Financial services has long been considered an industry where a professional can thrive and work up the corporate ladder to ever-increasing compensation structures. A few career choices that offer experiences that are both personally and financially rewarding are:.

Three areas within finance, however, offer the best opportunities to maximize sheer earning power and, thus, attract the most competition for jobs:. Investment Banking Earning Potential Directors, principals, partners and managing directors at the bulge-bracket investment banks can make over a million dollars - sometimes up to tens of millions of dollars - per year.

At the director level and up, there is responsibility to lead teams of analysts and associates in one of several departments, broken down by product offering:. Why do senior investment bankers make so much money? In a word, volume. Directors, principals and partners lead teams that work with high-priced items and make high commissions , since the bank's fees are usually calculated as a percentage of the transaction involved.

Investment banks are brokers. Not bad for a team of a few individuals - say two analysts, two associates, a vice president, a director and a managing director. Job Duties Analyst pre- MBA , associate post-MBA , and vice-president levels are the proving grounds, and the hours can sometimes exceed a hundred per week. Bankers at the analyst, associate and vice-president levels focus on the following tasks:.

Directors supervise these efforts and typically interface with the company's "C-level" executives when key milestones are reached. Partners and managing directors have a more entrepreneurial role, in that they must focus on client development, deal generation and growing and staffing the office. It can take 10 years to reach the director level assuming two years as an analyst, two years for an MBA, two years as an associate and four years as a vice president.

However, this timeline is dependent on several factors, including the firm involved and the individual's success at the job. Some banks require an MBA, while others can promote exceptional bankers without an advanced degree. Those who can't take the heat move on, and there is a filtering process prior to promotion to senior levels.

Those who wish to exit the banking industry can make lateral moves to corporate finance e. Managing partners at the largest private-equity firms can bring in hundreds of millions of dollars, given that their firms manage companies with billions of dollars in value. If their investment-banking counterparts handle high-priced items with high commissions, then private equity manages high-priced items with very high commissions.

Given that a private-equity firm of this size will have no more than one or two dozen employees, that is a good chunk of money to go around to just a few people.

Senior private-equity professionals will also have "skin in the game," that is, they are often investors in their own funds. Job Duties Private equity is involved in the wealth-creation process. Whereas investment bankers collect the bulk of their fees when a transaction is completed, private equity must complete several phases over several years, including:.

Analysts, associates and vice presidents provide various support functions at each stage, while principals and partners ensure that each phase of the process is successful. The level of involvement for principals and partners varies at each firm, but they hire the best and brightest pre-MBA and post-MBA talent at the junior levels and delegate most of the tasks.

Most of the initial filtering of prospective investment opportunities can be held at the junior levels associates and vice presidents are given a set of investment criteria by which to judge prospective deals , while senior folks step in typically on a weekly basis at the investment review meeting to review what the junior folks have yielded.

Principals and partners will head up negotiations between the firm and the seller. Once the company is bought, principals and partners can sit on the board of directors and meet with management during quarterly reviews more frequently, if there are problems.

Finally, principals and partners plan and coordinate with the investment committee on divestiture and harvest decisions, and strategize on getting maximum returns for their investors. If the private-equity firm is unsuccessful at a particular stage, you will generally see principals and partners get more involved to shore up efforts in that phase. For instance, if deal flow is lacking, then the senior folks will go on a road tour and visit investment banks.

At fund-raising road shows, senior private equity professionals will interface with institutional investors and high-net-worth individuals on a personal level, and also lead the presentations. At the deal-flow sourcing stage, principals and partners will step in and develop rapport with intermediaries, especially if it's a new contact and a budding relationship.

If a portfolio company is underperforming, you will find principals and partners more frequently on site at the company to meet with management. Hedge Funds Earning Potential Like their private-equity counterparts, hedge funds manage pools of capital with the intention of securing favorable returns for their investor clients.

Typically, this money is raised from institutional and high-net-worth investors. Job Duties Hedge funds tend to be staffed less than private equity assuming the same amount of capital managed , and they can have more leeway in choosing how to deploy and invest their clients' capital. Parameters can be set on the front end on the types of strategies these hedge fund managers can pursue.

How to Become a Buy Side Equity Analyst: The One Thing You Need

Unlike private equity, which buys and sells companies typically within an investment horizon of between four and seven years, hedge funds can buy and sell financial securities with a much shorter time horizon , even selling securities within days or hours of purchase. Because of this condensed investment horizon, hedge fund managers are much more involved on a daily basis with their investments as opposed to private-equity principals and partners , closely following market and industry trends and geopolitical and economic developments around the world.

Being heavily compensated on performance fees, hedge funds can invest or trade in all kinds of financial instruments , including stocks, bonds, currencies, futures and options.

How To Make $1 Million In Finance

The Bottom Line Getting into a private-equity firm or a hedge fund is brutally competitive. It is virtually impossible to get into these organizations coming straight from an undergraduate degree.

Elite standardized test scores help, along with academic pedigree and leadership activities. A quantitative academic discipline such as finance, engineering, mathematics, etc. Quality of professional experience is looked upon brutally, by a cynical, unforgiving set of eyes. Many investment bankers contemplating their exit opportunities will often transition to private equity and hedge funds for the next leg of their careers. Those looking to get into private equity and the hedge fund business should work a few short years between two and four at a bulge-bracket investment bank or at an elite consulting firm e.

Buy-side and sell-side work will be viewed favorably by private equity. For hedge funds, buy-side work at either an investment bank or private-equity firm will be viewed favorably for junior-level positions.

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Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. A few career choices that offer experiences that are both personally and financially rewarding are: Accounting Consulting Transaction advisory services Corporate finance Three areas within finance, however, offer the best opportunities to maximize sheer earning power and, thus, attract the most competition for jobs: Investment banking Private equity Hedge funds Read on to learn if you have what it takes to succeed in these ultra-lucrative areas of finance.

At the director level and up, there is responsibility to lead teams of analysts and associates in one of several departments, broken down by product offering: Bankers at the analyst, associate and vice-president levels focus on the following tasks: Writing pitchbooks Researching industry trends Analyzing a company's operations, financials and projections Running models Conducting due diligence or coordinating with diligence teams Directors supervise these efforts and typically interface with the company's "C-level" executives when key milestones are reached.

Key Traits Criteria for success include: Technical skills Ability to meet deadlines Teamwork Communication skills Career potential Those who can't take the heat move on, and there is a filtering process prior to promotion to senior levels. This investment vehicle attracts wealthy investors to increase the value of portfolio companies. Privatization can give management more time to make money for investors, but at what cost?

With the right planning, second- and third-year investment banking analysts can graduate to an associate position at a private equity firm. Here's a how-to guide on starting on starting a private equity firm. Going private means a large private-equity group or a consortium of private-equity firms acquires the stock of a publicly traded corporation.

Equity research is sometimes viewed as the unglamorous, lower-paid cousin to investment banking. In this article, we compare the two careers. Review an in-depth comparison between investment banking and investment management, their respective career paths and which one you should choose. A brief introduction to private equity real estate, and what investors should know if they want to get started.

Examine the two potential career options of investment banking and private banking, with an eye toward choosing the most suitable career. Discover how hedge funds and private equity face challenging market environments in and learn about funds that performed well in Read about the major differences between investment banking and private equity, two iconic financial industries with mixed Find out what a hedge fund is, how it is set up and why it is different than other forms of investment partnerships like Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting Learn about the various types of investments that hedge fund managers use, and explore basic hedge fund management trading An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other.

A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over No thanks, I prefer not making money.

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