Jobs in the Investments Industry Bryan Sudweeks Fall

Jobs in the Investments Industry Bryan Sudweeks Fall 2005 1

Jobs in the Investments Industry ü I. Investment Banking • Investment banking, Asset Management, Sales and Trading, Research ü II. Financial Planning • Investment advising, Insurance, and Estate planning ü III. Corporate Finance • Pension Fund Administration and Management ü IV. Financial Consulting • Pension Fund Consulting 2

I. Investment Banking ü Objectives • A. Understand the purpose of Investment Banking • B. Understand the structure of an Investment Bank • C. Understand the interaction between divisions of Investment Banking groups (and the recent problems) • D. Know where the potential jobs are Investment Banking • E. Know how to prepare for a career in Investment Banking 3

A. Purpose of Investment Banking ü An intermediary between the capital markets (investors) and corporations (borrowers) ü Offers strategic advice and financial analysis on Mergers & Acquisitions, Divestitures, and Capital Structure ü Offers Equity and Fixed Income Underwriting (e. g. . IPO’s, High Yield Offerings) ü Provides asset management advice to high net worth individuals and institutions ü Provides Sales and Trading of Equity (Stocks), Fixed Income Securities (Bonds), Derivatives (Options). ü Offers research and advice on publicly listed stocks and bonds to institutional and individual investors 4

B. Structure of Investment Banks ü Major investment banking divisions include: • Investment Banking • Intermediary between the capital markets • Advice and analysis on M&A and Capital Structure • Equity and Fixed Income Underwriting • Asset Management • Provide asset management services to investors and institutions • Sales and Trading of Equity (Stocks), Fixed Income Securities (Bonds), Derivatives (Options). • Research • Provide research on public stocks and bonds 5

Structure of Investment Banks (continued) Investment Bank I-Banking 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 6

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 Equity M&A 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 7

C. What is the Interaction between Investment Banking Divisions? ü Investment banking meets the needs of different clientele • Companies wanting to list equity/debt • Individuals/institutions wanting unbiased research for investing • Strategic and asset management advice for companies/individuals ü How should it be structured to maintain no semblance of “conflict of interest”? • A “Chinese wall” was proposed and instituted • Certain divisions are “inside” and others “outside” the wall 8

Interaction Between Divisions (continued) “Inside the Wall” Corporate Finance IBD “Outside Corporate Finance Sales & Trading, Research, and Asset Management Corporate Finance 9

D. Potential Jobs in Investment Banking ü Where are the jobs in Investment Banking? • Most investment banking jobs are in analysis • Equity market analyst • Debt market analyst • High Yield analyst • Mergers and Acquisitions • Industry Analyst • Consumer products, telecommunications, real estate, finance, etc. 10

Jobs in Investment Banking (continued) I-Banking Division Asset Management Division Research Analyst Senior Analyst Portfolio Manager Equity Capital Markets Industry Group (Corp Finance) Product Group Debt Capital Markets Assistant Analyst Research Analyst Senior Analyst High Yield Debt Mergers & Acquisitions Research Analyst Senior Analyst Consumer Products Technology Telecommunications Real Estate Utilities Assistant Analyst Health Care Research Analyst Retail Analyst 11 Senior Analyst

Jobs in Investment Banking (continued) ü 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 ü 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 ü What are buy-side analysts? • Analysts whose work is used in the process of buying securities for specific portfolios, i. e. Asset Management, Private Wealth Management, etc. Analysts prepare the research and then act on that research to buy companies. 12

The Analyst Position (continued) ü Why are Investment Banking analyst positions so hard to get? • They provide instant exposure to senior management teams of the largest companies in the world • They have the highest exposure, learning potential, and salary of any job in the Financial Services Industry (out of college) • They give opportunity to work in small teams, with learning from senior partners • After you have built experience in the field, it offers wonderful opportunities at top business schools and companies 13

The Analyst Position (continued) ü What are the skills gained as an analyst? • Financial modeling and strong quantitative work • Solid Understanding of Corporate Capital Structure & Capital Markets • Solid understanding of companies and industry composition and structure • Professional presentation analysis 14

The Analyst Position (continued) ü What are the responsibilities of an analyst? • Financial Analysis and Modeling • Discounted cash flow and Free cash flow analysis, • Comparable company • Precedent transactions, and • Leveraged buyout • Client Exhibits and Presentations • Market research and competitive analysis • Client interaction • Roadshow execution management 15

The Analyst Position (continued) ü What type of work do Analysts do? • Company Analysis (both buy and sell side) • Financial forecasting • Strategic analysis • Industry Analysis (both buy and sell side) • Strategic analysis • Portfolio implementation, construction, and reporting and attribution • Investment policy statement • Portfolio construction and management • Portfolio reporting and attribution • Whatever is needed to attain company goals and objectives 16

The Analyst Position (continued) ü What are the criteria used to select analysts? • There is a record of achievement • A strong academic record • A balanced individual with extracurricular activities • A good employment history • • • Strong communication skills Evidence of being a team player A tireless work ethic Attention to detail A strong analytical capability (with examples) 17

E. How to Prepare for a Career in Investment Banking ü Understand the industry, the positions, and the lifestyle • This is a wonderful but crazy industry • Are you suited for the lifestyle—very long hours ü Start building your contacts • Meet with as many of the visiting speakers as possible ü 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 ü Look to beginning your CFA program • It is looked on highly in the industry 18

A Career in Investment Banking ü Don’t get discouraged • Understand yourself and your goals • Work hard and be patient—Faith precedes the miracle ü Keep your priorities in order • Obedience is the first law of Heaven--do what you should • He will help take care of the rest ü Follow the Spirit • Stay worthy of the Spirit • He is your competitive advantage--stay worthy of His help ü Remember the Lord’s hand in your blessings • Always be appreciative of his blessings • Remember to share them with others 19