Career Overview
Field Overviews
Investment Banking
- Business Model: Advisory. People in this field advise their clients on transactions like M&A advise (valuation, negotiations, pricing, transaction structure), business restructuring, IPO underwriting, etc. Since 1999 they can also do normal commercial banking activities. They make money from selling these services, billing their clients, earning commission off of large deals, and earning interest from loans.
- Large Company Examples: Goldman Sachs, B of A Merrill Lynch, Barclays Capital, JP Morgan Chase, Morgan Stanley, Citigroup.
- Media Examples: The Game, Equity, The Family Man, Margin Call, Working Girl
- Pros: Easier to break into right out of college. Puts you at the center of a larger breadth of transaction types.
- Cons: A middle man industry, which are all likely to be killed by software.
Private Equity
- Business Model: Actively investing with other people's money. The firm has a pool of money from wealthy individuals, pension funds, insurance companies, etc. to invest long term. Because of this, funds are usually locked in for 3-5 years, then released. Typically invest in or acquire companies, and do all they can to improve that company's value (management changes, streamlining operations, etc.) with the goal of selling the company for profit. (Different from VC in that PE typically invests in mature companies vs startups, and typically buys the whole company vs a portion).
- Large Company Examples: TPG Creative Capital Firm, The Blackstone Group, The Carlyle Group, CVC Capital Partners.
- Media Examples: Wall Street, Pretty Woman, Other People's Money
- Pros: Performance based judgement, and judgement may come less often than other judgement based professions. Solid work life balance. Fewer deals so possible less stressed.
- Cons: Harder to break into right out of college.
Hedge Funds:
- Business Model: Similar to PE in that you are actively investing with other people's money, but taking a more short term approach. Goal is to get the highest return in the shortest amount of time. Usually investing in more liquid assets. Funds are not locked in, but managed indefinitely and pulled whenever the limited partners so choose since the funds are usually in fairly liquid assets.
- Large company Examples: Bridgewater Associates, AQR Capital Management, Two Sigma Investments, Millennium Management, Elliott Management Corporation
- Media Examples: Billions, Odd Mom Out (brother in-law's Hercules Partners)
- Pros: Performance based judgement, with judgement coming more often than PE. Able to do more deals than PE, so possible more exciting.
- Cons: Harder to break into. Possibly more stressful than PE.
Proprietary (Prop) Trading:
- Business Model: Use technical and fundamental analysis to price assets, predict the future movement of said asset, and act accordingly.
- Large Company Examples: The same companies from investment banking + Jane Street Capital, First New York Securities, Spot Trading, Jump Trading, Optiver
- Media Examples: Wolf of Wall Street, Trading Places, Boiler Room, Enron: The Smartest Guys in the Room, Quants: The Alchemists of Wall Street
- Pros: Since you will be investing your own money this way, it may be good to get professional experience with other people's money. Almost 100% performance based judgement since results are immediate.
- Cons: Short and/or straight career path (can't really exit to PE or HF). Not very exciting or project based. On edge the entire working day, can't really step away.
Real Estate: No. Not interested.
Management Consulting: No. Too much client boot licking.
Corporate Finance: No. Boring.
Asset Management: No. Boring.
Government/Treasury Department: Maybe in the far future, but you don't have to start there to end there.
Entry Level Jobs in Top Fields
Investment Banking Analyst
- Front Door: Degree in Finance + IB Internships
- Roles: Pitchbook creation, modeling, and administrative work.
- Work Life: Notoriously bad. Not going home until at least 8pm. More likely later. Develop deeper friendships because of this though. Further removed from the overall success of the company.
- First Year Total Comp: 130K-150K
Private Equity Analyst->Associate
- Front Door: Degree in Finance + Internships + maybe 2 years experience as an IB analyst.
- Roles: Help with fundraising administrative work (marketing materials for potential investors, etc), screening for investment opportunities and structuring those deals, managing investments and portfolio companies (helping grow their bottom lines), and building/executing exit strategies.
- Work Life: Typically 10-12 hour days. Less stressful than investment banking. Judged on performance. Close to the action. Business attire every day. Usually sitting in personal office.
- First Year Total Comp: 100K-220K
Hedge Fund Analyst->Associate
- Front Door: Degree in Finance + Internships + maybe 2 years experience as an IB analyst.
- Roles: Help with fundraising administrative work (marketing materials for potential investors, etc), screening for investment opportunities and making those investments, logging events that may impact your current portfolio and acting accordingly,
- Work Life: Business casual attire. Less formal because the office environment is louder (since you're more focussed on the day to day markets). Usually sitting at a trading desk.
- First Year Total Comp: 130K-300K
Quantitative Trading Analyst
- Front Door: Degree in Finance + Trading Internship
- Roles: Trading out of the gate. The organizations are flat. As you perform better, you get more money to manage.
- Work Life: Must give your constant attention to the market while it's open. No stepping away.