From the monthly archives:

April 2009

Last time we looked at the second tier on the investment banking job food chain, the associate. Now let’s look at some of the specific skills requested by employers who are looking to hire them.

In combing through the many positions listed at JobSearchDigest.com, we noticed a media/entertainment firm in New York looking for an equity associate. This person would perform equity research and analysis of public-traded corporations in the communications sector.

In another example, an associate in credit risk management for a major New York investment bank would need a thorough understanding of structured finance products. In this case, the employer is looking for an undergraduate degree in economics or finance and at least four years of credit-related work experience.

Another major New York Investment bank (yes, they’re hiring) is looking for an associate to help identify and investigate risk concentrations in the firm’s credit portfolio (no surprise there). This candidate would need a familiarity with traded securities, derivatives, finance, and of course, the fluency in Microsoft Excel and data analysis techniques that goes with the territory for associates.

Of course, you’ll need more than number-crunching wizardry to succeed as an associate at an investment bank. You’ll need exceptional people skills. Investment banking has been described as revolving around “power, politics and personalities.” Meaning you’ll be dealing with a lot of gigantic egos, jockeying for favor among the higher ups, and naturally making your boss look good.

Associates generally don’t have to do as much of the grunt work as first and second year analysts. But you can’t expect much coddling, either. At an investment bank, the world revolves around the deal and everything else comes second. You move up the ranks as an associate because you work hard, understand finance and people, and bring in deals.

References:

www.careers-in-finance.com

www.investopedia.com

www.mbaauthority.com

www.wetfeet.com

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Although research analysts may be promoted to the associate level, many investment banks also recruit candidates directly out of the MBA programs at the top business schools. These professionals are often hired as associates.

First-year associates usually get paid a base salary range of $80,000-$90,000. The average bonus paid to associates with less than one year of experience is over $20,000. Associates with experience of between one and four years can receive bonuses of $40,000 or as high as six figures (taking their total compensation over $200,000).

Many associates work in the position for three to four years. Although some associates have analysts reporting to them, associates still have to do a fair amount of grunt work. The hours are long and your job is still to make your boss look good. However, if you can add value to transactions or pitches or help the firm improve things in other ways, you can be on your way to moving up the ladder to VP or director.

As an associate, you’ll need:

– The ability to do Discounted Cash Flow (DCF) valuations, pricing of deals, and due diligence
– A complete comfort level with Excel spreadsheets
– Great interpersonal and networking skills
– The ability to manage subordinates (analysts)
– Stamina, because you’ll still be working 12- to 18-hour days for weeks at a time

The demands of the job and the long hours do lead to a fairly high attrition rate among associates. Many associates report working 80-100 hours a week. It’s common for your co-workers to become your family. Many investment bankers spend nights in the office.

The training and the experience of working at such a high level of finance does provide lucrative opportunities for those who wish to pursue other careers. However, those who excel in this environment can make a great deal of money in a short period of time. You are often promoted based on performance. After four years as an associate, you can be promoted to Vice President. Stay another four years and you could move up to Senior VP or Managing Director.

Next time, we’ll look at some of the specific skills requested by employers who are looking to hire investment banking associates.

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Last time we looked at what an analyst does in an investment bank, and the skills it takes to be successful. Now we’ll look at the range of analyst roles that are out there.

Analyst jobs in investment banking can be as varied as the securities that banks manage. For example, a major Wall Street investment bank in New York recently posted a job for a junior analyst at JobSearchDigest.com This position was for an experienced Analyst/1st year Associate for the Commodities team within their Credit Risk Management (CRM) division.
 
This junior analyst would be involved in doing fundamental research and credit analysis, such as performing financial statement analysis, preparation of credit reviews that assign an internal credit rating and risk limits. Duties also included sector analysis, the preparation of reports that evaluate sector trends and compare relevant characteristics of specific counterparties to which the bank has exposure. Finally, the job would involve trade analysis, using financial and trade modeling tools to estimate how much a counterparty could owe the bank in probability scenarios. 

This position required an undergraduate degree plus one to three years’ experience in financial services, preferably in credit analysis or evaluating corporate debt or equity. A strong analytical orientation would be a plus, such as business analytics, engineering or applied math or science.

At the mid-range level, a senior investment banking analyst could be expected to have an MBA from a top business school and at least five years of financial industry experience. At this level, he or she might lead a small team of analysts, leading meetings and conference calls with management and clients, and perhaps publishing investment recommendations. Superior analytical, modeling and communications skills would be a plus, as would a CFA designation.

And as you would expect, there are highly technical and specialized analyst jobs in investment banking. Top tier investment banks often seek analysts with quantitative skills for various strategic groups within their firm. Qualified candidates in this case would often possess a Ph.D. in a quantitative discipline from a top university, along with at least a year or two of financial industry experience. Candidates often need strong programming skills in C/C++ as well.

If you have a penchant for numbers and digging deep into data for trends and opportunities, and the stamina to work long hours towards a specific goal, then the research analyst role could be the launching pad for your career in investment banking.

References:

www.careeroverview.com

BMO Capital Markets http://www.bmocm.com/

www.careers-in-finance.com

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Investment Banking Jobs: Analysts

April 20, 2009

The analyst’s job is the typical entry-level position for investment banking. As an analyst, you’ll be doing industry research, company research, financial modeling, analysis, valuations and coordinating presentations to clients. You’ll be working with a team of professionals that includes other analysts, associates, managing directors and vice presidents. You’ll be in the center of the […]

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Leadership Secrets for Investment Bankers

April 15, 2009

How has JPMorgan Chase been able to weather a financial crisis that consumed other giants such as Citigroup and Merrill Lynch? The answer is gifted leadership says Patricia Crisafulli, who has authored a new book on Jamie Dimon, JPMorgan’s chief executive, titled “The House of Dimon.” According to a review of the book by the […]

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Investment Bankers Jump to Jobs at Smaller Firms

April 13, 2009

The stampede of investment bankers leaving bulge bracket firms isn’t just from those being let go. Many of the big firms’ top rainmakers have been looking for greener pastures among banks that do not face tighter regulations, or at foreign banks and small start-up firms, according to a recent report in the New York Times […]

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The Changing Role of the Investment Banking Analyst

April 9, 2009

The clamor is growing louder for investment banks to be more transparent when it comes to their “cheerleading” research analysts’ reports and the trades they are executing on their own behalf. One critic, Richard Kramer, who walked away from a lucrative career as a top-rated analyst at Goldman Sachs to form his own independent research […]

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