Career Beyond Investment Banking & Equity Research – You may have often thought in your mind that “what if I could use my ability and skills to do something else other than getting trapped in only two most popularized and hyped career choices!”
The purpose of writing this article is to answer this question that you probably asked.
Many people don’t want to go beyond the comfort zone. But few do. Because when they’re equipped with so many technical skills (financial modeling, financial analysis, valuing companies etc.), why go for the same old-fashioned “investment banking” and “equity research”? Why not something else?
We’re going through each career options you can take and we will discuss about the job-profile, skills required and compensation. Read on and you may discover something you may have never considered before.
Let’s get started with Career Beyond Investment Banking & Equity Research.
- Career in Costing
- Procurement & Negotiation
- Corporate Strategy & Planning
- Due Diligence
- Business Development (Bidding)
- Corporate Finance & Project Finance
- Treasury & Proprietary Trading
1) Investment Banking Training 99 Course Bundle, 500+ hours
2) Business and Financial Modeling (University of Pennysylvania)
3) Wharton Business and Financial Modeling Capstone (University of Pennysylvania)
4) Introduction to Finance: Valuation and Investing (University of Michigan)
5) Valuing Projects and Companies (University of Michigan)
Career in Costing
You have not thought about it yet. But have a look at the job-profile and skills required. You would see you already have the skills to tap into it and make your mark.
- Job profile: Usually there’s a separate department of costing in organizations, but in some cases, the costing is part of the accounting or marketing department. In this job profile, you need to go through each cost heads and through analysis you need to find out the cost drivers and cost control measures. As cost reduction is one of the prime goals of an organization, you would be contributing directly in achieving organizational objective. You also need to do ABC (Activity Based Cost) Modeling by using interest rate, expected inflation, past trends and other variables. You also need to take charge of monitoring the actual cost through variance analysis and design control measures.
- Skills required: There’re three basic skills you need to have to perform at your best in costing function. Firstly, you need to understand financial modeling and should be able to do it on regular basis. Secondly, you need to have good idea about statistical models so that you can use them to design various control measures. And lastly, you also require an analytical bent of mind to be aware of what’s going on especially in marketing, production and accounting department.
- Compensation: As of June, 2016, the median salary you would get to do cost analysis in an organization is US $53,972 per annum.
Procurement & Negotiation
Now not many of you may like negotiation. But many do. Most people think people who negotiate only act as debaters, but the fact is they’re the most brilliant and strategic minds of the world. Have a look at the profile and skills required.
- Job profile: As mentioned above, negotiation is not a cup of tea for everyone. But if you’re interested in negotiation, the maximum opportunity is in procurement/sourcing. In professional life, we all need to negotiate sometimes. But this sort of negotiation is completely different because a small decrease in the amount of the raw materials can create havoc in competing with other competitors. So only the best and brightest sit for negotiation.
- Skills required: You need to be very thorough in analyzing the situation quickly. Two things are required for success in this field. Firstly, you need to have amazing presence of mind to point out any loopholes in your vendors’/buyers’ proposal. Secondly, you need to be very thorough (organized) with the cost computations, pricing quote, financial modeling (not required always) etc.
- Compensation: Depending on the position you have, the compensation varies. In procurement, negotiation is the major part. If your position is procurement manager, the median salary is US $79,010 per annum.
Corporate Strategy & Planning
There’re people in business who need to plan for the growth of business. They sit, think, strategize, analyze and find out ways to implement their plans. If you’re interested in doing the same, read on.
- Job profile: It may seem easy as people sit, think and strategize but to be able to get the approval of the board for the new growth strategy, you need to present a lot of evidence as support for whatever you’re prescribing. Let’s look at the main functions of this job profile. First, you need to do many analyses – SWOT, Competitors’ analyses, PESTEL analyses, the cost of going into a new market or creating a new product etc. Then once you’re done with the analyses, you would be able to design a strategy via which the organization can take the leap into a new territory. After designing the strategy, you need to present the strategy in front of the board of directors. You also need to show them evidence why you’re going in this route and not any other route. If they approve, now it’s time to chunk down the whole strategy into do-able parts so that the execution becomes easier. Once chunking down is done, the responsibility of achieving these objectives are properly allocated to the departments (marketing, finance, human resource). The final step is constant monitoring or creating feedback loop so that the implementation doesn’t get halted in between.
- Skills required: From the job profile, you understood that it’s not for people who don’t have passion to learn new things. Because you need to know a lot more to be able to design a useful strategy. Until you know how things work in business, how to find out which territory to pick, which product to drop, which cost control measures to take and what things to accelerate, you won’t be able to do much about planning and strategy. The future of the whole organization lies on the strategy you would make. So you can understand the responsibility. Here are the skills you need to have to design and implement corporate strategy – financial skills (without which you can’t do any analyses on your own and you need to depend on others’ inputs), ability to understand human resources (you need to have understanding about human capital so that the right work gets attributed to the right person while implementing the strategy), marketing and business development (business doesn’t grow in vacuum, you need to know how to understand the preferences of customers and fulfilling them) and overall business knowledge. The good news is having knowledge in financial modeling will help you compute return on investment, IRR and NPV of projects, how to do strategic investments, how to do market analysis and how to lend, borrow and think about mergers and acquisitions.
- Compensation: It’s assumed that the compensation of corporate strategy manager would be more than six figures. The average salary of a corporate strategy manager is US $106,745 per annum.
If you are one of those who like to investigate more about the pragmatism of anything, you’re the perfect fit for this sort of profile. Read on to know more about it.
- Job profile: If we need to explain this profile in two words, it would be – feasibility analysis. The job profile of due diligence is primarily attached to the following functions –
- You need to go through the business plans and find out portions that seem unrealistic.
- You need to question the assumptions and expectations of business so that the organization can stand on a solid base.
- Lastly, but the most important is the feasibility analyses of commercial plans, strategic moves, business expansion and business intelligence.
- Skills required: You may ask that if this profile needs any requirement of financial modeling! The straight answer is not directly. But the truth of the matter is if you don’t know financial modeling, it would be impossible for you to do the diagnosis of whether the business plan, strategic moves and business expansion are feasible or not.
- Compensation: If you want to pursue a career in due diligence, you would be getting around US $62,561 per annum on an average. But you need to have thorough knowledge in due diligence to receive that range of salary.
Business Development (Bidding)
Your job as a business developer (being part of the bidding team) is to explore territories and venture into new geographies, products, tenders etc. Read on to know how exciting this field is for professionals who know financial modeling.
- Job profile: The basic thing about this profile is you need to decide what yields more profit; to be specific which project will generate more profits than another. How would you decide that? By using financial modeling. Unless there’s enough proof that the yield from the new project, new business, new expansion is more than the specified benchmark returns, the top management won’t give a nod. So you need to make sure that you have enough evident and supportive analyses.
- Skills required: In this profile the bid needs to be priced. Until and unless you have access to all the cost computation, interest rate, depreciation, rate of profit, safety margin etc. at a same place, you won’t be able to price the bid well. There’re two important skills required here. Firstly, you should have the ability to organize every detail at one place so that the execution becomes easy. Secondly, you should know financial modeling.
- Compensation: The salary of a bid manager (in different term they’re also called Request for Proposal manager) is around US $105,923 per annum on an average.
Corporate Finance & Project Finance
This is the traditional corporate finance and project finance field. But these career options have a lot to do with financial modeling. Let’s have a look at the job profile.
- Job profile: Corporate finance and project finance are completely different career options, but if we consider the role of financial modeling, in both these career options, financial modeling should be used actively. As far the main functions are concerned, there’re few key areas that you need to perform – making financial strategies, fund raising via equity or debt, financial planning, hedging, treasury management and risk management.
- Skills required: As both of these (corporate finance and project finance) are different fields, the parties involved, documents required and process of raising funds are different. You need to have specifically three skill sets which are applicable for both of these –
- You need to have in-depth knowledge and practical experience of ratio analysis and financial modeling. Because you would be required to calculate working capital, do cash flow analysis of PE investments, price the proper hedging instrument, compute the projections of future cash flow etc.
- You should have detailed knowledge of how the process works – how should you do the financial planning for the organization, from where you would raise the funds, what you will do with the profit that needs to be re-invested etc.
- Effective communication and inter-personal skills also go a long way. Because without these, you won’t be able to get the right things done. You need to be thorough with the organizational strategy, how the marketing team is thinking of expanding to new market, how human resources are planning to hire and many more such things that will need finance. Until you communicate and understand the nitty-gritty, it would be difficult for you to do financial planning at the first place.
- Compensation: No matter which area you choose to work in, we would like to give you range of compensation so that you can understand how much you can expect from corporate finance and project finance domain. The average compensation is around US $67,063 per annum.
Treasury & Proprietary Trading
This field needs active financial modeling. Let’s find out.
- Job profile: Both of these profiles are different. But the basic function of these profiles is creating short models. You need to take care of risk management, working capital management, hedging and pricing. All of these need financial modeling. Though the merit of these modeling may vary from simple to complex.
- Skills required: These are the skills you need to have –
- You should know how to do technical analysis.
- You should have fundamental knowledge in equity, debt, swap, commodities, options etc.
- You should know how to do both simple and complex financial modeling as well as how to create shorter models.
- Compensation: The compensation of a proprietary trader is around US $220,000 per annum and as a treasury bond trader, you would get around US $107,699 per annum on an average.
So with this, we have discussed various Career Beyond Investment Banking & Equity Research and be happily marching along with your existing skills and abilities.
If you want to learn Equity Research professionally, then do have a look at this Equity Research Training