Insurance: Job Options
Actuary Actuaries use their analytical skills to predict the risk of writing insurance policies on property, businesses and people’s lives and health. Why does automobile cost so much more if you under the age of 25? Because an actuary somewhere found that the risk of insuring automobiles is highly age-dependent. Actuaries are a crucial part of the insurance process because they use statistical and mathematical analysis to determine the risk of providing coverage. To perform effectively, actuaries must be informed about general societal trends and legislative developments which may affect risk. Actuaries can work either within insurance companies or for government, pension planning org anizations or third-party advisors.
Agent and Broker Agents and brokers advise people and organizations on how to protect things they value by selling customers insurance contracts. You will be the first person contacted after an accident, fire or injury. An understanding of insurance contracts is essential to this type of occupation. A career as an agent or broker can be financially rewarding. This work is highly time-flexible, requires some background in business and is best if you enjoy interacting with people.
Claims Adjuster Adjusters negotiate insurance claims with people have experienced a loss. The adjuster is responsible for reaching a claim settlement that is fair to all parties. Doing well in this job requires a person who is resourceful, tactful and good with people. Some adjusters work in the field, while others work out of an office.
Service Representatives Service representatives are the link in the field between agents who sell policies and insurance companies who write the policies. Field representatives must be good listeners and communicators. This position requires knowledge of your companies products and ability to establish good rapport with those working for your companies. A background in liberal arts can be a great preparation for this type of position.
Loss Control Specialist As a loss control specialist your job is to help keep accident and losses to a minimum. You will visit factories, shop floors and businesses to identify potential hazards and help to eliminate them. In the health insurance area you might work with an organization to promote preventive health care in the workplace or to limit exposure to certain types of ailments. This work requires an understanding of safety management or engineering. A combination of a technical major and a business major would be outstanding preparation for this job.
Risk Manager A risk manager is employed by an organization to help identify the risks that it faces and to make recommendations for dealing with these risks. The recommendations may include the purchase of insurance, adoption of precautionary measures and presentations to upper management. Risk managers are involved in the management of employee benefit plans. Valuable skills include knowledge of the insurance industry and of business practice as well as skill in making presentations to upper management.
Underwriter Underwriters decide whether to provide insurance to applicants seeking coverage. An underwriter evaluates an applicant’s exposure to risk and decides whether an applicant meets an insurer’s standards. An underwriter may also become involved in setting prices for insurance applicants.
Insurance: Skills & Talents
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: Medium
Work hours: 35-55/week
Commentary
The Business is About Risk Transfer Insurance companies are in the business of assuming risk by writing policies which transfer risks from customers to themselves. This work is challenging, complex and likely to continue to prosper.
There are a Variety of Key Business Areas Insurance companies are in the business either of providing property and casualty insurance (protect owners of cars, business and homes against loss and injury); life insurance or health insurance.
Insurance is one of Finance’s Best Kept Secrets Insurance may be one of the best kept secrets in the field of finance. Most students do not realize the high growth and enormous potential for personal development and advancement that this field offers.
People-oriented Types Who Can Listen Do Well The field of insurance and risk management is well-suited for those who are good listeners, who enjoy people and are comfortable with quantitative analysis of risks.
Most People in Insurance Don’t Sell Many people avoid insurance careers because they perceive that the business is about selling and slickness. Certainly, part of the business involves selling but keep in mind that insurance policies help people, especially in times of need. Moreover, most jobs in the field do not involve direct selling.
Real Estate: Overview
As you read this, there are more than five million people in the United States employed in identifiable real estate fields such as title insurance, construction, mortgage banking, property management, real estate appraisals, brokerage and leasing, and real estate development. In addition, many were engaged in corporate real estate and in real estate lending in commercial banks, savings and loans, and insurance companies where their jobs are not included in the real estate sector. Over a third of the world’s wealth is tied up in real estate. Real estate is collateral for mortgages and a large amount of financial assets. As important as the field of real estate might be, it is also worth recognizing how interesting the work in this field is. Real estate professionals are tied to the development of our society in a very direct way and participate in decisions that will shape the way we live for centuries. Work in real estate is personally rewarding, ever-changing and challenging. Take some time and consider your potential in the field of real estate.
Real Estate: Facts and Trends
Bright Future The Occupational Outlook Handbook sees a bright future for property managers and says that the market will increasingly call for persons with a degree in business. The office building market, in particular, is expected to boom through 2005 due to growth in the service sector of the economy.
Experience in real estate is key. Do everything you can to obtain investing and property management background, whether it be by taking an unpaid internship, managing some properties or making a few small investments of your own.
REITs are hot. The 1990s have seen a large rise in real estate financings to the public through Real Estate Investment Trusts (REITs). These trusts work like mutual funds and hold property. The REIT boom is unlikely to continue over the next decade but this sector hould continue to offer good job opportunities for real estate analysts.
Negotiation Skills are Crucial. A key skill in real estate is the ability to negotiate win-win contracts. Develop negotiating skills now and you will definitely see a pay off later.
Technology is becoming much more important in real estate. Those who know how to develop products which use digitized photographs and video will have an advantage in the future because they can take properties to the customer as opposed to having to take the customer to the properties.
Get Certified. Certification is important, and often required, of real estate professionals. Contact the National Association of Realtors at (312) 329-8449 for more information. Key designations include Certified Commerical Investment Member (CCIM), Certified International Property Specialist (CIPS), Certified Property Manager (CPM), Certified Real Estate Brokerage Manager (CRB), Certified Resid ential Specialist (CRS). Resident al Accredited Appraiser (RAA).
Real Estate: Job Options
Residential Real Estate Agent/Broker
Real estate agents and brokers are usually independent sales professionals who contract their services to real estate brokers in exchanges for a commission-sharing agreement (normally six percent). There are over 400,000 real estate brokers and agents in the United States. To become a broker you must be at least 18 years old, a high school graduate and have passed a written test on property laws and real estate transactions. Most states also require 30-90 hours of classroom training. You can visit the National Association of Realtor’s web page at http://www.realtor.com/ to find out more about this career area.
Commercial Real Estate Sales
Commercial property brokerage offices use sales associates who market office buildings, hotels and many other types of commercial real estate for brokers. Commercial real estate sales people usually specialize in a particular property type such as apartments, retail, office, hospitality, shopping centers and industrial plants. Most of the large commercial brokerage companies in the United States provide a great deal of local market data and research in order to be able to service a cadre of sophisticated clients who are making multi-million dollar investment decisions. Several trade organizations represent the various commercial real estate subspecialties including the American Industrial Real Estate Association, the Hotel and Motel Brokers of America, the National Association of Industrial and Office Properties, the Real Estate Exchange-a forum for women in commercial real estate, the International Council of Shopping Centers, and the Society of Industrial and Office Realtors. Additionally, the Commercial Investment Real Estate Institute (CIREI), through its education program, has been conferring the Certified Commercial Investment Member (CCIM) designation since 1969.
Real Estate Appraisal
Real estate appraisers provide unbiased estimates of a property’s value and quality. Appraisers usually work for banks or for appraiser firms and will normally value properties by finding comparable sales in an area or by es timating the discounted value of cash flows expected from a property. This profession is less cyclical than real estate brokerage because appraisers are required when homes are refinanced-a time historically when the real estate market has been slow. You can learn more about this area from the Appraisal Foundation.
Property Management
Leading real estate owners require professional property managers. Managers are responsible for negotiating leases, ensuring that tenants are satisfied, that rent is paid and that rents reflect market conditions. The career of property manager requires good interpersonal and analytical skills and a fair amount of negotiating prowess. This job is personally rewarding and allows you to really learn the real estate markets should you wish to embark in business on your own. The Institute of Real Estate Management (IREM) is the trade association representing property managers. Their training programs include the Certified Property Manager (CPM) and Accredited Residential Manager (ARM) designations.
Real Estate Advisory
Institutional investors are purchasing real estate more and more. But real estate is not like a stock or bond that you can buy and put in a vault. Real estate advisors help investors care for property and, more importantly, se lect property in the first place by suggesting areas and property types that are likely to experience price appreciation in the future. This job is fun and one that you can get into after getting experience in investing or property management. People who are good with statistics and excel at client contact do well in this job.
Investment Banking
Many investment banks have groups dedicated to real estate, particularly the repackaging of mortgages into residential mortgage-backed securities (MBS), collateralized mortgage obligations (CMOs) and commercial mortgage-backed securities (CMBS). Big players include CSFB, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and PaineWebber. Other popular areas include the REIT stock, bond and preferred stock origination business, lodging investment banking, principal investing in real estate and synthetic lease origination. If you have an interest in both real estate and investment banking, why not go for both areas at once?
Development and Construction
Are you willing to work hard and take risks to develop new properties? Then a career in real estate development may be for you. You can enter this business working for another developer, moving up to construction manager, or you can strike out on your own, starting with some smaller transactions. Good developers are results-oriented and know how to get work on time which involves managing labor, establishing time estimates, getting appropriate equipment operators and construction crews.
Real Estate Entrepreneur
Real estate is one of the last bastions of the free-enterprising entrepreneur who buys properties in hope that they will rise in value because of improvement in market conditions or renovations. Since WWII some of the weal thiest persons in the world have been real estate entrepreneurs. To make it in this career you need to be savvy, hard-working, willing to take risks and fortunate. Remember, their are others who would also like to become wealthy in real estate who will be bidding on the same deals and properties that you will. It is important, then, to think carefully of how you can succeed in this market through better wits, a superior management approach or a unique niche strategy.
Real Estate: Skills and Talents
Real estate employers are looking for people with a combination of strong deal-making and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Very High
Communication skills: High
Analytical skills: Medium
Ability to synthesize: Low
Creative ability: Medium
Initiative: High
Work hours: 20-70/week
Excellent Job Opportunities The field of real estate involves the sale, management and analysis of land and properties. This is one of the largest parts of the economy and offers excellent job opportunities.
Tough to Break In It’s relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
The Field is Highly Entrepreneurial Real estate jobs tend to be more entrepreneurial and create opportunities to become wealthy if you have the right mix of analytical skills and entrepreneurial drive.
There are Many Ways to Play the Field One of the exciting things about real estate is that it can be approached from so many different ways. You can be a white-collar worker projecting and analyzing cash flows from new developments with spreadsheets; an agent in the field with heavy contact with customers on a day to day basis; or an ent repreneurial property owner/manager looking for undervalued real estate buys and strategies for creating value.
Multiple Entry Points Available There are a variety of ways to break into real estate. If you are interested in the sales side you need to get licensed and should go to work for a commercial or residential broker. If you would like to get involved in property acquisition and analysis you should get a higher degree with a specialization in real estate and go to work for a major property management company. There are also many other ways to enter including through corporate site selection departments, governmental entities and banks.
Investment Banking: Life as an Associate
An associate is typically a recently graduated MBA or an analyst who gets promoted after three or four years. You will usually stay an associate for three years or so. An associate still has to do a lot of grunt work and may even have an analyst to call on. Your hours will still be miserable and you haven’t really become a human being yet. Like a good analyst, your job is to make your boss look good and to understand what’s going on. Your boss may abuse you from time to time and you aren’t supposed to complain really. This is a job where you can really start to shine. If you add value to transactions or help get things done in some other meaningful way, you can expect to be paid a reasonable bonus and have a shot a promotion to AVP.
Associate level pay in New York firms runs roughly $90,000 in your first year (including bonus). If you are good and stay awhile, expect to go up to roughly $130,000 to $150,000 before you hop up another level. In London expect a salary of roughly 60,000 to 80,000 Sterling (all-in).
Key Skills
In investment banking / corporate finance / M&A, key associate skills include:
* the ability to do DCF valuations
* the ability to use Excel in your sleep
* the ability to arrange client meetings and get the logistics right
* the ability to deal with horrendous egos
* the ability to find comparable companies
* the ability to network within the firm and befriend key people like librarians, IT gurus, messengers, lawyers, compliance etc.
In debt and equity capital markets positions, key associate skills include:
* the ability to massage league tables
* the ability to price up new deals (e.g. bonds, convertibles, preferreds)
* pretend that you know what’s going when clients call in and the boss is not around
* the ability to track past deals and pricing to sense where the market is going
* check and generate weekly newsletters (weeklies)
* the ability to fill in silences in meetings with insightful comments (while making sure your boss controls things)
* coordinate due diligence
* prepare document on debt and equity deals
* make sure analysts get burgers from the right place
* generate pitch books with your eyes closed while talking to clients and screaming at syndicate
In sales and trading positions, key associate skills include:
* the ability to watch your bosses blotter
* the ability to know where prices are
* the ability to work options pricing models
* the ability to bluff a little when needed
* the ability to eat endless fattening food without getting fat
* the ability to golf, play tennis, drink and joke around with clients
* the ability to make clients feel comfortable with you
Success Factors
Key success factors include (i) getting your job done well, (ii) getting many things done in a chaotic environment, (iii) dressing well, (iv) having a beer and a good time every once in awhile, (v) always making your boss look good, (vi) being a total whiz with computers, (vii) being able to spin bad news into ok news and (viii) network within the firm. Other good things to do include figuring out when a job could be done better and going out and doing it. For example, create a database to track the results of an equity tender offer. Initiative is key. Also, getting to know clients is very important since you will be using those relationships later on.
Assessment
As an associate you are in. Your job now is to prove you have what it takes to make in investment banking. You may not always like the environment and culture you are in, but your job is to survive and eventually excel. You are only a few years away from getting your own clients, initiating your own deals and making some good money.
Play your cards right and you’ll be happy you did the time. Big time.
Recommended Books
* Applied Corporate Finance: A User’s Manual, by Aswath Damodaran. Walks you through how to do corporate finance in detail with extensive examples. Read this for an investment banking job.
* Barbarians at the Gate: The Fall of RJR Nabisco, Bryan Burrough and John Helyar, Harper Collins Books, 1993. Describes the rather crazy life of one corporate executive. Lots of juicy personality conflict. If you liked the movie you will definitely enjoy the book. Good background for an M&A job.
* Fast Track: The Insider’s Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford Job and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Handbook of Fixed Income, Frank Fabozzi (editor). This is the bible for any job involving fixed income sales, trading, underwriting or derivatives. Should be required reading in every MBA program.
* Tim Crack’s Guide to Quantitative Questions from Wall Street Job Interviewers. If you are interviewing for a job in derivatives or other relatively quantiative area you should get this book. This is not so important to go through for a plain vanilla i-banking job, although it couldn’t hurt.
* Valuation: Measuring and Managing the Value of Companies, by Tom Copeland, Tim Koller and Jack Murrin. Valuation delivers more potent strategies for measuring and enhancing the bottom-line value of any company. Also walks you through how to do a valuation. The diskette is also quite valuable given that you get a ton of spreadsheets to play with. Great background for any job involving M&A or investment banking.
Investment Banking: Life as an Analyst
Analysts are typically recent undergraduates who work long hours and do a fair bit of grunt work. A good analyst helps his or her boss get their job done and done well. Analysts are not normally expected to contribute in meetings but often can. Many analysts return to the business. Others choose to try other opportunities. During recruiting out of an MBA program, former analysts will be at a significant advantage over others without experience. A good pay number after bonus is $38,000 for the first year. Expect to go up roughly $5,000 a year until you hit associate.
Key analyst skills include:
* the ability to work with Excel spreadsheets,
* write macros in VBA,
* track and generate weekly newsletters (weeklies),
* keep schedules,
* generate prospectuses,
* get burgers
* put in and retrieve pitch books from the copy center
* and answer client phone calls.
Success Factors
Key success factors include (i) getting your job done well and without friction, (ii) getting things done on time, (iii) asking for help when you need it, (iv) dressing neatly, (v) not complaining, gossiping or whining, (vi) learning to use the library and the web to do research, (vii) become a whiz-kid with Bloomberg, Excel, Word and Powerpoint, (viii) always give your boss credit, (ix) know when to cheer up your boss and (x) know when to stay out of the way.
A good analyst also networks, observes and thinks. You want to be genuine yet make it clear that you like your boss. Excessive posterior kissing is a negative. It’s always good to have a little hobby as well like following stocks, playing Liars Poker or following currencies. You can do this when things get quiet in August.
Assessment
It’s a tiring life but gives you a good chance to learn the investment banking field and bond with people whom you will work with later. Being an analyst is one of the best ways to break into a very good field. The return on investment from being a good analyst can be over 50 times what they actually pay you.
After two years, most analysts leave to get their MBA or pursue other positions. It all depends on the firm. Some places have a pretty strict policy of getting rid of you. Others are more mellow. It makes sense, after all, to try to keep very good people who can get a job done. If you don’t go back and get an MBA you might benefit from going out and getting a CFA.
Recommended Books
* Corporate Financial Management, Douglas Emery and John Finnerty, Prentice-Hall. An excellent, detailed book on topics in corporate finance. If you want to study what the field is about, this is a good book to start with. More “real world” than Brealey & Myers and Ross.
* The Economist. A great source for info on what’s happening in the world.
* Fast Track: The Insider’s Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading, by Miriam Naficy. A recent Stanford MBA and former employee of Goldman Sachs provides a highly practical overview of what it takes to get a good finance job. Highly recommended.
* Wall Street Journal. Should read this every day.
Investment Banking: Recruiting Outlook
We’re now seeing a bright recruiting season in investment banking shape up. If the market holds up, hiring this Fall and in 2000 will be spectacular. If.
Overall: Hiring volumes in i-banking this year was even to up. Salaries held and in some cases jumped nicely. It’s no longer a head-turner to hear of an MBA package (all-in) at a top bank in the 130K region. There are still plenty of highly stressed twenty-six year olds pulling down $300K+ salaries.
Environment: Financial intermediation in debt and equity capital markets (investment banking) plus the side businesses (M&A, project finance, operations) are all hot in 1999. Securities underwriting volumes this year have been the largest in history. At the same time, we are seeing the hottest M&A year in history. Monster M&A deals like BP/Arco/Amoco and AT&T/Media One are the play of the day.
The stock market in the U.S. is booming; however, Asia is still in “recovery” mode.
Who Did the Hiring in the U.S. Bulge?: Among the U.S. bulge bracket we saw increases in MBA recruiting at Morgan Stanley, Goldman Sachs, Salomon/Citi and Bear Stearns. Merrill and CSFB even to down. Lehman steady for quant and banking types.
Recruiting Climate in the U.S.: Average. New York real estate is still mightily expensive, reflecting strong bonuses and steady recruiting into the financial services sector. (To say nothing of a banner year in corporate, consulting, media and publishing).
Who Did the Hiring in the European Bulge?: Europe is red hot at the moment (esp. in the City of London). Big recruiters were Warburg Dillon Read, Deutsche Bank, ABN-Amro, Barclays, Dresdner (more in Germany) and CSFB. Other smaller players such Den Danske, BBV and Paribas have also been recruiting selectively. Japanese banks have quietly pulled out.
Recruiting Climate in Europe: Europe is the best place in the world at moment to be looking at investment banking career opportunities. The Financial Times jobs section is absolutely jammed with adverts for analysts/associates and specialists (you have to get the paper in the UK; web version doesn’t have the ads). London is THE place to be. Technology market (programmers) softening a bit. Eastern Europe is very mixed. Russia and Ukraine not good. Places like Poland and Hungary doing well.
Germans still ambitious for Frankfurt. Commerzbank, Deutsche, Dresdner all recruiting (but usually through apprenticeship programs). HypoVereinsbank is a new player, looking to grow.
France is a mess at the moment with the BNP, SocGen and Paribas tangle. Expect this to get worked out. Doesn’t bode well, but keep in mind that Paribas is a decent bank that will have to keep adding to its staff in time.
Recruiting Climate in Asia: Generally lousy. A recent job advertisement on Bloomberg for an entry level job in Tokyo generated nearly a thousand resume submissions. Disaster at Nikko, Nomura and Sakura. HSBC is very strong and is selectively recruiting. Places like ING/Barings are maintaining and growing presence in markets like the Phillipines. Asia is an unfortunate market in 1999. But hope springs eternal!
Recruiting Climate in Australia/NZ: Very good. The Financial Review carries quite a few investment banking recruiting advertisements. The big U.S. players such as Morgan Stanley and Merrills are growing their presence. The local banks such as NAB and ANZ are looking to strengthen. Deutsche Bank is selling the newly acquired BT Australia which should also cause jockeying and consequent recruiting amongst major players.
Recruiting Climate in Africa: Hoped for growth in places like Egypt and Nigeria still not happening. However, the South Africa market is alive and well. South African players like TD and Hambros are healthy. This market will grow in time, but high rates and a shaky fiscal situation may hamper the market.
Hot Jobs in the U.S.
1. Technology investment banking. Anyone involved in the tech equity and M&A area is absolutely frazzled this year. High deal flow with outstanding market reaction to priceline.com, ebay etc. Places like Morgan Stanley, ML, CSFB, BT Alex Brown are absolutely booming and are recruiting like mad. Now.
2. Structured finance. CBOs, CLOs and synthetic structures are booming. Associated area of credit derivatives is also very strong. Get an internship doing this because they wont teach you much about this area in business school these days.
3. Equity research. The quantity and quality of equity research is ever-improving. There has been high growth in this area with particular demand for MBA-types with interesting industry experience.
4. Operations and Risk Management. There is a stronger focus on risk management everywhere and operational back office people are in strong demand. This is a great entry point for folks who aren’t coming out of a top 20 business school.
5. Electronic Trading. A very cool area. It’s a lot more than eTrade, Ameritrade etc. Places like DLJ and Merrill are going into electronic debt and equity trading in a big way.
6. Government Bond Trading. Govvies have been the nightmare job area for the last decade. But suddenly it’s a hot area again. For one, there’s a lot more interest in value in the sector given liquidity differentials that have arisen lately. And, prop trading in governments has been a good business in the last year.
7. Private Client Services: Banking to high net worth individuals is growing in the US. Big players include Goldman, JP Morgan and Brown Brothers Harriman. UBS is looking to grow. A May report in Institutional Investor reads: “UBS is setting the stage for a major U.S. expansion. The push to grow across the States includes forming a dedicated wealth management group in New York and opening four private banking offices by the end of the year, with additional office openings slated for the year 2000. UBS also is looking into a strategic acquisition once it grows the private banking business further, says a senior UBS banker. In addition, UBS, which through its merger with Swiss Bank acquired trust powers, is now equipped to move forward and put those powers into use.”
Hot Jobs in Europe
1. Credit Research. There’s a huge shortage of people in credit research at the moment as there hasn’t been much of a corporate bond market.
2. Bond underwriting. The Euro capital markets are booming with volumes double those of the U.S. Jobs in Debt Capital Markets are widely available.
3. M&A. There’s been huge turnover as players like Lehman and Deutsche have been building their advisory sectors in Europe. With emerging hostile takeovers and megadeals like Telecom Italia look for this to continue.
4. High Yield. The high yield market didn’t exist in Europe five years ago. It exists today and is growing big time. Lots of jobs there.
Who’s Going to be Recruiting in the Next Year in the US?
* Merrill Lynch (comeback time, although there is lots of merger talk)
* Chase (serious about growing investment banking and continuing to recruit in size)
* Goldman Sachs (post-IPO glow will help grow)
* Morgan Stanley (expanding everywhere)
* NationsbancMontgomery/BankAmerica (they are VERY serious this time. Heavy recruiting in New York, San Francisco and Charlotte)
* DLJ (a very profitable high yield operation is basis for growth elsewhere)
* ING Furman Selz (smaller player with huge American ambitions)
* ABN Amro (in Chicago going after middle market clients. good strategy with growth potential).
Who’s Going to be Recruiting in the Next Year in Europe?
* ABN Amro (wants to grow throughout Europe, esp. Eastern Europe).
* Deutsche (currently #1 in Euro bond underwriting by a mile and hot in derivatives). Has sustainable platform for growth.
* Morgan Stanley (wants to grow faster in Europe)
* JP Morgan (looking for selective growth, esp. M&A)
* Warburg Dillon Read (a leading player that is getting done with a big merger)
* Merrill Lynch (putting a nice new building across from Ropemaker Place)
Investment Banking: Facts and Advice
A good time to send your resume to an investment bank is in November and December. Hires are usually made around January and February. But don’t stop in Feb. just because you haven’t hit your target. According to an analyst at Salomon Smith Barney “it’s really crucial to be persistent. It’s basically a numbers game. Contact lots of people. But at the same time, customize your approach to each person and bank. That means it’s going to be pretty much a full-time job.”
Don’t forget to check back. Traditional recruiting is done by April. Lots of people also change jobs in the March to July period. This means that many banks are scrambling for personnel in July, long after the resumes have been thrown away. Somewhat surprisingly, the best time to find a full-time job is by screening your contacts in late Spring and Summer.
Investment banking is one of the most global businesses on earth. Investment bankers spend plenty of time tracking down corporations in Peoria and Seattle. But they are just as likely to be working with investors and issuers on the other side of the world–perhaps Hong Kong, Bulgaria or even Africa.
Electronic investment banking is emerging in a serious way. Companies like E-Trade offer online stock trading. Other organizations like DLJ and Deutsche Bank are offering electronic trading of stocks and bonds. Electronic origination of securities is being led by W.R. Hambrecht and Wit Capital. There are tremendous opportunities for growth in this area.
Investment banking is seeing massive consolidation. Today,firms merge at unprecedented speed. The mid-1990s have seen mergers of Citibank, Smith Barney and Salomon, Bankers Trust, Dean Witter and Morgan Stanley, Bank of America and Montgomery Securities and SBC, UBS, Warburg and Dillon Read. Expect this to continue. The big players, particularly, Merrill and Goldman, are not done yet.
Investment banks had a great year in 1999 with a strong market. Unfortunately, problems in the emerging markets have crimped hiring lately. Areas that are worth looking into in tough environments include investment grade debt, firm risk control and certain types of M&A. Also keep in mind that if you can’t find a job due to the lousy environment, investment banks often hire from corporate treasuries when times improve. Thus, pursuing a corporate finance job isn’t such a bad alternative. It beats driving a taxi.
Investment banks have experienced rapid salary escalation as firms fight to try to keep good people. According to a recent McKinsey study, the average salary at a top ten US investment bank in 1980 was a little over $50,000. By 1998 it had more than tripled.
The investment banking business is notoriusly competitive. A recent Goldman Sachs research report finds that five large European investment banks (headed by commercial bank parents) have committed almost $17 billion in capital to the industry. Firms like CSFB, Warburg Dillon Read, Santander and ING are attempting to expand rapidly in the US and are putting salary pressure on other firms as they go after talent and business. In Fall 1998 a lot hiring was coming from Dresdner Kleinwort Benson. A recent McKinsey study argued that many firms in the business will not be able to survive long-term (overcapacity situation). This argues that you should try to get on with one of the stronger players in the industry if you have a choice.
The Asia crisis has put the dampers on much investment banking activity in places like Indonesia, Hong Kong, China and Thailand. Yet hiring is happening because so many have quit in 1997 and 1998. The market declines and losses on emerging market bonds that book place in late 1998 will continue to drive personnel changes.
Investment banks are facing declining margins on bread and butter business. Margins are falling in underwriting of investment grade debt, vanilla foreign exchange and many areas of OTC derivatives. Treasury bond trading is fast becoming one of Wall Street’s least profitable areas. This is putting downward pressure on salaries in places. Expect more pressure on salaries in time for traders as electronic trading becomes more prevalent.
Sometimes you will find yourself working for an egotistical jerk. What do you do? First, don’t take the job in the first place. If someone mistreats you in an interview, get up and walk out (funny… you may actually get offered the job). Second, be sure to communicate your needs very clearly when it matters when dealing with an ego-creep. It might just be that someone is so busy and overwhelmed that they get abusive. Laying it out in a nice way may help. Finally, if you find yourself in a truly pathological environment working with dysfunctional people, bail out. Life is too short and the money isn’t worth it.
Pick the first firm you work for carefully. People who jump from firm to firm too much are less likely to get hired into a great job because your loyalty will be in doubt. One leading global investment bank has a practice of minimizing hiring from outside to avoid “career jumpers.”
Investment banking is seeing entry from traditional banks. The Glass-Steagall Act which restricts commercial bank activity in underwriting equity and debt is being relaxed. The following U.S. banks, for example, have entered securities underwriting in a serious way:
* BankAmerica
* JP Morgan
* Chase
The 1998 merger of Travelers, Citibank and Salomon into Citigroup will only accelerate this.
Investment banking is generally transaction driven. In this environment a single individual with good client contact can make an enormous difference for a firm. This is part of the reason that star investment bankers (“rainmakers”) take home high bonuses.
Investment Banking: Skill and Talent Requirements
Investment banks want employees with a combination of strong analytical and interpersonal skills. Some jobs lean more towards one skill set than another (e.g. brokers need to be mainly sales people). A typical job of an equities analyst requires both analytic and interpersonal skills. The skills involved include:
Key Skill Area Requirement
People skills: High
Sales skills: Medium
Communication skills: High
Analytical skills: High
Ability to synthesize: High
Creative ability: High
Initiative: Medium
Work hours: 50-120/week
Hard Work Expected and Respected Investment banking is a high work, high risk, high reward profession. When you start your hours will typically be long but the work can be exciting. Be prepared for moments of frustration where you are stretched too thin and moments of exhiliration where everything clicks.
Tough to Break In It’s relatively hard to break into investment banking. You need to be prepared to pursue firms on your own after you have thoroughly prepared yourself.
Believe it or Not, Bankers Have Social Value Investment bankers are often the subject of social scorn in movies like Bonfire of the Vanities. Are investment bankers really greedy narcissistic scum? Some probably are. But keep in mind that they play a crucial social role of helping to direct capital to companies with great ideas that make people better off.
Analyst Jobs Are the Best Entry Point Many college graduates start in investment banking in an analyst position. To succeed in these positions you need to be extremely dedicated, have good spreadsheet skills and be analytically fluent. Your next step will be to become an associate. Same skills, just raise the volume.
Communication and Completion Abilities Key In mid-career, your success usually will depend on your ability to communicate with clients and get deals done. At this level it is also important to have a good understanding of market trends, the political and macroeconomic environment and deal mechanics.
Math Skills Can Help Some jobs in investment banking call for very strong mathematical ability. If you are good at math think about getting an advanced degree in a technical field (studying areas such as stochastic calculus and differential equations), then take some advanced finance courses in options pricing or bond valuation and apply to a research department on Wall Street (Carnegie-Mellon’s FAST program is a leading in training mathematicians and physicists for Wall Street jobs).
Accounting Skills Valuable The ability to analyze accounting numbers critically is important in most analyst positions. Ultimately, you should aim for the CFA designation if you would like to be a securities analyst. The CFA helps you become much more mobile over time. If you have ambitions too “bail out” some day and become a corporate financial analyst you might also want to consider the CMA (Certified Management Accountant) designation.
Traders are Multi-Talented It’s hard to define what makes a good trader. A good understanding of the market, quick reactions, analytical skills and the ability to bluff help. Read Liars Poker by Michael Lewis to learn more about sales and trading.
Get Used to New York Most large firms operate out of New York. Even if you are interested in working in another location, your general interviewing activities are likely to be centered there. Other places you should look at include Hong Kong, Tokyo, London, Moscow and Singapore. If you go looking for a job in investment banking using informational interviews in the U.S. it is crucial that you make several trips to New York.
Teamwork Crucial A crucial success factor in investment banking is teamwork. Being able to pull together persons with large egos to get a presentation together for a client is a challenge and is likely to be rewarded highly.
Scientists and Lawyers Wanted There’s definitely an interest in people with backgrounds in science and law. Scientist types can work on everything from derivatives algorithms to biotech banking. Lawyers can help design new securities, sell leasing business and use their analytical prowess to talk to clients. This said, you have to sell yourself. It often doesn’t hurt to go back and get an MBA from a top school, and then try to repurpose your career into investment banking.
Contacts are Everything The key to breaking into investment banking is a good network of contacts. You may already be blessed with such a network, but if you don’t have one, you can start to develop one by going on informational interviews, attending industry conferences, finding alumni from your school in the business etc. Keep in mind that your network might not really “pay off” for some time. If you are young and haven’t gone for an MBA degree, try to get into the best possible school and then go for quantitative and analytical coursework.
Getting Things Done is Important Starting off in an investment bank, you are usually responsible for getting projects done well and on-time, whether it be writing reports, running spreadsheets, trading, doing research or coding programs. Later, once you get involved with clients and ideas for generating revenue, you will be rewarded greatly if you can bring in business. At higher levels (usually Director, Managing Director and up) you are exposed to much greater risk. At this level, people are often fired for non-performance, whereas at lower levels you may not be scrutinized as closely.
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sf!!! 
thx!!helpful 
Thanks, LZ!
Read your posts almost every day from last week, great deal of information. Support!
楼主的帖子从来都是很有用的，顶顶顶！
超赞。我滴本行哦，
thank u
Quite difficult to read them all at one time。。。。 
xiexie…
先顶后看
谢谢 