Author: Fmi_Online

Asset management is a popular career choice for finance students who want to use their analytical and strategic skills to manage investments and maximize returns. However, building a successful career in asset management requires more than just a degree in finance. In this article, we will explore some tips and strategies that can help finance students build a successful career in asset management.

  1. Gain experience through internships

One of the best ways for finance students to gain experience in asset management is through internships. Internships provide an opportunity to work alongside experienced professionals and gain hands-on experience in the industry. They also provide an opportunity to network with industry professionals and build relationships that can help students launch their careers.

  1. Choose a specialty

Asset management is a broad field that encompasses various specialties, such as equity, fixed income, and alternative investments. Finance students should choose a specialty that interests them and focus on building their expertise in that area. Specializing in a particular area can make students more marketable to potential employers and help them stand out in a crowded job market.

  1. Build a strong network

Networking is essential in any industry, and asset management is no exception. Finance students should attend industry events, join professional organizations, and connect with industry professionals on LinkedIn. Building a strong network can help students learn about job opportunities, gain insights into the industry, and build relationships that can help them advance their careers.

  1. Develop strong analytical skills

Asset management requires strong analytical skills, including the ability to analyze financial statements, assess risk, and evaluate investment opportunities. Finance students should focus on developing their analytical skills through coursework, internships, and other learning opportunities. They should also be proficient in Excel and other data analysis tools.

  1. Stay up-to-date on industry trends

The asset management industry is constantly evolving, with new technologies and investment strategies emerging all the time. Finance students should stay up-to-date on industry trends and developments by reading industry publications, attending conferences and webinars, and networking with industry professionals. This can help students stay ahead of the curve and position themselves as thought leaders in the industry.

  1. Be adaptable

The asset management industry is highly competitive and constantly changing. Finance students should be adaptable and able to respond quickly to changes in the industry. This may mean learning new skills or taking on new responsibilities. Being adaptable can help students thrive in a dynamic and ever-changing industry.

  1. Demonstrate a strong work ethic

Asset management is a demanding field that requires a strong work ethic. Finance students should demonstrate their commitment to their careers by working hard, being proactive, and taking on additional responsibilities. This can help them stand out to potential employers and position themselves for long-term success.

  1. Build a personal brand

In today’s digital age, building a personal brand is more important than ever. Finance students should create a strong online presence by developing a professional website or blog, building a strong LinkedIn profile, and maintaining an active social media presence. This can help them showcase their expertise and position themselves as thought leaders in the industry.

  1. Be patient

Building a successful career in asset management takes time and patience. Finance students should be prepared to start at the bottom and work their way up, gaining experience and building their skills along the way. It may take several years to build a successful career, but with hard work and dedication, it is achievable.

  1. Never stop learning

Finally, finance students should never stop learning. Asset management is a complex and ever-changing field, and staying up-to-date on industry developments is essential for success. Finance students should continue to build their skills, take on new challenges, and seek out learning opportunities throughout their careers.

In conclusion, building a successful career in asset management requires a combination of education, experience, and hard work. Finance students who follow these tips and strategies can position themselves for long

Would you like to earn 5-6 figures in salary with lots of bonuses right off from graduation? You can get this by working with a big bank, a finance company, an investment house or even with the Big 4; as an investment banker. It is a high-profile job with lots of critical thinking, analytical and mathematical skills involved. This article will explore the pros and cons of investment banking and how you can get in if you feel this is the career for you.

Here are some of the pros of being an investment banker

  • Huge Compensation: The money you make as an investment banker is one of the main attractions of this profession. The salary is great, running up to 5,6 and even 7 figures. Then there are starting bonuses, performance bonuses and other deferred bonuses that you get later. You can start as an analyst, and grow to become an associate, a VP, a director, a managing director or even a CEO. All these with a salary which increases every year and increases at every level. 
  • Smart Colleagues: A career in investment banking exposes you to working with smart people which includes both your colleagues and clients. You meet with people who are working on real-world problems and people working with the latest technologies. Interacting with driven people helps you learn more and develop faster in your knowedge of the business world. Within a few months of joining, you will get responsibilities which will help you learn a lot in a short space of time as your colleagues will challenge you to put on your best foot always. All these will help in your personal development journey.
  • Good Perks: Apart from the mind-boggling bonuses, there are lots of benefits like free lunch and dinner if you work late at night. If you need to travel for your work, you can be sure of getting the best treatment. You get to stay at the best hotels, and wine and dine at the best restaurants and bars and of course, you have business-class flights. The medical coverage you get working in this career is great, with awesome paternity and maternity leave as well as a great pension when you retire. 
  • Open Doors: This job will open doors for you that other jobs cannot. For example, this job will help you to meet and interact with wealthy people and build a network of great connections. If you decide to leave this job, there are loads of places you can work. You can decide to go into coaching and consulting and you will have lots of clients. You can decide to move into another section or department in a bank if you are thinking of a better work-life balance. You can start your own company with the knowledge you’ve gained working as an investment banker. 
  • You Gain Experience Fast: Working in a high pace environment like the one offered to investment bankers helps you learn a lot about business. You get to learn about brokering deals, negotiating debts, equities, raising capital and much more. Working in a fast-paced work environment all day every day, helps you gain expertise fast. You cannot be compared to someone who works fewer days and will take years to learn what you learn in a few months. You can make a partnership at a young age and start earning millions in your late 30s or early 40s.

But it’s not all rainbows and sunshine. There are some disadvantages involved in this career too. Here are some of the demerits of working as an investment banker:

  • Long Hours: You get to work long hours often staying late at night. Sometimes you stay weekends working in the office. This is a high-paying yet high-stress job. An analyst typically works 80-90 hours with average work hours based on a survey reaching 102 hours. 16 hours days are quite the norm in this career though it gets shorters as you progress up the ranks.
  • No Off-clock: You can’t stay off the clock when working as an investment banker. You are expected to be available 24/7 when working especially when you are just starting. You have to be at work in the evenings, at weekends and sometimes on holidays. This can take a toll on your personal relationships. 
  • Highly Competitive: A career in investment banking is full of competition. The reason is obvious, it pays better than most jobs so there is fierce competition before you can get in. After you get the job you still have to be on your best performance so you don’t get kicked out and replaced by others.

You can see that the benefits far outway the cons, and that is why many people are doing all they can to get into this career. If you are dreaming of getting in as an investment banker, here are the 4 steps you take to make sure that you make a success of it.

  1. Good Education: To start your journey into investment banking, you need to make sure that your foundation is right. You need a good bachelor’s degree in finance or a related field from an accredited university or college. You can also get a graduate degree or an MBA to further qualify yourself.
  2. Certifications: Before and after you get a job as an investment banker, it is good to get a certificate to augment your degree. Having great certificates from reputable institutions will help you scale through during the interview. You can get certificates like Certified Fianal analyst (CFA), Certified Public Accountant (CPA) or Commercial banking & Credit Analyst. 
  3. Job Interview: Passing an interview is a requisite to getting a job as an investment banker. Proper preparation will help you to excel in it. Remember that this job is highly competitive so you need to make sure that you are ahead of the competition. You can check out this course that specifically teaches you how to prepare for an interview as an investment banker. 
  4. Get experience: You can get an internship during your bachelor’s degree program. This will give you the needed experience and develop the math and analytical skill needed for the job. You can also get jobs in banks or work in a smaller finance or investment business while you wait for your dream job. The on-the-job training you get will add to your CV and help you to get better jobs later.

Conclusion

A job as an investment banker comes with lots of perks, and a great salary. You work with smart people, get open doors and gain lots of experiences fast. Even though you get to work long hours, most people don’t mind because the money is great. In 4-7 years of consistent work, you can get to the top and start earning 7 figures with huge benefits. With a few years of consistency, you will make a great income while helping a lot of people with their finances. 

Authored by: Juliet Ugochi, Fintech Content Curator

When it comes to job interviews, many employers are now incorporating case studies and other types of assessments to evaluate candidates’ skills and suitability for the role. These types of assessments are designed to test a variety of competencies, including problem-solving, critical thinking, communication, and collaboration. While they can be challenging, with the right preparation, you can improve your chances of success. In this article, we’ll explore some tips for preparing for case studies and other interview assessments.

Understand the Assessment

The first step in preparing for any interview assessment is to understand what you’ll be evaluated on. Case studies may focus on a specific industry, market segment, or business problem, and may involve financial data, customer research, or other types of information. Other assessments may focus on teamwork, leadership, or presentation skills. Make sure to review the job description and any information provided by the employer to get a sense of what you can expect.

Research the Company and Industry

To perform well in any interview, it’s important to have a solid understanding of the company and industry you’re interviewing for. Research the company’s mission, values, and products or services, as well as any recent news or developments. Additionally, review industry trends and insights to gain a broader understanding of the market landscape. This information can help you contextualize the assessment and provide valuable insights during the interview.

Practice, Practice, Practice

One of the best ways to prepare for case studies and other assessments is to practice. Find sample case studies or assessment exercises online or from career resources at your university or library. Work through these exercises to gain familiarity with the format and content. Additionally, practice presenting your solutions or recommendations to someone else, such as a friend or mentor. This will help you get comfortable with presenting and receiving feedback.

Improve Your Analytical Skills

Analytical skills are critical for success in case studies and other assessments. To improve your analytical skills, focus on developing your problem-solving and critical thinking abilities. Take online courses or read books on logic and critical reasoning, and practice applying these skills in real-world situations. Additionally, work on improving your ability to analyze and interpret data, such as financial reports or customer feedback.

Communicate Effectively

In addition to analytical skills, effective communication is essential for success in assessments. Practice delivering concise and clear explanations of your thought process and solutions. Additionally, work on active listening skills, as this will help you better understand the assessment prompt and any feedback from the interviewer. Finally, be sure to communicate any assumptions or limitations in your analysis or recommendations.

Case Study: Market Entry Strategy for a Technology Company

You are interviewing for a position at a technology company that is considering entering a new market. The company currently sells software to businesses in the financial industry, but wants to expand into the healthcare industry. Your task is to develop a market entry strategy for the healthcare industry.

Assessment Prompt:

  • What are the key factors to consider when entering a new market?
  • What is the current state of the healthcare industry and how is it evolving?
  • What are the main competitors in the healthcare industry and how does the company’s offering compare?
  • What are the potential risks and challenges in entering the healthcare industry and how can they be mitigated?
  • What are the potential revenue streams and growth opportunities in the healthcare industry for the company?

To prepare for this assessment, you would want to conduct research on the healthcare industry, including market trends, key players, regulatory environment, and customer needs. You would also want to review the company’s current offering and assess how it could be adapted to meet the needs of healthcare customers. Additionally, you would need to consider the financial implications of entering a new market, including potential costs and revenue streams.

During the assessment, you would need to clearly communicate your thought process and recommendations, taking into account the key factors outlined in the prompt. You would also need to be prepared to answer follow-up questions and respond to feedback from the interviewer.

By preparing for this type of case study, you can demonstrate your analytical and communication skills, as well as your ability to think strategically and adapt to new challenges.

Conclusion

At FMI, we understand the importance of interview preparation, including case studies and other assessments. That’s why we offer an Interview Preparation course to help you prepare for your next interview. Our course covers a wide range of topics, from resume and cover letter writing to behavioural and case study interviews. With our expert instructors and practical exercises, you’ll be well-prepared to tackle any interview assessment. Sign up for our Interview Preparation Bundle course today to take the next step in your career.

Building a DCF Model from Scratch: A Step-by-Step Guide

A Discounted Cash Flow (DCF) model is a financial model used to value investment by estimating its future cash flows and discounting them back to their present value. It is one of the most popular valuation techniques used by investment bankers, financial analysts, and equity researchers to value companies, projects, and other investment opportunities. In this article, we will provide a step-by-step guide on how to build a DCF model from scratch.

Step 1: Understand the Basics of a DCF Model

Before building a DCF model, it is important to understand the basic components that make up the model. A DCF model is composed of three main sections: Cash Flow Projection, Discount Rate, and Terminal Value. The cash flow projection estimates the expected cash flows generated by the investment over a specified period, while the discount rate is the rate at which future cash flows are discounted to their present value. The terminal value is the value of the investment at the end of the projection period and is calculated using a terminal value multiple.

Step 2: Build a Cash Flow Projection

The first step in building a DCF model is to build a cash flow projection. This is done by forecasting the future cash flows generated by the investment over a specified period. The period could be five years, ten years, or more, depending on the investment being valued. The cash flow projection should include all relevant cash flows, including revenue, operating expenses, capital expenditures, and taxes.

To build a cash flow projection, start by gathering historical financial statements of the company or investment being valued. Use the historical data to estimate future revenue growth rates, operating margins, and capital expenditures. Once you have estimated the key inputs, build a detailed projection of future cash flows over the specified period.

Step 3: Determine the Discount Rate

The next step is to determine the discount rate to be used in the DCF model. The discount rate is used to discount future cash flows back to their present value. The discount rate should reflect the risk associated with the investment being valued. A higher-risk investment will require a higher discount rate, while a lower-risk investment will require a lower discount rate.

To determine the discount rate, start by estimating the risk-free rate. The risk-free rate is the rate of return on a risk-free investment, such as a U.S. Treasury bond. The risk-free rate serves as a benchmark for the discount rate. Next, estimate the market risk premium, which is the additional return required by investors to invest in a risky investment compared to a risk-free investment. Finally, estimate the beta of the investment, which measures the volatility of the investment compared to the overall market. The formula for the discount rate is:

Discount Rate = Risk-Free Rate + Beta x Market Risk Premium

Step 4: Calculate the Terminal Value

The next step is to calculate the terminal value. The terminal value represents the value of the investment at the end of the projection period. To calculate the terminal value, you can use the Gordon Growth Model or the Exit Multiple Method.

The Gordon Growth Model assumes that the company will continue to grow at a constant rate indefinitely. To calculate the terminal value using the Gordon Growth Model, use the following formula:

Terminal Value = (Cash Flow in the Final Year x (1 + Growth Rate)) / (Discount Rate – Growth Rate)

The Exit Multiple Method assumes that the company will be sold at a multiple of earnings or cash flow. To calculate the terminal value using the Exit Multiple Method, use the following formula:

Terminal Value = (EBITDA x Exit Multiple)

Step 5: Discount Future Cash Flows

The final step is to discount the future cash flows and the terminal value back to their present value. To do this, multiply each future cash flow by the appropriate discount factor, which is calculated using the discount rate. The discount factor for year n is calculated as:

Discount Factor = 1 / (1 + Discount Rate)^n

Once you have calculated the discount factor for each year, multiply it by the corresponding cash flow to calculate the present value of each cash flow. Add up the present value of all the cash flows to arrive at the net present value (NPV) of the investment.

Step 6: Sensitivity Analysis

Sensitivity analysis is a crucial step in building a DCF model. It involves changing the key inputs of the model to see how they affect the NPV of the investment. By doing sensitivity analysis, you can identify the key drivers of the investment’s value and assess the impact of changes in those drivers.

For example, you can test the impact of different revenue growth rates or different discount rates on the NPV of the investment. This analysis will help you to understand the risks associated with the investment and to make informed investment decisions.

Step 7: Conclusion

In conclusion, building a DCF model requires a thorough understanding of the basic components of the model, including cash flow projections, discount rates, and terminal values. By following these seven steps, you can build a DCF model from scratch and use it to value an investment. However, building an accurate DCF model requires a deep understanding of finance, accounting, and Excel, as well as the ability to make informed assumptions and conduct sensitivity analysis.

To gain a more comprehensive understanding of financial modelling and DCF models, it is recommended to take a course in financial modelling. FMI’s Introduction to Financial Modeling course is an excellent resource for students who wish to get into investment banking. The course covers the basics of financial modelling, including DCF models, and provides hands-on training in Excel. By taking this course, students can develop the skills they need to build accurate financial models and make informed investment decisions.

In conclusion, building a DCF model requires a lot of skill and practice, and this guide provides an overview of the key steps involved. Taking a course in financial modelling, such as the one offered by FMI, can help students develop the skills they need to build accurate financial models and succeed in the world of investment banking.

How can you earn a six-figure salary at top investment banking firms without any experience

On average, a first-year investment banker makes a 5-digit salary, in the range of $70,000 – $90,000, while a 7-digit salary is considered above average and is difficult to achieve for most people in their careers. A six-digit cheque hits the sweet spot in the middle, which fresh graduates strive for and can actually achieve. However, is it possible in your first year, to start without any experience? Let us find out. 

Break up of an investment banker’s salary

To understand how you can make six figures as a fresh investment banker, we first must understand how investment bankers make money. Unlike other industries, pay in investment banking is not a fixed, end-of-the-month salary. Instead, it is made up of several components and varies based on the parameters that define them. These components may vary from bank to bank, however, they are similar among the top global investment banks. 

  1. Base salary

The most important but not necessarily the largest component of the overall compensation is base salary. It is “salary” in the traditional sense. It plays a huge role in the overall compensation as other components are usually a percentage of the base salary. The base salary is generally paid biweekly, is stable, and increases each year. An investment banker’s performance does not influence this component unless there is a serious lack of productivity.

  1. Stub bonus 

Stub bonuses are a sub-component of the overall bonus structure but only represent a fraction of the usual bonus. These bonuses are paid to align employees with the financial year as investment banks recruit graduates in the middle of the calendar year. It is generally 20%-30% of the first-year base salary and is paid for a duration of four to six months. 

  1. End-of-year bonus

The end-of-the-year bonus defines your overall compensation as an investment banker. You will earn this after a full year of working. Analysts, associates, and senior bankers receive this sum entirely in cash or in the form of ESOPs. Two of the most important parameters used to determine the ‘end-of-year bonus are deal flow and overall individual performance. Year-end bonuses are again represented as a percentage of base salary.

  1. Stock-based bonus:

Associates, positioned above analysts, at publicly listed investment banks receive a part of their total bonus in the form of company stock, vested over a defined period of time. As an analyst, in most cases, you won’t be eligible for stock-based compensation. However, a few of the young investment banks have initiated stock-based compensation for fresh graduates as well. In such a case, stock-based compensation could be a significant part of your year-end bonus. 

  1. Signing bonus

When analysts accept full-time offers, they generally receive about $10,000 to $15,000, while associates receive $50,000 to $60,000 as signing bonus.

How to get a six-figure pay?

Now that you are aware of the compensation structure of an investment banker, you would realise that bonuses represent a big portion of the overall pay. A six-figure pay as a fresh graduate, in the first year, might not be possible solely based on your base salary but is certainly possible as your total compensation.

In order to earn this amount you must work hard on two things, first maximising your chances of getting a full-time job at one of the top investment banks and second, making a decent amount as bonuses. To get a full-time job you must focus on the following factors: 

  1. An impressive educational background: as a fresh graduate l, you don’t have experience and all the necessary skills required to be a top-class investment banker. Therefore, having good grades and completing your education at a tier-one university can give you an edge. Having done abridged courses related to economics, finance and business always add to your resume. 
  1. Required skill set and technical knowledge: You must be aware of the fundamentals of corporate finance, valuation methods, company and business evaluation, and the basic working of the industry. Moreover, you must have decent communication and presentation skills and must be willing to work hard and learn new things. 
  1. Experience in the form of internships: As a graduate, it is not possible for you to have a lot of job experience, however, you can make up for it through investment banking internships. Internships allow you to learn business practices and show your passion for the industry.

To improve your chances of getting higher bonuses, you must analyse the compensation structure of each investment bank, individually. In general, your base salary is the biggest determinant of your bonus, since bonuses are disbursed as a percentage of your base salary. In addition, other bonuses such as signing bonuses vary by bank and can be higher if you have a commendable academic record from a top university and a strong resume.

Conclusion

In the US, the average base salary for analysts is between $75,000 and $95,000 a year, and they may receive $40,000-$60,000 in total bonuses, depending upon the base salary, year-end bonus structure and the signing bonus. This takes the total remuneration to $115,000 to $150,00. Therefore, dedicated a first-year investment banker could make up to $140,000 in their first year, without any significant experience. It is important to note that some experience, in the form of internships, could help you break into the industry and get that full-time job. 

To learn more about investment banking and the working of the industry, check out the investment banking newsletter published by FMI. 

How you can get a front-facing role in a top investment bank without any experience

Keywords: top investment bank, financial institution.

Traditionally, job roles are divided into three categories, front desk, middle desk and back desk jobs. Front desk jobs are the face of the company, responsible for generating revenue. Job roles such as sales, trading, and product departments are part of this group. Middle desk positions are responsible for strategy making and ensuring that the company stays solvent, for financial institutions. Risk management and treasury roles generally fall under middle desk roles. Back office positions are job roles which provide support to these activities, positions such as accounting, compliance, and technology support come under back desk jobs. 

With changing organisational structures, technology incorporation and adoption of multi-disciplinary employee backgrounds, the line dividing front, middle and back-end positions are becoming blurry. As a result, these roles are changing with different financial institutions, geographies, and job responsibilities. This article will explore how you can get a front desk role in a top investment bank as a fresh face in the industry. 

Front Desk Jobs in Finance 

Before we dive into how to get a front desk job in a top investment bank, it is important to understand what is a front desk job in finance. In the financial services industry, unlike other businesses where the job role is limited to sales representatives or receptionists, front-desk employees generate revenue for the company by providing services directly to clients, such as wealth management or consultancy. 

Similarly, in investment banking, there are two main branches within the front desk roles, investment banking, and markets. As an investment banker, you would be required to make presentations and work with clients on M&A and capital-raising deals. You would also spend significant time networking to acquire new clients for the financial institution. Graduates or employees working in market-related roles, on the other hand, would perform sales, which involves selling investment products to the bank’s target customers, or trading and research activity.  

How to get a front desk role in a top investment bank

The process of getting a front desk role is very similar to getting any other job role in investment banking. It requires you to prepare and apply for your desired position, and develop the required skills. Moreover, since front desk roles involve dealing with large institutions directly, with millions of dollars and the bank’s goodwill at stake, the position places a great deal of responsibility on you. Therefore, you might spend your initial years working in a team before you could get a full-fledged front desk role. 

To improve your chances of getting a job you can refer to the following guidelines: 

  1. Get the right qualification

A relevant educational background helps you establish yourself as a worthy candidate for the role. Along with your degree courses, you can also commit to specialised courses relevant to front-desk investment banking roles. Bridge courses such as algorithmic trading, statistical analysis, and valuation of distressed assets are highly useful certifications to mention in your resume. 

  1. Develop the right skill set 

When going through a resume, recruiters look for skills pertaining to investment banking, or a trait that differentiates you. You must focus on both, the hard skills (career-specific), and the soft skills (personal skills) that are considered important in investment banking. 

  1. Get Internships 

Internships can help you demonstrate a deeper understanding of the job role and the working of the industry. They also show your willingness to dedicate time and effort to the chosen job role and the financial institution. Internships in business and equity investing and private equity are also considered useful. 

  1. Network 

Networking is one of the key tools that many people use to start their careers in investment banking. Making a good impression on people who can recommend you to recruiters or hire you will help you stand out and increase your chances of getting an interview.

Conclusion

To get a job at one of the top investment banks, it is important to first understand if you enjoy the job role and whether you possess the required skills. Most of the important skills required in investment banking can be developed over time. You can develop a better understanding of the industry by reading the FMI investment banking newsletter. Moreover, you must have a strong educational background, as a fresher, to enter the industry. An internship would be a huge differentiator and an added advantage.

How to Make a Successful Career in the Derivatives Market

The derivatives market is a huge industry within the financial sector. A large portion of the workforce involved in the financial markets is directly or indirectly associated with derivatives markets.  

Derivatives refer to any financial instrument whose value is linked to an underlying asset. In simple terms, the performance of the underlying asset dictates the performance of the derivative. For example, an equity futures contract of Apple Inc. would rise in price if the market participants are optimistic about the future performance of Apple – the underlying asset. There are multiple reasons for buying a derivative rather than the asset itself, speculation being the predominant one. Today, there exist various kinds of derivative instruments such as options, futures, swaps, and forex. 

In this article, we will discuss some of the career paths in the derivatives industry, and how you can prepare for them. Before we delve into these career paths, it is important to note that working with derivatives does not eliminate the need for financial analysis as one must evaluate the underlying asset to reap benefits from derivatives.

Job Profile in Derivatives:

There are three broad job roles in the derivative markets: 

  1. Derivatives Trader
  2. Derivative Operations Analyst
  3. Derivatives Risk Analyst

Derivative Trader

A derivatives trader conducts research and creates strategies to trade derivatives across fixed income, commodities, and equities with an aim to make a profit with price fluctuations. These include financial instruments such as interest rate swaps, total return swaps, fixed income and commodity futures, equity index options, and other credit derivatives. 

Moreover, a derivative trader evaluates trading strategies, improves trading practices, conducts portfolio analysis, creates performance reports, and maintains relationships with multiple brokers. This ensures efficient and timely execution of trading positions, and trade settlements, and improves accuracy in the cash flow of trades.

Qualifications required: 

In general, the following qualifications are required to become a derivatives trader, however, it varies with different financial institutions and the nature of work. 

  1. A bachelor’s degree in finance, economics, computers or mathematics. 
  2. Sound knowledge of corporate finance, fixed income, equities, and commodities.
  3. Understanding of financial markets and their working, including technical knowledge relevant to derivative trading, such as programming in VBA, R, SQL, Bloomberg, MS Office, etc.
  4. Other certifications, which improve your credibility, including CFA, CPA, and FRM.

Derivative Operations Analyst

Derivative operations analysts collect, analyse, and help process derivative lifecycle dealings for different types of products in order to support the derivative hedging team in the front office. Other major responsibilities of a derivative operations analyst include managing collateral of over-the-counter products, monitoring movement in margins for futures, coordinating and performing reconciliation of derivatives position and preparing periodic reports. 

Qualifications required: 

A derivative operations analyst should have the following qualifications:

  • A bachelor’s degree in accounting, finance, or business administration.
  • Sound knowledge of derivative instruments along with an understanding of investments and financial markets.
  • Strong organisational skills
  • Knowledge of relevant tools such as Microsoft office, Macros, etc.

Derivatives Risk Analyst

In addition to analysing different types of fixed-income strategies and yield curve positions, derivatives risk analysts evaluate macroeconomic developments. Among their responsibilities are developing a fair understanding of trading teams’ operations and strategies, monitoring risk limit consumption with VARs, and following up on breaches with the relevant office. They also communicate with senior management on daily and monthly transactions and P&Ls. 

The qualifications required to be a derivatives risk analyst are similar to that of a derivative trader, however, require more experience and knowledge of risk management tools. It is difficult for fresh graduates to start their derivatives career as a derivative risk analyst and requires a master’s degree or certification courses in risk management.

Conclusion

A career in the derivatives industry requires the capability to evaluate the underlying assets. Thus, an aspiring derivatives trader must have an understanding of corporate finance, financial analysis and working of financial markets, along with introductory or intermediate knowledge of technical analysis to understand price movements. Moreover, you need skills and qualifications that will help you navigate the dynamic and fast-paced financial markets. As a result, a job in the derivatives market can be very demanding and stressful but also offers lucrative compensation and growth opportunities.

What are the top investment banking internships you should be aiming for in 2023? 

Top investment banks open internship positions for young graduates every year. These internships attract thousands of applicants and generally have an acceptance rate between 1% and 1.5%, on average. Goldman Sachs received 236,000 intern applications in 2022 of which only 2,900 interns were selected. 

An investment banking internship from one of the top investment banks is a highly differentiating and admirable factor in a graduate’s resume. These internships will not only allow you to earn over $80,000 on a prorated basis over 10 weeks but will also improve your odds of landing a full-time investment banking job. In this article, we will explore the top investment banking internships that you can put on your radar in 2023. 

JP Morgan Chase 

JP Morgan Chase & Co. has its roots dating back to the late 1800s founded by the famous American banker JP Morgan Sr. The financial institute operates through two verticals: JP Morgan, focused on core investment banking, and Chase, which operates in consumer and commercial banking. 

JP Morgan offers an investment banking internship programme for a duration of nine to ten weeks. Internship requirements vary by programme but most require undergraduate students who have completed their first three years of study. If the candidate has enrolled for a master’s degree, they must pursue the internship within two years of a bachelor’s degree. Internship programs are available in the United States, Canada, India, Japan, Hong Kong, China, Singapore, the United Kingdom, Israel, Turkey, UAE, Australia, and major European countries. 

Goldman Sachs

Goldman Sachs is one of the top global investment banks with a rich history of over 150 years. The bank has one of the most competitive work cultures in the financial industry. Major divisions of the bank are financial advisory, underwriting, and investing portfolios. 

Goldman Sachs offers an eight to ten-week investment banking internship programme for undergraduate students who have completed their first or second year in a finance-related degree. As a summer analyst, young investment bankers get a chance to assist professionals in developing pitch books and mergers and acquisitions presentations. Under equity research, graduates work on company valuations, industry research, and collecting relevant data for senior bankers. Most internship programs are available in all major Goldman Sachs offices. 

Morgan Stanley

The investment bank traces its roots back to 1935 and is ranked highly for its advisory services in M&A and IPOs. Much like Goldman Sachs, the financial institution is known for being intensely competitive and is amongst the top dealmakers of the year.

Morgan Stanley offers an internship program for 10 weeks for undergraduate students who have completed their second or third year of study. Interns get to participate in analysing the financial performance of companies, presenting research, and assisting in mergers and acquisitions. The responsibilities vary based on the internship program. Interns can participate in internships from North America, the EU, and some Asian countries. 

Bank of America 

Bank of America is the second-largest U.S. bank, in terms of size, with a balance sheet size of approximately $3.1 trillion and is known for its soft and amiable work culture. The institution ranks the highest when it comes to diversity. 

Bank of America offers a variety of internship opportunities, for undergraduate and advanced degree students. Internship programs cover a broad range of departments from advisory to investment management. Summer interns are typically responsible for engaging clients, reviewing portfolios, assisting senior bankers with projects, and conducting financial analysis. The internships are available across the United States, Canada, Europe, the Middle East, Asia Pacific, and Latin America.

Conclusion

Internships significantly improve the chances of landing a full-time job. An investment banking internship from a reputable investment bank not only gives you valuable on-the-job experience but can also help you get a job in investment banking. Even though the application process is competitive, internships offer an excellent opportunity for bankers to gain insight, learn relevant skills, network and progress into full-time work. You should also have the relevant practical skills required in the industry to break through. The FMI monthly subscription to IB courses can help you gain that edge and consistently acquire new knowledge. 

What does an investment banking intern do on a daily basis?

An investment banking internship is an 8 to 10-week paid placement for graduates to start their career in investment banking. It is a crucial step to break into the industry and secure a full-time role. Investment banking programs are open for both undergraduate and postgraduate students. Generally, investment banks consider candidates in their final year of study so that the candidate can join as a full-time investment banker after their graduation based on their performance. 

Most top investment banks offer investment banking internships across a variety of divisions, with the most popular being the ‘summer internship program’. Global markets, M&A – mergers and acquisitions, corporate finance, structured finance, and leveraged finance are some of the other divisions in which banks offer internship programs. Interns may also get an opportunity to work with analysts from specific sectors, such as FMCG/ Consumer goods, BFSI (Banking, Financials and Insurance), utilities, metals, etc. 

What does an investment banking intern do?

An investment banking intern’s job is to work with analysts and associates and support them with industry and company research, putting together presentations, and collecting relevant information. The internship starts with a week of training, followed by the beginning of actual work to ensure technical proficiency. In the later stage of the internship, interns may get team projects that involve financial analysis and modelling, investment evaluation, etc, depending on the type of work assigned. 

A Proactive Morning

Interns generally start their day at 09:00 am arriving at the office. They start by checking emails from analysts and associates for any updates or remarks. Mornings may include preparing a market update depending on the sector or team you are working with. Or you may be part of an internal meeting, where you would be listening to discussions on macroeconomic developments, potential pitches, proposals for upcoming client meetings, or reviewing new business opportunities.

Post meetings, analysts will assign you a project, which may include working on the Public Information Book (PIB), presentations or research. 

Busy Afternoons

Post lunch, interns generally work on pitch books and presentations, creating the first draft of selected slides before other team members review and alter them. You may also be part of various team introduction events organised specially for interns to understand the various roles and functions of each department within the bank. For instance, the M&A department might discuss their day-to-day responsibilities, the skills they need, and how they collaborate with other teams. This will help you understand the operations of each department and make an informed decision for your career ahead. 

Get your things in order

By evening, you would be required to send the first draft of the assignment that you have been working on since morning to the analysts. It’s really important that you are comfortable with Microsoft Office since you would be spending a lot of time on Excel and PowerPoint. After submitting your work, you can start working on the long-term intern project assigned to you at the beginning of your internship.

One for the road

Interns generally leave after finalising and making all the required changes in their assignments and pitchbooks. However, you may be asked to stay for formatting slides, or adding or removing parts of the pitchbook. After incorporating the latest comments, you send the latest draft back to the analyst for their review and suggestions. The presentation will be reviewed in the morning by senior colleagues as part of the next round of comments.

Conclusion

Top investment banks prefer candidates who have internship experience over fresh graduates. Thus, completing a summer internship can be vital in securing a full-time role within the industry. Additionally, if you get an internship for one of these coveted banks, that’s an added bonus. An internship will involve working for long hours in a dynamic environment, with high standards for accuracy and work ethic. You must be aware of the practical workings of the industry to cope with your work, where FMI newsletters can help you get the edge. By gaining insight into life as a junior analyst in a bank and networking, the internship maximises your chances of receiving a full-time offer.

How an investment banking simulation can train you for your dream career in investment banking

Investment banking is a complex field; graduates and fresh recruits are often told that they would gradually learn by doing things. Investment banking simulations allow an individual to learn by trying different things at their own pace and time. A simulation is any model that replicates the real world or a particular situation, to deliver a specific experience in a controlled environment. In this article, we will explore how an investment banking simulation can train you for your dream career.

Problem-Solving

Investment banking requires creative problem solving but at the same time when transactions are in millions, small mistakes can be costly. Aspiring investment bankers can use simulations to test their decision-making skills in a given real-life situation. 

With hundreds of variables influencing each decision, simulations are optimal for investment banking. Providing a safe and controlled environment allows young investment bankers to adapt to creative problem-solving and experiment with different approaches. It further enables them to reflect on their actions, build confidence based on the results, or take feedback for improvement. 

Simulations can prepare candidates to answer case study questions asked during the investment banking interviews, since they are required to act as a decision maker, evaluate variables, and draw conclusions. To put things in perspective, imagine being the M&A head of a top global investment bank, in the middle of the global financial crisis, being asked to decide on acquiring one of the rival investment banks. Hard, right? You can be part of situations like this with this M&A simulation, for example, which not only helps you develop vital skills but also evaluate your own decisions.  

Skill development 

Simulations not only help candidates understand the job role, but also enables them to develop the necessary skills. With simulation like this on investment management, you would get an opportunity to create your portfolio, conduct equity research, work on stock allocation and of course, manage risk.

Working as a fresh investment banker in a dynamic market environment might overwhelm you with an overload of information and new concepts, making learning difficult. Moreover, since a small mistake could incur huge losses you might not get a chance to be part of key decisions in the initial years of your career. However, in a simulated environment, the real world is replicated and includes multiple attempts. This makes the learning process fun and you can take risks, which as a real investment banker may be difficult to do. As a result, you can trust your judgement and build the traits that are required in the industry. 

Better understanding of the job role 

Aspiring investment bankers often make wrong career choices because of limited information about the job role. Although investment banking job profiles include a comprehensive job description, it is hard for fresh graduates to imagine the responsibilities that come with the role and the level of commitment required to fulfil those responsibilities by reading a piece of paper. 

Simulations can help investment bankers understand the job role in a much more effective way. The individual not only understands their duties but can also experience vital factors that result in job satisfaction, such as is the work repetitive in nature, does it involve a lot of reading, does it require deep communication with team members, etc. 

Simulations further aid the investment banking candidate during job interviews, where recruiters often test a candidate’s understanding of the job role. If you have experienced an investment banking division’s work through a simulation, you will have a better answer around the topic since you were involved in the job and have experienced the work.  

Conclusion 

Simulations, which replicate real-world situations, are a great way of both learning and knowing yourself, which further allows you to make rational decisions. Learning through simulations is like net practice in investment banking. Aspiring investment bankers can develop problem-solving skills, gain confidence, learn to evaluate different components that drive the economy and more importantly make the right career choices, one that suits their personality and skill sets.