Jobs in the
Investments Industry II:
Investment Management
Bryan Sudweeks
Fall 2007
1
Jobs in the Investments Industry
 I. Investment Banking
• Investment banking, Asset Management, Sales and
Trading, Research
 II. Investment Management
• Investment Management, Investment Research,
 III. Financial Planning
• Investment advising, Insurance, and Estate planning
 IV. Corporate Finance
• Pension Fund Administration and Management
 V. Financial Consulting
• Pension Fund Consulting
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I. Investment Banking and Investment
Management
 Objectives
• A. Understand the purpose of Investment Banking
• B. Understand the purpose of Investment Research
• C. Understand the divisions of Investment
Management
• D. Know where the potential jobs are in Investment
Management
• E. Know how to prepare for a career in Investment
Management
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A. Purpose of Investment Banking
 An intermediary between the capital markets
(investors) and corporations (borrowers)
 Offers strategic advice and financial analysis on
Mergers & Acquisitions, Divestitures, and Capital
Structure
 Offers Equity and Fixed Income Underwriting (e.g..
IPO’s, High Yield Offerings)
 Provides asset management advice to high net worth
individuals and institutions
 Provides Sales and Trading of Equity (Stocks), Fixed
Income Securities (Bonds), Derivatives (Options).
 Offers research and advice on publicly listed stocks
and bonds to institutional and individual investors
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Structure of Investment Banks (continued)
Investment Bank
I-Banking
Division (IBD)
Asset
Management
Industry Groups
Private Client
Corporate Finance
Services
Product Groups
• Work with High
M&A
Net Worth Individuals
High Yield
Debt Capital Markets
Equity Capital Markets
Sales &
Trading
Buy and Sell
Financial
Securities
and Derivatives
Research
Analyze all
Public information
in order to give
advice to
investors and
sales and trading
group
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Structure of Investment Banks (continued)
Investment Bank
I-Banking
Division
Industry
Group
(Corp Finance)
Product
Group
Equity
Capital
Markets
Asset
Management
Debt
Capital
Markets
High
Yield
Debt
Manage funds
for institutions
and individuals
Sales &
Trading
Research
Private Client
Services
M&A
Equity
Consumer Products
Technology
Telecommunications
Real Estate
Utilities
Health Care
Retail
Fixed
Income
Derivatives
Economic
Equity
Consumer Products
Technology
Telecommunications
Real Estate
Utilities
Health Care
Retail
Fixed
Income
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B. Purpose of Investment
Management
 Major investment management divisions include:
• Asset Management
• Provide asset management services to investors
and institutions including:
• Private Wealth Management
• Portfolio Management
• Asset Allocation
• Performance Attribution
• Research
• Provide research on public stocks and bonds
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Structure of Investment Management
(continued)
Investment Bank
Asset
Management
Private Client
Services
• Work with High
Net Worth Individuals
Research
Analyze all
Public information
in order to give
advice to
investors and
sales and trading
group
8
Structure of Investment Management
(continued)
Asset Management
Companies
Investment Bank
Asset
Management
Manage funds
for institutions
and individuals
Equity
Fixed
Income
Consumer Products
Technology
Telecommunications
Real Estate
Utilities
Health Care
Retail
Research
Private Client
Services
Derivatives
Economic
Equity
Consumer Products
Technology
Telecommunications
Real Estate
Utilities
Health Care
Retail
Fixed
Income
Derivatives
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Top 15 Asset Management Companies
Rank
Firm
ASSETS UNDER MGMT (bill.)
1 Fidelity Investments
$853
2 State Street Global Advisors
$785
3 Barclays Global Advisors
$768
4 JP Morgan Flemming Asset Mgmt.
$604
5 Capital Group Cos.
$589
6 Mellon Financial
$537
7 Merrill Lynch Inv. Managers
$529
8 Citigroup
$503
9 AXA Financial (Alliance Capital)
$481
10 Morgan Stanley Investment Mgmt.
$415
11 Vanguard
$412
12 UBS Investment Management
$405
13 Allianz
$383
14 Amvescap (AIM / Invesco)
$334
15 Putnam Investments
$315
Source: Institutional Investor
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C. What are the Divisions of Investment
Management?
Investment management divisions
include:
•
•
•
•
•
Investment Management
Portfolio Management
Operations
Investment Research
Private Wealth Management
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D. Potential Jobs in Investment
Management
Where are the jobs in Investment Banking?
• Most investment banking jobs are in analysis
• Equity market analyst
• Debt market analyst
• High Yield analyst
• Industry Analyst
• Consumer products, telecommunications,
real estate, finance, etc.
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Jobs in Investment Management (continued)
Asset Management
Research Analyst
Analyst
Senior Analyst
Portfolio Manager
Partner
Equity
Capital
Markets
Research
Industry
Group
(Corp Finance)
Product
Group
Debt
Capital
Markets
Assistant Analyst
Research Analyst
Analyst
Senior Analyst
High
Yield
Debt
Consumer Products
Technology
Telecommunications
Real Estate
Utilities
Health Care
Retail
Research Analyst
Analyst
Senior Analyst
Assistant Analyst
Research Analyst
Analyst
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Senior Analyst
Jobs in Investment Management (continued)
 What are the different types of analyst positions?
• Analysts position vary depending on who they are doing
research for, i.e., sell-side versus buy-side research
 What are sell-side analysts?
• Analysts whose work is used for selling securities to
investors, i.e. Research, Sales and Trading, etc. Analysts
prepare the research for potential investors in the hope that
investors will buy and sell companies through the I-bank
 What are buy-side analysts?
• Analysts whose work is used in the process of buying
securities for specific portfolios, i.e. Asset Management,
Private Wealth Management, etc. Analysts prepare the
research and then act on that research to buy companies.
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The Analyst Position (continued)
 Why are Investment Management analyst positions so
hard to get?
• They provide instant exposure to senior management teams
of the largest companies in the world
• They have the highest exposure, learning potential, and
salary of any job in the Financial Services Industry (out of
college)
• They give opportunity to work in small teams, with learning
from senior partners
• After you have built experience in the field, it offers
wonderful opportunities at top business schools and
companies
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Compensation
• The median total compensation for investment
professionals is $170,000. Total compensation has increased
materially since bottoming out in 2003 due to positive
market conditions.
Source: CFAI & Russell Reynolds Associates - 2005 Investment Management
Compensation Survey
Total
$113,000
< 5
Years
$85,000
5 - 10
Years
$105,000
10 - 20
Years
$140,000
20 +
Years
$160,000
$35,000
$15,000
$34,000
$55,000
$50,000
$5,000
$0
$4,200
$10,000
$12,000
Median Total
Compensation
$170,000
$111,207
$160,000
$233,750
$260,000
90th Percentile
$530,000
$252,500
$425,000
$670,000
$940,000 16
2005 Median
Salary
2004 Median
Bonus
2004 Median
Non-Cash Comp.
The Analyst Position (continued)
 What are the skills gained as an analyst?
• Financial modeling and strong quantitative work
• Solid Understanding of Corporate Capital Structure &
Capital Markets
• Solid understanding of companies and industry composition
and structure
• Professional presentation analysis
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The Analyst Position (continued)
 What are the responsibilities of an analyst?
• Financial Analysis and Modeling
• Discounted cash flow and Free cash flow
analysis,
• Comparable company
• Precedent transactions, and
• Leveraged buyout
• Client Exhibits and Presentations
• Market research and competitive analysis
• Client interaction
• Roadshow execution management
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The Analyst Position (continued)
 What type of work do Analysts do?
• Company Analysis (both buy and sell side)
• Financial forecasting
• Strategic analysis
• Industry Analysis (both buy and sell side)
• Strategic analysis
• Portfolio implementation, construction, and
reporting and attribution
• Investment policy statement
• Portfolio construction and management
• Portfolio reporting and attribution
• Whatever is needed to attain company goals and
objectives
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The Analyst Position (continued)
 What are the criteria used to select analysts?
• There is a record of achievement
• A strong academic record
• A balanced individual with extracurricular activities
• A good employment history
•
•
•
•
•
Strong communication skills
Evidence of being a team player
A tireless work ethic
Attention to detail
A strong analytical capability (with examples)
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E. How to Prepare for a Career in
Investment Management
 Understand the industry, the positions, and the lifestyle
• This is a wonderful but crazy industry
• Are you suited for the lifestyle—very long hours
 Start building your contacts
• Meet with as many of the visiting speakers as possible
 Do well in your classes
• A strong GPA is important
• Have a good financial analysis project to leave with
potential employers as an example of your best work
 Look to beginning your CFA program
• It is looked on highly in the industry
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A Career in Investment Management
 Don’t get discouraged
• Understand yourself and your goals
• Work hard and be patient—Faith precedes the miracle
 Keep your priorities in order
• Obedience is the first law of Heaven--do what you
should
• He will help take care of the rest
 Follow the Spirit
• Stay worthy of the Spirit
• He is your competitive advantage--stay worthy of His
help
 Remember the Lord’s hand in your blessings
• Always be appreciative of his blessings
• Remember to share them with others
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