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Finance 101

Finance 101. Executive Board. President-Anna Mayr Exec VP- Sam Pulitzer VP of Finance- Jeff Williamowsky VP of Administration- Matt Captline VP of Marketing- Matt Bromiley Corporate Liaison- Josh Pupkin SUSA Rep- Paul Abel FMA Rep- Webster Hughes Webmaster- Eric Kuang.

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Finance 101

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  1. Finance 101

  2. Executive Board • President-Anna Mayr • Exec VP- Sam Pulitzer • VP of Finance- Jeff Williamowsky • VP of Administration- Matt Captline • VP of Marketing- Matt Bromiley • Corporate Liaison- Josh Pupkin • SUSA Rep- Paul Abel • FMA Rep- Webster Hughes • Webmaster- Eric Kuang

  3. Financial Consulting • Advise corporations on financial issues • Review business plans and decisions • Suggest methods to improve valuation • Assess business and capital structure • Provide useful advice for • Risk management • Government regulations • Industry trends • Provide independent evaluation of potential options

  4. Financial Consulting • Profitable industry • Intense travel schedules • Team-oriented environment • Major firms • McKinsey • Bain • Boston Consulting Group • Deloitte

  5. Financial Advisory • AKA financial planning; help clients select appropriate assets • Education: Pass the Series 7 broker/dealer exam; possibly obtain CFP designation and/or MBA • Responsibilities: Find clients and help them understand investment opportunities; monitor markets and make quick decisions; have strong people skills and be able to sell your ideas; initially work long hours to find clients • Pay: According to BLS, as of May 2009, median compensation was $68,200; top 10% earned over $160,000; financial advisory is very strongly commission based

  6. Wealth Management • Combines financial/investment advice, tax services, and legal/estate planning; financial advisory for clients with higher net worth; often employed by banks and investment firms • Education: Pass Series 7 exam; possibly obtain CFP designation, law degree, or an MBA • Responsibilities: Find clients and provide them with personalized advice; sustain and increase clients’ wealth over time and help them plan for the future; after clients have been acquired, work as long as it takes to meet their needs • Pay: Typically between $65,000 and $85,000; once again, strongly based on commission

  7. The “Big Four” • All firms offer areas specializing in finance • PwC – Financial Consulting • IPO readiness, risk & capital management, finance function systems & applications • Financial Instruments & Credit Group (FICG) • Deloitte – Financial Advisory Services • Business valuation, forensic center, capital projects consulting • Ernst & Young – Advisory for Financial Services • Performance improvement, risk management, capital & transaction management • KPMG • Private equity consulting, banking & finance restructuring

  8. The “Big Four” • Work Load • Internship: 10 weeks, 40-50 hrs. per week. Limited responsibilities, but very informative • Full Time: 50-60+ hrs. per week, specific responsibilities. Travel may be involved. • Salaries • Internship: $23+ per hour • Full Time: Many factors influence, but median starting salary is $59,000 (2010) • Career Paths • Pre-defined track in each company. • Analyst – Consultant – Senior Consultant – Manager – Senior Manager - Director/Partner/Principal • Culture • Culture is important aspect in all companies • Intra-company clubs, community service activities • Important work/life balance through telecommuting, on-site options • Continuing education – Tuition/Certification options for all employees

  9. The “Big Four”

  10. Sales and Trading

  11. Sales and Trading Is Sales & Trading Right for You? • Skills/Traits Needed: • Highly focused • Excellent quantitative skills • Thrive in fast-paced, stressful environment • Ability to multitask & prioritize.

  12. Sales and Trading Exit Opportunities Few Exit Ops outside trading Can move up the ladder Trading at Hedge Funds Professional Areas • Sales • long term client relationships • Present investment ideas • Sell and cross sell firms products • Trading  • Develop and execute trading ideas and analysis • Market Making trade execution process

  13. Investment Banking • Help companies raise debt or equity • Advise companies • Mergers & Acquisitions • Restructuring • Analyst, Associate, Director, Managing Director • Analyst Responsibilities: • Presentations, Pitch books • Valuation & Financial Modeling • Industry/Company Research *Investment Banking Interview Prep http://investmentbankinginterviewprep.blogspot.com/2008/02/citigroup-profile.html

  14. Investment Banking Cont. • Pros • Deep understanding of financial statements and valuation • Great exit opportunities (Private Equity, Hedge Fund, etc) • Experience • Salary (entry level: $90K- $150K) • Cons • 80-100 hrs/week • Hours vary • Stressful *Investment Banking Interview Prep http://investmentbankinginterviewprep.blogspot.com/2008/02/citigroup-profile.html *http://www.careers-in-finance.com/ibsal.htm

  15. Introduction to Corporate Finance • Responsibility - Corporate Finance addresses the following three questions: • What short and long-term investments should the firm engage in? • How can the firm raise money for the required investments? • How much short-term cash flow does a company need to pay its bills? • Early Career Path - Many firms hire undergraduates and MBAs for training programs in corporate finance; some programs are finance and accounting-specific, and others rotate trainees throughout the company. • Education - To advance through your career, you will eventually need an advanced degree or certification (MBA, CFA, CPA, etc.) in addition to an undergraduate degree. • Compensation - Corporate finance compensation will vary by seniority, region, size of company, and industry. • The median expected salary for a typical Entry Level Corporate Finance Analyst in the US is $55,970, according to vault.com

  16. Corporate Finance (cont.) • Life Style: Hours Per Week depends on seniority, region, size of company, and industry. • Generally can be demanding for entry level positions (anywhere from 60 to 65 hours per week) • Jobs in corporate finance are relatively stable. • Benefits of working in the field include: • You generally work in teams which help you work with people • Responsibility is to tackle business problems that make a difference • Opportunities to travel and meet senior people in different industries • Pay is generally quite goodrelative to entry level positions in other industries

  17. The MBA • What: 2 year program • Admissions based on resume, GPA, GMAT scores, work experience & essay responses • When: 3-5+ years after Undergrad • Why: • Exit Opportunities & alumni network • “Reset Button” • Top schools: • Harvard, University of Chicago, Wharton, Stanford, Northwestern, Columbia, Michigan, NYU, etc.

  18. The Buy Side: Private Equity & Hedge Funds • The Buy Side: No clients = less “fire drills” • Mostly only experienced hires & MBAs • Better pay & hours (sometimes) than investment banking • Private Equity: • Firm buys part or all of a company and later resells for a profit • Top firms: KKR, Blackstone, Apollo, TPG (more hours here) • Hedge Funds: • Comparable to Mutual Funds but more advanced strategies & exclusive • Thousands of HFs in the US • Positions: trading, risk management, quant analyst, fundamental analyst

  19. Upper Finance Courses • BMGT443 Equity Analysis & Portfolio Management • BMGT 444 Futures & Options Contracts • BMGT 445 Banking and Financial Institutions • BMGT 446 International Finance • Lemma Senbet Fund

  20. What Should I Be Doing Now? • Get some sort of experience (business preferred) the summers following your freshman and sophomore year • Start reading + become familiar with the terms! • Learn about the industries…the vault guides are a good place to start • Fellows Programs

  21. Resources • Available on HireSmith (for free) • Vault Guides • WetFeet • Mergers & Inquisitions (also have courses) • Wall St. Journal • Economist • Investor’s Business Daily

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