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

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

FINANCIAL CONSULTING

Profitable industry Intense travel schedules Team-oriented environment Major firms

McKinsey Bain Boston Consulting Group Deloitte

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

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

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

• 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.

Work Load

• Internship: $23+ per hour• Full Time: Many factors influence, but median starting salary is $59,000

(2010)

Salaries

• Pre-defined track in each company. • Analyst – Consultant – Senior Consultant – Manager – Senior Manager -

Director/Partner/Principal

Career Paths

THE “BIG FOUR”

• 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

Culture

THE “BIG FOUR”

Pros

• Company focus on culture and employee development

• Great starting salary

• Continuing education options

•Career path is laid out

Cons

•Long work week

• Not as much responsibility as smaller firms – client restriction

• High internal and external competition

• Geographic restrictions due to clients

SALES AND TRADING

SALES AND TRADING

Is Sales & Trading Right for You?Skills/Traits Needed:

Highly focusedExcellent quantitative skillsThrive in fast-paced, stressful

environmentAbility to multitask & prioritize.

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

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

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

INTRODUCTION TO CORPORATE FINANCE Responsibility - Corporate Finance addresses the following three

questions:o What short and long-term investments should the firm engage in?o How can the firm raise money for the required investments?o 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.o The median expected salary for a typical Entry Level Corporate

Finance Analyst in the US is $55,970, according to vault.com

CORPORATE FINANCE (CONT.) Life Style: Hours Per Week depends on seniority,

region, size of company, and industry.o Generally can be demanding for entry level

positions (anywhere from 60 to 65 hours per week)

o Jobs in corporate finance are relatively stable. o 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 good relative to entry level positions in other industries

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.

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

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

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

RESOURCES

Available on HireSmith (for free) Vault Guides WetFeet

Mergers & Inquisitions (also have courses) Wall St. Journal Economist Investor’s Business Daily