Guide to Life on Wall Street
Welcome to the Uptick’s Guide to Life on Wall Street!
Whether you are a college student or young professional trying to get your bearings in the often complicated world of finance or one of our subscribers simply interested in learning more, we appreciate your support and hope this guide is beneficial.
We first came up with the idea for a guide as we wondered what recruiting and interviewing would look like in this new, socially distant world. As in-person coffee chats get replaced with the now too-familiar Zoom calls, we wanted to provide you with a resource to navigate your next steps. Having spoken to dozens of professionals in a variety of business realms, we hope we’ve covered the basics in answering any lingering questions about this exciting industry.
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The Uptick Team www.theuptick.net [email protected]
Table of Contents
Investment Banking ...... 2
Investment banker ...... 2
Salesperson or Trader ...... 3
Research Associate ...... 5
Asset Management ...... 5
Mutual Fund/Hedge Fund Analyst ...... 6
Private Equity Investor ...... 7
Venture Capital Analyst ...... 9
Quantitative Trader ...... 10
Corporate Finance ...... 12
Diversity and Inclusion ...... 13
Final Thought ...... 14
Most investment banks specialize in facilitating large and complex financial transactions - anything from helping corporations with mergers and acquisitions to assisting companies in raising capital (money) through equity or debt transactions. Some investment banks also act as a broker or financial advisor to institutional clients such as mutual funds and hedge funds. Some of the largest investment banks in the world are referred to as “bulge bracket firms,” which include banks such as Bank of America, Goldman Sachs, JP Morgan, and Morgan Stanley. In contrast with bulge bracket banks, generally smaller or specialized “boutique” firms exist such as Evercore, Guggenheim, Jeffries, Moelis, and Lazard.
Within the investment banking realm, there are numerous roles and career options. Here are some of the most popular from a junior recruiting standpoint:
Investment banker
Investment bankers act as financial advisors to companies and help with a variety of deals — from raising capital (debt or equity) to engaging in mergers and acquisitions. Any time you read about a company in the news that made a big decision (such as selling itself, buying a competitor, IPOing, or issuing debt), there were likely investment bankers working to ensure a smooth operation.
What would I do as an investment banker?
Investment banking analysts are responsible for putting together all of the materials that the senior management needs for meetings and conducting analysis surrounding ongoing deals. As an analyst, you will spend many hours in Powerpoint and Excel preparing company profiles, economic trend overviews, and valuation models.
Is this for me?
2 Investment banking is a common field for students who have an interest in finance because the rigor of the job prepares you for many different exit opportunities. Students who have an interest in market events will find the work investment bankers do extremely rewarding. Good candidates will have strong attention to detail and a willingness to work hard. While the technical training from the job is rewarding, investment bankers notoriously work long hours — including nights and weekends. If you go into investment banking, there will likely be instances where you feel like your time is not your own, as last-minute requests could take over a weekend or vacation.
I'm interested, what now?
Both large investment banks and small advisory firms typically recruit juniors in college for internships. These internships are useful for the firm to assess the quality of the candidate, but are equally important for students to evaluate whether a career in investment banking is for them. Most banks hire from a diversity of majors as long as students can pass the technical interview, which will consist of accounting and valuation questions.
Salesperson or Trader
Sales and Trading is a key role at an investment bank and involves activities related to the buying and selling and securities and other financial instruments. Often, it is referred to as the “sell-side.” An investment bank will typically perform these tasks on behalf of itself or its institutional clients, often referred to as the “buy-side,” including hedge funds, asset managers, pension funds, insurance companies and mutual funds.
Broadly speaking, products are broken into two categories: equities (stocks) or fixed income (bonds or other products that pay a fixed interest or dividend at regular intervals).
What would I do working in Sales and Trading?
On the fast-paced trading floor (but much quieter than reflected in the movies), the primary roles are salespeople and traders. These roles work cooperatively to service clients. Salespeople generally “own” the relationship with the client - they are responsible for 3 understanding what the client needs from the investment bank, market appropriate research products to the client, and provide access to firm resources. Traders, on the other hand, buy and sell financial products and are responsible for managing their own profit-and-loss statement. While salespeople and traders have different responsibilities and profit in differing ways, each must work in conjunction with the other to maximize returns.
Is this for me?
If you’re a market junkie with an aptitude for following the latest stocks, sales and trading could be an ideal field to pursue. From the range of financial products and trading strategies, along with the high intensity trading floor, you will certainty never get bored in this environment. The creative minds can also exercise their ability to suggest trading ideas to their clientele, which is extremely rewarding when these trades prove profitable. While a day on the trading floor begins in the early hours of the day, you will generally get off work when your particular market closes in the late afternoon, which allows for a more balanced lifestyle compared to investment banking. When deciding between being a salesperson or trader, you should consider whether you would prefer managing people and relationships (sales) or returning home with a P&L (profit and loss) number over your head every night (trading).
I'm interested, what now?
Large investment banks typically recruit juniors in college for internships, yet there are also smaller sell-side firms hiring salespeople and traders. Most firms hire from a diversity of majors as long as students can pass the technical interview, which will consist of testing macro-economics knowledge and a keen interest in the markets. In preparation for an S&T internship or full-time job, it’s most integral to follow along with major news events globally and the most pertinent market trends.
4 Research Associate
Research is critically important to the “sell-side” firms as it is valued by the “buy-side” to help inform their investment decisions. Research analysts are tasked with providing unbiased opinions of the securities they follow based on their own proprietary findings.
What would I do as a research associate?
The role of a research associate involes building models, understanding companies, and speaking with knowledgeable sources in the industry to form opinions. Rather than being staffed across different sectors or exposed to a wide variety of deals, you would be tied to one sector and group of stocks to follow closely. While the job would appear to have a more normal rhythm than banking – more tied to busy periods in the corporate calendar (i.e. earnings season) – any market-moving news could completely change the trajectory of your day.
Is this for me?
To be successful as a research associate, it is critical to select a senior research analyst (and team) that you will ultimately respect and work well with. Most of the job is directly tied to this team with little room for movement, so forming a good bond is also crucial to your success in this field. It is also beneficial to pick an interesting sector to follow - you will be tasked with becoming an expert in that sector, closely following all news and reading everything you can to stay most informed. Love of writing and expressing ideas is a must, as well as strong analytical skills for financial modeling. Client interaction also comes with seniority - but expect to eventually explain ideas and investment projections to the firms’ institutional clients.
I’m interested, now what?
Most large banks do a fair amount of recruiting for junior research roles. That said, for a lot of the boutique firms, direct outreach and networking could be a good start. Begin following sectors and stocks that you care about and uncover who the most influential and well-regarded analysts are. Research analysts can really move markets - so if this appeals to you, start keeping lists of just who is able to get stocks to move and reach out!
5 Asset Management
Asset Management broadly refers to the financial service of managing assets with the aim of increasing the value of the assets. The more traditional asset managers include mutual fund complexes (think Fidelity, Wellington and Vanguard) and non-traditional or alternative asset managers which encompass hedge funds (e.g. Citadel, Millennium), private equity (e.g. Blackstone and KKR), and Venture Capital (e.g. Andreessen Horowitz and Benchmark Capital).
There are numerous junior roles in both traditional and alternative asset management. Here are a few:
Mutual Fund/Hedge Fund Analyst
A mutual fund is a professionally managed fund that pools money from many investors to purchase securities. Mutual funds are offered to the public and available for daily trading.
In contrast, hedge funds are private investments that are only available to accredited investors. Hedge funds are known for managing higher risk investing strategies with a goal of also achieving higher returns for their investors. Hedge funds can vary in the type of investing they partake in; for example, some might determine how to invest in the market based on an algorithm (quantitative) while some might invest based on research and decisions made by the managers (discretionary).
Both Mutual and Hedge funds can be invested in many different asset classes, such as stocks, futures, commodities, currencies, or any combination of products.
What would I do at a Mutual or Hedge Fund?
The role of an analyst can be diverse and might include research or client-facing work depending on which practice you join. A research analyst could be assigned to a strategy,
6 asset class, or sector, and be responsible for long-term research projects to improve the investing approach.
Is this for me?
To be successful at a mutual or hedge fund you need to be a strong communicator and be confident in your convictions. In contrast to the sell side research position, on the buy- side, you need to display a good track record of making the right investments while avoiding major mistakes. Whether you are interacting with clients and representing your firm or describing the ideas you compiled from research, you will need to confidently express your thoughts. It is also important to have a strong interest in the market and be able to grasp complicated financial concepts. At a hedge fund, your hours will likely be on the longer side during the week, especially during earnings season or month-end reporting, but you can expect to have weekends free. You should also be an independent worker since most of your assignments will not be team-based.
I'm interested, what now?
Some larger mutual or hedge funds might hire students right out of college, but most look for candidates with at least two years or experience in another technical role such as investment banking or sales and trading. If you are interested in working at a fund, you should research what your opportunities are right after graduation, or plan to go into a different position that would give you technical experience and recruit in several years.
Private Equity Investor
Private equity is an alternative investment vehicle, where general partners pool funds from limited partners (i.e. high net worth individuals, pension funds, sovereign wealth funds) and invest that money in private companies or public companies with the goal of taking them private. Typical private equity deals are leveraged buyouts (“LBOs”), wherein a significant amount of debt is used to acquire a company and future earnings are used to pay down the debt and achieve a specific return on investment. Following the investment, PE firms seek to improve business operations with the intention of selling the
7 business in 3-5 years to a strategic or another financial buyer. Private equity firms attempt to create value by improving operating efficiency, strengthening management teams, restructuring a company’s debt, cutting costs, improving top line growth, and overall increasing a company's earnings.
What would I do working in Private Equity?
Private equity is a commonly pursued career path after two-years at an investment bank; however, some PE firms provide opportunities for undergraduates. Analysts will work on deals sourced by more senior members of the team beginning with stages of due diligence, industry market mappings and talks with industry experts in order to make a decision about whether to move forward in the bidding process for a company. Attractive deals will enter the next stage of the process, whereby deal teams schedule calls with management, begin modeling the historical and projected financials, capital structure, and returns scenarios for the investment. Ultimately, once a firm’s bid is accepted and the acquisition is closed later on, the company becomes part of the PE firm’s portfolio and must be continually managed by the team.
Is this for me?
Private equity provides a great opportunity to learn how companies operate and generate cash flows but also what makes a good investment. Creativity, attention to detail, willingness to learn and strong work ethic are key characteristics of a good analyst. The competitive and time sensitive bidding processes can create harsh timelines and notoriously long work hours — including nights and weekends. Analysts must also be prepared to work for many months on deals that never close or are passed on during later stages of diligence.
I'm interested, what now?
Private equity has a much smaller recruiting pool for juniors in college seeking internships, though it still seeks students from a diverse array of majors and experiences. These interview processes are typically more technical and specific to leveraged buyouts than an investment banking interview. While summer internships are a great way for firms to assess their candidates for potential full-time offers, most students interested in PE will
8 seek a two-year investment banking experience with the opportunity to recruit during their first year of banking for PE.
Venture Capital Analyst
Venture Capital (VC) is a type of investing that provides funding to companies in their early stages in return for stakes in those companies. In addition to providing capital, VC investors often provide advice on how the growing companies can improve business operations. Companies that look for VC investments are typically start-ups in need of a significant amount of capital (funding) to acquire resources, hire talent, and fund other operations. A VC firm generally begins its process by creating funds, which are pools of money from its investors that the VC assigns to a specific investment (a stake in a company). Once a VC raises a fund, it enters the sourcing stage where it looks for viable investments. The firm will then conduct proper due diligence, where it will research a specific company and the company’s competitive market. Once an investment is selected, the VC will provide the necessary financing and find opportunities to add value. The VC will eventually exit within several years, distributing the financial returns to its investors. These returns come from the difference in valuation between when the VC first invests and when it exits.
What would I do as a Venture Capitalist?
Much of your day as a VC Investor would be spent looking at investment opportunities and helping existing portfolio companies – with a major focus on research and analysis. At the analyst level, you can expect to source deals by cold-calling companies, conducting research surrounding potential opportunities, and supporting existing investments.
Is this for me?
To succeed in VC, you need three critical skills. First, you have to be a good listener. This is important as you will need to listen to a company’s founder and understand their ideas and motivations to be able to decide whether the idea has long-term merit. Second, you have to be inquisitive, questioning a founder’s motives and asking the difficult questions.
9 Lastly, you must have a genuine passion for the industry of investment opportunities you are examining. For aspiring entrepreneurs, VC can be an exciting place to start since you will hear from founders and CEOs every day and learn the fundamentals of a successful start-up.
I'm interested, what now?
While the typical path to get into VC is to transition after a few years of management consulting or investment banking, VCs tend to look for a variety of backgrounds. In addition, many large corporations, like Google and Samsung, have venture capital arms. Students interested in venture capital should try to network their way into a summer internship position. One senior VC investor relayed: "Venture capitalists are very public, very social, and very accessible. I'd first google around and find venture capital firms that you find interesting. Many of these firms have summer internships, fellowships, and opportunities. Build a prospect list and reach out. Ask questions around internships and interviews to get a position. This is probably the best way to see if this is a career for you."
Quantitative Trader
A trader is someone who executes trades, buying and selling financial instruments. These instruments may include stocks, bonds, commodities (like gold, oil, and sugar), and more. To execute these trades, traders are in constant contact with banks and broker dealers, requesting prices and determining the best way to carry out their trade. Quantitative traders, or “quants,” use mathematical models to compute the fair value of trades as well as the expected value and volatility of an asset.
What would I do as a Quantitative Trader?
Entry level traders spend most of their days executing trades. “Quants” research and mine data and are tasked with developing unique trading strategies and models using mathematics and computer science. More senior traders will often split their time between analyzing trades, executing trades, and investor relations.
10 Is this for me?
Quantitative trading might be for you if you like problem solving, thinking mathematically, and are attracted to finance and financial markets. As a quantitative trader you will be expected to give concrete recommendations and will constantly be receiving feedback from the market on those decisions. Your job will always be changing and, as a result, new challenges will constantly be arising. While the lifestyle of a trader varies depending on the firm, quantitative traders often work intensely during market hours, but are not expected to work late into the night.
I'm interested, what now?
Because there is a heavy quantitative aspect to the job, companies often look for experience studying math, science, finance, or engineering when considering candidates. These majors tend to be rigorous and mathematical, preparing candidates for the job. If possible, display some type of quantitative experience to show potential employers you have the skills to be a quantitative trader. While the interview process also varies by firm, many companies will give math and logic problems during the interview. As with many other finance jobs, good old-fashioned networking is a great way to get your foot in the door.
Unlike most of the other jobs discussed, corporate finance is a division within a company which focuses on the day-to-day financial activities of that company. Corporate finance is an extremely broad term and includes departments such as Internal Audit, Treasury, Financial Planning & Analysis, Tax, Mergers & Acquisitions, Investor Relations, and more.
What would I do in Corporate Finance?
The role of a corporate finance analyst varies depending on the division you join. An associate financial analyst at Johnson & Johnson said she is responsible for dailys, weekly, and quarterly reports that track performance, inform budgeting decisions, and provide information to the investor relations team. Though she works within a specific vertical, she emphasized that teams in corporate finance collaborate greatly across business units.
Is this for me?
Corporate finance is a great way to integrate an interest in finance with a curiosity about a specific business. Since corporate finance departments are very large, you have the flexibility to try many different roles to figure out what you are passionate about. You will also be directly connected to your work and company, which is not necessarily true for entry-level banking or investing positions. On the other hand, working for a corporation, especially in a large firm, means that you have to be proactive about your career or you might get stuck along the corporate ladder.
I'm interested, what now?
You can apply to the corporate finance division at any large corporation, but it is always a good idea to begin your search with companies you admire. Many top companies in the Fortune 500 have great corporate finance development programs that you can apply to right after college. The interviews will vary firm to firm, but most will try to understand your interest and fit within the specific corporation, as well as test some basic finance or accounting.
12 Diversity and Inclusion
Historically, Wall Street has not been known as a center of diversity but rather the “boy’s club on the trading floor.” Despite such impressions, the industry has continued to evolve and the number of women and minorities represented in the field look drastically different from just 10 years ago.
To sum it up: firms today have even further strengthened their commitment to diversity in the workplace. As these institutions aim to cultivate diversity in all aspects of their business, diversity and inclusion programs are becoming a large recruiting focus for internships. Across investment banks and asset managers, diversity programs exist to allow college freshmen and sophomores to learn about financial services. All Black, female, Hispanic/Latino, Native American, LGBTQAI, and/or first generation undergraduates are included to provide students the opportunity to explore future career interests. These exploratory development programs offer skill-building workshops, networking with firm professionals, information sessions and technical skill training. The 2-3 day programs prepare students for the application and interview process and often pairs students with mentors at the firm with the goal of accelerating a diverse pool of top talent into the interview process ahead of the normal recruiting cycle. Applications vary across banks including a written statement, phone interview, or simple resume drop.
Should you be interested in finance and identify with the above backgrounds, we strongly urge you to participate and apply!
13 Final Thought
The key to finding a job? Network, network and network more. The best networkers always find the most interesting opportunities. While this may appear harder in a virtual world, you will find that people are very receptive to speaking with young students interested in learning about career options. Remember, Wall Street professionals are traveling less these days and can more likely take the time for a quick Zoom. Good luck, and happy networking!
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