Finance Careers James Refalo Chair, Finance & Law For CSULA FMA
Corporate Finance Analyst • Investment & Operating Decisions • Project Analysis • Do we buy new equipment or lease? • Do we build a factory, bridge, or oil derrick? • Do we add an apartment building to our portfolio? • Mergers and Acquisitions • Determine Capital Structure
Corporate Financial Analyst • Hours: vary greatly depending on firm and corporate culture. 8-6, 8-8. • May have some long days • Probably wear a suit • Compensation is less than Wall Street • Goal is to make CEO in 20 years.
Corporate Finance Analyst • Fin 403, 437, and 431 • Must have leadership and management skills to advance (generally cannot be a dictator) • Political and Communication Skills at higher levels • E.g. Think Alan Mulally, Jack Welch • Ability to get big picture and execute
Commercial Banker • Businesses • Making and Selling Loans • Mortgages (Mortgage Loan Officer/Broker) • Bank Management • Trusts • Some fields are more commission based and have greater high end.
Commercial Banker • Commission based business • Loan Officer, Workout Officer, Mortgage Loan and Mortgage Broker • Salary Based • Bank Manager Path • Trust Officer/Asset Manager Path
Commercial Banker • Basic Quantitative Skills • Numerical Skills/Good with numbers • Ability to read/interpret financial statements • Qualitative Analysis • Some Sales Skills • Some Interpersonal Skills • Fin 437, 403, 335 for loan/management paths • Fin 439, 493 for Mortgage Officers
Financial Advisor/Broker • Job is to sell financial products/generate trades • There are pure FA positions that are fee based • Can involve all aspects of financial planning • Estate planning and determining investment strategies/goals • Effectively these are commission based positions—you are running your own business
Financial Advisor/Broker • Good social skills • Sales skills • Be comfortable working with individuals on their problems • Be knowledgeable about the products you are selling and understand portfolio construction • Fin 332, 437, 450. Fin 335 will help you understand your clients needs.
Financial Advisor/Broker • Hours can be longer when starting, building a book of business • Years later, becomes a cash-cow if maintained • You will start work with the markets 6AM west coast time, and finish with them 2-3PM • Probably some research on your own • Compensation depends on you, can be very lucrative.
Investment Banker • Business of assisting firms in raising capital • Assist in Creation/Issuance of Stocks/Bonds • Areas • Equity and Fixed Income • Leveraged Finance and Private Placements • Structured Products • Mergers and Acquisitions/Financial Restructuring • Municipal Finance
Investment Banker • Each group acts as a business unit • Often relies on Managing Director Reputation • You will be part of a team, and enter at the rank of analyst • Your job will include financial analysis, issue structuring, financial research, copying, creating slides for a presentation, anything they give you
Investment Banker • Hours are long. 9AM to 11 or 12PM, 7 days • May have all-nighters • Major banks pay very well, currently 100 to 150K. But remember, they own you. • Sky is the limit as you progress, but at the higher levels, you will need to be able to sell and retain clients. • Hours also depend on bank culture.
Investment Banker • Skills • Very tough field to break into • Be very good with spreadsheets, financial statement analysis, and financial modeling • Thorough understanding of Fin 437. On the equity side Fin 403 and 401 are quite valuable. • Fin 440 for structured products • Fin 450 for fixed income
Investment Banker • Personal Traits • This can be a combative field, must have a strong constitution • Strong intellect • Good sales skills will be needed to survive • Managerial skills and people skills are desirable, but, but don’t be surprised if your boss doesn’t have them. There are many big egos in this field.
Sell Side Analyst • Sell Side Analysts are tasked the following and analyzing a market or specific securities, and providing position recommendations–buy/sell • High pressure field. You will have to write reports and deal with clients. • Advise clients during the day, research during the night. • Generate reports/recommendations in hours.
Sell Side Analyst • Very long hours, often 12-14 hours per day, often working weekends. • Very lucrative, but work under constant time pressure—responding immediately to events • Must be adept at interpreting financial statements and firm/market events. • Constant awareness of markets/industry • Must know Fin 437, 403, 431, Cold.
Sell Side Analyst (Quant) • Fixed Income, Derivative, and FX analysts tend to be more quantitative • Often trained in Math, Physics, or Engineering • Familiar with the quantitative models that describe these securities • Fin 440, 450, and 437 are ideal courses • Should also have background in Money and Banking, and Macroeconomics
Buy Side Analyst • Money Management firms, e.g. Mutual Funds and Pension Funds (buyers of securities) • Must be able to sell recommendations to portfolio managers • Unlike Sell Side, recommendations not made public (held proprietary by firms) • Not as high pressure as Sell Side, hours vary 45 to 70 hours per week (extreme weeks).
Buy Side Analyst • Starting point is usually an MBA • Strong Analytical and Personal Skills—Analyze financial statements and Qualitative Info • Often meet with CEO/CFO/COO’s of potential recommendations (5-6 times per month) • Requires some travel/on-site visits 1-2 times per month • Fin 437, 403, and 431 for Equities
Buy Side Analyst (Quant) • Fixed Income and Quantitative Fields • Quants also develop portfolio strategies • Many are Ph.D.’s in Econ/Finance • Need strong math skills, understanding of economics, Fin 440, 450, and 332 • Good area for Math/Physics/Engineering, but need masters + background in econ/finance • Background in Statistics/Econometrics