Description of the Field
Finance and banking offer many career opportunities for people who want to work in global financial markets. The field serves as a bridge between capital-raising entities and capital-producing investors. The globalization of banks, the integration of banking activities, and the growth of emerging markets are ongoing trends. Internationalization means greater exposure to interest rate movements, economic challenges in developed and developing countries, erratic currency fluctuations, and stock and bond market volatility.
A career in banking and finance normally requires a solid background in business-related courses such as accounting, micro- and macro-economics, business finance, money and financial markets, and statistics. In addition, candidates should be able to understand financial statements and analyze a corporation’s growth potential, profitability, industry niche, future projections, and perform a number of similar tasks. Demonstrable experience that includes economic analysis and an understanding of economic markets and financial trends is also valued by employers. For those without previous experience in finance, it may be difficult to enter the field of finance. The most recent recession has increased the competition in the financial sector. A summer internship at a bank can provide valuable experience that may help students enter the financial services industry.
The financial services industry is traditionally broken down into the following areas:
Asset Management - Asset management companies manage the money of their clients to achieve specific financial objectives within guidelines under which the investment pool is organized. The pool might take the form of a mutual fund, hedge fund, pension fund, or institutional fund, and could invest in a range of financial vehicles including equities, fixed-income securities, and derivative products. Graduates working within asset management firms can work as buy-side and sell-side research analysts, quantitative analysts, and portfolio managers.
Corporate Finance - Corporate finance covers a wide range of financial services, including corporate structure finance, mergers and acquisitions, initial public offerings (IPOs), private placements, and real estate finance. The mission of a corporate finance department is to help its clients form and develop sound financial strategies to meet their goals by serving as advisors and by raising or managing funds. Businesses may need to raise cash to buy another firm, expand manufacturing capacities, pay down debt, buy back their own stock, or possibly divest themselves of a division.
Investment Banking - Investment banking isn't one specific service or function. It is an umbrella term for a range of activities: underwriting, selling, and trading securities (stocks and bonds); providing financial advisory services, such as mergers and acquisition advice; and managing assets. Investment banks offer these services to companies, governments, nonprofit institutions, and individuals.
Hedge Funds - A hedge fund is a private investment fund that trades and invests in various assets, such as securities, commodities, currency, and derivatives on behalf of its clients, typically endowments and pension funds and in some cases wealthy individuals. Wealthy individuals comprise a smaller fraction of the assets because of the desire to add assets and scale of the different clients - for example, one pension client allocation of $1 bil = 1,000 individual millionaires. Many hedge fund employees have previous experience in the financial services industry, such as within the alternative investment arms of investment banks. Strong math skills can be very useful in entry level recruiting.
Private Equity - Private equity firms invest money into privately owned companies, and, at times, invest and hold ownership positions in publicly traded firms. The private equity career market is highly competitive and values previous experience in finance or business. It is common for private equity to take struggling public companies private, improve operations, and then take them back publicly 3-5 years later. Thus, business knowledge in the areas of operations and corporate strategy may also be important, in addition to finance knowledge.
Public Finance - This department raises funds for the development of public projects. Investment banks help states and their agencies and authorities, municipalities, and counties to raise large capital through the issuance of federal tax-exempt securities. These bonds finance institutions, including but not limited to, hospitals, airports, schools, mass transit systems, and power plants
Sales and Trading - This group serves a variety of institutions, including pension plans, mutual funds, and insurance companies. In addition, many traders are dedicated to the firm’s own “house account.” The sales department’s main responsibility is to maintain positive client relationships. Other key functions include the sale of existing securities in the firm’s inventory and the distribution of the firm’s initial public offering. Traders execute trades in equities, corporate and municipal bonds, derivatives, currencies, and commodities.
Venture Capital - Venture capital firms raise funds from institutional investors and high net worth individuals to invest in start-up firms in specific industries (internet, biotechnology, energy, etc.). Venture capital firms look to hire individuals with technological or industry expertise and experience working for a tech start-up company, or in business or finance.
Other - Corporate banking also includes the research departments where equity (stocks), fixed income (bonds), and other negotiable instruments are analyzed. Also, portfolio and money management often falls under the responsibility of the research department. The high yield group manages high-risk bond issues with higher interest rates than many other investment vehicles. This group usually has its own set of specialized sales representatives and traders. In addition, private client services cater to individuals of high net worth and commercial banking typically caters to individuals and small to mid-size businesses.
Internships are one of the most effective ways to gain the experience necessary to enter the field. Many banks offer a summer analyst program, with recruiting for summer positions beginning in fall semester. A summer analyst position is often a requisite for those seeking full-time banking positions. Recruiting for full-time positions begins in early fall but many positions are summer internships that are converted to full-time offers. Every job seeker in finance and banking should be aware of the risk factor in this sector. Jobs and job availability are subject to the unpredictable elements of the market. Hiring can be as fierce as the market, so patience and perseverance are necessary. Please keep in mind that very smart, hardworking people, who do all the right things on the job, are subject to a higher rate of job insecurity than in other industries.
Any demonstrated experience which requires economic analysis, understanding of economic markets, or reacting to financial news or trends is of interest to potential employers. Networking, especially in more difficult financial periods, is essential for anyone interested in entering this competitive field. Contact alumni who are working with firms in which you have an interest and begin building your networking infrastructure. (See “Building Your Network” Handout)
Salaries at investment banks, even for nonprofessional staff, almost always consist of a base salary plus a fiscal year-end bonus. Bonuses are determined at the end of each year and are based on the performance of Wall Street, as well as the performances of your firm, department, and your personal contribution to them. Base salaries tend to be relatively moderate at the entry level and bonuses are discretionary. Your take-home pay from year to year can go through swings of more than 100 percent, especially as you attain higher levels of seniority.
Opportunities in investment banking are not the same as they were a few years ago; competition has become fierce. The incomes of employees in these firms rise and fall with the global economic tides. This is a market driven by the economy and in downtimes it becomes even more competitive to enter this lucrative field. Regarding opportunities in asset management, what is in demand is closely tied to a firm’s strategy. The largest, generally New York–based, brokerage houses (sometimes called wirehouses) continue to recruit trainees for number-crunching analyst positions and more sales-oriented marketing and brokerage support jobs. With online and self-service brokerages, investors can self-direct their own investment strategy, but most are willing to pay qualified professionals to guide them. In addition, many brokerage houses have access to research and historical data that would take the average investor months to track down. No matter who actually places a buy or sell order, there will always be a need for securities traders who work behind the scenes, locating the buyers or sellers who are willing to accept the securities transactions their clients or brokers want to make. Expect to face rigorous competition for securities (equities, debt, derivatives) sales agent positions, where only the most experienced applicants will get the job.
Source: WetFeet Library Career & Industries Overview: Investment Banking, Asset Management, and Sales and Trading with input from Professor Carter Doyle, U.Va. Department of Economics
Qualifications Necessary to Enter the Field
A bachelor's degree in finance, accounting, economics, mathematics/statistics, or business administration is the minimum academic background for financial managers. However, many employers increasingly seek graduates with a master's degree, preferably in business administration, economics, finance, international business, or risk management.
A solid background in business-related courses such as accounting, business finance, money and financial markets, statistics, micro- and macro-economics is recommended. In addition, candidates should be able to analyze a corporation’s growth potential, profitability, industry niche, future projections, etc. They must be able to read and understand annual reports, balance sheets, income statements, and cash flows.
Potential employers are interested in any demonstrated experience that requires economic analysis, valuation analysis, financial modeling, understanding of economic markets, or reaction to financial news or trends. An internship with a bank will improve your chances and grant you the necessary experience to attract recruiters. A solid framework of public policy, international trade, and both language and cultural fluency combined with business skills is an invaluable combination for entry into the financial industries.
Sample Group of Employers
Bank of America Merrill Lynch- http://www.bofaml.com
Barclays Capital - www.barcap.com
Bessemer Trust - http://www.bessemertrust.com
BlackRock - www.blackrock.com
Capital Group - http://www.thecapitalgroup.com
Capital One – https://campus.capitalone.com/
Citi - www.citigroup.com/citi
Credit Suisse - www.credit-suisse.com/us/en
Deutsche Bank – www.db.com
Goldman Sachs - www.gs.com
Houlihan Lokey - www.hlhz.com
J.P Morgan Chase & Co. - www.jpmorgan.com
Lazard - www.lazard.com
Macquarie Group- www.macquarie.com
Morgan Stanley - www.morganstanley.com
Nomura - www.nomura.com
Societe General- www.societegenerale.com
Selected U.Va. Organizations/CIOS
For a full list of organizations at U.Va., please see: https://atuva.student.virginia.edu/Organizations
Accounting Society (formerly Alpha Kappa Psi)
Alternative Investment Fund
Get on the Street
Global Markets Group (formerly Sustainable Investment)
Sales and Trading Group
Smart Woman Securities
Student Entrepreneurs for Economic Development (SEED)
Virginia Venture Fund
Resources for Additional Information
- American Banker - www.americanbanker.com
- Breaking into WallStreet - https://breakingintowallstreet.com/biws/homepage/
- Business Week - www.businessweek.com
- Careers in Finance - www.careers-in-finance.com/ib.htm
- The Economist - www.economist.com
- eFinancialCareers- www.efinancialcareers.com
- The Financial Times- www.ft.com/home/uk
- Forbes - www.forbes.com
- Fortune - fortune.com
- Institutional Investor - www.institutionalinvestor.com
- Vault - www.vault.com
- Wall Street Journal Online Careers - www.careerjournal.com
- Wall Street Prep – wallstreetprep.com
- WetFeet – www.wetfeet.com
- *20 Top Financial Services Firms. Published by WetFeet Press.
- *Beat the Street: Investment Banking Interviews. Published by WetFeet Press.
- The Bond Buyer/Thomson Financial Yearbook. Published by Michael Stanton.
- Business Week. Published by McGraw-Hill Companies.
- *Careers in Asset Management and Retail Brokerage. Published by WetFeet Press.
- *Careers in Investment Banking. Published by WetFeet Press.
- *Careers in Real Estate. Published by WetFeet Press.
- *Careers in Venture Capital. Published by WetFeet Press
- Directory of American Firms Operating in Foreign Countries. Published by Uniworld Business Publications.
- Directory of Foreign Firms Operating in the United States. Published by Uniworld Business Publications.
- The Economist. Published by The Economist Group, Inc.
- Environmental Finance. Published by Fulton Publishing, Ltd.
- *Finance Interviews. Published by Vault, Inc.
- *The Insider’s Guide to Jobs in Venture Capital. Published by WetFeet Press.
- *Killer Investment Banking Resumes. Published by WetFeet Press.
- *Vault Guide to Advanced Finance and Quantitative Interviews. Published by Vault, Inc.
- *Vault Guide to Finance Interviews. Published by Vault, Inc.
- *Vault Guide to Hedge Fund Careers. Published by Vault, Inc.
- *Vault Guide to Investment Banking. Published by Vault, Inc.
- *Vault Guide to Investment Management. Published by Vault, Inc.
- *Vault Guide to Leveraged Finance. Published by Vault, Inc.
- *Vault Career Guide to Private Wealth Management. Published by Vault, Inc.
- *Vault Guide to Sales and Trading. Published by Vault, Inc.
- *Vault Guide to the Top 50 Banking Employers. Published by Vault, Inc.
- *Vault Guide to the Top 50 Finance Employers. Published by Vault, Inc.
- *Vault Guide to the Top Financial Services Employers. Published by Vault, Inc.
- *Vault Guide to the Top Private Equity Employers. Published by Vault, Inc.
- *Vault Guide to Venture Capital. Published by Vault, Inc.
- World Trade. Published by BNP Media.
*Vault and WetFeet resources can be accessed through the OCS website.
- Finance Club - https://www.linkedin.com/groups/2046019/profile
- Finance and Accounting Professionals - www.linkedin.com/groups/Finance-Plus-Private-Equity-Venture-39259
- Financial Services Career Center - www.linkedin.com/groups/Financial-Services-Career-Center-838087
- Investment Banking Careers- https://www.linkedin.com/groups/2445872/profile
- Investment Banking Professionals - https://www.linkedin.com/groups/2162860/profile
- Investment Banking JobWire - https://www.linkedin.com/groups/3300518/profile