be a tyrant. Forbes reported in September 2000 that hes been nicknamed the Sun King after Louis XIV, a French king whose rule lasted 72 years. Forbes went further, charging that David-Weill is disliked among Lazards partners and minority shareholders. Lazards monarch allegedly angered colleagues in a 1998 meeting by pointing at selected partners and declaring, I dont need you. I dont need you. I dont need you and I dont need you. David-Weill made more friends among minority shareholders in a meeting when he dismissed their claims and literally blew smoke in their faces. He was unhelpful and
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incredibly arrogant, an institutional shareholder told Forbes. He lit up a humongous cigar and puffed it in our faces for a half an hour. He really dismissed us as totally unimportant ... and we had been large shareholders in his companies for years. David-Weill concluded his goodwill tour at a firm event by failing to thank influential partners Felix Rohatyn and Antoine Bernheim for helping build Lazard.
M&A powerhouse
Lazards most notable strength is in mergers and acquisitions advisory, and the firms prominence is evident in the league tables. In 2000 the bank ranked ninth among advisors of completed worldwide M&A, according to Thomson Financial Securities Data, advising on 173 transactions worth $367.3 billion. Lazards M&A engagements include Abotts $6.9 billion acquisition of BASFs pharmaceutical business, Enel SpAs $6.5 billion of Infostrada, Thames Waters $9.9 billion purchase by RWE and Halifax Groups $40 billion merger with Bank of Scotland. The firm counts Daewoo, Armstrong World Industries, Fruit of the Loom, Owens Corning and Vlasic as restructuring clients. While M&A advisory is the firms primary expertise, it isnt Lazards only business. The firm has a relatively small equity underwriting practice, mainly because the firm does not have equity distribution channels like those of competitors such as Morgan Stanley or Goldman Sachs. The equity business is helped by a joint venture in France with French securities firm Credit Agricole Indosuez. The Lazard/Credit Agricole partnership was the top bookrunner for equity offerings in France for 2000. The firm co-led a $190 million IPO for Orient-Express Hotels in August 2000 and a $224 million IPO for W.P. Stewart in December 2000.
Coming together
The firm, traditionally known for its avoidance of publicity, has been increasingly in the news in recent years. In the late 1990s, Lazard garnered negative press that eventually resulted in changes at the firm. Michel David-Weills son-in-law and expected successor, Edouard Stern, left the firm in mid-1997 after the two clashed repeatedly over issues such as Sterns role in the company and the companys direction. Felix Rohatyn, who gained fame by orchestrating New York Citys recovery from bankruptcy in the 1970s, also left Lazard in 1997 to become the U.S. ambassador to France. (Rohatyn has since returned to Lazard as a senior advisor.) As a result, David-Weill was forced to reevaluate Lazards management structure.
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David-Weills solution was to consolidate the firms London, Paris and New York offices. Post-merger, the firm changed its name from Lazard Frres to Lazard. The firm is now managed by a seven-person committee headed by David-Weill and CEO William Loomis. The merger, announced in June 1999 and finalized in March 2000, met with some resistance from partners before its completion. Investment Dealers Digest reported that two partners in the Paris office, Antoine Bernheim and DavidWeills son-in-law Stern (who retained an ownership stake despite leaving the firm in 1997) balked at the reorganization. Their specific objections were never publicized, but the concerns were a significant issue because under French law a partnership cannot be reorganized without unanimous partner approval. David-Weill acknowledged the need for cooperation, telling BusinessWeek, [The reorganization] has to be done in a spirit of partnership and avoiding the feeling that any part of the firm would dominate any other part. He added, What is clear is that in some respects the businesses have to be unified. David-Weill quashed speculation that the company would go public after the consolidation, saying a public Lazard would tend to serve two masters: your [outside] owners and your clients. Whatever his opinions are about going public, David-Weills changes to Lazards structure havent pleased all the partners. Some who are unhappy with David-Weills reign and his reported $100 million annual take of Lazards profits want him to reconsider going public or at least make changes to the firms ownership structure and compensation formula. Those partners were backed by Vincent Bollore, a French industrialist who quietly amassed a large block of shares in Rue Imperiale de Lyon. Incidentally (or perhaps not), Rue Imperiale de Lyon controls more than 17 percent of Lazard. Then, a few days into 2001, it was announced that Bollore sold his interest in Rue Imperiale to the French bank Credit Agricole. David-Weill now has the satisfaction of knowing that Bollore is no longer gunning for him, but the chunk of stock that Bollore controlled has merely shifted to a new owner. While the 17 percent stake isnt enough to wrest control of the firm from the David-Weill family, the battle with Bollore has been enough to force the Sun King to study Lazards structure and make some changes. The first changes were announced in November 2000. Eurafrance SA, one of the holding companies that indirectly owns a piece of Lazard, offered to purchase the remaining 43 percent of Azeo SA, another Lazard owner. At the same time, a similar consolidation plan was announced for two Italian finance companies that may eventually sever ties between Lazard and the two firms. Finally, David-Weill named American Bill Loomis as CEO. There was speculation that Loomis would succeed David-Weill when he eventually steps down, and David-Weill told The Wall Street
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Journal, [It] would not be abnormal that he becomes my successor when I disappear. Although no date for his retirement was announced, Loomis has embraced the challenge of running the firm. He told the Journal that his focus would be getting Lazard involved in large deals. That may be tough considering the plethora of large investment banks recently created through mergers. It will require us to be more Lazard, Loomis said. We want to have local relevance with a more global view. Despite these changes, many observers feel a new structure is needed if Lazard is to compete with bulge-bracket players. The business model of the Lazard bank no longer seems to be in line with the evolution of the investment banking profession and market, Laurent Marie, an analyst at Credit Lyonnais Securities Europe, told the Financial Times. A buyout by an international partner similar to the $1.4 billion purchase of Wasserstein Perella by Dresdner Bank in late 2000 has reportedly piqued the interest of some Lazard partners. Deutsche Bank and Merrill Lynch have been named as possible suitors, but Lazard has flatly denied any interest in a deal.
Going places
The merger led some Lazard executives to seek greener pastures. Steven Rattner, David Tanner, Peter Ezersky and Joshua Steiner left to form Quadrangle Group, a private equity firm, in March 2000. Rattners departure was expected. A wellrespected M&A player, whom David-Weill called a wonderful business getter and a deal guy in BusinessWeek, Rattner stepped down as deputy CEO after the announcement of the combination and took the title of deputy chairman. The other departing bankers, while not as high-profile, still represented significant losses for the firm. The Daily Deal reported that Ezerskys client roster included Polygram and America Online and called Steiner, 34, a young rising star. Thomas Dunn and Ira Handler, the heads of the asset management groups fixed-income department, departed the firm in January 2000 after a poor performance by the fixed-income group.
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to Lazard that month; the firm also added Vernon Jordan, formerly a partner at Washington, D.C., law firm Akin, Gump, Strauss, Hauer & Feld. (Jordan stayed on at the law firm as of counsel, a title usually reserved for senior, non-equity lawyers.) Jordan, a close friend of former President Bill Clinton, was previously scrutinized for his role in finding intern Monica Lewinsky a job after her time in the White House. Life is about new occasions and new duties, and this is another hill to climb, Jordan told Black Enterprise regarding his new position. In November 2000, Lazard hired John Kornblum, who had been U.S. ambassador to Germany, to improve the firms standing in the Rhineland. Early in 2001, the company hired Harvey Golub as a senior adviser. Golub recently retired from the CEO post at American Express.
GETTING HIRED
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you come back and do some more interviews, and they will give you the offer then. Other contacts report, They fly people to New York.
How bad it is for Lazard bankers depends almost entirely on where one is on the totem pole, according to sources. Contacts concur that analysts have no life. Explains one insider: The attitude is that the analysts are not bankers. Its I want to work you for two years and then spit you out, and youre lucky to be here. That source continues: The analysts do not exercise, they do not leave, they are there all the time. The analysts for the most part are extremely bitter, says one associate. I think theyre going to do better in the future, because theyre starting to realize that its not good, says that contact. Despite Lazards hard-work reputation, the firm reports that in 2000, 10 out of 24 second- and third-year analysts stayed on at the firm after the completion of the analyst program. Associates dont have it much better, insiders say, but they know what theyre getting into and morale is pretty high. The first three years as an associate youre throwing those years away, says one banker. Youre just trying to survive. Why do associates put up with the intense work? For the promotion to VP that happens in three or four years. If you can survive the four years, youre looking at a pretty good lifestyle, explains one insider. A VP at Lazard is very different from a VP at other places. At other places, the VP gets dragged down to do associate work and still gets dragged into the office on weekends. A VP at Lazard they really know their shit, and if they want to, which pretty much everyone wants to, they refuse to do associate-level work. They want to be working on getting clients and things like that. During the week, insiders report, VPs are there until 9:00 even MDs put in long hours at Lazard; on the weekends theyll be at the Hamptons with a fax machine. On the plus side, some insiders report having meaningful work at least some of the time. I get to do interesting things which Lazard is comfortable doing, but there tends to be resistance to new ideas, says one source. I also do more mundane work, being low enough on the totem pole. That source continues, I personally have gotten a lot of respect and recognition for my intelligence in conversation and to some extent responsibility. The firm was one of the last to go business casual, but some worry that privilege might be pulled. Now that the dot-coms have crashed and burned we dont expect [business casual] to last, but its been nice, says one source, who adds we are waiting for the memo to go back to suits and ties.
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about it Oh, the roof in my Hamptons house is leaking, and now I can only sell it for $3 million. The amazing luxury that the Lazard lifestyle affords is the reason the firms bankers endure the almost unconscionable hours. Bankers at Lazard are usually paid 25 to 50 percent more than the market salary [for] comparable positions at other banks, says an analyst. They basically tell you that their goal is to be the highest-paying firm, and theyre looking to start private equity stuff up in order to expand what they can do as far as compensation, reports another banker. This is serious stuff. Insiders also agree that Lazard is at the top of the list when it comes to prestige. Its an amazing place, says one source. They really do have great relationships with the CEOs of major companies. Says another: Were the cutting edge of management and finance theory. The culture is very focused on production, merit and profits. Says a former banker: Theyre not spinning their wheels, working their hours. They really put some time and thought into the work theyre doing.
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The attitude is that the analysts are not bankers. Its I want to work you for two years and then spit you out, and youre lucky to be here.
Lazard insider
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V A U L T
PRESTIGE RANKING
11 Lehman Brothers
UPPERS
High-quality deals Meritocratic culture
3 World Financial Center New York, NY 10285 Phone: (212) 526-7000 Fax: (212) 526-3738 www.lehman.com
DOWNERS DEPARTMENTS
Corporate Advisory Equities Fixed Income Global Economics Investment Banking Operations and Corporate Services Private Client Services Private Equity Risk Management Frat-like atmosphere in some divisions Long hours
EMPLOYMENT CONTACT
Investment Banking Analyst Recruiting Candace Darling Investment Banking Associate Recruiting Bess Frank 3 World Financial Center 24th Floor New York, NY 10285 Sales, Trading & Research Analyst Recruiting Joycelyn Arencibia Sales, Trading & Research Associate Recruiting Stephanie Amanatides 3 World Financial Center 8th Floor New York, NY 10285 Private Client Services Associate Recruiting Valerie Demartino 1 World Financial Center 28th Floor New York, NY 10281
THE STATS
Chairman and CEO: Richard S. Fuld, Jr. Employer Type: Public Company Stock Symbol: LEH (NYSE) 2000 Revenue: $26.4 billion 2000 Net Income: $1.8 billion No. of Employees: 11,300 No. of Offices: 67
KEY COMPETITORS
Goldman Sachs Merrill Lynch Morgan Stanley
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THE SCOOP
Southern roots
Lehman Brothers was founded in 1850 in Montgomery, Ala., by brothers Henry, Emmanuel and Mayer Lehman. The enterprise began as a commodities brokerage and trading firm and opened a New York office in 1858. In 1887 Lehman acquired a seat on the New York Stock Exchange and underwrote its first stock offering two years later. Expanding over the last 151 years, the company is currently a full-service global investment bank providing a wide range of services, including fixed-income and equities sales, trading and research, M&A advisory, public finance, and private client services. Lehmans investment banking group serves 11 industry segments: chemicals, communications/media, consumer/retailing, financial institutions, financial sponsors, health care, industrial, natural resources, power, real estate and technology.
An auspicious start
American Express purchased Lehman in 1984 as part of its strategy to become a fullservice institution covering all consumer and business financial needs. But Amex changed its tune 10 years later, deciding to refocus on core businesses. Amexs new strategy resulted in a spin-off that once again created an independent Lehman Brothers. The newly independent Lehman Brothers stumbled out of the starting gate, implementing considerable layoffs and cost cuts to survive. By some estimates, within the first two years after the spin-off Lehman cut both expenses and staff by approximately 20 percent. The firm managed to rebound and made significant strides in high-margin businesses such as equity and high-yield underwriting and M&A advisory. Lehman Brothers has regained its footing has been one of the most profitable investment banks in recent years. While competitors such as Merrill Lynch were announcing staff cuts in mid-1998, Lehman which has a reputation for lean staffing reported no layoffs. Despite posting lower first quarter profits in 2001, Lehman had managed to avoid layoffs even as a wave of workforce reductions spread throughout the investment-banking industry in late 2000 and early 2001. In fact, the firm claims to have added 600 people over the first three months of 2001 after increasing its staff by 27 percent in 2000. Lehman was able to avoid job cuts by posting big-time profits. The firms net income for fiscal year 2000 was approximately $1.8 billion, up from $1.1 million in 1999. That steady performance allowed Lehman Brothers to capture the title of Most
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Profitable Banking Company from U.S. Banker. Lehman was also honored by BusinessWeek, which rated it No. 11 in its 50 Best Companies in the S&P 500 index.
In Fidelity?
In June 1999, Lehman Brothers announced an alliance with Fidelity Investments, the Boston-based asset management and mutual fund firm, to provide Fidelity customers access to Lehman-led debt and equity offerings as well as Lehmans research products. As a result of the partnership, Lehman could access a larger distribution network for public offerings and presumably attract more deals from companies eager to issue securities. At the time of its announcement, the partnership yielded speculation that the two firms would merge. The rumors disappeared shortly after the announcement, only to resurface a year later. The Wall Street Journal, which first resurrected the rumors in June 2000, conceded that a merger was a long shot and said formalization of the Lehman/Fidelity distribution alliance was more likely. A Fidelity spokesman quashed the gossip, telling The New York Times, We have no such plan[s] and there is nothing under discussion.
Big-league clients
Lehman has a client list befitting its status as a top-tier investment bank. The firm led a $1.5 billion convertible and common stock offering for Cendant, a $2.3 billion convertible securities offering for Tecnost/Telecom Italia and a $617 million IPO for Tele1 Europe Holding. Lead-managed debt offerings included a $5.75 billion offering for Wal-Mart, named U.S. Dollar Bond Deal of the Year and U.S. Investment-Grade Corporate Bond Deal of the Year by International Financing Review. The firm also managed a $2.8 billion offering for Ford Motor, a $2.3 billion offering for Pepsi Bottling Group and a $1.25 billion offering for Liberty Media Group. M&A transactions of note include the MediaOne/AT&T merger. (Lehman
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represented MediaOne in the $63.1 billion merger, completed in June 2000.) The bank also advised US West on its $48.5 billion pairing with Qwest Communications.
GETTING HIRED
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Analysts and associates begin their careers at Lehman with a five-week training program in New York. Associates then move on to three one-month rotations in various departments. Regional associates may elect to spend a year in New York before being assigned to a permanent group in their home office, while analysts are immediately placed in a group.
Life at Lehman
Lehman bankers report working long hours. However, the opportunity to work on top-notch deals seems to ease some of the pain. I work more than my friends at other firms, as do most of the people in my group, but it is because the group is aggressively gaining market share faster than we are adding people, a contact tells us. We are constantly competing for the best assignments in the industry, boasts one banker. I am very proud of both the number and the quality of the deals I have had an opportunity to work on. Additionally, sources describe Lehman as being comprised of highly motivated colleagues who feel like partners in the franchise. If there is a downside to life at Lehman, employees say it could be the perception that the firm, which has been climbing the rungs of the league tables in last few years, is still not on par with Goldman Sachs and Morgan Stanley.
Effort rewarded
Perhaps the most attractive aspect of working for Lehman, employees say, is that the firm rewards effort. This place is as close to a meritocracy as it gets. An associate calls the companys culture fluid, commenting that managers tend to move around the firm. Ive been given more responsibility than Id ever imagined, says one associate in trading. Another associate in Lehmans fixed-income group calls the firm an aggressive firm that will let you take risk, if you can justify it. According to one capital markets associate, [Lehman gives] lots of responsibility early. They push employees to progress quickly. Another associate in that area boasts, The opportunity is fantastic. The firm has focused on a number of growth opportunities and is aggressive about getting people involved. That doesnt mean analysts are free of cumbersome tasks. One I-banking analyst warns, Its easy to get pigeonholed into doing a lot of pitches.
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Insiders generally report a young culture that is very entrepreneurial. Reports one insider, The firm is very open to people moving around departments where it makes sense; they dont really mess around if something makes sense, they just do it. One Lehman analyst complains the firm is a little behind the bulge bracket in terms of pay, though the bank did come through with raises in response to recent competitor increases. First-year analysts received 40 percent raises, second-years 45 percent and third-years 54 percent. Lehman also offers a leveraged investment account for all employees.
Frat brothers
Although Lehman may be laid-back in the sense of not being stuffy or aristocratic, that doesnt mean the temperature doesnt rise at the firm. One ex-employee in New York notes, Theres a lot more yelling at Lehman Brothers than at my current firm.
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Insiders say that Lehman, like most major investment banks, has a macho culture and many arrogant attitudes. According to one: Antics are somewhat unprofessional. Many employees have something of a locker-room, fraternity culture. Reports another: Its meritocratic but can be easily abused by overly aggressive people. Another associate says, This is definitely a culture of a work ethic they put in the hours. Still, insiders generally note the firm has been receptive to recent changes in the industry. In addition to salary and expense improvements, one insider notes that management is showing more of an interest in people having well-rounded lives.
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V A U L T
PRESTIGE RANKING
12 Vanguard Group
UPPERS
Onsite store, cleaners, cafeteria and health club Internal training program
100 Vanguard Boulevard Malvern, PA 19355 Phone: (610) 669-1000 Fax: (610) 669-6605 www.vanguard.com
DEPARTMENTS
Asset Management Research Sales Trading
DOWNERS
Work sometimes not challenging Business attire required most days
EMPLOYMENT CONTACT
Kathleen C. Gubanich Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355
THE STATS
Chairman and CEO: John J. Brennan Employer Type: Private No. of Offices: 7 No. of Employees: 11,000
KEY COMPETITORS
Charles Schwab Fidelity Investments Merrill Lynch
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THE SCOOP
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First Index Trust but is now known as the Vanguard 500 Index Fund. Unlike other funds that are based on idea and research-heavy management, index funds require no stock-picking prowess from human managers. As with the firm itself, the index funds did not immediately take off. Now, however, these funds are the keys to Vanguards rapid growth. In 1998 66 percent of the new money invested in Vanguards stock funds went into index funds 19 percent went into the 500 fund. The Vanguard 500 Index fund surpassed Fidelitys massive Magellan fund as the single largest fund in 2000.
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GETTING HIRED
The basics
Vanguard lists job openings at its web site, www.vanguard.com, for those who wish to become Vanguard crew members. The firm allows applicants to submit resumes through an online form, as well as through the typical means. Vanguard also posts its recruiting schedule at its web site. Insiders say the firm recruits from a variety of schools in the Northeast and South, including Penn State, the University of Pennsylvania, Temple, UNC-Charlotte, Duke, Georgia Tech, NC State, Vanderbilt and others. One source says: Were growing at such an incredible pace, so there are always openings, reports one insider. One contact reports having one phone interview and one on-site visit that consisted of three or four more in-person interviews. Others report interviewing with an HR representative, a department manager and a principal. Expect two major categories of questions: behavioral-based and technical.
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work 45 to 50 hours and take work home. The work assignments can also leave something to be desired. One of the above-quoted sources describes his job as very easy and only occasionally requiring deep thought. The firm counters that its retention rate is three times the industry average.
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I am paid for a 37.5hour work week, but routinely work 45 to 50 hours and take work home.
Vanguard Group insider
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V A U L T
PRESTIGE RANKING
13 Management
Pequot Capital
UPPERS
Potential to shine Relaxed culture
500 Nyala Farm Road Westport, CT 06880 Phone: (203) 429-2200 www.pequotcap.com
DEPARTMENTS
Asset Management Research Sales Trading
DOWNERS
Killer travel requirements Nearly impossible to break in as a junior employee
KEY COMPETITORS
Putnam Investments T. Rowe Price Vanguard Group
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Pequot schism
Samberg and Dawson went their separate ways in January 1999 when Pequot was spun off as a separate company with Samberg as the head. While the company claimed the split was amicable, some say a division over the risks Pequot was taking was a factor. Alternative Investment News claimed that Dawson felt the companys investments were spread too thin and that Pequot was too tech-heavy, while Samberg pushed for more risk-taking. Dawson soon split from Samberg altogether, leaving to run Dawson-Giammalva Capital Management. Rumors of a similar divide within Pequot surfaced in early 2001. This time Samberg was afraid the company was too big while Daniel Benton, Pequots president, pushed the firm to focus on technology companies both in the public and private marketplace.
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Despite the reported conflict in investment styles Pequot continues to grow. The firm opened offices in London and Taiwan in March 2001. That same month it closed a $725 venture capital fund dedicated to expansion-stage companies.
GETTING HIRED
With only 200 employees, Pequot is a very selective employer. The firm does accept resumes at its Westport, Conn., Headquarters and maintains an e-mail account for employment questions ([email protected]). But youd better be on top of your game if you want to get in, and fresh graduates are all but excluded from consideration. The firm rarely takes candidates out of school, according to one source. [Pequot] prefer[s] to hire from the sell side (banking or research) with one to three years of experience. Have a good story ready. Candidates generally need to show some compelling case for why they are specifically interested in the buy side too many are just looking for better pay and an escape from the crappy conditions of the sell side.
Flat structure
Insiders say the culture at Pequot is extremely informal. You can dress and act as you please, as long as you are productive. That source continues, We live well and enjoy many diversions to help with the inevitable stressful days when the market moves against us. Additionally, the firm provides great ability to make an impact, [the] ability to be paid for performance, intelligent and likeable colleagues, [and] very little annoying bureaucracy or hierarchy. I could not imagine a better work environment. Insiders boast of the firms ability to retain its employees. Extremely competitive compensation means that people seldom leave voluntarily. However, there is somewhat of an up-or-out mentality. Employees either need to show they can scale to the next level or they risk being asked to leave.
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V A U L T
PRESTIGE RANKING
14 T. Rowe Price
EMPLOYMENT CONTACT
[email protected]
100 East Pratt Street Baltimore, MD 21202 Phone: (410) 345-2000 Fax: (410) 345-2394 www.troweprice.com
DEPARTMENTS
Brokerage College Funding Mutual Funds Private Account Management Retirement Plans
THE STATS
Chairman and President: George A. Roche Employer Type: Public Company Ticker Symbol: TROW (Nasdaq) 2000 Revenue: $1.2 billion 2000 Net Income: $269 million No. of Employees: 4,000 No. of Offices: 21
KEY COMPETITORS
Fidelity Investments Janus Capital Vanguard Group
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Investing pioneer
Thomas Rowe Price, Jr., began his investment firm in 1937 after a dozen years at Mackubin Goodrich & Co., a Baltimore-based brokerage firm now known as Legg Mason. Price didnt particularly enjoy selling stocks, but discovered he had a knack for picking them. Price had a theory that companies with new products, services or technology could enjoy a sustained growth curve, and that investing in these companies during this growth stage would prove profitable. The goal was to buy stocks in such firms and hold them for the long term an idea practically unheard of in post-Depression America. Through his company, Price promoted his philosophy by providing advice to investors on picking stocks. In 1950 he introduced his first mutual fund, the T. Rowe Price Growth Stock Fund. Although Prices reputation as a stock-picker is impeccable, his reputation as a manager is less impressive. Prices own son reportedly called him a bear to work with and colleagues, including company co-founder Thomas Kidd, said he was aloof. Yet through his intuitive understanding of the market, along with a grueling work schedule, Price built his company into one of the leading investment management firms. In 1966, perhaps tired from the grind of nearly 30 years, Price sold his stake in the firm for a relatively small sum (published reports say he received less than $800,000) with the condition that control of the company remain with previously agreed upon successors. T. Rowe Price went public in 1986 and now has $148.7 billion in assets under management (as of March 31, 2001).
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got to stick to our principles, even though those principles may hurt us in the short term, vice chairman James Riepe told The Wall Street Journal in March 2000. Those principles have been proven true, as Prices funds havent experienced a downturn as dramatic as those who were more tech-heavy, such as Janus Capital. There was a downside for T. Rowe. The firm experienced a net outflow of $2.5 billion from its funds in 2000, one of the largest redemption rates in the industry for 2000. The bulk of the outflow was from two sources. California Savings Plan Plus dropped three of the four T. Rowe Price funds it had in its list of investment choices, while another large Price client completed a merger and consolidated its pension funds to a different provider. The irony of the market downturn is that while it increased the appeal of T. Rowes investment strategy, the companys financial results suffered after the correction. When earnings reports came out in January 2001, T. Rowe was among the companies bearing bad news; the firm announced that its net income for the fourth quarter was $55.5 million, down from $70.1 million in the prior-year period. The slump carried over into early 2001 as the companys net income fell from $75 million in first quarter 2000 to $49.3 million for 2001. Despite the profit shortfall, the firm has said officially it doesnt expect to have significant job cuts. However, Chairman George Roche indicated in April 2001 that the company is looking to cut costs, inspiring Merrill Lynch analysts to predict impending layoffs. Again, the firm downplayed the prospect of layoffs, telling the Baltimore Business Journal that other costs, including advertising and consulting spending, were being reviewed.
stake in August 2000, T. Rowe Price changed the name of the company to T. Rowe Price International.
GETTING HIRED
T. Rowe Price recruits at a number of colleges, mostly on the East Coast, for analysts and associates. The firm also scouts out marketing and IT talent during its campus visits. There is also a summer program for associates, analysts and IT specialists. Check out the company web site at www.troweprice.com for a complete listing of available openings and schedule of campus visits.
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V A U L T
PRESTIGE RANKING
15 Citibank
UPPERS
Company-wide business casual High level of diversity
399 Park Avenue New York, NY 10043 Phone: (800) 285-3000 Fax: (212) 793-3946 www.citigroup.com
DOWNERS DEPARTMENTS
Emerging Markets Global Consumer Banking Global Corporate and Investment Bank Private Banking Group Mergers have resulted in undefined culture Bureaucracy typical of a large firm
EMPLOYMENT CONTACT
Michael Schlein Citibank 399 Park Avenue New York, NY 10043
THE STATS
Chairman and CEO: Sanford I. Weill Employer Type: Public Company Stock Symbol: C (NYSE) 2000 Revenues: $118.8 billion 2000 Net Income: $13.5 billion No. of Employees: 230,000
KEY COMPETITORS
Bank of America Bank of New York Credit Suise First Boston J.P. Morgan Chase
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Branding strategy
Legendary for its ability to use the latest technology to make life easier for its customers, Citibank has actively developed web-based banking services. Overall, the bank is making good progress toward the mission first articulated by former Citigroup co-CEO John Reed: to transform the Citibank name into an internationally recognized and trusted brand name on par with the likes of Coca-Cola or Xerox. Industry observers predicted that if the Citicorp/Travelers combination proved successful, it would likely spur similar mergers in the future. Citibank is the worlds largest issuer of credit cards, a position cemented by the banks acquisition of AT&Ts Universal Card Services. But the companys interests are not limited to banking and credit: In December 1999, Citigroup announced a 5050 partnership with Boston-based State Street Corp. to form a joint venture, called Citistreet, to sell 401(k) retirement plan services.
senior management, and executives complained on several occasions. The issue finally came to a head in late February 2000, when the board of directors debated for several hours the fate of the companys two CEOs. At one point, said the Journal, a compromise was offered: Reed would stay as non-executive chairman and Weill would be CEO. Reed rejected that compromise and the board unanimously voted to ask Reed to retire. Despite the shake-ups, Citi has turned in an outstanding performance. In 2000, the firm earned a record $13.52 billion, according to The Wall Street Journal. Weill has been handsomely rewarded for his work: His 2000 paycheck was a whopping $28.6 million, nearly double what he made in 1999.
Not so fast
Contrary to all the talk of a succession plan, Weill really hasnt shown any interest in retiring, and the board isnt pressuring him to do so. Not only is the board pleased with the companys results, many of its members are among Weills staunchest supporters. Word has it that Weill wants to hang around until 2004 or longer. Lest anyone get the impression that hes short sighted, Weill did name Charles Prince and Jay Fishman co-chief operating officers in December 2000. Still, insiders say there are at least four additional Citi execs vying for Weills approval for the top spot. There are also rumors of an outside contender: American Express CEO Kenneth Chenault.
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Europe and Japan. The $31.1 billion acquisition came at a time when other large commercial banks, including Conseco and First Union, were eliminating such businesses because of heavy losses. Citigroup predicted approximately $600 million in savings over two years from the purchase despite the fact that few layoffs were expected. The deal was completed in November 2000. Industry insiders also speculated that the Associates purchase may have brought a successor to Sandy Weill. The Daily Deal reported that Keith Hughes, Associates Firsts 53-year-old chairman and CEO, would become vice chairman and a director and is a potential leader once Weill retires. But any Citi executives holding their breath for Weill to retire might as well inhale, as the CEO demonstrated that he still has at least one big deal left in him. In February 2001, the bank announced the acquisition of 100 branches of the European American Bank (EAB) from the Dutch group ABN Amro for $1.6 billion. The deal is significant because it will heighten Citigroups exposure to wealthy depositors in the densely populated (and high income) Long Island area. The purchase also got a lot of folks in banking circles talking; they speculated that Citi snapped up EAB to keep it out of the hands of FleetBoston.
GETTING HIRED
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For those one year from graduation, Citibank offers summer associate programs in global consumer global corporate, operations and technology, and in the banks advanced development group. The global consumer banks summer program rotates its summer hires through different areas, while in global corporate, summers choose one particular area and work there for the duration of their internship. Citibank also offers internships during the semester that may count for credit. Another tip: Salomon Smith Barney and Travelers Insurance recruit independently; check Citis web site for more details. Those interested in working at a particular branch should direct their inquiries to the branch manager of that branch. If no opportunities are currently available at that branch, the branch manager will direct the applicant to Citibanks main staffing department, where his or her resume will be kept on file. When a branch manager contacts Search & Staffing to fill an opening, he or she receives a list of appropriate resumes on file. The branch manager then selects the most appealing resumes and arranges for interviews; sometimes, two or three branch managers with openings will interview a pool of applicants jointly and decide which candidates are most appropriate for the different branches.
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would have a better balance between my work and home lives, adds a banker who describes the work environment as very comfortable. While one contact believes Citibank is one of the most diverse corporations in the financial industry sector, another says, There are issues being [addressed] about gays. Some employees warn that challenging work assignments can be hard to come by during the first couple of years at the company. According to one source, A number of people who entered the bank with me have left for this very reason. Insiders lay some of the blame on the banks lack of focus and bureaucracy. One of the previously quoted bankers says, I am not finding the work itself to be very challenging, which impacts my satisfaction. These opinions contrast those of a banker in the companys Management Associate Program, who praises the program for giving him opportunities for international exposure and [a] breadth of work experience
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I dont think I could find a financial services company where I would have a better balance between my work and home lives.
Citibank insider
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PRESTIGE RANKING
16 Deutsche Bank
UPPERS
Global presence Growing in the U.S.
31 West 52nd Street New York, NY 10019 Phone: (212) 469-5000 Fax: (212) 469-3660 www.db.com
DOWNERS DEPARTMENTS
Corporate and Investment Banking (Global Markets, Global Equities, Global Credit Products and Global Corporate Finance) Private Clients and Asset Management Bureaucracy Slow on perks for juniors
EMPLOYMENT CONTACT
Corporate Finance Nebal Fahed 130 Liberty Street 12th Floor New York, NY 10006 [email protected] Sales, Trading & Research Caryn Blumenfeld 130 Liberty Street 12th Floor New York, NY 10006 [email protected] Global Technology & Operations Jacqueline Murray 130 Liberty Street 12th Floor New York, NY 10006 [email protected]
THE STATS
Chairman, Management Board: Rolf Bruer Head of Corporate and Investment Banking: Josef Ackermann Employer Type: Public Company 2000 Revenue: $27 billion 2000 Net Income: $4.7 billion No. of Employees: 98,300 No. of Offices: 2,300
KEY COMPETITORS
Citigroup Credit Suisse First Boston Goldman Sachs J.P. Morgan Chase UBS Warburg
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German giant
With approximately $894 billion in assets (as of March 31, 2001), Deutsche Bank AG is one of the largest financial institutions in the world. The company recently initiated a reorganization that established two distinct business groups. The Corporate and Investment Bank Group includes corporate finance, sales and trading, and transaction banking, while the Private Clients and Asset Management Group contains the banks personal banking, private banking and asset management operations. Deutsche Bank was founded in 1870 in Berlin. The company expanded first throughout Germany and later through the rest of Europe (its first branch outside Germany was its London outpost, opened in 1873). The company first made its mark in the U.S. in the 1880s when it helped finance the construction of the railroads that linked the East and West Coasts. Deutsche Banks growth in the late 1800s can largely be attributed to mergers as the company merged with or acquired a number of European banking firms. Like most German corporations, Deutsche Banks actions during World War II are a sensitive subject. The company has admitted that it helped finance the construction of the Auschwitz concentration camp and has participated in the $1.25 billion settlement fund offered by Swiss and German companies to Holocaust victims. To its credit, Deutsche Bank hasnt hidden its past and even mentions unseemly events such as the 1933-1934 ouster of Jewish board members in the history section of its corporate web site.
More merging
The companys growth continued after the war but it wasnt until the late 1990s that the firm made the move that placed it among the major international players. In June 1999 Deutsche Bank acquired Bankers Trust for approximately $9 billion. BT had purchased Alex. Brown & Co., a U.S. investment bank with nearly 200 years of history, two years earlier, giving Deutsche Bank significant corporate lending and underwriting prowess. (According to The Baltimore Sun, Mayo Shattuck, who had been president and COO at Alex. Brown, battled Deutsche Bank management to keep the Alex. Brown name. The name survives as some of Deutsche Banks U.S. investment-banking business is conducted under the Deutsche Banc Alex. Brown marketing name.)
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Some analysts were initially skeptical about fate of the Deutsche Bank/BT deal. Im not bullish on this deal, Evangelous Kavouriadas, an analyst at Sanford C. Bernstein, told The Baltimore Sun when the deal was announced in November 1998. The combined company experienced the typical post-merger departures, including a handful of managing directors from the health care investment banking group in June 1999. The initial skepticism has worn off as Deutsche Bank has had time to integrate the BT acquisition. Although the deal was marked by the usual clash of cultures that occurs when a commercial and investment bank come together, Deutsche Bank has done a terrific job now in getting over the hurdles and moving forward with the acquisition, Robert Bostrom, head of the financial institutions practice at New York law firm Winston & Strawn, told The Wall Street Journal in November 1999. The best praise, however, came from a competitor: J.P. Morgan research analyst Stuart Graham said in a research report, We consider there is now no doubt that Deutsche has created a bulge-bracket investment bank.
advantage of suitable opportunities. The company disclosed it was exploring a possible distribution alliance with insurance giant Axa Financial, but those discussions were terminated shortly after the Deutsche Bank annual meeting.
Tasty offerings
The companys equity underwriting practice has been busy, even as the market for new issues has dried up. Deutsche Banks tasty foods division co-led a $63 million IPO for Krispy Kreme Doughnuts in April 2000 and a $154 million follow-on offering in January 2001, as well as a $79.5 million IPO for California Pizza Kitchen in August 2000 and a $114 million secondary offering in February 2001. If the bankers needed to work off the weight, they were helped by the firms participation in Ballys Total Fitness Holding Corp.s March 2001 secondary offering, worth $108 million. Other equity offerings include a $70 million IPO for Watson Wyatt in October 2000 and a $130 IPO for Align Technologies in January 2001. Deutsche Banks M&A team brought home several awards, including Best Foreign M&A House in the U.S. and Best Domestic M&A Advisor in Germany from Euromoney and Deal of the Year from Institutional Investor for representing NTT Communications. International Financing Review honored Deutsche Banks derivatives practice, naming the company best derivatives house and best credit derivatives house for 2000.
GETTING HIRED
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campus before being invited to offices in Europe or Asia. Current bankers suggest applicants talk to people with experience in the industry before interviewing at the firm. Consult either the firms job hotline or its web site, www.db.com, for a list of current job openings. Both analysts and associates are recruited by, and hired directly into, specific departments. One financial analyst reports that the firm looks for smart people and thinks that grades are very important in determining mental horsepower. Also, the company looks for a strong work ethic, and an outgoing and engaging personality, because you have to get along with clients when away from the office and with peers when working 100 hours a week. Those who join the firm as full-time investment banking analysts participate in four to six weeks of training in New York. Those who sign on as investment banking associates attend a four-week training program in New York. Analysts in sales, trading or research are in for eight to 12 weeks of training in London; associates can expect either six to eight weeks in New York or eight to 12 weeks in London, depending on the division. The firm also offers summer analyst and associate positions. Summer positions for investment banking are available in New York, Europe, Singapore and Hong Kong, and last anywhere from six to 10 weeks between June and September.
Less intense
Insiders describe the firm as being both less intense and less structured than its Wall Street peers. One insider, formerly of Alex. Brown, speaks favorably of the firms merger: Things have moved very smoothly with Deutsche Bank it wasnt 100 percent seamless, but it was a fluid transition. The firm had a great 1999 and there is a lot of positive sentiment here. Another insider adds, [The merger] played out well. That source, however, also notes that the firm has become more bureaucratic since the merger, which was expected, but not necessarily welcome. Another source agrees, nothing, The firm is going through some of the typical growing pains associated with the integration of various groups or businesses. But the firm is building a great culture, has a great vision and has the potential [and] standing in some areas to make great strides.
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Employees in the firms Baltimore office give the location mixed reviews. One insider says that unlike New York, Baltimore rents are really cheap. Another insider is less optimistic: Baltimore is really limited in the number of places where you can live. Insiders in the New York office describe a typical Wall Street feel at the firms offices. Says one associate, There is a lot of energy here. That source goes on to note, They have also paid more attention to bankers on the junior level. We werent on track with the market before, but I think we are now. Employees at various locations offer praise for the perks. All the facilities are topnotch, says one analyst, especially in the San Francisco branch, where the offices are on the top floor of a building that overlooks the city and the bay. Other perks include: overtime meals, taxis and bonuses. When you travel you stay in the top hotels, notes another source. Bankers in all American locations enjoy a full-time business casual dress policy.
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V A U L T
PRESTIGE RANKING
17 CalPERS
EMPLOYMENT CONTACT
Human Resources CalPERS Lincoln Plaza 400 P Street Sacramento, CA 95814 Fax: (916) 326-3065
Lincoln Plaza 400 P Street Sacramento, CA 95814 Phone: (916) 326-3000 Fax: (916) 326-3005 www.calpers.ca.gov
DEPARTMENTS
Actuarial and Employer Services Asset Managment Benefit Services Fiscal Services Health Benefit Services
THE STATS
CEO: James E. Burton Employer Type: Government 2000 Revenues: $18.8 billion No. of Employees: 1,500 No. of Offices: 8
KEY COMPETITORS
TIAA-CREF
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THE SCOOP
Shareholder advocacy
CalPERS has become known for using its power as a shareholder to voice its opinions on how the corporations it invests in should be run. The firm established a corporate governance program in 1984, and has become well known for issuing a list of under-performing companies. Each year, the pension manager combs its investments for 10 of the consistently worst performers and publishes a list of the losers to warn them that theyre being monitored. Although the firm still contacts managers at these companies to voice its concerns and to hear how management plans to improve performance, CalPERS has been criticized in recent years for not being aggressive enough in following up with companies on the lists. However, CalPERS still takes action when it deems necessary. In April 2000, the group protested Bank of America Chairman Hugh McColls $76 million salary by not casting its votes when Bank of America board members were up for re-election. While the protest had no immediate impact, it was noticed. By January 2001, McColl had announced his resignation, in part due to bad press and outraged shareholders who thought the salary was too high. Additionally, CalPERS has made several investments in Relational Investors, a corporate governance fund that invests in under-performing U.S. companies. CalPERS most recent investment in Relational was in June 2001 for $250 million. EDS, Apple, Reebok, Citigroup, Disney and General Motors are just a few of the companies that have faced the brunt of CalPERS wrath. In 1996 CalPERS expanded its corporate governance program to include international companies. The firm also has a history of being just as hard on its health care providers. After haggling with Kaiser Permanente about a rate increase, CalPERS agreed to a 10.75 percent hike in June 1998 (Kaiser was asking for 12 percent), but closely questioned the provider on how it planned to trim a proposed $363 million from its operating
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expenses. CalPERS reasoning: Kaiser needed to get a grip on its expenses instead of passing those costs along to CalPERS members. Loyalty to its shareholders was certainly part of the reason for CalPERS tough stance, but its motives were not totally benevolent. An October 2000 article on the Internet site WebMD noted that the rising costs of health care had taken a bite out of the firms reserves for claims payments. In February 2001, CalPERS rejected 10 bids from health care providers, citing costs that were too high. The pension manager told the providers to go back to the drawing board and return with some reasonable rates.
Up in smoke
CalPERS has also experimented with socially responsible investing. State Treasurer and board member Phillip Angelides has pushed the social agenda, first proposing that the firm sell its tobacco stocks and then advocating investing 2 percent of CalPERS assets in the states low-income neighborhoods. Furthermore, Angelides said tobacco stocks are a bad investment because of lawsuits against cigarette makers. But getting this initiative off the ground proved more difficult than CalPERS foray into corporate governance, partly because socially responsible investments have historically had lower returns. Bills were introduced in the state legislature in 1998 to force a divestiture of the tobacco stocks, but the board opposed it. With the backing of the state legislature again, Angelides convinced CalPERS board to sell $525 million worth of tobacco stocks in October 2000.
Taking a stand
CalPERS is facing a true test of its right to act independently. Early in 2001, the State Controller, Kathleen Connell, filed a suit alleging that the firm had unlawfully overcompensated board members and portfolio managers, who are considered civil servants. CalPERS disputes the claim, stating that a 1992 amendment to the state constitution gives CalPERS the authority to raise salaries. CalPERS also claims that it is difficult to attract and retain qualified managers because they can go elsewhere
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and make much more money. An interesting twist: Not only was Connell campaigning to be the next mayor of Los Angeles (CalPERS officials say the suit was an attempt by Connell, who lost the election, to call attention to her campaign), but her position as controller makes her a non-elected member of the CalPERS board. This isnt the first time Connell and the giant money manager have tangled, although this suit may be their most public battle. Connells campaign committee filed an earlier suit in 1998 in protest of rules CalPERS passed restricting campaign contributions to elected officials who serve as board members. (She eventually won.) And in 1999, Connell was just one of four board members who voted to allow board candidates to make an expanded statement of their views in mailings sent out to members. After a spat between board president William Crist and candidate Jim McRitchie, other board members voted to only include biographical information about candidates.
New frontiers
CalPERS is considered an innovative investment manager. The firm has even bought stakes in several venture capital firms to ensure it gets in on the ground floor of new companies before they go public. In 1999 the firm purchased a 10 percent stake of merchant bank Thomas Weisel Partners for $100 million. The firm also made an investment of $500 million in Weisels venture funds and has an option to invest another $500 million pending board approval. In January 2001, CalPERS made two huge VC deals. The firm spent $485 million in a partnership with Texas Pacific Group to establish a technology venture fund investing in early- and late-stage companies. Another $425 million was spent to buy a 5 percent stake in private equity firm Carlyle Group and invest in future Carlyle funds. In May 2001, CalPERS announced investments totalling $475 million in 11 California-based private equity firms. The funds are earmarked to be invested in underserved urban and rural communities throughout the state. Barry Gonder, one of the senior investment offices at CalPERS, is often credited with drastically improving the firms private equity investing. Prior to Gonders arrival, many private equity firms did not want to deal with CalPERS because of its reputation for bureaucracy doing business with CalPERS required completing an 80-page document and getting past a gatekeeper who decided which equity firms CalPERS would or wouldnt work with.
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GETTING HIRED
The 411
Because CalPERS is a state agency, its employees are civil servants. Therefore, potential employees must take an exam. Tests for most positions are administered by the State Personnel Board, but CalPERS oversees the testing and hiring process itself for some of the banking, actuarial and IT openings. CalPERS offers continuous testing, while the SPB administers tests on an as-needed basis. The firms web site, www.calpers.ca.gov, provides a link to the State Personnel Boards online application form. The site also provides information on how to contact the SPB and CalPERS regarding employment.
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CalPERS has become known for using its power as a shareholder to voice its opinions on how the corporations it invests in should be run.
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PRESTIGE RANKING
18 UBS Warburg
UPPERS
Opportunities for advancement Relaxed culture
1/2 Finsbury Avenue London EC2M 2PP United Kingdom Phone: (44-20) 7567-8000 Fax: (44-20) 7568-4800 www.ubswarburg.com 299 Park Avenue New York, NY 10171 Phone: (212) 821-3000 Fax: (212) 821-3285
DOWNERS
Problems with seniors Second-tier image in U.S.
EMPLOYMENT CONTACT
Human Resources UBS Warburg 677 Washington Boulevard Stamford, CT 06901
DEPARTMENTS
Corporate Finance Credit Equities Fixed Income Interest Rate Products and FX Sales and Trading
THE STATS
Chairman and CEO: Markus Granziol Employer Type: Subsidiary of UBS AG No. of Employees: 39,000 No. of Offices: 66
KEY COMPETITORS
Credit Suisse First Boston J.P. Morgan Chase Lehman Brothers Salomon Smith Barney
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THE SCOOP
Neutral parent
UBS Warburg represents the investment banking operations of UBS, the Swiss-based financial services behemoth with more than 70,000 employees worldwide. Besides investment banking, UBS offers private and corporate banking services through UBS Switzerland and asset management and mutual funds through the aptly named UBS Asset Management. After a tumultuous history of mergers and acquisitions, the firm hopes to become a major player in the U.S. market. In May 2000, the firm listed its shares on the New York Stock Exchange. At the time of the listing, firm representatives made it clear that UBS Warburg had expansion and acquisitions on its agenda and the firm didnt disappoint: UBS later acquired PaineWebber for $10.8 billion.
Multi-mergers
The companys story begins in 1872 with the founding of the Swiss Bank Corporation (SBC). SBC grew internationally (the London office, the banks first outside Switzerland, opened in 1898) and by the 1990s had established alliances or subsidiaries in the worlds financial centers. In the mid-1990s, the firm became a major player in the investment banking world by purchasing the securities business of S.G. Warburg Group, a firm started in London in the 1930s by Siegmund Warburg, a German who was fleeing Nazi persecution. The investment-banking division of the new firm was dubbed SBC Warburg. SBC Warburg expanded into the U.S. with its September 1997 acquisition of Dillon, Read & Co., a New York I-bank founded in 1832. The investment-banking division was then named Warburg Dillon Read. In June 1998, Warburg Dillon Read merged with UBS, taking the name UBS AG. UBS had been formed in 1912 by the merger of two regional Swiss banks, the Bank of Winterthur and Toggenbirger Bank. Early analysis of the UBS/SBC/Warburg combination was not favorable. The newly combined firm reported a profit of $4.2 billion for 1999; that was nearly double the profits for 1998. However, in 1998 the firm was hit with one-time write-offs (including a $650 million loss due to an investment in hedge fund Long-Term Capital Management) that dragged profits down and made 1999s performance look artificially good in comparison. The Economist called UBS a directionless and unhappy institution and said the banks problems resulted from the merger with SBC, which it felt was poorly managed.
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Things picked up in 2000 as UBS reported profits of $4.8 billion. Insiders say it was because the bumps from the UBS/SBC deal were finally smoothed over. We now have a range of seamless teams working together, rather than worrying about whos the better guy or who should deal with a particular client, Heino Teschmacher, cohead of European M&A at UBS Warburg, told The Financial News in January 2001.
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However, other observers felt the new firms increased distribution capabilities will allow for natural growth in I-banking. HSBC Holdings analyst Derek Chambers told The Daily Deal that the PaineWebber acquisition will give [UBS Warburg] a very substantial amount of placing power. It is by having placing power that Merrill Lynch was able to move up the league tables in corporate banking, Chambers pointed out. One potential pitfall for the merger is talent defection, especially since PaineWebber has been known as an aggressive pursuer of talent at other banks. UBS addressed this issue when it reportedly set aside $875 million in incentives for PaineWebber employees; $75 million was reserved for six top executives, including the firms president. According to The Daily Deal, PaineWebber CEO Donald Marron signed a separate contract extension with UBS. Furthermore, industry insiders say mass defections are unlikely because consolidation in the industry means there are fewer banks looking to recruit.
Best at M&A
UBS Warburgs strength is its M&A advisory practice. According to Thomson Financial Securities Data, the firm ranked seventh in announced worldwide M&A in 2000, advising on 291 deals worth $371 billion. Among the firms biggest assignments: advising Vodafone AirTouch on its $193 billion merger with Mannesmann in February 2000 and advising Diageo plc on the sale of its Pillsbury unit to General Mills for $10.5 billion in July 2000.
GETTING HIRED
UBS Warburg posts recruiting schedules on its web site, www.ubswarburg.com. The firm has instituted a snazzy online application procedure that is required for all candidates outside the U.S. and Switzerland. Associates at UBS Warburg have in the past warned that a business degree doesnt carry the same weight at UBS Warburg as it does at most American banks, especially in sales and trading. However, the firm is taking steps to emphasize the MBA. For example, the firm has changed its training program to separate undergrads from MBAs in corporate finance, and to initiate undergrads in S&T with a three-week core training program before they join the MBAs for training (rather than have undergrads and MBAs go through the exact same program, as they had in the past).
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On the other side of the coin, insiders note, the firm provides greater opportunity for undergrads. Says one contact: For undergrads in the analyst position, its a fantastic place. If youre a Wharton undergrad, its really ideal. They really love that profile, the really hungry young person. Says one corporate finance analyst, I worked on a divestiture where I did all the plant tours in addition to the management presentation. On the other side, the most junior person I saw was an associate. Thats the opportunity. On the other hand, if youre looking for structure, its probably not the best place for you.
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to live in Connecticut for them, its an ideal situation. Anyone who doesnt live in Connecticut better think twice [about joining UBS Warburg].
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V A U L T
PRESTIGE RANKING
19 Charles Schwab
UPPERS
Quarterly bonuses Merit-based stock grants Free YMCA membership at headquarters Great diversity
101 Montgomergy Street San Francisco, CA 94104 Phone: (415) 627-7000 Fax: (415) 627-8840 www.schwab.com
DEPARTMENTS
Capital Markets Electronic Brokerage Retail Services Retirement Plan Services
DOWNERS
Average base pay Some periods of intense work
THE STATS
Chairman and Co-CEO: Charles R. Schwab President and Co-CEO: David S. Pottruck Employer Type: Public Company Ticker Symbol: SCH (NYSE) 2000 Revenue: $7.1 billion 2000 Net Income: $718 million No. of Employees: 25,800 No. of Offices: 429
EMPLOYMENT CONTACT
George A. Rich Charles Schwab 101 Montgomergy Street San Francisco, CA 94104
KEY COMPETITORS
Alliance Capital Management E*Trade Fidelity Investments T. Rowe Price
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The companys acquisition spree may not be over. Schwab admitted his company is looking to boost its banking capabilities, possibly through merger. The company currently offers limited banking services to customers, including checks and ATM services. However, Schwab is looking to attract customers by building those services, especially since bank products provide a more steady stream of income than brokerage and trading services.
Getting noticed
Schwab made major headlines at the start of 2001 when the company, burned by rising expenses and a decline in fourth quarter earnings, announced that some employees would be given minor pay cuts in the first quarter and have to take three vacation days off without pay. The move was well received by some industry analysts, not only as a sensible solution (more so than massive layoffs) to what may be a temporary problem, but also because Schwab himself and co-CEO David Pottruck agreed to take substantial pay cuts. However, the firm soon had to backtrack on part of the directive instead, labeling the vacation days as voluntary because of concern that a mandatory time-off policy might be illegal. The firm has scored kudos from several self-appointed trend-watching publications that compile lists for this, that or the other best thing. On its 2000 list of 100 Best Companies to Work For, Fortune ranked Schwab No. 5, citing paid employee sabbaticals and business casual dress code, among other perks. Schwab also showed up on Working Womans Top 25 Companies for Executive Women at No. 2 (the top spot went to Avon). In December 2000 for the third straight quarter Gomez Internet Brokerage Scorecard named Schwab Best Internet Brokerage. Although Schwab has managed to maintain a fairly good reputation in investment management circles, it has not been immune to the occasional scrutiny. In October 2000, a class action suit was filed against the company in connection with short-term redemption fees the company charged certain customers. The case is pending in a California court.
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401(k)s and IRAs in the U.S. However, Schwab has gotten off to a slow start on the continent. According to the Financial Times, Schwab has approximately 100,000 online accounts in the U.K., making it the largest online broker in that country. However, besides the U.K., Schwab is currently online only in Switzerland, unlike rival E*Trade, which has online clients in the U.K., Sweden, Norway and Denmark. The company faces identical issues in Australia, where investors have a reputation for being especially savvy. Charles Schwab Australia, which started up without the benefit of the name recognition it enjoys domestically, originally committed to service rather than price, a strategy it was forced to abandon in late 2000 when its competitors slashed prices, some to as low as $4 per trade. The sudden shift in strategy, along with the expensive marketing campaign the firm has launched to build its brand, leave some doubting Schwabs ability to become a major player in Australia. Schwab is going to have a tough time here, Mara Bun, an analyst at Macquarie Equities, told BusinessWeek in April 2001.
GETTING HIRED
Schwab hosts a separate web site for undergraduate and MBA recruiting, located at www.schwabwfd.com. (The WFD stands for Work Force Development.) The site includes the firms recruiting schedule (Schwab recruited at 61 undergraduate schools and nine MBA schools in 2000-2001), as well as links to descriptions of open positions. According to an insider, the firm shows up at most Bay Area job fairs, and stages a few of its own from time to time. For MBAs, the firm offers a 13month Management Associate Program (MAP) that includes an initial classroomtype training program, followed by a series of three-month rotations. Undergrads are hired primarily in Jersey City, N.J., Denver, Colo., Orlando, Fla., Phoenix, Ariz., Indianapolis, Ind., Austin, Texas and San Francisco, Calif. Applicants can submit resumes electronically using the sites online resume submission form, by regular mail or by fax. Insiders say the company performs a background check, which they run past the Federal Bureau of Investigations before hiring a candidate. However, insiders also call interviews informal, to get an impression of the person beyond the resume.
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Great diversity
It is a very eclectic group of people, says one insider about the company. Schwab prides itself on its diversity and having employees that appreciate how much that enhances a companys performance. There is no old boys network here. Says an employee at the companys headquarters: Theres no locker room talk, even in private, about one race or another. They take harassment very seriously. No one cares if youre straight or gay, and people are pretty liberal and PC. Continues that contact: If youre going to run afoul of the corporate culture at Schwab, its most likely going to be in the opposite direction. I think if you made a remark hostile to sex, race, sexual preference or religion, youd probably get nuked. Schwab has won national renown for making its workplace friendly to gays and lesbians; it was among the first in the industry to extend equal benefits to their partners. Minorities and women have also fared well at Schwab when it comes to career opportunities. Many minorities and women are in senior positions and therefore diversity is not an issue, says one insider. Says another: Some of the women in my department have discussed a glass ceiling, but they are talking about the top 10 positions in the company being disproportionately males. Up to and including the VP level, Im not aware that there is any disparity.
Good perks
Pay at Schwab is considered average, but insiders agree that the benefits the firm kicks in push compensation into quite healthy levels. Starting salaries wont knock your socks off, but the company match on money put into ones 401(k) is generous. It wont seem like all that big a deal at first, but they keep giving us special grants of stock, which splits all the time, and quarterly bonuses, and lots of little extras and
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perks along the way. Another insider reports that pay will always be low to start off with until you get your professional Series 7 license to trade securities. However, says that contact, the perks are great. It really adds up to a lot of unrealized salary when you have such great health benefits, 401(k) plan and stock options. One contact reports receiving about $10,000 in benefits annually. Says another: This week theres a guy down in the warehouse whos retiring after only 15 years with the company with about $2.5 million in his 401(k). Not exactly Microsoft millionaires, but this is a pretty low-ranking guy who just did his job a good long while. For those with heart, Schwab offers nice benefits. Theyre quite generous in doing 100 to 200 percent company matches to charitable contributions, reports one insider. They encourage employees to donate to whatever individual causes they are for, and in some cases donate more than money, like building materials. The longer you stay at Schwab the more you see opportunities to turn your connection to the company into an increased opportunity to participate in more charitable stuff.
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Schwab prides itself on its diversity and having employees that appreciate how much that enhances a companys performance.
Charles Schwab insider
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V A U L T
PRESTIGE RANKING
20 Management
Alliance Capital
UPPERS
Excellent pay Reasonable hours
1345 Avenue of the Americas New York, NY 10105 Phone: (212) 969-1000 Fax: (212) 969-2229 www.alliancecapital.com
DOWNERS DEPARTMENTS
Equity Management Fixed-Income Management Research Bureaucracy Tough vacation policy
EMPLOYMENT CONTACT
Human Resources Alliance Capital 1345 Avenue of the Americas New York, NY 10105
THE STATS
Chairman and CEO: Bruce W. Calvert Employer Type: Public Company Stock Symbol: AC (NYSE) 2000 Revenue: $2.5 billion 2000 Net Income: $669 million No. of Employees: 4,400 No. of Offices: 26
KEY COMPETITORS
Fidelity Investments T. Rowe Price Vanguard Group
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since 1977. Williams remained the companys chairman until Calvert assumed the role in May 2001.
GETTING HIRED
Form an Alliance
Many of the firms equity, fixed-income analyst, and portfolio manager positions are in its New York offices. Alliance says it looks for knowledgeable and hardworking applicants. The extent and type of knowledge required varies by position. Try clicking on the Careers at Alliance button on the companys homepage to find out more about openings at Alliance. That button takes potential applicants to a site hosted by HotJobs.com listing open positions at the company. Candidates can also submit a resume and cover letter directly to the company if interested in a position thats not listed as open.
Some criticisms
Some employees say co-workers are generally okay, but criticize upper-level bureaucracy for slow decision making. Other criticisms include a bad vacation policy, and a great year-end bonus that is based more on corporate politics than merit. However, not all insiders agree with these assessments. Says one: The people are extremely open, kind and fun to work with. Continues that contact: The pay is excellent and commensurate with performance. If you work hard, you get ahead.
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The pay is excellent and commensurate with performance. If you work hard, you get ahead.
Alliance Capital Management insider
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V A U L T
PRESTIGE RANKING
21 Management
EMPLOYMENT CONTACT
Human Resources Gabelli Asset Management Inc. 1 Corporate Center Rye, NY 10580 Fax: (914) 921-5392 [email protected]
Gabelli Asset
1 Corporate Center Rye, NY 10580 Phone: (914) 921-3700 Fax: (914) 921-5392 www.gabelli.com
DEPARTMENTS
Asset Management Research Trading
THE STATS
Chairman, CEO and Chief Investment Officer: Mario Gabelli Employer Type: Public Company Ticker Symbol: GBL (NYSE) 2000 Revenues: $233.9 million 2000 Net Income: $58 million No. of Employees: 130 No. of Offices: 6
KEY COMPETITORS
Alliance Capital Management Franklin Resources Vanguard Group
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News article states that Gabelli paid an average of $17.38 per share for a little more than a half million shares.
GETTING HIRED
Introduce yourself
Check Gabellis web site, www.gabelli.com, for a listing of full- and part-time openings. Resumes and cover letters can be submitted directly from the site, and must be sent as plain text files (no attachments). If an opening is not listed on the site for a desired position, interested parties can apply by sending a resume and cover letter directly to the Rye, N.Y., office.
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[Gabelli Asset Management] says it seeks to identify undervalued companies with dominant industry positions.
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V A U L T
PRESTIGE RANKING
22 Robertson Stephens
UPPERS
Deal and client exposure for junior bankers Entrepreneurial spirit Friendly, warm culture
555 California Street Suite 2600 San Francisco, CA 94104 Phone: (415) 781-9700 Fax: (415) 248-4110 www.robertsonstephens.com
DEPARTMENTS
Capital Markets Convertibles Corporate Finance Mergers and Acquisitions Private Client Services Private Capital Research Sales and Trading Venture Capital
DOWNERS
High turnover and recent layoffs Lack of hierarchy can lead to disorganization Lack of infrastructure and support staff
EMPLOYMENT CONTACT
Investment Banking Leah Lovelace [email protected] Research Laurel Rund [email protected] Institutional Sales Pamela Rattary [email protected] Financial Services Department Amy DeTolla [email protected]
THE STATS
President and CEO: John Conlin Employer Type: Subsidiary of FleetBoston Financial 2000 Revenues: $1.6 billion No. of Employees: 1,200 No. of Offices: 9
KEY COMPETITORS
Credit Suisse First Boston Deutsche Banc Alex. Brown Thomas Weisel Partners
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Merger magnet
Like many other San Francisco area boutique banks (Hambrecht & Quist and Montgomery Securities being the two most notable examples), the firm became a merger target in the late 1990s. In 1997 Robbie Stephens chose BankAmerica, then the third-largest bank in the U.S., as its partner. BankAmerica, seeking to take advantage of Robbies underwriting and M&A capabilities, paid $540 million for Robbie Stephens. BankAmericas deep pockets enabled Robbie Stephens to expand its staff and to venture outside its high-tech industry base. The ink was barely dry on the BankAmerica/Robbie Stephens merger agreement when the parent decided to merge again. In April 1998, BankAmerica merged with NationsBank, which had previously snapped up its own investment bank Robbie Stephens cross-town rival Montgomery Securities. Neither Montgomery nor Robbie Stephens was happy about the prospect of being paired. The two firms had, in the words of a Robertson Stephens spokesman, a notoriously different approach to doing business. To avoid an I-banking death match, BankAmerica agreed to sell off Robbie Stephens investment banking operations (at the time, Montgomery seemed the far better catch) to BankBoston for $800 million in the summer of 1998. BankAmerica went on to relaunch itself as Bank of America, and renamed its investment-banking arm Banc of America Securities. Shortly after the acquisition by BankBoston, Sandy Robertson, Robbie Stephens founder and former chairman, left the firm, along with Misha Petkevich, the head of investment banking. Though such high-level departures usually open up the floodgates, few senior bankers left the firm. The $400 million employee-retention pool was a big factor, but observers say that Robbie Stephens and BankBoston handled the transition well in general, in stark contrast to the BankAmerica/Montgomery combination.
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Banking prowess
Robbie Stephens rebounded nicely from a sub-par 1998, reappearing on the 1999 league tables in its core industries. The company ranked fifth among advisors of technology M&A transactions and ranked third in the Internet sector. All told, the firm completed more than $60 billion worth of M&A transactions in 1999. Notable clients include WebMD in its $7.5 billion sale to Healtheon, Excite in its $7.2 billion purchase by @Home Network, and CMGI in that companys $2.3 billion purchase of AltaVista. In 2000 Robbie Stephens advised Ask Jeeves on its $507 million purchase of Direct Hit Technologies, E*Trade Group on its $1.8 billion acquisition of Telebanc Financial, and Healtheon/WebMD in a $1 billion investment by News Corp.
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In a red-hot tech IPO market, equity underwriting was another booming business for Robbie Stephens. In 1999 the firm lead managed numerous IPOs, including the $98 million December offering by OnDisplay, the $108.8 million offering by IBasis in November, and the $145.5 million IPO for Value America in April. In 2000 the firm lead managed OrphaPharmas $72 million March IPO, as well as the $77 million IPO for Opus360 and the $168 million IPO for DDI, both completed in April 2000. The company was also a co-manager on Palm, Inc.s $874 million offering in March 2000 and the $180 million IPO of EMachines in June 2000. Robertson Stephens biggest hit in 2001 was Verisity, which raised $23.3 million in March of that year. By midyear, Verisity was the top-performing IPO, having shot up 115 percent from its initial offering price. The company probably would have preferred a little less publicity for what was arguably its most high-profile IPO of 2000. Divine interVentures, a Chicago-based Internet incubator, experienced a trying time getting to the public markets. The company hired Robertson Stephens after founder Andrew Flip Filipowski and advisors at CSFB couldnt come to terms on whether to shelve the offering or go forward during the economic downturn. Robbie came on board and soon after encountered a roadblock when Filipowski talked to reporters in what was supposed to be a pre-IPO quiet period. Flips loose lips meant Robbie had to update the prospectus and re-file for the offering. When the company finally went public, it raised much less capital than Robertson Stephens had hoped for.
Taking stock
Early in 2001, Robbies parent FleetBoston announced a plan that would give the 400 employees who had attained vice president or above status ownership in the investment bank. The plan has been described as an employee retention tool for executives who stick with the firm for at least the next three years. Talk of a Robertson Stephens spin-off had been bandied about; the employee ownership plan seems to be considered a step in that direction, although Fleet will probably not move too quickly on a spin-off, considering lingering uncertainty about the economy. As a result of the treacherous economic conditions of early 2001, Robertson Stephens was sending out mixed signals on its hiring strategy. The firm announced plans to boost its European staff by 10 percent over 2001, including an increase of 30 percent in equity research. On the home front, however, Robbie Stephens began reducing headcount, laying off 160 workers, approximately 11 percent of the overall workforce. The layoffs were part of an overall trend among investment banks hurt by the economic slowdown of early 2001 and subsequent dearth of underwriting and
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advisory business. However, some analysts felt that costs leftover from the firms retention efforts after the numerous acquisitions of years gone by played a part in the layoffs, a charge a Robertson Stephens spokesperson denied.
GETTING HIRED
Picky picky
Like many niche investment banks, Robertson Stephens is fairly selective in hiring. Robertson Stephens is still who you know and in Boston, Ivy League is almost a must, says one contact. The firm conducts campus recruiting at top-tier undergraduate and MBA schools, including Harvard, Penn, Stanford, Columbia and the University of Chicago. When interviewing, expect to meet with at least five senior-level bankers. Typically, there is one round of on-campus interviews and a Super Saturday at the office the candidate is interviewing for, reports one insider. Candidates meet several bankers throughout the process, including informational sessions [and] social events. Another contact reports that final round interviews take place at corporate headquarters in San Francisco, though the firm says that investment banking recruits interview at field offices and other departments are considering following suit. Expect a broad range of questions. Interviewers can usually identify the capabilities of the interviewees by asking them to explain past experiences and course work, says one banker. The firm also tries to determine the level of interest that the interviewees demonstrate for banking, particularly technology banking. Dont just spout banking buzzwords, though. We also want to see that the candidate is personable, intelligent and articulate.
Culture of innovation
Bankers say the culture is the best part of Robertson Stephens. The firm does an excellent job of recruiting people who mesh well with the team-oriented
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environment, reports one insider. We take our culture seriously, says another contact. All the analysts in San Francisco work in one area the bullpen. We pride ourselves on working with each other, helping one another out so that everyone has an easier time with the demands that are placed on us. Analysts in New York and Boston also enjoy the bullpen life. For those in the bullpen, the firm provides fruit, sodas and snacks. New Yorkers at Robbie Stephens report a satellite feel. The New York office is only now rising to the level of the Boston office, says one banker. As a satellite office, there are unique challenges in staying in the loop. We will never be on par with San Francisco, but our experience here is possibly more humane, and we are in the center of the universe for all things civilized here in the Big Apple. There are trade-offs, of course, but I have been generally happy with my decision to stay in New York rather than relocating to San Francisco. Another New York-based employee adds, The firm is very laid-back and very much concerned about employees happiness.
No hierarchy
Relationships between senior and junior bankers are smooth. Were too busy for people to have big egos, says one source. Ive been very pleased with the senior bankers, says one young contact. I view them not just as bosses and co-workers, but rather as generally good people. I think theres a pretty good understanding about the pressures on a young bankers life, so they are sympathetic and empathetic. Observes another insider: The senior bankers at Robertson Stephens treat the younger [bankers] with much more respect than at other banks. In keeping with the congenial culture, the firm promotes a healthy social environment. The majority of bankers here have very athletic backgrounds and this carries over into the overall feel of the bank, reports one contact. Firm-sponsored events are common, with Friday afternoon beer bashes every month, group dinners and lunches, off-sites every quarter, and the occasional firm trip to Colorado for skiing. Insiders feel the firm is committed to creating a positive social environment that makes the day-to-day enjoyable.
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concern. The pay is all over the board, says one Boston banker. You have to pressure the firm to step up. In New York, the pay is not the highest, but certainly good compensation. The firm is considering ways to crank up the compensation for junior bankers who currently cant participate in our private investments. Reportedly, the firm recently raised analyst compensation to match Street increases. Hours at Robbie Stephens are on par with or better than industry average, according to most insiders. One source says M&A analysts can expect 100-hour workweeks, with 80 hours for corporate finance. Our travel schedule can be a little more demanding than at other firms because of the level of client contact and small deal teams, says another banker. Of course, in the words of one contact, We do work hard, but its a trade-off, too. Anything worth doing will require a commitment. Another source concurs: If you want a nine-to-five job, dont get into investment banking. The hours are long but rewarding.
Training evolution
The training program is an ever-evolving thing, says one insider. It is currently thought that for associates, training should be a refresher, to knock the cobwebs out from the summer. [Its] very focused on teaching the incoming class the Robertson Stephens mode of operation. That contact further notes that training is composed of several individual assignments focused on analytics and several group projects focused on applying those skills in real banking. The topper is a final project
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analyzing an M&A transaction with teams on both sides making presentations to senior bankers. For analysts, Robertson Stephens devotes an entire month to analyst training, according to one contact. After that, much of the training comes from exposure to deals. They do offer the opportunity for continuing education. Still, some feel the firm is a little behind other banks in terms of training. Robertson Stephens is not as full service an investment bank, so the training is limited to the areas we work in, says an insider. So I think training is much more extensive everywhere.
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V A U L T
PRESTIGE RANKING
One Montgomery Street San Francisco, CA 94104 Phone: (415) 364-2500 Fax: (415) 364-2695 www.tweisel.com
DEPARTMENTS
Private Client Private Equity and Asset Management Research Institutional Sales and Trading Investment Banking M&A and Corporate Finance
DOWNERS
Hasnt attained bulge-bracket status Lacks diversity Tech focus increases vulnerability to market conditions
KEY COMPETITORS
Credit Suisse First Boston Morgan Stanley Robertson Stephens
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Im outta here
Thomas Weisel founded Montgomery Securities in 1978. He sold Montgomery to NationsBank in 1997 for $1.3 billion. (Weisel himself reportedly netted between $100-$120 million from the deal.) Weisel originally intended to remain and run Montgomery after the sale. But Weisels plan to continue running Montgomery fell by the wayside when NationsBank merged with BankAmerica (now Bank of America). Weisel clashed repeatedly with NationsBank CEO Hugh McColl after the union with BankAmerica. At NationsBank, in effect, they were taking the entrepreneurial spirit away, Weisel would later tell Forbes. Specifically, after the NationsBank/BankAmerica merger, Weisel felt the bank was trying to fold Montgomery into the combined firm. This, Weisel told Red Herring, constituted a violation of the merger agreement and of my employment contract. (A little history: Montgomery narrowly escaped being merged with Robertson Stephens because BankAmerica had purchased Robbie. Initially, NationsBank and BankAmerica discussed combining the two I-banks when
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the parents merged, but decided against it. BankAmerica then sold Robbie to BankBoston and proceeded with its merger with NationsBank.) Weisel finally quit in September 1998. He told Red Herring: It was very easy for me to say, Fine, see you later. I had no interest in being around people who dont keep their promises. (It appears Weisel can enjoy the last laugh McColl announced his resignation in January 2001 because of BofAs lackluster performance.)
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Renaissance man
Weisel is described by those around him as intense and driven. He holds an AB from Stanford and a Harvard MBA and is an accomplished athlete. In fact, he is a fivetime speed skating champion who won his first title at the age of 14. (Rumor has it that Weisel just missed making the 1960 Olympic team.) Weisel has also served as chairman of the U.S. Ski Team. More recently, he sponsored Lance Armstrong and the U.S. Postal Service biking team in the 1999 Tour de France. Weisel is also a frequent financial contributor to the San Francisco Museum of Modern Art and a wing at the museum is named after him. His business prowess has also been recognized. He was named Executive of the Year in December 1999 by the San Francisco Business Times and won a 1999 Banker of the Year award from Investment Dealers Digest.
New partners
While 1999 was a solid year for the company, 2000 got off to a great start as well. The California Public Employee Retirement System (CalPERS) invested $100 million for a 10 percent stake in the company in January 2000. The investment valued the firm at approximately $1 billion after just a year in business. According to reports in Investment Dealers Digest, CalPERS also agreed to invest $500 million in Thomas Weisel Partners private equity funds and an additional $500 million to support new business activity by the firm. The bank added some new blood in February 2000 when Mark Shafir and Jamie Streator came aboard as partners. Shafir arrived from Merrill Lynch, where he was head of global technology investment banking. He joined Weisel as co-director of investment banking and co-director of the banks M&A advisory practice. Streator had been a health care banker at Hambrecht & Quist (now J.P. Morgan H&Q) and
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serves as head of the health care investment banking practice at Weisel. In October Weisel lured two new partners into the fold. Bob Kitts, a former managing director at Morgan Stanley Dean Witter, became TWPs co-director of M&A and director of the financial sponsors investment banking, while Gill Sawhney, an ING Barings managing director, joined the firm as a managing director in the health care group. In January 2001, Tony Stais left Goldman Sachs to join TWP as partner and head of sales trading. The firm also poached Credit Suisse First Boston research star Mark Manson as director of research in April 2001.
Quick splash
The firm quickly established itself as an up-and-comer among technology I-banking firms. One of its first transactions was advising Yahoo! on its $4.7 billion acquisition of Geocities in May 1999. The bank also advised REZsolutions on the companys $250 million purchase by Pegasus Systems in April 2000 and SDL on its mammoth $41 billion merger with JDS Uniphase. The firm scored a major coup over larger I-bank competitors by securing the JDS mandate. In speaking about the deal, I-banking co-head Mark Shafir told Dow Jones, The big firms do not have a monopoly on M&A talent. Other deals that kept TWP bankers busy in 2000: advising Exodus Communications on its $6.5 billion acquisition of GlobalCenter Inc. and Cisco Systems on its purchase of Active Voice Corp. Thomas Weisel Partners has also been active in the equity markets, though it has not lead-managed many transactions. In August 1999, the bank co-managed the $96.6 million Red Hat IPO. Thomas Weisel Partners was also one of several co-managers for the enormous $10.6 billion AT&T Wireless IPO in April 2000. In June 2000 Weisel led a follow-on offering for Flextronics worth $450 million. The firm also led a $58.9 million IPO for Harvard Bioscience in December 2000. Finally, Weisel was tapped to co-lead an IPO for Tellium in May 2001.
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Thomson Financial Securities Data. A spokeswoman for the firm informed IDD that TWP is definitely not for sale. Weisel himself sent a strongly worded letter to IDD, denying that the firm had seriously considered a sale or IPO. IDD stood by its assertion that the firms partners were asked to go without pay in the fourth quarter but noted that the firm did pay up, though much less than it paid in the first half of the year.
GETTING HIRED
Growth industry
As at many start-up organizations, insiders report that the hiring process at Thomas Weisel Partners is still being refined. Insiders report a very quick response [from the firm] if an individual is seen to have strong potential. People take recruiting very seriously. At times, the firm gets carried away with candidate pedigree, but this is changing. The firms target schools are the same as most of Wall Street, typically top-20 schools, but we will consider candidates from other [schools]. Candidates can expect one or two preliminary rounds, either on campus or at one of the satellite offices. After the preliminary rounds, candidates are flown out to San Francisco or New York for a series of final interviews. Interviewees meet between seven and 10 people who ask very technical banking skill questions as well as personality questions.
Near-perfect harmony
Some variation of opinions about working relationships with senior bankers at Thomas Weisel partners seems to exist among junior-level employees. To your face, people are pleasant, but the knives come out when you turn your back, fumes one employee. Junior people are used as fall guys for senior peoples incompetence, adds the disgruntled worker. Along those same lines, another banker says, Some senior bankers can show little interest in or respect for younger,
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developing bankers unless they are clearly stars. But this contact adds that most senior bankers offer help and encouragement across the board. A third co-worker offers up quite a different opinion regarding his experiences with senior bankers: They are not tight lipped with the thank-yous, and are respectful of my time commitment. In general Weisels environment is considered laid back and its people respectful. Versus the other firms at which Ive worked, the analysts are treated very fairly and given lots of responsibility, says one fairly happy employee. Senior bankers generally see junior bankers as part of the team not just resources and treat them with a high level of respect, echoes another insider. As for the culture, many employees describe it as entrepreneurial and collegiate. One insider says, Its not stodgy, but also not laid back. Its young and aggressive and extremely competitive. We work on integrated teams, but theres a feeling that you better carry your share of the load (and then some) or you better find a new job. Typically, the hours are long, but as one employee put it, theres no face time required. Another banker explains the work/life dynamic at TWP thusly, In New York, people wear 100 hours a week like a badge of honor. In California, it is a badge of shame. People work hard, but playing hard is just as important. Insiders report that diversity at Thomas Weisel Partners is not very good, but (sadly) we are probably on par for the industry. While contacts are careful to point out that I dont believe Ive seen intentional non-welcoming behavior, and the firm makes an effort to encourage diversity, there are very few women and minorities at the firm. In the end, the firms problems with diversity may be a result of its fast growth, which can make maintaining a diverse environment difficult. When you build a $450 million business in two years, concedes one banker, it is hard to be as proactive as larger, more established firms.
Class act
If theres one area where theres no disagreement, its about the offices themselves. As far as aesthetics go, Weisel offices are downright swanky. Employees say custom-designed furniture and beautiful art are staples in all the offices, not just the San Francisco headquarters. The offices in San Francisco and Menlo Park are extremely posh, reveals an insider. The New York offices are also very nice and are still undergoing construction. We just put in a very cool state-of-the-art sales and trading floor in our Park Avenue building. No expenses were spared. Dont get too excited, though. Many TWP employees, including principals, share offices.
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V A U L T
PRESTIGE RANKING
24 Franklin Resources
UPPERS
Tuition reimbursement Excellent job training
777 Mariners Island Boulevard San Mateo, CA 94404 Phone: (650) 312-2000 Fax: (650) 312-5606 www.frk.com
DOWNERS DEPARTMENTS
Asset Management Portfolio and Trading Research Sales and Marketing Bureaucracy
EMPLOYMENT CONTACT
Donna Ikeda Franklin Resources 777 Mariners Island Boulevard San Mateo, CA 94404 [email protected]
THE STATS
President and CEO: Charles Johnson Employer Type: Public Company Ticker Symbol: BEN (NYSE) 2000 Revenue: $2.3 billion 2000 Net Income: $562 million No of. Employees: 6,500 No. of Offices: 45
KEY COMPETITORS
Fidelity Investments Janus Capital Vanguard Group
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THE SCOOP
Steady growth
While it is possible to buy into Franklins funds directly, Franklin mostly sells through stockbrokers. Charles Johnson, the son of the firms founder, has been at the companys helm since 1958, and is largely credited with the firms impressive growth. The junior Johnson describes his investment style as utilizing a long-term outlook and intense bottom-up research, meaning that the firm gives much more weight to the strengths of potential and current investments than what is occurring in a particular business sector. Recent expansion efforts have added a touch of aggressiveness to the firms traditional conservative investing touch. These include the 1992 acquisition of Templeton, Galbraith and Hansberger, Ltd., a leader in international equity investing known for finding out-of-favor stocks believed to be undervalued. In 1996 Franklin merged with Heine Securities Corporation, strengthening the firms equity fund offerings.
Recent troubles
Franklin suffered a difficult year in 1998, when income dropped to $68 million, from $130 million in 1997. The firm attributed much of its troubles to the fiscal crisis in Asia. In January 1999, the firm laid off 7 percent of its workforce, cutting 450 employees in its San Mateo headquarters and 560 overall. The business was
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restructured, resulting in a $58 million charge. The cuts came as the result of a consolidation of clerical operations such as transaction processing; no investment management jobs were lost. Investors in the firms Templeton Emerging Markets Investment Trust were upset that the fund fell 6 percent in 12 months. According to a March 2001 article in Money magazine, the fund went on to lose a third of its value for 2000. Fund manager Mark Mobius, who is considered a guru on investing in foreign markets, told The Wall Street Journal, Weve all woken up to the reality of these markets. Were being a lot more discerning [about the stocks we buy]. Today, the firm seems to be on the upswing. Franklins Mutual series of funds suffered heavy losses following the departure of its star manager, Michael Price, in 1998. Franklins Mutual series of funds struggled in 1998 but showed some improvement in 1999. The funds then rebounded; all six funds in the series beat the S&P 500 Index in 2000, the first time entire series performed that well since 1994. There is some concern, though, that the firm may lose some of the funds managers in November 2001. Contracts for five of the six managers of the Mutual series will expire then.
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GETTING HIRED
Franklin maintains an employment section of its web site, www.frk.com. The page lists job opportunities and contact information for positions at various offices. Franklin offers a two-year development program for entry-level employees, The Futures Program (formerly called Management Training Program). The program is designed to expose employees to different functions, and offers training in a variety of areas including marketing, sales and portfolio management.
A challenging environment
When I think of Franklin, says one insider, a few words come to mind absorbing, high stress, fun, hard work. This challenging environment leads to a culture comprised of go-getters. Says one contact: The people I work with are a great bunch of people very sharp. Franklin employees note the pay is competitive, and the experience you can gain is great. Perks include full medical and dental coverage, and 100 percent tuition reimbursement for employees taking courses related to their work.
Good training
Employees note there is lots of opportunity at Franklin. According to one employee, the best route for recent college grads is through the Futures Program: It is a two-year program where you rotate through various departments every four months, and during the last several months of the program you hope to find a department that you like, and will take you on permanently. Says another insider about the program: Its well regarded by our competitors who often hire [graduates of the Futures Program] because its such a cost effective way to get good management material.
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V A U L T
PRESTIGE RANKING
25 Bear Stearns
UPPERS
Responsibility for juniors Top of the pay scale
245 Park Avenue New York, NY 10167 Phone: (212) 272-2000 Fax: (212) 272-4785 www.bearstearns.com
DOWNERS DEPARTMENTS
Asset Management Custodial Trust Derivatives Equities Fixed Income Global Clearing Services Investment Banking Merchant Banking Private Client Services Sink-or-swim culture not good for those who cant swim Company strives to cut corners
EMPLOYMENT CONTACT
Investment Banking Undergraduates: Megan Kelaghan Recruiting Manager, Investment Banking MBA: Abbe Shatles Recruiting Manager, Investment Banking Bear, Stearns & Co. 245 Park Avenue New York, NY 10167 Fax: (212) 272-3052 Private Client Services MBA: Robert Benjamin Senior Managing Director Bear, Stearns & Co. 245 Park Avenue New York, NY 10167 Fax: (917) 849-0218 For more contacts, check the career section of www.bearstearns.com.
THE STATS
Chairman and CEO: James Cayne Employer Type: Public Company Ticker Symbol: BSC (NYSE) 2000 Revenue: $10.3 billion 2000 Net Income: $773 million No. of Employees: 11,200 No. of Offices: 21
KEY COMPETITORS
Deutsche Bank J.P. Morgan Chase Lehman Brothers Merrill Lynch
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THE SCOOP
Always profitable
Bear Stearns & Co. is younger than many of its high-profile rivals, but the firms reputation stands up to those of its competitors. Known as Bear to Wall Street players, the venerable institution is one of the nations top investment banking, securities trading and brokerage firms. With about half a million dollars in capital among the three of them, Joseph Bear, Robert Stearns and Harold Mayer started Bear Stearns in 1923. The firm initially operated with a small staff out of a single office at 100 Broadway. Founded as a partnership, Bear Stearns originally focused on brokerage. With a gamut of financial services available, Bear Stearns now serves as financial advisor to many of the nations major corporations and its clearing operations are a top choice of brokerage and other investment firms around the country, including many of its own rivals. After a few years of profit hibernation during the early 1990s, Bear Stearns has bounced back and is outgrowing its office space at a rapid pace. The company is currently building a new headquarters in New York, which is expected to be completed in 2002. Bear has something of a ferocious reputation for cultivating a sink-or-swim culture and was headed for 15 years by a colorful chairman so thrifty that he reportedly tied broken rubber bands back together. But Bear employees report being satisfied with the relatively small (by Wall Street standards) organization and the entrepreneurial possibilities and sense of responsibility that the firm promotes.
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Big Board. (Specialist firms manage trades of specific stocks, as well as the trades of certain firms.) The purchase is being made in partnership with Hunter Partners, the seventh-ranked specialist firm. Bear Stearns will own 49.8 percent of Wagner Stott; Hunter will own the remaining 50.2 percent. Taking less than half interest in the firm means Bear wont have to report Wagner liabilities on its balance sheet; Bear will have to report profit and losses on its income statement, though. Wagner Stott counts Citibank and Merrill Lynch as its major clients, putting Bear Stearns in the unusual position of being in charge of the orders of two competitors. The transaction closed in April 2001.
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Legal troubles
Unfortunately, Bear Stearns clearing operations have also generated some unwanted attention. One of the many brokerages for which the firm has cleared transactions, A.R. Baron, collapsed after bilking as many as 8,000 investors out of more than $75 million. The government investigated a possible Bear Stearns role in the Baron case in particular, the ties between former Baron CEO Andrew Bressman and Richard Harriton, Bear Stearns former chief of clearing. Bear agreed in June 1999 to pay $38.5 million in restitution and penalties to settle the SEC charges. In April 2000, Harriton paid a $1 million fine as a settlement with the SEC without admitting or denying any wrongdoing. Under the terms of his settlement, Harriton paid the fine and was banned for life from the securities industry but did not admit to or deny the charges. In September 2000, a federal judge granted class-action status to a series of lawsuits filed against Bear and Harriton by A.R. Baron customers. The plaintiffs lawyer told The Wall Street Journal that they would be seeking between $50 and $100 million in the lawsuit.
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Bears clearing troubles were not yet behind it. A few weeks prior to Harritons settlement, Bear was named in a class-action lawsuit by Cromer Finance. Cromer Finance invested in Manhattan Investment Fund, a $400 million hedge fund that lost nearly $300 million. The funds manager, Michael Berger, was accused by the SEC of covering up these losses. According to the lawsuit against Bear, the company was aware in 1998 that Berger was losing large amounts of investor money but did not act to hinder his activities. The suit also charges that Bear slyly hinted to certain investors, with whom the investment bank had other business relationships, that they should pull out of the fund. The firm had other legal problems, as well. The bank was ordered to pay a Canadian investor $111.5 million by a federal grand jury in May 2000; the trial judge tacked interest onto the verdict, bringing Bear Stearns payment total up to $164 million. The wealthy investor claimed his Bear Stearns broker failed to disclose the risks involved in currency trades he made in the late mid- to late-1990s. Bear countered that the client, who at one time had currency positions valued at $6.5 billion, was a sophisticated investor well aware of the risks he was facing. The award, one of the largest against a Wall Street firm, led to a significant drag on the banks secondquarter 2000 earnings, which were $118.4 million down from $198.1 million for the same period in 1999.
GETTING HIRED
For investment banking, the firm targets approximately 12 business schools. At these schools, either the co-head of investment banking or another high-ranking official makes a presentation. At about five other business schools, the firm interviews but does not give presentations. Dont worry if your school is not targeted. The firm conducts in-house interviews for those who write in from out-of-the-way schools. Bear Stearns draws many of its associates from its summer programs. The summer hiring process is condensed into a three-week period. The first round is usually an on-campus, two-on-one interview. While students at some schools will travel to Bears New York headquarters for second rounds, many will simply interview again that evening on-campus. (For example, since the University of Chicago business school does not excuse time off from classes to travel for interviews, Bear conducts both first and second rounds on campus.) The final round in New York is described as the typical super day format with analyst-level candidates meeting mostly with
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associate and VP-level bankers and associate candidates meeting mostly with VP and managing director/senior managing director-level people. That source also reports that one of the two co-heads of investment banking generally interviews every associate candidate. The firm also generally targets about 40 undergraduate schools each year. It hires about 100 analysts into I-banking worldwide, and about 75 of them work in New York. Although Bear accepts resumes from all undergraduate schools, for summer analyst positions Bear likes to have representation from its core schools the firm only recruits on campus for summer analysts at Wharton, Dartmouth, Michigan and the University of Virginia. Insiders say not to look for technical questions. There is a uniqueness to our culture and we look for people who can both enhance it and excel in it, says one source. We stay away from the brain teaser questions. Another contact concurs, saying Bear asks the typical banker questions. Why banking, why you and why you with Bear? Some technical questions for undergrad students with a business degree and MBAs but nothing out of the ordinary [it] all depends on the interviewer. The firm doesnt recruit undergrads for sales and trading, although those with BAs who complete the firms operations training program can go into sales and trading. For associates in sales, trading, research and public finance, the firm recruits on campus at 10 business schools NYU, Columbia, Harvard, Wharton, Chicago, Kellogg, Stanford, UCLA, Fuqua and Darden. Says a recruiter, We do very well with Columbia, NYU and Chicago; those are our three best. Associates are hired into one of four departments: fixed income, equity, research or public finance. Candidates in these areas can expect one-on-one interviews, with probably two rounds. For a full-time hire, you have to have six interviews, according to one insider. Summer hires generally go through an on-campus round and then one callback. About 50 to 75 percent of the sales trading, and public finance associate class is hired through the summer program. In these departments, the firm hires about 20 to 25 summer associates and about 20 full-time associates. All fixed-income hires complete 12 weeks of rotations, covering six different desks, and are placed after that; the equity division hires students for both specific slots and as generalists. All research positions are hired on an as-needed basis.
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Sink or swim?
While insiders note the lack of hand-holding that might be present at some other firms, at least one Bear employee says everyone has the chance to become a star player for the firm. Some employees say the firm has a survival of the fittest mentality which extends into all ranks. Bear is very much a cowboy culture, continues another source. [Theres] lots of whooping and hollering emanating from the trading floor. A colleague put it best: Every man is his own corporation, with his own bottom line. Bear employees are quick to point out that the firm is not a completely sink-or-swim environment, saying that they are provided support from senior employees. Bear people are, above all else, individuals, and the culture not only accepts but applauds this. Still, the firm makes an effort to encourage teamwork. I-banking associates are assigned a junior and a senior mentor (a VP as the junior mentor and an MD as
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the senior mentor). There are those who downplay the competitive culture. The bottom line is to make money, says one associate. If all that they say about back stabbing and sink-or-swim were true, how the hell would we make any money? From a junior bankers perspective, the culture encourages development and rewards those who excel, brags another insider. It truly is a meritocracy.
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No joke, if I see a paper clip on the floor or a pen on somebodys desk if somebodys stupid enough to leave a pen on their desk I take it.
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Success at Bear Stearns depends partly on good results and partly on patronage.
Bear Stearns insider
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FINAN FIRMS
THE BEST OF THE REST
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UPPERS
Lucrative profit sharing No face time Schmooze with the stars
DEPARTMENTS
Asset Management Investment Banking Sales and Trading Venture Capital
DOWNERS
Bad deals can savage salaries Extraordinarily competitive and difficult hiring process Must do own research
THE STATS
CEO: Herbert Allen, Jr. Employer Type: Private Company No. of Employees: 200 No. of Offices: 1
EMPLOYMENT CONTACT
Human Resources Allen & Co. 9th Floor New York, NY 10022
KEY COMPETITORS
Goldman Sachs Lazard Morgan Stanley Veronis, Suhler & Associates
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THE SCOOP
Founded in New York in 1922, Allen & Co. is a highly unusual investment bank. Bankers are required to pay their own travel and support expenses and the firm demands that principals at the company do their own research. Despite that, anyone in the industry will tell you that bankers from Allen & Co. are among the most highly regarded in the I-banking universe. Thats because the firm, which specializes in media M&A work, carries prestige, an impressive array of media clients and investment opportunities rarely matched by other banks. Besides its M&A prowess, Allen & Co. is probably best known in the industry for its Sun Valley conference, an annual gathering of entertainment and business elite in Sun Valley, Idaho. Brothers Charles and Herbert Allen founded Allen & Co. as a partnership in 1922. The company provides a mix of investment banking (including securities underwriting and mergers and acquisitions), private equity and venture capital and investment management services.
GETTING HIRED
Allen & Co.s personnel department does not accept outside calls, does not maintain a job hotline and does not publicize job openings. The firm does, however, accept resumes mailed to its headquarters. Allen hires only MBAs as bankers and typically requires two to three years of experience. Insiders say getting a job directly out of business school is rare, and getting hired right out of college is next to impossible. In an exclusive interview with Vault, Allen & Co. Chairman Don Keough had this to say to prospective Allen employees: My advice to a young person, especially a business school student, interested in Allen & Co. is to be sure you become an interesting person. You should develop a full range of interests and not worry about a career. Secondly, any young person who doesnt put the international world into perspective is a damn fool. Any education in todays world must incorporate some part of it outside the United States.
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EMPLOYMENT CONTACT
www.americancentury.com/careers
DEPARTMENTS
Finance/Accounting Investment Management Market/Research Analysis Retirement Plan Services Sales Trading
THE STATS
President and CEO: William M. Lyons Employer Type: Private Company No. of Employees: 3,100 No. of Offices: 4
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THE SCOOP
American Century Investments was founded in 1958 by James Stowers, Jr., in Kansas City. Though the company initially offered just two mutual funds, American Century now offers individuals and institutions a variety of investment management options, including IRAs, 401(k)s and 403(b)s, trusts, separate and subadvisory accounts and more than 70 mutual funds. American Century has more than $95 billion in assets under management. Formerly Twentieth Century Investments, the firm changed its name to American Century Investments following a 1995 merger with fixed-income investment firm Benham Group. Although hes no longer responsible for day-to-day management, Stowers still has an active role in the company, serving as chairman of the board. He and his family retain a controlling interest in the firm. However, financial services giant J.P. Morgan Chase owns a big chunk of the company; the former J.P. Morgan purchased a 45 percent stake in 1998 for $900 million. Although Morgan Chase has two seats on American Centurys board Stowers still controls most of the voting stock. American Century plans to leverage the Morgan Chase relationship by marketing its retirement plans to Morgan Chase customers. Another high-profile American Century partnership is with Charles Schwab, which is acting as a distributor of American Centurys 529 college savings program. American Century is the administrator of the State of Kansas 529 plans.
GETTING HIRED
Check out American Centurys web site, www.americancentury.com, to search a listing of the companys job openings. Prospective employees can also create a profile based on their area of interest and preferred location. American Century will then e-mail candidates jobs matching the information in their profiles. The firm says it is committed to providing opportunities for advancement. According to the firm, 52 percent of its job openings in 2000 were filled by people already employed at the firm. New hires go through a two-day orientation. Based on pre-set goals, each employee creates what the firm calls an individual success plan. Employees can monitor their plans through the companys intranet, complete with links that connect the individuals goals to department objectives. The firm offers additional courses onsite and online. American Century has been named one of the top 100 companies to work for by Working Mother and Fortune magazines.
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UPPERS
More responsibility at junior level
DOWNERS
Muddled culture due to extensive merger history
THE STATS
CEO: Ken Lewis (Bank of America) President, Global Corporate and Investment Bank: Ed Brown Employer Type: Division of Bank of America No. of Employees: 9,000 No. of Offices: 60
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THE SCOOP
Born of complicated merger history, Banc of America Securities is the investment banking arm of Bank of America Corporation, a Charlotte, N.C.-based commercial bank. Banc of America Securities has focused on companies in eight primary industries: technology, consumer retail products, health care, real estate, financial services, media and telecommunications, natural resources, and diversified industries. The investment banking practice has 60 offices worldwide with hub offices in New York and San Francisco.
GETTING HIRED
Insiders report that Banc of America Securities recruits from Ivy League and larger regional schools. MBAs say candidates can generally expect two rounds of interviews. The first round is more technical and more why do you like us and why do you want to do banking? The second round is definitely determining whether [the candidate] fits with employees at [the company], says one associate. The firm hires investment banking MBAs directly into an industry focus or product area.
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Bank of America
100 North Tryon Street Charlotte, NC 28255 Phone: (704) 386-5000 Fax: (704) 386-6699 www.bankofamerica.com
UPPERS
Entrepreneurial culture Growing in investment banking, asset management
DEPARTMENTS
Asset Management Consumer and Commercial Banking Global Corporate and Investment Banking Principal Investing
DOWNERS
Big bank means big bureaucracy Following industry layoff trend
EMPLOYMENT CONTACT
Bank of America Scanning Operations Attn: WWW CA4-707-01-37 PO Box 37000 San Francisco, CA 94137 [email protected] Applications for retail branches and regional offices can be sent to the particular office.
THE STATS
Chairman and CEO: Kenneth Lewis Employer Type: Public Company Stock Symbol: BAC (NYSE) 2000 Revenue: $57.8 billion 2000 Net Income: $7.5 billion No. of Employees: 142,700 No. of Offices: 4,500
KEY COMPETITORS
Bank One Citigroup First Union FleetBoston J.P. Morgan Chase
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THE SCOOP
Bank of America is certainly living up to its name. Formed by the $43 billion merger of the already large Bank of America and NationsBank, it has approximately 4,500 branches in 21 states and the District of Columbia. Before the merger, which was completed in September 1998, Bank of America (then known as BankAmerica) was the third-largest commercial bank in the country. The combination created the second-largest American bank, in terms of assets. With 8.1 percent of U.S. bank deposits and 29 million households as customers, BofA is the largest in the country in terms of number of accounts under management.
GETTING HIRED
At Bank of America, MBA-level associates are recruited directly by each department. One former employee cautions: Heres a tip. You cant always choose your city. [The firm] will try, but for example if you want to work in high-yield bonds, you arent going to be working in San Francisco. The firm also recruits on the undergrad level at UC Berkeley, UC Davis, Stanford, the University of Wisconsin and the University of North Carolina at Charlotte. Candidates from other schools and working professionals can search the companys job listing and submit a resume online.
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UPPERS
Job security Profit sharing
DOWNERS DEPARTMENTS
Asset Management Corporate Banking Global Market Services Global Payment Services Private Client Services Retail Banking Securities Services Bureaucracy Limited advancement opportunities
EMPLOYMENT CONTACT
Human Resources One Wall Street 13th Floor New York, NY 10286
THE STATS
Chairman and CEO: Thomas A. Renyi Employer Type: Public Company Ticker Symbol: BK (NYSE) 2000 Revenue: $7.5 billion 2000 Net Income: $1.4 billion No. of Employees: 18,860 No. of Offices: 400+
KEY COMPETITORS
Bank of America Citibank J.P. Morgan Chase
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THE SCOOP
The Bank of New York (BNY) was founded in 1784 and is now the oldest bank operating under its original name in the U.S. The companys constitution was written by Alexander Hamilton, founding father and the first Secretary of the Treasury. The Hamilton connection came in handy for BNY; the company made the first loan to the United States, for $200,000 in 1789. When the New York Stock Exchange was founded three years later, BNY was the first stock traded. Now, the company provides a full range of corporate and individual services, including retail and commercial banking services and custodial and trust services (handling of assets for individuals and businesses).
GETTING HIRED
The Bank of New Yorks web site, www.bankofny.com, has a complete listing of job openings, qualifications and descriptions. The firm posts developmental positions for both MBAs and college grads, as well as for those in computer technology. Expect to meet an HR representative, then several managers in your division including (in some cases) the division head. And be careful not to fib on your resume or in your interviews. Be aware that HR will check up on the information you provide them experience, education, salary, etc., says one source. If it is discovered that you are dishonest in how you present yourself, you will be asked to leave the firm.
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BlackRock
345 Park Avenue 29th Floor New York, NY 10154 Phone: (212) 754-5560 Fax: (212) 754-3123 www.blackrock.com
EMPLOYMENT CONTACT
BlackRock, Inc. Attn: Recruiting 101 East 52nd Street, 7th Floor New York, NY 10022
DEPARTMENTS
Account Management Global Operations Information Technology Portfolio Management Real Estate Funds Risk Analytics Sales/Marketing
THE STATS
Chairman and CEO: Lawrence D. Fink Employer Type: Public Company Stock Symbol: BLK (NYSE) 2000 Revenue: $476.9 million 2000 Net Income: $87.4 million No. of Employees: 727 No. of Offices: 6
KEY COMPETITORS
Gabelli Asset Management PIMCO Advisors T. Rowe Price
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THE SCOOP
For a firm that few people outside the financial industry have even heard of, BlackRock has had a long and successful history. The company was created in 1988 as a unit of leveraged buyout firm Blackstone. Its mastery of the bond market has netted the company more than $200 billion in assets under management. The firm also sells a variety of mutual funds and risk management products to institutional and individual investors. Blackrock runs 700 mutual funds that service approximately 200,000 individual investors and 3,300 institutional clients and is the 13th-largest manager of institutional assets. The company has six offices, including a joint venture with Tokyo-based Nomura Securities. Blackrock was essentially created in 1988 when Larry Fink, the firms chairman and CEO, left what was then First Boston to create a fixed-income asset management business for private equity powerhouse Blackstone. Fink and his management group were given a 60 percent stake in the asset management business. Within three years, the team had built up $9 billion under management and a client list of heavy hitters (including Chrysler and GE). But Fink and Blackstone management clashed over strategic planning issues: He wanted to issue more shares with which to entice prospective fund managers; Blackstone didnt want to dilute its equity. Fink and the firm were at a stalemate, with the only solution being dissolution, so in 1995 Fink and friends left Blackstone, sold to PNC Financial Services for $240 million. Out of an interest in maintaining some connection to the reputation he built at Blackstone, Fink named the fixed-income unit BlackRock. By 1998 PNC had folded much of its asset management services, including its equity and liquidity management businesses, under the BlackRock umbrella. In October 1999, BlackRock went public, selling a 14 percent stake for $126 million, marking the first time a bank had spun off an asset management unit as a public company. The firm is run by an independent management committee that includes Fink and the founders.
GETTING HIRED
The firm offers internships in accounting for juniors and a year-round internship in account administration. BlackRock recruits at more than 20 universities, including Columbia, Cornell, Howard, NYU, Princeton and the University of Virginia. In addition, the company attends several job fairs each year in New York, Washington, D.C., and Chicago. Consult the firms web site for further details and recruiting schedules. Once a year, BlackRock gives a four-week training program for incoming employees. Other employees are allowed to attend the training, regardless of how long theyve been with the firm.
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249
Broadview International
One Bridge Plaza Fort Lee, NJ 07024 Phone: (201) 346-9000 Fax: (201) 346-9191 www.broadview.com
UPPERS
Easier hours than bankers on the Street Analysts given responsibility at an early stage
DEPARTMENTS
Divestitures Mergers and Acquisitions Private Equity Recapitalizations Refinancings
DOWNERS
N.J. headquarters inconvenient for some Manhattanites Single-sector focus could hurt firm in market downturn
THE STATS
Chairman and CEO: Paul Deninger Employer Type: Private Company No. of Employees: 350 No. of Offices: 5
EMPLOYMENT CONTACT
Justin Kulo Recruiting Manager Broadview International One Bridge Plaza Fort Lee, NJ 07024 Fax: (201) 346-9191 [email protected] [email protected]
KEY COMPETITORS
Allen & Company Dresdner Kleinwort Wasserstein Thomas Weisel Partners
250
THE SCOOP
Founded in 1973, Broadview International has become a major player in the mergers and acquisitions field, especially in middle-market transactions. The firm focuses exclusively on IT, communications and media deals. In 2000 the firm executed 105 M&A transactions with a cumulative value of $32 billion. The company also led 10 private placements worth $951 million over the same period. Broadviews venture capital unit makes early- and late-stage investments and has over $570 million under management. The firm has approximately 350 employees in five offices worldwide. Chairman and CEO Paul Deninger has led the company since 1997. Citing the industry environment, Broadview cut 50 employees, including analysts and support staff in the M&A advisory division, in June 2001.
GETTING HIRED
Broadview recruits analysts and associates at top U.S. and European schools. Calendars for presentations and on-campus interviews can be found at www.broadview.com. The firm hires undergrads into a two-year analyst program that begins with three weeks of training in the firms Foster City, Calif., office. Unlike some other investment banks, Broadview prefers one-on-one interviews to two-on-ones. The process for analysts involves an on-campus interview (or one at the firms headquarters) and then a super day, usually a Saturday, with four to six interviews. Insiders say you can expect to see at least two senior bankers, typically managing directors.
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251
EMPLOYMENT CONTACT
The Capital Group Companies 333 South Hope Street Los Angeles, CA 90071-1447 Fax: (213) 486-9035
DEPARTMENTS
Global Institutional Investment Services Global Private Equity Personal Investment Management U.S. Mutual Funds
THE STATS
President: Larry Clemmensen Employer Type: Private Company No. of Employees: 5,000 No. of Offices: 19
KEY COMPETITORS
Charles Schwab Fidelity Investments Vanguard Group
252
THE SCOOP
Although it may have a lot to crow about, the Capital Group Companies is one of the most low-key firms in the financial industry. Capital Group, a privately held firm formed in 1931, has more than $500 billion in assets under management and 19 offices around the world, but its executives choose to keep a low profile, rarely granting interviews. Founded during a time when the reverberations of the stock market crash of 1929 were still being felt, Capital Groups philosophy of prudent, long-term investing as opposed to investing in the current hot sector continues to serve it well today. The firm was begun by investment researcher Jonathan Bell Lovelace. Lovelaces observance of market conditions led him to believe that many of the stocks on the market were overvalued, but he was unable to convince his partners at E.E. MacCrone & Co. Fearing a market downturn, Lovelace sold many of his personal investments in the summer of 1929. Two years later, Lovelace started the Capital Research and Management, the precursor to the Capital Group. By 1939, Lovelace had reorganized the assets of a former client, The Investment Company of America, creating the firms first open-end mutual fund. ICA later became the flagship product of American Funds Group, a subsidiary of Capital.
GETTING HIRED
Capital management prefers to call those who work at the firm associates, rather than employees. According to corporate literature, the use of the term indicates that everyone who works for Capital Group plays an important role in the companys growth. It should come as no surprise, therefore, that job candidates undergo a thorough interview process. Applicants should be prepared to meet many people with whom you may interact if you become an associate. Those interested in employment at Capital should search the listing of open positions on the firms site, www.capgroup.com. Searches can be conducted by location or job function. Resumes can be submitted online; they can also be faxed or mailed to a specific office with an opening. Capital is known in the industry for having low turnover among associates; the firm claims the annual rate hovers near 5 percent. Benefits may account in part for the low turnover. In addition to the standard health and 401(k) benefits given by most companies, Capital associates receive reimbursements for approved educational programs and gym fees, same-sex partner health benefits and a retirement fund contribution equivalent to 15 percent of annual salary.
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UPPERS
High level of deal exposure Relaxed working environment
DOWNERS
Long hours Not as well known as other firms on the Street
DEPARTMENTS
Equities Investment Banking Leveraged Finance
EMPLOYMENT CONTACT
Campus Recruiting CIBC World Markets USA 1 World Financial Center 36th Floor New York, NY 10281 Fax: (212) 667-5314
THE STATS
Chairman and CEO: David Kassie Employer Type: Subsidiary of Canadian Imperial Bank of Commerce 2000 Revenues: $3.1 billion 2000 Net Income: $731 million No. of Employees: 3,300 No. of Offices: 32
KEY COMPETITORS
Bear Stearns Lehman Brothers TD Securities
254
THE SCOOP
CIBC World Markets, the investment banking and brokerage arm of the Canadian Imperial Bank of Commerce (CIBC), provides access to debt and equity markets, leveraged lending, mergers and acquisitions advice and everything else a company could need. Rather than pursuing big clients that have existing relationships with bulge-bracket firms, CIBC serves mid-sized corporations. We believe that theres a big chunk of companies that arent served well by bulge-bracket firms, Paul Rogers, CEO of CIBC World Markets U.S. operations, explains.
GETTING HIRED
On the interview day, its a half-day, with five or six interviews. The interviews are 30 minutes, one-on-ones with senior-level people. As for the questions, says that contact, Some people go straight for finance and technical, and some people go for, Do you have any sort of life? Insiders say interviewers are impressed by those targeting CIBC. Theyre looking for someone who, if they can extend an offer, is going to take it. It matters how strong your interest is.
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UPPERS
Friendly colleagues High-quality deals
DOWNERS
Slow workflow/lots of downtime Long hours
DEPARTMENTS
Asset Finance Bank Debt Dresdner Kleinwort Capital Equities Debt Capital Markets Mergers, Acquisitions and Advisory OTC and Structured Sales
EMPLOYMENT CONTACT
M&A Recruiting Analyst, Associate and Lateral Hiring: Frances A. Lyman 1301 Avenue of the Americas New York, NY 10019 Fax: (212) 969-7977 [email protected] Associate MBA Recruiting, Debt & Equity Sales & Trading, Research, Information Technology and Online Markets: Jacquelyn Johnson [email protected] Associate Lateral Hiring, excluding M&A: Jeffrey Mann Fax: (212) 429-2467 [email protected] 75 Wall Street New York, NY 10005-2889
THE STATS
Executive Chairman and CoChairman: Bruce Wasserstein CEO and Co-Chairman: Leonhard Fischer Employer Type: Subsidiary of Dresdner Bank AG No. of Offices: 36
KEY COMPETITORS
Goldman Sachs Lazard Morgan Stanley
256
THE SCOOP
In January 2001, Wasserstein Perella combined with Dresdners London-based investment bank, Dresdner Kleinwort Benson (DKB) to form Dresdner Kleinwort Wasserstein for approximately $1.4 billion. WP Founder Bruce Wasserstein and Dresdner CEO Bernd Fahrholz serve as executive directors, while Leonhard Fischer, DKB CEO, is filling the same role at the new firm. As part of the deal, Dresdner set aside $190 million for retention payments maturing in 2002-2003. We want to keep the [Wasserstein] people medium-term, a Dresdner spokesman told Reuters. DKW doesnt transact the same volume of deals as some of its bulge-bracket competitors, but it has advised on some major deals, most notably the Time Warner/America Online merger. The firm also advised UBS on its $12 billion acquisition of PaineWebber and Ernst & Young Global Consulting on its $11 billion purchase by Cap Gemini. The firm provides its clients with access to equity and debt capital market. The Grantchester Securities division of the firm focuses on fixed income sales, trading and research. The primary groups in this division are high yield, distressed securities and private debt.
GETTING HIRED
Dresdner Kleinwort Wasserstein posts information regarding its internship, analyst and associate programs on its web site, www.drkw.com. Resumes and cover letters can be submitted electronically.
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257
Federated Investors
Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 Phone: (412) 288-1900 Fax: (412) 288-2919 www.federatedinvestors.com
EMPLOYMENT CONTACT
Employment Services 19th Floor Federated Investors Federated Investors Tower Pittsburgh PA 15222-3779 Fax: (412) 288-6823 [email protected]
DEPARTMENTS
Clearing Services Investment Management Investment Research Marketing Sales
THE STATS
President and CEO: J. Christopher Donahue Employer Type: Public Company Ticker Symbol: FII (NYSE) 2000 Revenue: $680.8 million 2000 Net Income: $155.4 million No of Employees: 1,900 No of Offices: 7
KEY COMPETITORS
Janus Capital SEI Investments Vanguard Group
258
THE SCOOP
Federated Investors was founded in 1955 by John Donahue, Richard Fisher and Thomas Donnelly. The trio borrowed enough capital to set up shop in Pittsburgh, Pa., where they began selling savings plans and mutual funds door-to-door. The company went public in 1960 and was purchased by Aetna in 1982. The firm claims to have introduced government bond funds, municipal bond funds and high-yield bond funds, as well as the method for valuing money market fund shares at $1. Federateds management, especially the Donahue family, was reportedly unhappy with Aetnas control; the Donahues bought 75 percent of the firm back from Aetna in 1989 and the rest in 1996. The company is now run by J. Christopher Donahue, the eldest son of founder John. Christopher joined the firm in 1972 and was appointed COO in 1993. He became CEO five years later and led the company through its 1998 IPO. (The Donahue family still owns approximately 20 percent of the companys shares.) Federated is a lesser-known investment management firm, mainly because the companys 138 mutual funds are targeted to institutional clients. Federated has a reputation for aggressively marketing its services to those institutional clients, including wooing decision makers at the firms. Millions of shrimp have sacrificed themselves for Federated Investors, Christopher Donahue told Money & Investments, referring to the companys penchant for wining and dining potential clients. The strategy has been effective; Federated has approximately $146 billion in assets under management (as of March 31, 2001).
GETTING HIRED
Federateds web site, www.federatedinvestors.com, lists open positions in numerous departments, including investment research, investor services, sales and product development. The web site suggests applicants send resumes to Federateds Pittsburgh headquarters. The site also details the companys benefits program. Federated offers comprehensive health insurance, profit sharing, 401(k) and employee stock purchase plans, and tuition assistance, among other things.
Visit the Vault Finance Job Board one of the best job boards on the Internet exclusively for finance professionals. Go to www.vault.com.
259
First Union
One First Union Center Charlotte, NC 28288 Phone: (704) 374-6565 Fax: (704) 374-3425 www.firstunion.com
UPPERS
Excellent benefits Fast-growing company
DOWNERS DEPARTMENTS
General Banking Capital Management Capital Markets Credit Administration E-Commerce Finance Can be political Culture in flux due to many mergers
EMPLOYMENT CONTACT
First Union Corporation ATTN: Resume Scanning 1525 West W.T. Harris Boulevard Charlotte, NC 28288-0970
THE STATS
Chairman and CEO: Ken Thompson Employer Type: Public Company Ticker Symbol: FTU (NYSE) 2000 Revenue: $24.2 billion 2000 Net Income: $92 million No. of Employees: 71,300 No. of Offices: 2,600
KEY COMPETITORS
Bank of America Citibank FleetBoston
260
THE SCOOP
First Union traces its history back to 1908 with the founding of Union National bank in Charlotte, N.C. The First Union name first appeared in 1958 when Union National merged with Asheville, N.C.-based First National Bank and Trust. The bank expanded throughout the Tar Heel state until the mid-1980s, when deregulation made interstate bank mergers possible. First Union went on a buying spree, expanding throughout the Southeast. In addition to its commercial banking presence (the company has 2,100 banking branches in the U.S.), the company offers securities brokerage (it has 500 brokerage offices in the U.S.), corporate finance services, insurance and mutual funds.
GETTING HIRED
First Union recruits aggressively on college campuses and at job fairs. The company web site, www.firstunion.com, features a thorough listing of employment opportunities, training programs and benefits. Candidates generally have an interview with human resources, followed by a full day of interviewing with a number of people. One contact says usually you would interview with HR first, then with the department manager and then with the group leader. Those with little or no experience in the industry need not worry; employees say the company is very interested in people people. You need to be a team player, adding that the interview process is between moderately relaxed and somewhat stressful.
261
FleetBoston Financial
One Federal Street Boston, MA 02110 Phone: (617) 346-4000 Fax: (617) 346-0464 www.fleet.com
UPPERS
Tuition reimbursement Paid volunteer days Job training
DEPARTMENTS
Asset Management Brokerage Commercial Banking Investment Banking Retail Banking Venture Capital
DOWNERS
Excessive bureaucracy Long work days
EMPLOYMENT CONTACT
Fleet Employment Shared Services 111 Westminster Street Mailcode: RI DE 03314G Providence, RI 02903
THE STATS
Chairman and CEO: Terrence Murray Employer Type: Public Company Ticker Symbol: FBF (NYSE) 2000 Revenues: $22.6 billion 2000 Net Income: $3.4 billion No. of Employees: 53,000 No. of Offices: 250
KEY COMPETITORS
Bank of America Citibank First Union J.P. Morgan Chase
262
THE SCOOP
FleetBoston Financial is the holding company for one of the top 10 financial services firms in the U.S. and one of the largest banks in the Northeast, where it has 1,250 branches. FleetBoston was formed by the merger of Fleet Financial and BankBoston in October 1999. A year later, the combined firm added Summit Bancorp to the fold, further expanding its base. FleetBoston offers the typical range of commercial and retail banking services, including deposits and loans. The company has a respected investment banking subsidiary (Robertson Stephens) and a discount brokerage (Quick & Reilly). Fleet Financial and Bank Boston finally came together in a $16 billion merger finalized in October 1999. Terrence Murray, Fleets CEO, kept that position in the merged company while Charles Gifford, BancBostons chief, was named president and chief operating officer. Under the merger agreement, Murray is to step aside on January 1, 2002, giving the CEO post to Gifford.
GETTING HIRED
Fleet maintains a large database of resumes at its Rhode Island resume center. Applicants must, however, indicate the department code that corresponds to individual job openings listed on the companys job hotline and on its web site, www.fleet.com. Applicants can submit their resumes via regular mail or e-mail. Says one insider: Most jobs are posted internally at first. Then, if necessary, they will advertise. And sometimes they will hold, or participate in, job fairs.
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UPPERS
Livable hours Loads of responsibility for junior employees
DEPARTMENTS
Corporate Alliances Financial Opinions and Advisory Services Financial Restructuring Financing Mergers and Acquisitions
DOWNERS
Interview chock full of technical questions Not on the I-banking radar
EMPLOYMENT CONTACT
1930 Century Park West Los Angeles, CA 90067 [email protected] Fax: (310) 553-2173
THE STATS
President and CEO: O. Kit Lokey Employer Type: Private Company No. of Employees: 500 No. of Offices: 10
KEY COMPETITORS
Banc of America Securities Broadview International Wit SoundView
264
THE SCOOP
Founded in Los Angeles in 1970, Houlihan Lokey Howard & Zukin provides investment banking services to more than 1,000 clients annually. The bulk of Houlihan Lokeys clients are privately held middle-market companies. A wellrespected leader in middle-market M&A, in 2000 Houlihan Lokey acted as advisor on 154 deals worth $39.2 billion. The company has 10 offices in North America and Asia, eight of which are in the U.S. Houlihan Lokey has expanded its international presence in recent years through a strategic alliance with British-owned Close Brothers. The company also partially owns Mergerstat.com, an M&A data and analysis company based in Los Angeles.
GETTING HIRED
Insiders say the firm generally has two rounds of interviews. One source says, The first round was a one-on-one with an HR representative. The second round was a Super Saturday-style round with a series of four interviews in four hours. Two of the interviews during the Super Saturday were rigorous technical interviews. Other interviews were both fit and behavioral to some extent. The bottom line is that if you are not technically inclined, then it will be tough to make it through these interviews.
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265
SG Cowen
1221 Avenue of the Americas New York, NY 10020 Phone: (212) 278-6000 Fax: (212) 278-6789 www.sgcowen.com
EMPLOYMENT CONTACT
Investment Banking in New York, Boston, Chicago Analyst Recruiting: Jennifer Munoz [email protected] Associate Recruiting: Alexa Vieira [email protected] SG Cowen 1221 Avenue of the Americas New York, NY 10020
DEPARTMENTS
Corporate Bond Brokerage Fixed Income Institutional Sales and Trading Investment Banking Private Client Services Research
THE STATS
President and CEO: Kim Fennebresque Employer Type: Subsidiary of Socit Gnrale No. of Employees: 1,900 No. of Offices: 16
KEY COMPETITORS
Banc of America Securities Deutsche Banc Alex. Brown Robertson Stephens
266
THE SCOOP
SG Cowen was formed in 1998 when French bank Socit Gnrale acquired Cowen & Co., a New York boutique investment bank. Socit Gnrale paid $540 million for Cowen, which was founded in 1919. The French parent had immediate plans for its new toy. While Cowen had traditionally focused its investment banking operations on three core industries, Socit Gnrale decided to expand to other areas. Another result of the buyout: Cowens once-robust asset management and mutual fund businesses were scaled down. SG Cowen underwrote a total of 102 equity deals worth approximately $28.8 billion in 2000. Notable offerings include Vivendi Environements $2.4 billion IPO in July 2000 and Thomson Multimedias $2.0 billion follow-on offering in October 2000. More recent engagements include Orange SAs $5.9 billion IPO in February 2001.
GETTING HIRED
SG Cowen says it looks for accomplished and motivated individuals with strong academic backgrounds, and analytical, computer and communication skills. Visit the investment banking section of SG Cowens web site, www.sginvestmentbanking.com, for job descriptions and contact information. The firm gives presentations to undergraduates at 11 schools, including NYU, Columbia, Yale, Georgetown and Vanderbilt in September and October and holds interviews in October, November and January. For associate (MBA-level) positions, the firm presents in September and October and interviews in October and November at 12 schools. A recent associate hire explains her interview process: I did a two-on-one for the first round. The second round was a round robin of one-on-ones. I interviewed with four people, and each interview was 30 to 45 minutes.
267
TD Securities
31 West 52nd Street New York, NY 10019 Phone: (212) 827-7300 Fax: (212) 827-7248 www.tdsecurities.com
UPPERS
Relaxed work environment encourages creativity and teamwork Good work/life balance
DEPARTMENTS
Debt Capital Markets Derivatives, Money Markets and Foreign Exchange Institutional Equities Investment Banking Private Equity
DOWNERS
Pay below Street average Reputation not firmly established outside Canada
EMPLOYMENT CONTACT
Human Resources: Recruitment TD Securities (USA) Inc. 31 West 52nd Street New York, NY 10019-6101 Fax: (212) 827-7248 [email protected]
THE STATS
Chairman and CEO: Donald A. Wright Employer Type: Subsidiary of TD Bank Financial Group 2000 Revenues: $2.7 billion No. of Offices: 20
KEY COMPETITORS
Banc of America Securities CIBC World Markets First Union Securities
268
THE SCOOP
TD Securities is the investment banking unit of Toronto Dominion Bank Financial Group. TD Bank, which reported revenues of $13.2 billion in 2000, also consists of retail bank TD Canada Trust, TD Commercial Banking, TD Asset Management and TD Waterhouse, the worlds second-largest online securities broker. TD Bank was formed in 1955 by the union of the Bank of Toronto and the Dominion Bank. While fairly unknown in the U.S., TD Securities has an excellent reputation in its Canadian homeland. The Financial Post called TD Securities the top debt underwriter in Canada for 2001, crediting the firm with 169 deals worth $8.8 billion.
GETTING HIRED
TD Securities web site, www.tdsecurities.com, advertises for analyst and associate positions in the firms North American offices as well as in Asia and Australia. The site lists additional positions in sales and trading, research and operations and a mailing address for each of its offices. Applicants should send resumes to the office of interest and keep an eye out for TD Securities on-campus representatives. Insiders report there are no crazy questions in interviews. The types of questions varied, but were less on the technical side, in contrast to other firms. Fit questions as in Why are you interested in investment banking and in TD specifically? are much more common, sources say.
269
TIAA-CREF
730 Third Avenue New York, NY 10017-3206 Phone: (212) 490-9000 Fax: (212) 916-4840 www.tiaa-cref.org
UPPERS
Reasonable hours Responsibility at an early level
DOWNERS DEPARTMENTS
Insurance Services Mutual Funds Retirement Services Trust Services Tuition Financing Bureaucratic culture
EMPLOYMENT CONTACT
TIAA-CREF HR Staffing 730 Third Avenue New York, NY 10017 Fax: (212) 916-5883 [email protected]
THE STATS
Chairman, President and CEO: John H. Biggs Employer Type: Not-for-Profit No. of Employees: 6,358 No. of Offices: 24
KEY COMPETITORS
Fidelity Investments Vanguard Group
270
THE SCOOP
Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF) is a nationwide retirement system that manages the pension plans of two million teachers and staff at colleges, universities and other nonprofit educational and research institutions throughout the U.S. The nonprofit TIAA-CREF serves more than 11,000 educational and research institutions, making it one of the largest private retirement systems in the world. TIAA-CREF is comprised of TIAA, founded in 1918 by Andrew Carnegie to provide retirement services for teachers, and CREF, established in 1952. The firm currently has more than $278 billion invested for employees of higher education institutions and their families. The companys professionals manage portfolio holdings in nearly every economic sector, with assets spread among private placements, publicly traded bonds, commercial mortgages and real estate. However, the firm is known primarily for its investments in stocks, and is led by its flagship CREF Stock Account, the largest single-managed equity account in the world. The TIAA-CREF group of companies has approximately 50 in-house equity analysts.
GETTING HIRED
The firms web site, www.tiaa-cref.org, has a searchable list of job openings grouped by state. Send or fax resumes to TIAA-CREFs human resources department at its New York headquarters. Qualifications and requirements vary by position.
271
UBS PaineWebber
1285 Avenue of the Americas New York, NY 10019 Phone: (212) 713-2000 Fax: (212) 713-4889 www.painewebber.com
UPPERS
Fewer hours than most firms Relaxed working environment
DOWNERS DEPARTMENTS
Equities Financial Planning Services Fixed Income and Municipal Securities Investment Consulting Services Private Client Services Little interaction among departments
EMPLOYMENT CONTACT
Financial Advisor and Branch Manager UBS PaineWebber PO Box #549235 Suite 83 Waltham, MA 02454-8533 Fax: (781) 663-8533 Municipal Securities Group Recruiter UBS PaineWebber 1285 Avenue of the Americas, 15th Floor New York, NY 10019 Fax: (212) 713-6051 [email protected] Private Client Group College Recruiter UBS PaineWebber 1000 Harbor Boulevard, 10th Floor Weehawken, NJ 07087 Fax: (201) 583-7180 [email protected]
THE STATS
President and CEO: Joseph J. Grano Employer Type: Subsidiary of UBS AG No. of Employees: 20,000 No. of Offices: 390+
KEY COMPETITORS
Merrill Lynch Morgan Stanley Salomon Smith Barney
272
THE SCOOP
PaineWebber traces its roots back to 1879, when William Paine and Wallace Webber opened a brokerage house in Boston. The company broke into the big leagues in the 1960s when it moved its headquarters to New York. In recent years, PaineWebber had been the subject of merger rumors. Swiss banking giant UBS finally landed PaineWebber in an $11.8 billion purchase that closed in November 2000. The firm was renamed UBS PaineWebber in March 2001. PaineWebbers investmentbanking and asset-management operations were transferred to UBS Warburg and UBS Asset Management, respectively. The firm now focuses on private clients, especially affluent investors (defined as those with over $500,000 to invest). UBS PaineWebber is the fourth-largest private client business in the U.S. with 8,900 financial advisors serving approximately 2.1 million investors.
GETTING HIRED
UBS PaineWebbers web site has a detailed career section with job openings and human resource contacts. The firm recruits for financial advisors and branch managers year-round. Additionally, UBS PaineWebber recruits on campus for a number of training programs targeted to undergrads. First interviews for these positions occur on campus. Selected candidates make the trip to Weehawken, N.J., for the second round.
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273
UPPERS
High level of job responsibility Street-comparable pay for junior bankers
DOWNERS DEPARTMENTS
Asset Management Equity Capital Markets Fixed Income Capital Markets Private Advisory Services Venture Capital Lack of diversity Long hours
EMPLOYMENT CONTACT
U.S. Bancorp Piper Jaffray 800 Nicollet Mall Suite 800 Minneapolis, MN 55402
THE STATS
President and CEO: Andrew S. Duff Employer Type: Subsidiary of U.S. Bancorp No. of Employees: 3,600 No. of Offices: 125
KEY COMPETITORS
Banc of America Securities CIBC World Markets Credit Suisse First Boston Robertson Stephens Thomas Weisel Partners
274
THE SCOOP
In May 1998, Minnesota-based commercial bank U.S. Bancorp purchased Piper Jaffray, a Minneapolis-based firm founded in 1913 by C.P. Jaffray and H.C. Piper, Sr., for $730 million. The investment banking division was given the cumbersome name U.S. Bancorp Piper Jaffray to distinguish it from the companys other operations. Piper Jaffray provides equity and fixed-income underwriting and venture capital services for companies. Additionally, the firm handles individual investment accounts and asset management. U.S. Bancorps operations may not be bulge bracket, but are nonetheless healthy. Lead-managed deals include IPOs for Eloquent and Antigenics in February 2000. As a co-manager, the firm was involved in Therapeutic Systems $230 million offering in February 2000 and the June 2000 offerings of Handspring ($200 million) and Charles River Laboratories ($224 million).
GETTING HIRED
The companys web site, www.piperjaffray.com, lists job openings and contact information for various positions, including investment banking. Associate recruiting has focused on the top-10 business schools. They draw a lot from Chicago and Northwestern because theyre in the Midwest, but they [also] have a lot of Harvard Business School people, reports one insider.
275
EMPLOYMENT CONTACT
Cathie Suchecki Executive Director Recruiting Waddell & Reed 6300 Lamar Avenue Overland Park, KS 66202 Fax: (913) 236-1545 [email protected]
DEPARTMENTS
Accounting/Finance Insurance Investment Management Sales
THE STATS
Chairman and CEO: Keith A. Tucker Employer Type: Public Company Ticker Symbol: WDR (NYSE) 2000 Revenue: $521 million 2000 Net Income: $139 million No. of Employees: 1,340 No. of Offices: 433
KEY COMPETITORS
Liberty Financial Companies Jones Financial Companies Van Kampen Investments
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THE SCOOP
Chauncey Waddell and Cameron Reed founded Waddell & Reed in 1937. The company provides mutual funds, retirement and other savings plans and life insurance and annuities. W&R has carved out a niche by targeting personal finance products to moderate-income investors, mostly in suburban communities. According to The Wall Street Journal, the companys financial advisors are known to do business across the kitchen table with customers who put an average of $47,000 into its funds. The firm has about 2,600 sales representatives across the country who advise clients about the companys products. These representatives used to only sell funds managed by W&R, but in 2000 the firm began forming alliances with companies such as Nationwide and BISYS Group to market their products. Waddell & Reed is partially owned by Birmingham, Ala.-based insurance firm Torchmark. Thirty-four percent of W&R was spun off in March 1998 through an IPO that raised $499 million. The remaining 66 percent of W&R shares were later distributed to Torchmark shareholders. A series of mergers among asset managers fueled speculation during the summer of 2000 that Waddell was interested in being acquired. Investment News named American International Group as the potential buyer. The company has sent mixed signals about its willingness to partner with another financial services firm. While the company officially claims to be enjoying its independence, during an August 2000 analyst conference CEO Keith Tucker conceded that Waddell would not stand in the way of our shareholders deciding to sell if a good offer came along.
GETTING HIRED
Openings in Waddell & Reeds main office in the areas of accounting, insurance, investment management and sales are posted on the companys web site, www.waddell.com. Additionally, the site contains extensive information on how to become a financial advisor or sales manager in one of W&Rs local offices. Theres also a quiz designed to assess ones aptitude to be a financial advisor. Financial advisors are based in one of the local offices and work directly with clients, helping them to develop investment strategies based on their life goals. New financial advisors participate in a series of training activities to help them identify sales prospects and hone their marketing skills. During this time, advisors who dont already hold the appropriate licenses must prepare to pass the certification exams required of financial planners. Applicants should contact offices in their area regarding available positions.
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Wells Fargo
420 Montgomery Street San Francisco, CA 94163 Phone: (800) 411-4932 Fax: (415) 677-9075 www.wellsfargo.com
UPPERS
Excellent training Free and discounted banking services
DEPARTMENTS
Commercial Banking Consumer Banking Insurance Investment Services Venture Capital
DOWNERS
Commercial bankers pay Long hours
EMPLOYMENT CONTACT
Recruitment Services 633 Folsom Street 4th Floor MAC A0149-047 San Francisco, CA 94107
THE STATS
Chairman, President and CEO: Richard M. Kovacevich Employer Type: Public Company Ticker Symbol: WFC (NYSE) 2000 Revenue: $27.6 billion 2000 Net Income: $4.0 billion No. of Employees: 120,000 No. of Offices: 4,300
KEY COMPETITORS
Bank of America Bank One Citibank
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THE SCOOP
In 1850 Henry Wells and William Fargo were among the New York businessmen who founded American Express, a mail delivery service that was the precursor of the financial services behemoth of today. According to legend, Wells and Fargo were excited about the prospect of expanding west but couldnt convince their partners at American Express. The two started their self-named firm in 1852, providing banking and stagecoach and pony express delivery services. Wells Fargo separated its banking business from its express service in 1905, and has remained with banking since. Thanks in part to a number of mergers (including First Interstate in 1996, Norwest in 1998 and First Security in 2000), Wells Fargo is now the fourth-largest bank in the U.S. Wells Fargo offers the complete range of financial services, including consumer and corporate banking, investment services and brokerage, insurance and venture capital.
GETTING HIRED
In general, recruiting is decentralized, so the process varies. For example, one contact in sales reports an interview process with a group interview that includes role-playing and individual questions regarding customer service and person-toperson interaction. A panel of managers will observe the proceedings. This contact reports two or three rounds before a candidate is made an offer.
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Wit SoundView
826 Broadway 6th Floor New York, NY 10003 Phone: (212) 253-4400 Fax: (212) 253-4428 www.witsoundview.com
UPPERS
Exposure to senior bankers and clients Relaxed culture Responsibility for junior bankers
DEPARTMENTS
Investment Banking Research Sales and Trading Venture Capital
DOWNERS
Compensation impacted by low stock price Lack of reputation Start-up infrastructure
THE STATS
CEO: Mark Loehr Employer Type: Public Company Ticker Symbol: WITC (Nasdaq) 2000 Revenues: $376 million 2000 Net Income: -$22 million No. of Employees: 350 No. of Offices: 5
EMPLOYMENT CONTACT
Tiffany Wells Wit Soundview 826 Broadway 6th Floor New York, NY 10003
KEY COMPETITORS
Broadview International Deutsche Banc Alex. Brown Robertson Stephens Thomas Weisel Partners
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THE SCOOP
Based in New York, Wit SoundView is the investment banking arm of Wit SoundView Group. Wit Capital, the predecessor to Wit SoundView, was founded in 1996 by Andrew Klein, now vice chairman and chief strategist at the firm. In March 1999, Goldman Sachs purchased a 22 percent stake in Wit for approximately $20 million. Wit Capital went public in June 1999, raising $70 million in its offering. In January 2000, Wit acquired SoundView Technology Group, a Stamford, Conn.-based boutique firm, for approximately $310 million. The firm changed its name to Wit Soundview six months later. In May 2000, Wit entered into a strategic alliance with E*Trade. Wit acquired E*Offering, E*Trades underwriting group, while E*Trade absorbed Wits retail brokerage accounts. Wits efforts to boost its equity underwriting prowess has paid off. The company lead- or co-managed 42 IPOs in 2000.
GETTING HIRED
According to insiders, Wit recruits mostly from Ivy League and top-20 schools. The interview process is typical for the industry. For college and MBA recruits, theres the typical three-round structure, with on-campus interviews, a round at the firm and a Super Saturday. Expect to meet between 10 to 15 people at all levels. The interviews themselves are described as informal and unstructured, with emphasis on experience, intelligence and cultural fit. It really depends on the fit of the individual with the firm, says one insider. We have had candidates get offers from larger bulge-bracket firms who we did not feel were a good fit.
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FINAN FIRMS
WHY WORK FOR US?
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1. Freedom to manage your own schedule and decide with whom you work. Self-employment means having to make hard decisions. It also means getting to make great choices. As a Financial Representative, some days you might wake up, jog some laps, have breakfast with your family. Or you might be in your office before most are getting up preparing to get in front of the markets you want to pursue. That means you work with whom you choose. Enter a business where variety is just one perk. 2. Income that reflects your hard work and efforts. If youre willing to work hard, your income can be a reflection of your energy, commitment and drive, not a reflection of someone elses expectations of you and your work. With The Network, your potential isnt stifled with salary caps and glass ceilings. Instead, your work is your reward. 3. Impact peoples lives positively-every day. With The Network, youll address your clients concerns with securing businesses, providing legacies to their families or planning comfortable retirements. Youll build relationships in which youll understand your clients financial situations, values and goals. And youll have the financial tools and resources right in front of you to help your clients dreams seem just that close. 4. Support from a network of specialists, mentors and education programs. As a Financial Representative youll be in business for yourself, not by yourself. In Northwestern Mutuals 144 years of industry experience, weve learned how to help our representatives make winning skills excellent habits. Our training and mentoring programs will help you help your clients achieve their goals. 5. Reputable financial products and services. We dont expect you to learn it all. Neither will your clients. But youll learn where to turn. Through The Network, youll have access to knowledgeable specialists of vast products and services. These specialists will provide you and your clients with expertise in areas like retirement planning, estate planning, asset allocation and small business planning. This expertise is backed up by reputable financial products that have been built to meet your clients needs.
NOTABLE BENEFITS
Comprehensive medical coverage (Flex I & II) Two company-funded retirement plans Group Life and Accidental Death Benefit Disability income plan Sponsored Errors & Omissions Insurance Program Maternity leave
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Highlights
Since its inception in 1857, Northwestern Mutual has proudly maintained a reputation of excellence both in products and client service. Northwestern Mutual has always received the highest possible ratings from the four major ratings services: Standard and Poors, AAA; Moodys, Aaa; Fitch (formally Duff & Phelps), AAA; A.M. Best, A++. Northwestern Mutual Financial Representatives have been ranked the Best Sales Force in the Industry by Sales and Marketing Management Magazine in 2000. The Network now boasts more than 350 offices and 7,500 Financial Representatives across the United States. Through The Network, these representatives have access to a vast array of products and services from The Northwestern Mutual Life Insurance Company, Northwestern Mutual Investment Services, LLC, Robert W. Baird & Co., Incorporated, Northwestern Long Term Care Insurance Company, The Frank Russell Company, and Strategic Employee Benefit Services (a nationwide marketing program providing employee benefit services exclusively through Northwestern Mutual Financial Network Representatives).
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Most of The Networks Financial Representatives rally around Northwestern Mutual, calling it an excellent company with a great reputation and lauding its really top-notch group of associates. One contact boasts that representing a quality company like Northwestern Mutual is a win-win for you and your clients. Another Financial Representative commented on the career, describing the opportunity as good for someone who is self-motivated, looking to be independent, likes to help people, can put up with the ups and downs of dealing with the public and is willing to work hard.
* Financial Representatives are independent contractors, and not employees of Northwestern Mutual. Northwestern Mutual Financial Network identifies the sales and distribution arm of The Northwestern Mutual Life Insurance Company and its subsidiaries and affiliates.
FINAN FIRMS
APPENDIX
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Finance Glossary
Agency bonds: Agencies represent all bonds issued by the federal government, except for those issued by the Treasury (i.e., bonds issued by other agencies of the federal government). Examples include the Federal National Mortgage Association (FNMA), and the Guaranteed National Mortgage Association (GNMA). Arbitrage: The trading of securities (stocks, bonds, derivatives, currencies, and other securities) to profit from a temporary difference between the price of security in one market and the price in another (also called risk-free arbitrage). This temporary difference is often called a market inefficiency. Distinguish from risk arbitrage (see below). Asset management: Also known as investment management. Basically, this is exactly what it sounds like. Money managers at investment management firms and investment banks take money given to them by pension funds and individual investors and invest it. For wealthy individuals (private clients), the investment bank will set up an individual account and manage the account; for the less wellendowed, the bank will offer mutual funds. Asset managers are compensated primarily by taking a percentage each year from the total assets managed. (They may also charge an upfront load, or commission, of a few percent of the initial money invested.) Beauty contest: The informal term for the process by which clients choose an investment bank. Some of the typical selling points when competing with other investment banks for a deal are: Look how strong our research department is in this industry. Our analyst in the industry is a real market mover, so if you go public with us, youll be sure to get a lot of attention from her. Or: We are the top-ranking firm in this type of issuance, as you will see by these league tables. Bloomberg: Computer terminals providing real time quotes, news and analytical tools, often used by traders and investment bankers. Bond spreads: The difference between the yield of a corporate bond and a U.S. Treasury security of similar time to maturity. Bulge bracket: The largest and most prestigious firms on Wall Street (including Goldman Sachs, Morgan Stanley, Merrill Lynch, Salomon Smith Barney, and Credit Suisse First Boston).
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Buy-side: The clients of investment banks (mutual funds, pension funds) that buy the stocks, bonds and securities sold by the investment banks. (The investment banks that sell these products to investors are known as the sell-side.) Chartered Financial Analyst (CFA): A designation given to professionals that complete a multi-part exam designed to test accounting and investment knowledge and professional ethics. Commercial bank: A bank that lends, rather than raises money. For example, if a company wants $30 million to open a new production plant, it can approach a commercial bank for a loan. Commercial paper: Short-term corporate debt, typically maturing in nine months or less. Commitment letter: A document that outlines the terms of a loan a commercial bank gives a client. Commodities: Assets (usually agricultural products or metals) that are generally interchangeable with one another and therefore share a common price. For example, corn, wheat and rubber generally trade at one price on commodity markets worldwide. Common stock: Also called common equity, common stock represents an ownership interest in a company. (As opposed to preferred stock, see below.) The vast majority of stock traded in the markets today is common, as common stock enables investors to vote on company matters. An individual with 51 percent or more of shares owned controls a companys decisions and can appoint anyone he/she wishes to the board of directors or to the management team. Comparable company analysis (Comps): The primary tool of the corporate finance analyst. Comps include a list of financial data, valuation data and ratio data on a set of companies in an industry. Comps are used to value private companies or better understand a how the market values and industry or particular player in the industry. Consumer Price Index: The CPI measure the percentage increase in a standard basket of goods and services. CPI is a measure of inflation for consumers. Convertible preferred stock: This is a relatively uncommon type of equity issued by a company; convertible preferred stock is often issued when it cannot successfully sell either straight common stock or straight debt. Preferred stock pays a dividend, similar to how a bond pays coupon payments, but ultimately converts to common stock after a period of time. It is essentially a mix of debt
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and equity, and most often used as a means for a risky company to obtain capital when neither debt nor equity works. Convertible bonds: Bonds that can be converted into a specified number of shares of stock. Derivatives: An asset whose value is derived from the price of another asset. Examples include call options, put options, futures and interest-rate swaps. Discount rate: A widely followed short-term interest rate, set by the Federal Reserve to cause market interest rates to rise or fall, thereby causing the U.S. economy to grow more quickly or less quickly. More specifically, the discount rate is the rate at which federal banks lend money to each other on overnight loans. Today, the discount rate can be directly moved by the Fed, but maintains a largely symbolic role. Dividend: A payment by a company to shareholders of its stock, usually as a way to distribute profits to shareholders. Equity: In short, stock. Equity means ownership in a company that is usually represented by stock. The Fed: The Federal Reserve, which gently (or sometimes roughly), manages the countrys economy by setting interest rates. Federal funds rate: The rate domestic banks charge one another on overnight loans to meet federal reserve requirements. This rate tracks very closely to the discount rate, but is usually slightly higher. Fixed income: Bonds and other securities that earn a fixed rate of return. Bonds are typically issued by governments, corporations and municipalities. Float: The number of shares available for trade in the market times the price. Generally speaking, the bigger the float, the greater the stocks liquidity. Floating rate: An interest rate that is benchmarked to other rates (such as the rate paid on U.S. Treasuries), allowing the interest rate to change as market conditions change. Floor traders: Traders for an investment bank located in the firms offices. Floor traders spend most of the day seated at their desks observing market action on their computer screens. Glass-Steagall Act: Part of the legislation passed during the Depression (GlassSteagall was passed in 1933) designed to help prevent future bank failure the establishment of the F.D.I.C. was also part of this movement. The Glass-Steagall Act split Americas investment banking (issuing and trading securities)
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operations from commercial banking (lending). For example, J.P. Morgan was forced to spin off its securities unit as Morgan Stanley. The act was gradually weakened throughout the 1990s and in 1999 Glass-Steagall was effectively repealed by the Graham-Leach-Bliley Act. Graham-Leach-Bliley Act: Also known as the Financial Services Modernization Act of 1999. Essentially repealed many of the restrictions of the Glass-Steagall Act and made possible the current trend of consolidation in the financial services industry. Allows commercial banks investment banks, and insurance companies to affiliate under a holding company structure. Gross Domestic Product: GDP measures the total domestic output of goods and services in the United States. Generally, when the GDP grows at a rate of less than 2 percent, the economy is considered to be in recession. Hedge: To balance a position in the market in order to reduce risk. Hedges work like insurance: a small position pays off large amounts with a slight move in the market. Hedge fund: An investment partnership, similar to a mutual fund, made up of wealthy investors. In comparison to most investment vehicles, hedge funds are loosely regulated, which allows them to take more risks in their investments. High grade corporate bond: A corporate bond with a rating above BB. Also called investment grade debt. High yield debt (a.k.a. Junk bonds): Corporate bonds that pay high interest rates (to compensate investors for high risk of default). Credit rating agencies such as Standard & Poors rate a companys (or a municipalitys) bonds based on default risk. Junk bonds rate below BB. Initial Public Offering (IPO): The dream of every entrepreneur, the IPO is the first time a company issues stock to the public. Going public means more than raising money for the company: By agreeing to take on public shareholders, a company enters a whole world of required SEC filings and quarterly revenue and earnings reports, not to mention possible shareholder lawsuits. Institutional clients or investors: Large investors, such as pension funds or municipalities (as opposed to retail investors or individual investors). Lead manager: The primary investment bank managing a securities offering. (An investment bank may share this responsibility with one or more co-managers.) League tables: Tables that rank investment banks based on underwriting volume in numerous categories, such as stocks, bonds, high yield debt, convertible debt,
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etc. High rankings in league tables are key selling points used by investment banks when trying to land a client engagement. Leveraged Buyout (LBO): The buyout of a company with borrowed money, often using that companys own assets as collateral. LBOs were the order of the day in the heady 1980s, when successful LBO firms such as Kohlberg Kravis Roberts made a practice of buying up companies, restructuring them and reselling them or taking them public at a significant profit Liquidity: The amount of a particular stock or bond available for trading in the market. For commonly traded securities, such as big cap stocks and U.S. government bonds, they are said to be highly liquid instruments. Small cap stocks and smaller fixed income issues often are called illiquid (as they are not actively traded) and suffer a liquidity discount, i.e. they trade at lower valuations to similar, but more liquid, securities. The Long Bond: The 30-year U.S. Treasury bond. Treasury bonds are used as the starting point for pricing many other bonds, because Treasury bonds are assumed to have zero credit risk taking into account factors such as inflation. For example, a company will issue a bond that trades 40 over Treasuries. The 40 refers to 40 basis points (100 basis points = 1 percentage point). Making markets: A function performed by investment banks to provide liquidity for their clients in a particular security, often for a security that the investment bank has underwritten. (In others words, the investment bank stands willing to buy the security, if necessary, when the investor later decides to sell it.) Market Cap(italization): The total value of a company in the stock market (total shares outstanding x price per share). Merchant banking: The department within an investment bank that invests the firms own money in other companies. Analogous to a venture capital arm. Money market securities: This term is generally used to represent the market for securities maturing within one year. These include short-term CDs, repurchase agreements, commercial paper (low-risk corporate issues), among others. These are low risk, short-term securities that have yields similar to Treasuries. Mortgage-backed bonds: Bonds collateralized by a pool of mortgages. Interest and principal payments are based on the individual homeowners making their mortgage payments. The more diverse the pool of mortgages backing the bond, the less risky they are. Municipal bonds (Munis): Bonds issued by local and state governments, a.k.a. municipalities. Municipal bonds are structured as tax-free for the investor,
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which means investors in munis earn interest payments without having to pay federal taxes. Sometimes investors are exempt from state and local taxes, too. Consequently, municipalities can pay lower interest rates on muni bonds than other bonds of similar risk. Mutual fund: An investment vehicle that collects funds from investors (both individual and institutional) and invests in a variety of securities, including stocks and bonds. Mutual funds make money by charging a percentage of assets in the fund. Pitchbook: The book of exhibits, graphs, and initial recommendations presented by bankers to a prospective client when trying to land an engagement. Pit traders: Traders who are positioned on the floor of stock and commodity exchanges (as opposed to floor traders, situated in investment bank offices). P/E ratio: The price to earnings ratio. This is the ratio of a companys stock price to its earnings-per-share. The higher the P/E ratio, the more expensive a stock is (and also the faster investors believe the company will grow). Stocks in fastgrowing industries tend to have higher P/E ratios. Prime rate: The average rate U.S. banks charge to companies for loans. Producer Price Index: The PPI measure the percentage increase in a standard basket of goods and services. PPI is a measure of inflation for producers and manufacturers. Proprietary trading: Trading of the firms own assets (as opposed to trading client assets). Prospectus: A report issued by a company (filed with and approved by the SEC) that wishes to sell securities to investors. Distributed to prospective investors, the prospectus discloses the companys financial position, business description, and risk factors. Red herring: Also known as a preliminary prospectus. A financial report printed by the issuer of a security that can be used to generate interest from prospective investors before the securities are legally available to be sold. Based on final SEC comments, the information reported in a red herring may change slightly by the time the securities are actually issued. Retail clients: Individual investors (as opposed to institutional clients). Return on equity: The ratio of a firms profits to the value of its equity. Return on equity, or ROE, is a commonly used measure of how well an investment bank
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is doing, because it measures how efficiently and profitably the firm is using its capital. Risk arbitrage: When an investment bank invests in the stock of a company it believes will be purchased in a merger or acquisition. (Distinguish from risk-free arbitrage.) Risk-free arbitrage: When an investment bank buys a derivative or equity for a slightly lower price in one market and resells it in another. For example, if Dell stock were trading at 212 in the United States and 213 in Japan, buying it in the U.S. and reselling it in Japan would be risk-free. Risk-free arbitrage opportunities are infrequent and much more arcane than the example provided. Roadshow: The series of presentations to investors that a company undergoing an IPO usually gives in the weeks preceding the offering. Heres how it works: Several weeks before the IPO is issued, the company and its investment bank will travel to major cities throughout the country. In each city, the companys top executives make a presentation to analysts, mutual fund managers, and others attendees and also answer questions. S-1: A type of legal document filed with the SEC for a private company aiming to go public. The S-1 is almost identical to the prospectus sent to potential investors. The SEC must approve the S-1 before the stock can be sold to investors. S-2: A type of legal document filed with the SEC for a public company looking to sell additional shares in the market. The S-2 is almost identical to the prospectus sent to potential investors. The SEC must approve the S-2 before the stock is sold. Sales memo: Short reports written by the corporate finance bankers and distributed to the banks salespeople. The sales memo provides salespeople with points to emphasize when hawking the stocks and bonds the firm is underwriting. Securities and Exchange Commission (SEC): A federal agency that, like the Glass-Steagall Act, was established as a result of the stock market crash of 1929 and the ensuing depression. The SEC monitors disclosure of financial information to stockholders, and protects against fraud. Publicly traded securities must first be approved by the SEC prior to trading. Securitize: To convert an asset into a security that can then be sold to investors. Nearly any income-generating asset can be turned into a security. For example, a 20-year mortgage on a home can be packaged with other mortgages just like it, and shares in this pool of mortgages can then be sold to investors.
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Short-term debt: A bond that matures in nine months or less. Also called commercial paper. Syndicate: A group of investment banks that will together underwrite a particular stock or debt offering. Usually the lead manager will underwrite the bulk of a deal, while other members of the syndicate will each underwrite a small portion. T-Bill Yields: The yield or internal rate of return an investor would receive at any given moment on a 90-120 government treasury bill. Tax-exempt bonds: Municipal bonds (also known as munis). Munis are free from federal taxes and, sometimes, state and local taxes. 10K: An annual report filed by a public company with the Securities and Exchange Commission (SEC). Includes financial information, company information, risk factors, etc. 10Q: Similar to a 10K, but contains quarterly financial data on a company. Tombstone: The advertisements that appear in publications like Financial Times or The Wall Street Journal announcing the issuance of a new security. The tombstone ad is placed by the investment bank to boast to the world that it has completed a major deal. Treasury Securities: Securities issued by the U.S. government. These are divided into Treasury Bills (maturity of up to 2 years), Treasury Notes (from 2 years to 10 years maturity), and Treasury Bonds (10 years to 30 years). As they are government guaranteed, often treasuries are considered risk-free. In fact, while U.S. Treasuries have no default risk, they do have interest rate risk; if rates increase, then the price of USTs will decrease. Underwrite: The function performed by investment banks when they help companies issue securities to investors. Technically, the investment bank buys the securities from the company and immediately resells the securities to investors for a slightly higher price, making money on the spread. Yield: The annual return on investment. A high yield bond, for example, pays a high rate of interest.
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Recommended Reading
Suggested Texts
Burrough, Bryan and Helyar, John. Barbarians at the Gate: The Fall of RJR Nabisco. New York: Harper & Row, 1990. Endlich, Lisa. Goldman Sachs: The Culture of Success. New York: Alfred A. Knopf, 1999. Gordon, John Steele, The Great Game: The Emergence of Wall Street As a World Power, 1653-2000. New York: Scribner, 1999. Lewis, Michael. Liars Poker. New York: Norton, 1989. Lewis, Michael. The Money Culture. New York: W. W. Norton, 1991. Rolfe, John and Traub, Peter. Monkey Business: Swinging Through the Wall Street Jungle. New York: Warner Books, 2000. Stewart, James Brewer. Den of Thieves. New York: Simon and Schuster, 1991.
Suggested Periodicals
American Banker Business Week The Daily Deal The Economist Forbes Fortune Institutional Investor Investment Dealers Digest Investors Business Daily Red Herring The Wall Street Journal
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