Career Planner: Financial Industry

“In this first edition, we will outline what the financial industry is, what are the various fields within it and what specific designations and other forms of education one should consider completing in order to pursue a career in whichever field you hope to pursue”

By David Fung and Jeff Fritz

We all want success, to graduate from school with our options unhindered by obstacles, big or small. And for those interested in pursuing work in finance, the potential for that success can be mind-boggling. We’ve all read stories of those big names, those market tycoons we all hope to follow, with their seven-figure plus salaries, generous stock options, private jets and exclusive parties.

These things and more are all possible to you. But on this winding, yellow brick road of life, there are many forks in the road—choices that if made poorly, may pull you away from your ultimate goals. To protect yourself, to ensure that the choices you make are the right ones for you and your dreams, we at the Arbitrage have developed the Arbitrage Career Planner.

In this first edition, we will outline what the financial industry is, what are the various fields within it and what specific designations and other forms of education one should consider completing in order to pursue a career in whichever field you hope to pursue. In the following editions of this planner, we will further hone and build upon the knowledge imparted in these pages, as well as go in depth into each of the various fields of the finance industry to give you a better idea about what life is really like working in these areas.

In all, it is our hope that by reviewing the information inside this Arbitrage Career Planner, planning out your financial career will become that much easier, helping you to make the right turns along life’s yellow brick road until you reach the point where the world will be yours for the taking … .

The Basics
Self-Reflection
Job Profiles – Management
Job Profiles – Sales Department
Job Profiles – Research Department
Job Profiles – Trading Department
Job Profiles – Underwriting Department
Selection
Training Directory

THE BASICS

What is Finance and the Finance Industry?

This is a doozie of a question. Depending on whom you ask, you’ll be sure to hear a variety of answers. But essentially, finance is the management of money or other assets. Exciting! Well, for those who don’t quite share our level of enthusiasm, bare in mind that money and how it’s managed is what determines much of how the world works. The better an understanding you have of money, and the rules that regulate it (finance and accounting), the more power you will have to determine your own future.

Intrigued? We hope so. Because the next several pages will try to answer the second half of your question: what is the financial industry? To be clear, this is like asking what is food industry or the entertainment industry. The finance industry, just like these two examples, can be very ambiguous, as it covers so many different fields, from business consulting to money & wealth management to commercial banking and even insurance. For the purposes of this first edition of the Arbitrage Career Planner, we will be focusing only on the investment banking industry, since (from our experience) it tends to be the most popular amongst finance graduates.

But not to worry, the Arbitrage Career Planner will slowly expand to cover the many other fields within the financial industry and, in so doing, we hope to do our part in supporting our readership in their future career ambitions.

The Canadian Finance Industry at a Glance:

The finance industry has enabled Canada to be one of the most attractive places to conduct business, as well as to invest. Canada possesses the following characteristics that have help create such a great environment: a relatively stable political environment, stable economic trends, skilled and productive labour force, moderate taxation, and not overly regulated trade barriers, fiscal and monetary policies. Consequently, the finance industry provided Canada with a capital market that is one of the most sophisticated and efficient in the world. This industry runs on the basis of the flow of capital and financial instruments. The following is an informal order, dictated by this flow of capital, which categorizes the affected parties of individuals in the Canadian society.

Users of Capital and Investors:

– Non-financial corporations, such as retailers, food distributors, machinery and electronic manufacturers, raw material extractors, etc

– All levels of the government, including municipalities

– Retail Investors (known as private investors who trade and own financial instruments for their own personal accounts and not for another company or organization)

– Institutional Investors (companies that trade and own large volumes of financial instruments for business purposes)

– Foreign and non-residential investors (including both retail and institutional types)

Financial Intermediaries:

These organizations are the parties that offer all sorts of services to users of capital to help them manage and invest it. They act as a bridge between the investors and the capital markets. Some can also act as brokers for their clients or as investment dealers or both, in primary and secondary securities markets.

– Schedule I, II, & III Chartered Banks

– Investment Funds

– Trust Companies

– Credit Unions

– Insurance Companies

– Sales Finance and Consumer Loan Companies

Capital Markets:

– Stock Exchanges. These are auction markets where buyers and sellers of securities trade with each other, they include: Toronto Stock Exchange (TSX), TSX Venture Exchange, Bourse de Montreal, Winnipeg Commodity Exchange (WCE), Canadian Trading and Quotation System (CNQ)

– Over-the-counter (OTC) markets. They are the unlisted equity markets that are also dealer markets. They consist of a network of dealers who trade with each other, where these dealers act as market makers as only the dealers’ bid and ask quotations are entered. Many of these markets are privately owned, computerized networks that match orders. These trading systems are mostly owned by private brokerage firms. Most bonds and money market securities trade in these OTC markets. Three of the most popular OTC electronic trading systems: Can Deal, CBID, CanPX.

The Clearing System:

All financial intermediaries in Canada are required to clear their securities and financial instruments through the Canadian Depository for Securities (CDS). It is a central clearing system where it handles the daily settlements between the intermediaries. They help reduce the number of certificates and amount of cash that has to change hands among the members. CDS creates and confirms the cash balances for each firm, compiles the clearing settlement sheets and notify their members of the securities that they need to deliver in order to balance their accounts.

Government Regulation:

Securities Commissions (in Ontario, it’s the Ontario Securities Commission), are official government agencies that are responsible for overseeing and supervising the self-regulatory organizations, as well as regulating the Canadian securities industry. These activities fall under provincial jurisdiction; thus, the securities commissions are provincial government agencies. They delegate the authority to make procedures and regulations that governs the financial institutions and capital markets to these self-regulatory bodies.

Office of the Superintendent of Financial Institutions (OSFI) is the regulatory body for all the federally regulated financial institutions. It does not oversee the Canadian securities industry.

Canada Deposit Insurance Corporation (CDIC) is a federal crown corporation that insures eligible deposits up to $100,000 per depositor in each of its member institutions.

Self-Regulatory Organizations include:

– Investment Dealers Association of Canada (IDA)

– Mutual Fund Dealers Association (MFDA)

– Listed Stock Exchanges, such as the TSX

– Canadian Investor Protection Fund (CIPF)

– Mutual Fund Dealers Association Investor Protection Corporation (MFDA IPC)

– Ombudsman for Banking Services and Investments (OBSI)

SELF-REFLECTION

The most important step in deciding upon a career path is self-reflection. Understanding both who you are and what you want when it comes to work, to life, it can seem trivial—but, for most, these can be the toughest questions to answer. Statistics show that most individuals in this current market place will likely switch jobs, and even whole careers, between four to ten times over the course of their lives. So take comfort, at least, in the knowledge that you’re not alone in your uncertainty about what you want to do with the rest of your life.

But even if you are one of the lucky few who know exactly what career they want to strive for right at this very moment, there are a few things to consider: (1) you may start your favoured job and soon after find that you hate it, (2) an amazing job opportunity might arise that may pull you into a different field, (3) life may kick you in the butt and you may never reach that favoured career, (4) life may kick you in the butt really hard and yank you out of your favoured job, i.e. recession, downsizing, etc, and (5) you may work in your favoured job for a few years and then find that life has introduced you to completely new interests that you would like to pursue. These possibilities, and many more, are what career advisors call life.

No matter what you plan for your future, your life will always take you in directions that you would never have imagined. Thus, while choosing a career may be difficult, or maybe even unrealistic in this day-and-age, you can at least gauge what underlying needs drive you and plan from there. Below are a number of categories we at the Arbitrage put together to help you in this self-reflectionary process. Ask yourself the questions below and compare them to the job descriptions that will follow. By doing this, we hope the fog in front of your career path might just clear up a bit.

Categories for Career Interests:

*Skills (What kind of technical and/or occupational skills are you enthusiastic in utilizing on a daily basis? What kind of skills are you passionate about to attaining?)

*Knowledge and Expertise (What kind of knowledge do you most look forward to gain? What kind of knowledge and/or expertise are you most passionate about to working toward that will support career ambitions?)

*Experience (What are the types of challenges and on-the-job intrinsic rewards that will make your future career satisfying and fulfilling?)

*Abilities (What abilities do you have to contribute and which ones do you want to improve on?)

*Opportunities for growth (What future opportunities are you hoping to achieve? How high up the corporate ladder do you hope to climb over the course of your career?)

*Prestige and Recognition (How much respect and popularity does your ego need [i.e. if a lot, then chose an occupation that commands a great deal of respect and popularity from your peers, co-workers and the general public]? What level of authority do you envision your ideal position possessing in regards to your team, your division and your firm?)

*Work & Team Environment (What kind of surroundings are you most comfortable working within?)

*Characteristics of Personalities (Do you feel that the qualities of your personality allow you to meet and exceed the demands of your ideal job?)

*The objective of the job (Does the purpose of your desired career align with the core organizational goals of your ideal company, as well as your own career expectations and objectives? Will your desired career allow you to achieve a sense of accomplishment when reflecting on your job on a daily basis?)

*Responsibilities & Duties (Do you believe that you will be passionate and enthusiastic about the responsibilities and tasks you will likely carry out on a daily basis)

*Salary Levels (What is your target salary range that you hope to aspire to over the course of your career?)

JOB PROFILES

The following are general descriptions of the five basic divisions within an average investment banking institution. Within each will be an outline of some of the main job positions that embody each said division, in addition to the general accountabilities & duties, key skill requirements, estimated range of salary, education, certification & licenses, and additional information that are generally necessitated by each position.

When reading these overviews, please consider them as a kind of realistic job preview that will help prepare you for making the career choices of your future. These overviews are by no means definitive and will likely be out of date within another few months (as the financial industry tends to evolve quite regularly), thus while we recommend using this guide to aid in your career choices, we also recommend reviewing secondary sources before you make your final decision.

Keeping this, as well as your self-reflection answers, in mind, we hope you find the following career planner section quite eye opening.

Management

This component consists of the all the firm’s decision makers who seize business opportunities, maximize available resources and capital, respond to market and competitor related changes and penetrate into new and existing markets.

Firm size and the nature of business dictate the organizational structure of the management level(s). Senior managers are more involved with daily operations in small firms and probably manage more than one area of business, in contrast to those who work for the large firms. There is no typical career path in management, not only in the investment banking industry, but also in the broad field of business. Some managers change their job titles every few years, others start in roles such as CFO or Credit Risk Managers. Some work their way up in an organization for an entire career. However, the general consensus is that your experience and expertise holds a higher priority than your qualifications in determining the seniority of your management position.

The role of management is necessary at each division/department of a firm. In general, there are 3 levels of management: Line managers, middle managers and executive managers.

COMMON TITLES

Line Managers

Project Managers, Associate Managers, Team Leaders, Supervisors, Office Managers and Management Trainees.

Middle Managers

Program Managers, Senior Managers, Departmental Managers and Functional Managers.

GENERAL ACCOUNTABILITIES & DUTIES

Line Managers

*Initiate the work assignments or projects by outlining costs, resources, time frames and any other related requirements, such as technical and functional specifications.

*Manage issues as they arise in the course of a project or within the team

*Ensure solutions delivered achieve the project’s stated objectives, analyze all potential solutions and recommend the optimal solution that will meet the project’s goals

*Provide consulting and guidance on project and team initiatives

*Monitor progress against plans and initiate appropriate corrective action when necessary for both short term and long term goals & objectives

*Provide support to Senior Director and Senior program managers

Middle Managers

*Review complex financial reports prepared by others with advanced financial skills and knowledge

*Prepare/research/present policy recommendations that are reviewed by the executive managers

*Conduct key analytics (data sourcing, analysis, testing) required to inform strategic recommendations (e.g., competitor benchmarking, market assessment and financial modeling)

*Effectively communicate key messages/recommendations to all managerial levels

*Make effective and persuasive presentations on complex topics to employees, clients, top management and/or public groups.

*Provide a supporting role in committee or board reporting

KEY SKILL REQUIREMENTS

Line Managers

*Strong organization and time management skills

*Able to build effective relationships within the project team and supporting areas of the firm, customers and vendor groups

*Ability to choose the most appropriate procedures and approaches to suit the circumstances of each problem

*Able to plan for own responsibilities where the nature is non*routine and of moderate complexity

*Knowledge of related industry common practices & procedures of project management to sufficiently apply and adapt appropriate standard practices

*Strong negotiation and facilitation skills

*Strong leadership skills

Middle Managers

*Working knowledge of several areas of external activities (financial and/or other industries, market and/or regulatory environment, or client business practices. Expert analytical, quantitative, and financial modeling skills

*Exhibits a working knowledge of core enterprise competencies, including knowledge of the enterprise’s business environment and products, understanding of the workings of the enterprises organization and procedures and proficiency in the use of standards, tools and methodologies

*Ability to establish conducive working relationships with managers across different business groups

*Ability to think strategically and to synthesize the business and financial data.

*Able to develop creative solutions using innovation and initiative to assist in delivery and issue resolution

*Expert skills in Excel and PowerPoint

*Solid presentation and relationship building skills.

*Outstanding analytical and conceptual skills and able to operate within a high level of ambiguity

ESTIMATED RANGE OF SALARY

Line Managers

*$50,000 to $100,000 annually for most cases, dependent on experience, nature, of work, qualification and the size of the employer

Middle Managers

*At least $80,000 to $100,000+ annually for most cases, dependent on experience, nature, of work, qualification, and the size of the employer

EDUCATION, CERTIFICATION & LICENSES

Line Managers

*PMP Designation for specialist in project management

*At least one of the following: Bachelors degree in Business Administration, Accounting, Finance and even Computer Science or Engineering for technology related work

*Canadian Securities Course

*Canadian Investment Manager (CIM), Fellow of CSI (FCSI), Financial Management Advisor (FMA) are recommended designations

*Chartered Financial Analyst (CFA), Masters of Business and Administration (MBA, or Master of Finance are all valuable assets for positions related to corporate financing, portfolio & wealth management, and institutional sales related work

Middle Managers

In addition to all the qualifications mentioned in the Line Managers sections, the following requirements/recommendations are listed:

*Program Management Professional designation (PgMP) for senior project management positions, such as program managers

*Chartered Financial Analyst (CFA), Charters Investment Counsellor (CIC), Chartered Accountant (CA), Masters of Business and Administration (MBA), and/or Master of Finance are required in many cases

Additional Information

Executive Managers

Most firms, regardless of their size, are usually headed by an executive committee that is responsible for most decision and policy making. They include senior executives, such as a chairman, a president, vice-presidents of all functional departments and executive officers, among others. However, management functions can vary substantially among investment firms, but nonetheless, they represent and govern their functional areas of the company. For some firms, the chairman is also the chief executive officer who plays a critical role in the management, whereas a chairman in other firms may act as a consultant.

Some of these executives belong to an elite group of individuals that earn the highest income in the North American society; thus, they have a wide range of different salary levels. It is safe to assume that they are making at least 6 digits yearly. Masters of Business and Administration (MBA) are very common among these individuals. All the financial designations mentioned in the Line Managers and Middle Managers sections are all required. Many pursue an International MBA (IMBA), Bachelors of Laws (LLB) and Executive MBA (EMBA). Some even hold PhD qualifications, as well as different Master degrees in their related field of work, along with multiple financial and accounting designations.

Sales Department

This division is where most of a firm’s profits are generated and is likely the company’s largest and most geographically dispersed division. Largely, firms have this department divided into institutional and retail divisions. The nature of their job as well as their job title is extremely diverse. The sales involved will depend on whether the company is geared towards more commercial banking, corporate financing, wealth management, or simply private banking and financial planning.

The sales representatives that serve the institutional investors (either large non-financial companies or corporate size financial institutions) usually work at the head office or major branch offices. They work with other departments, such as the trading department, where they pull in day-to-day trade orders for outstanding securities in their inventories. They also work with the underwriting department to help sell new securities issues to other institutional investors.

Large-scale firms would maintain a separate portfolio management division. They would advise their institutional clients on their investment portfolios on a fee basis with customized strategy plans, or manage in-house pooled funds, pension funds and mutual funds.

The retail sales representatives are usually the largest group of a firm’s employees where they need to deal with individual and small business accounts. Their duties are extremely diverse, but many usually do most of the following: process orders of securities and financial instruments, develop a client list, meet their clients, design a customer’s portfolio and advise them on investment decisions based on their risk tolerance, financial position and goals.

COMMON TITLES

Retail Sales:

Investment/Financial Advisors, Financial Planners, Life Insurance Sales Agent, Mutual Fund Sales Representatives

Institutional Sales:

Institutional Equity Sales representative, Fixed Income Institutional Executive, Institutional Investment Consultant, Inside Sales Representative, Corporate Business Development Manager

Portfolio Management:

Associate Portfolio Manager, Portfolio Manager, Investment Counsellor

GENERAL ACCOUNTABILITIES & DUTIES

Retail Sales

*Develop new business through contact with internal company referral sources, including commercial, retail, private banking, financial advisory and other personnel

*Incorporate cold*calling activities to further build pipeline and sales results.

*Maintain widening network of outside referral sources in assigned territory, including individuals and organizations likely to produce wealth management referrals and meet them regularly

*Assess and formulate financial solutions for clients that are monitored and review regularly

*Provide information to answer prospects’ questions involving fiduciary law, estate, tax and retirement planning based on personal knowledge of financial advisory, portfolio management, retirement plan, tax and other areas.

*Create and deliver sales presentations, including presentations to larger audiences and organizations

*Represent one’s organization at organization functions, business groups and civic organizations to develop referral network and enhance sales performance

*Join and participate in several outside associations and organizations likely to generate prospect leads serves on boards and committees as appropriate

Institutional Sales

*Consist of many accountabilities and duties listed in the retail sales section

*Generate revenue from the sales of corporate retirement plans, institutional/corporate trust services, investment management products and services to medium and corporate size clients in a designated region.

*Responsible for researching and understanding prospect’s key business drivers and market data needs

*Prepare and present proposals, presentations, and online/web demonstrations to senior level decision makers of the institutional investors

*Have heavy contact with your own firm’s portfolio managers, analysts and traders

Portfolio Management

*Consist of many accountabilities and duties listed in the institutional sales section

*Emphasis on managing portfolio of high net worth investors and institutions, such as mutual funds, pension funds, and pool of asset backed securities

*Develop the right combination of securities to maximize the portfolio’s return for a given level of risk

*Develop and implement investment policies and strategies with a variety of security research information and selection options following specific portfolio construction procedures

*Regularly measure, monitor and evaluate portfolio performance and rebalance the portfolio as it changes to reflect original objectives

*Meet with investors to review investment performance and forecast market changes based on economic and industry analysis, including objectives and asset allocation models

*Maintain and manage business relationships with partnered firms and institutional investors

*Prepare and present proposals, presentations, and online/web demonstrations to prospective clients on behalf of the organization

KEY SKILL REQUIREMENTS

Retail Sales

*Strong consultative selling skills, as well as strong negotiation and closing skills

*High level of organization and time management to follow up effectively on all sales and service related activity.

*Sound knowledge of the local market where the individual can build their books of clients and contacts

*Demonstrate strategic thinking and understanding of client’s overall business goals and objectives

*Knowledge of investment management and other company products and services

– General overall knowledge of investment management industry practices and trends.

Institutional Sales

*Consists of many key skills listed in the retail sales section

*Well networked in the Institutional Channel * municipalities, mutual funds, insurance companies, corporate retirement plans, etc

*Have established institutional contacts and a familiarity with institutional portfolio investing

*Able to deal with and influence senior level and executive decision makers

*Experienced in selling financial products in a business*to*business environment

*Ability to sell ideas and win trade execution opportunities

*Ability to build effective relationships with a team environment

Portfolio Management

*Consist of many key skills listed in the institutional sales section

*Broad-based technical knowledge of investments, tax, legal and operations

*Knowledge of fiduciary standards, principles and applicable laws and regulations usually acquired through training or law school

*Skilled in negotiation, delegation, leadership, client service and relationship management

*Requires outstanding analytical, strategic and critical thinking

*Experienced with portfolio statistics and fundamental analysis

*Expert knowledge of the investment management industry, practices, trends and different industry sectors of the economy

ESTIMATED RANGE OF SALARY

Retail Sales

*$30,000 to over $100,000 annually with additional bonuses and commissions dependent on experience, type of expertise, establishment of book of clients and the size and business model of the firm

Institutional Sales

*$70,000 to over $100,000 annually with additional bonuses and commissions dependent on experience, type of expertise, establishment of book of clients and the size and business model of the firm

Portfolio Management

*$45,000 to $55,000 annually for analyst positions

*$70,000 to $90,000 annually for associate positions

*Over $100,000 annually for manager positions

*The salary of portfolio management roles are coupled with additional bonus and commissions

EDUCATION, CERTIFICATION & LICENSES

Retail Sales

*Bachelors degree in Business Administration and other business related fields usually required

*Canadian Securities Course

*Canadian Insurance Course (to sell insurance products)

*Conduct and Practices Handbook Course

*Derivatives Fundamentals Course and Options Licensing Course with a Derivatives Market Specialist designation (DMS) for corresponding specialization

*Certified Management Consultant (CMC), Chartered Financial Consultant (ChFC), Canadian Investment Manager (CIM), Financial Management Advisor (FMA), Professional Financial Planner (PFP) and Certified Financial Planner (CFP) designations are highly desirable and a requirement in some circumstances

*A variety of investment and wealth management courses offered by CSI Global Education Inc. would assist in enhancing skills, knowledge, and credibility

Institutional Sales

*Consist of many of the qualifications listed in the retail sales section

*U.S. licensing (FINRA Series 7, 63, 66, 24) are desirable, especially a majority of the clients are U.S based companies

*Masters of Business and Administration (MBA) are recommended or required by many investment banking firms

Portfolio Management

*Consist of many of the qualifications listed in the institutional sales section

*U.S. licensing (FINRA Series 7,63, 66,24) are desirable, especially a majority of the clients are U.S based companies

*Masters of Business and Administration (MBA) and/or Chartered Financial Analyst (CFA), Certified Investment Management Analyst (CIMA), and Chartered Investment Counsellor (CIC) are recommended or required by many investment banking firms

RESEARCH DEPARTMENT:

In many investment-banking firms, this department maybe divided into retail and institutional sections to serve each type of client better. The institutional side offers help to the institutional sales representatives to make investment proposals and strategic plans of managing portfolios. They also provide research information to the underwriting department involving new issues of securities, mergers and acquisitions. The retail side provides information and answers to questions about different companies and their securities from the retail sales department. They give detailed insights and advice to the retail sales representatives to evaluate and make proposals for their clients.

This department usually consist of a handful of economists and technical analysts and several research analysts in a large investment-banking firm. Each research analyst will be assigned to a particular industry. Each will study the current operations and future prospects of the companies and perform comparative analysis with current and future economic and industry trends. The main duty of these analysts is to provide research reports with recommended investments, where they offer extensive analytical coverage for the institutional salespeople and short summaries for the retail sales side.

This department overview will be divided into the two most common research disciplines: technical and fundamental research.

COMMON TITLES

Technical/Quantitative Research:

Technical Research Analyst, Quantitative Analyst

Fundamental Research:

Equity Research Analyst, Fundamental Research Analyst, Equity Researcher

GENERAL ACCOUNTABILITIES & DUTIES

General:

The following are essential for research analyst in general:

*Perform research and analyze company and industry information for prospective purchase, asset allocation, fee generation or other cash flow, using typically industry/company standard analytical tools or measures

*Provide investment recommendations based on company and industry outlook and valuation modeling to the portfolio management division

*Design and manage financial and valuation models to generate financial forecasts for revenue and income forecasts

*Contribute analyses to report being prepared for other business units of the firm to aid in making financial, client, acquisition, or other business decision

*Generate detailed research reports for specific companies and industry trends in the coverage sub*sectors

*Assist with writing quarterly and annual portfolio performance commentaries

Technical/Quantitative Research:

*Perform quantitative/statistical analysis of macroeconomic and microeconomic variables that impact the industry.

*Conduct analysis of marketing and behavioural factors from both a univariate and multivariate prospective.

*Utilize technical research data to build forecasting statistical models

*Extract and process large quantities of data from various databases and other data sources in support of analytic assignments.

*Assist in developing, implementing, and enhancing quantitative portfolio models and strategies.

Fundamental Research:

*Conduct fundamental analysis of individual companies to evaluate quality of company management, financial performance and competitive position within an industry

*Review business and trade publications, annual reports, financial filings and other sources in order to gather, synthesize and interpret data on companies

*Determine the quality of financial statement information and analyze potential responses to scenarios of simulation from sensitivity analysis

*Determine a company’s future performance, with respect to: sales and profit, costs, profit margins, future cash flows, rates of return on capital and asset utilization; based on varying assumptions and projected market or economic conditions

*Utilize financial statements analysis data to build forecasting financial models

*Monitor and analyze economic and market data, industry trends, and security characteristics to support investment decisions.

KEY SKILL REQUIREMENTS

General:

The following are essential for research analyst in general:

*Strong analytical and quantitative skills along with advanced modeling experience, and a willingness to leverage technology and systems.

*Ensure integrity of analyses through rigorous attention to detail and validation of data.

*Capacity to quickly digest substantial volumes of information.

*Identifying relationships to draw logical conclusions and interpret results for use in decision*making.

*Demonstrate independent, creative, and strategic thought on investment issues and generate investment recommendations

*Competency in dissecting and valuing both mature and hyper*growth business models

*Understanding of corporate governance issues, corporate transactions and capital markets;

*Experienced in access and use of public information and proficiency with multiple proprietary third*party tools and databases

*Ability to write analytical commentary based on financial analysis and take a stance on buy/hold/sell positions

*Proficient with the use of Bloomberg and Reuters market data information systems

Technical/Quantitative Research:

*Solid understanding of time-series analysis and econometrics

*Strong quantitative and programming abilities, such as: programming skills (C++, C#, VB), statistical packages (R, SAS, Matlab, S*Plus), optimization and risk modeling (APT, Barra, Northfield, Axioma), databases (database design, SQL), financial packages (Market QA, FactSet)

Fundamental Research:

* Experienced and Skilled in rigorous financial statement analysis

ESTIMATED RANGE OF SALARY

*Research analysts are paid a fixed salary ranging from $80,000 to over $100,000 annually with bonuses. Technical and Quantitative analysts generally receive notably higher salary levels than fundamental research analysts.

EDUCATION, CERTIFICATION & LICENSES

Fundamental Research:

*A bachelors degree in Finance, Accounting, Economics or related field of studies is required

*Designations of Chartered Accountant (CA) and Chartered Financial Analyst (CFA) are highly desirable and required in some cases

*Master of Business Administration (MBA), or Master of Economics, Master of Finance, are highly desirable and required especially for senior positions

Technical/Quantitative Research:

*The Chartered Market Technician (CMT) designation is highly preferred

*Having the Chartered Financial Analyst (CFA) designation is an asset

*A bachelors degree in quantitative fields such as statistics, engineering, mathematics, computer science, economics, or finance is a must. A Master degree in these disciplines is often required for senior positions.

TRADING DEPARTMENT:

Traders work closely with the firm’s sales and underwriting department and are usually divided into divisions represented by the particular product that they trade with. The type of securities traded and the nature of trading transactions are dictated by the certain type of business that the firm operates in. Trade order clerks, also called Order Trader or Approved Traders, link buy and sell orders from the sales department to the stock traders, so they can trade on the exchanges without any precious time wasted, as many of these orders are time sensitive.

The bonds traders typically utilizes their firm’s inventory to buy and sell bonds and debentures, or their firm have some form of cooperation with other firms so that they can trade from these other inventories. In many cases, they also trade money market instruments. In contrast, the stock traders don’t trade from their own inventory unless they are dealing with OTC markets. Otherwise, the norm is to trade on exchanges.

Firms also employ other different kinds of specialists for other financial instruments, such as options and futures and money market instruments and even specialists for a particular group of commodities or a certain sector of the economy. Some of the more exclusive trading environments in these firms may include high frequency statistical arbitrages, hedge funds, options & futures, foreign exchange and currencies.

COMMON TITLES:

Order and Approved traders, equity traders, fixed income traders, options & futures traders, Hedge Funds Trader, High frequency quantitative traders, statistical arbitrage traders

GENERAL ACCOUNTABILITIES & DUTIES:

*Analyze and execute trading orders while employing systematic trading strategies

*Track and monitor the availability of positions within the marketplace

*Quantify fair market values within sectors and identify opportunities based on client needs

*Quickly respond to requests, questions, or trading issues from clients, exchanges, regulators, internal compliance or other parties

*Help identify client trading requirements, as well as provide market related data and news over the telephone.

*Assist with post-trade ticketing and processing and with the resolution of clearing and settlement issues

*Monitor electronic trading systems and order flow to ensure proper operation, regulatory and trading limit compliance and to identify any potential issues and take corrective action

*Contribute to the design and implementation of new electronic trading products and services and development of systematic trading strategies

*Junior level traders in brokerage firms assist Financial Advisors and their clients with placing trades on securities and advise the use of online trading systems

*Hedge funds traders would hedge the company’s current book and create new hedging strategies

*High frequency traders work with a team of experienced traders and quantitative analysts who are responsible for linear risks, high turnover activities and correlation models

KEY SKILL REQUIREMENTS:

*Able to multi-task in a fast moving, stressful environment. For example: placing trades on the system while on the phone and approving orders.

*Mental discipline with quick thinking and focus, as well as the ability to solve problems under pressure

*Strong working and theoretical knowledge of the type of securities trading that they are being hired for

*Knowledge of trading regulations, market structure changes, technical developments of trading platforms, industry rules & regulations

*Ability to read and interpret documents, such as financial statements, financial market indices, rates, articles, contracts and reports.

*Ability to calculate figures and amounts, such as discounts, interest rates, commissions, proportions, percentages and amortizations

*Experience with trading platforms such as JP Morgan and Pershing’s platforms is a plus

*Proficient with the use of Bloomberg and Reuters market data information systems

*Programming skills, including C++, Java, and familiarity with VBA and/or .NET frameworks are highly valued and required for high frequency quantitative traders, statistical arbitrage traders and traders utilizing sophisticated trading platforms

*Requires a strong mathematical aptitude with exceptional analytical, strategic and critical thinking for options & futures, statistical arbitrage and high frequency quantitative traders

ESTIMATED RANGE OF SALARY:

*Order and Approved traders earn in the range of $35,000 to $50,000.

*Registered Security Traders (equities, bonds, options) can earn $50,000 to over $100,000 and entitled to bonuses

*Fixed income and foreign exchange traders’ salary is dictated by bonuses that are tied to trading profits

*High frequency quantitative traders and statistical arbitrage traders with advanced programming and mathematics skills earn at least $100,000 and may go up to $1 million or more, dependent on the success of past strategies and performance results.

EDUCATION, CERTIFICATION & LICENSES:

*A Bachelors degree in Finance, Mathematics, Statistics and computer science is recommended, or a bachelors degree in related business fields.

*A Bachelors degree in Computer Science or Mathematics with solid GPA for options, statistical arbitrage and high frequency quantitative traders.

*U.S. trade licensing (FINRA Series 7, 55, 63 or 66 licenses) is highly desirable

*Licensing and knowledge in other asset classes (i.e. Options and Futures) would be beneficial

*Canadian trader licensing and registration (completion of CSC, CPH, Trader Training)

UNDERWRITING DEPARTMENT

Underwriting, a broad term that can be simply known as financing, is a process where the issuer (client companies and governments) needs to raise debt or equity capital either publicly or privately. The larger the firm is, the more diversified and different forms of underwriting that its underwriting division provides. This functional area of the investment bank often represents the business model that the firm operates on in most cases. They are in charge of negotiating with their clients on the type of financing that suits them the best. A close working relationship with the trading department is a common practice as the traders would be responsible for executing the trades of new issues of securities or secondary offering of securities on stock exchanges or OTC markets.

Many investment banks offer underwriting for new issues of securities that can take the form of private offering or public offering. Security, price, interest or valuation multiple, special features and protective provisions are negotiated in order to market the new issues successfully. The final decision will be made on whether to assume the risk of temporarily possessing the ownership of the new securities of the issuing companies, dependent on the type of prospectus offering.

Large-scale firms would employ financial engineers in this department to design and build complex structured risk management products for their clients to help mitigate their foreign exchange, equity, credit and general market risk. In addition, analysts and associates in this division are also in charge of services, such as providing advice on re-organization and restructuring of firms, taking companies public, buying public shares back, as well as assistance in the management of mergers and acquisitions. Due to the variety of different forms of underwriting/financing that the investment-banking field presents, the following comprehensive illustration of this department is necessary.

COMMON TITLES

Corporate Financing

Corporate Finance Analyst, Corporate Finance Associate, Corporate Investment Analyst

Capital Markets

Equity Capital Market Analyst, Debt Capital Market Analyst

Merger & Acquisitions

M&A analyst/consultant

Project Finance

Project Finance Analyst, Project Finance Associate

Structured Finance

Derivatives Financial Engineer, Financial Analyst (Structured Finance)

Public Finance

Public Finance Analyst

GENERAL ACCOUNTABILITIES & DUTIES

Corporate Financing:

*Managing directors, VPs, associates and analysts are assigned to their designated industry coverage group

*A client team is usually established for specific client deals with assistance from the equity and debt capital market specialists within the same division

*Engage with institutions to establish deals on raising capital through the securities market by providing them with an understanding of their issuer’s valuation, institutional investor targeting efforts and anticipating the reaction to a major corporate action, such as a merger, acquisition, spin*off, dividend policy change or IPO.

*Help the institutional investors understand how their stock is viewed as an investment vehicle and how current market trends, changes in valuation and major corporate actions will impact their shareholder base and share price.

*Extensive financial modeling including sensitivity analysis to support potential investment opportunities

*Determine the amount and structure of fund needs of a client through equity, debt, convertibles, preferred, asset*backs, or derivative securities.

*Prepare registration statements, quarterly financial report, and annual corporate appraisal for investor relation purposes

Capital Markets:

*Receive orders from the corporate financing client teams who have clients who are interested in new issues of debt or equity

*Examine market conditions and tracking swap spreads across the interest rate curve using a Bloomberg terminal and advise as to the right time and form of issuance.

*Development and maintenance of sophisticated corporate projection models highlighting critical financial performance metrics including return on capital, projected leverage, cost of capital and income growth

*Interact with the syndicate desk, which is the hub of a new issue.

*The syndicate manages which investors get what portion of a new issue and builds up a “book” of orders.

*The debt capital markets functional area is often broken down into high yield bonds and investment grade bonds segments.

Mergers & Acquisitions:

*Acts as advisors to clients to value transactions, creatively structure deals and negotiates favourable terms.

*Prepare analyses on client capital structure, debt capacity and credit profile to determine the appropriate form of participation.

*Evaluate the due diligence process, debt documents, financial statements and negotiate an Operating Partnership Agreement through extensive financial modeling

*Balance the objectives and needs between the internal stakeholders (investor due diligence, risk management, and loan administration) and the external stakeholders (legal counsel, developer clients, various third party professionals)

Project Finance:

*Provide initial investment review and screening of prospective investment opportunities for the firm

*Work as a business partner with operational leaders to evaluate/improve business processes and arrive at mutual, cost*effective solutions to fund infrastructure and capital projects

*Participate in negotiations on behalf of the firm for new investments dealing with partnership arrangements, financing arrangements and other project contacts which impact the project return

*Evaluate and analyze ownership and governance structures including framework agreements, joint ventures, partnerships and acquisitions.

*Execute project financing structures using a variety of non-recourse project finance structures including term debt, subordinated debt, equity and contributed asset transactions.

*Coordinate directly with business partners, banks, institutional investors, and government agencies, including underwriting and legal teams to manage the timely funding of project transactions.

*Develop and maintain financial models required to analyze IRR, income statement, balance sheet, cash flow, debt service, equity returns and key financial ratios of the client

Structured Finance:

*Creation of financing vehicles such as asset-backed securities: credit card receivables, auto loan receivables, collateralized mortgage obligations (CMOs), collateralized bond obligations (CBOs); to redirect cash flows to investors

*Be involved with Cash Flow Modeling and Analysis, Data Management and Portfolio Analytics of structural risks associated with these derivatives transactions and to help both internal and external clients understand the underlying risks.

*Assess the credit quality of the underlying assets, the adequacy of cash flow generated by the underlying assets, and the legal framework of the transaction by analyzing the operative documents and collateral data necessary for ratings.

*Execute transactions including managing the underwriting risk, coordinating the marketing, book*building, pricing, and allocation process of these derivatives

Public Finance:

*Provide underwriting, advisory services, ongoing credit assessment of portfolios of governmental enterprises that issue debt for public infrastructure purposes, including state and local government agencies, higher education institutions, healthcare providers, housing and real estate issuers and other non-profit organizations.

*Creating, managing and evaluating output of economic models to build tax advantaged vehicles in the form of debt securities

*Evaluate market trends for consumer financial products, government programs and regulation

*Development of financial models to analyze and execute government based financial transactions, writing business proposals, conducting research and financial analysis.

KEY SKILL REQUIREMENTS:

General

*An ability to write clearly about complex business issues over a variety of industries and communicating accurately under tight deadlines. Writing assignments that range from strategy reports, board reports, press releases, and corporate profiles.

*Adept at communication, particularly communication of complex information, and able to manage a complex and shifting environment.

*Able to display a professional demeanour in fast-paced environment, have strong phone presence, and disciplined time management.

*Must be able to combine strong research and analytical abilities to display a solid understanding of financial statements and securities analysis

*Superior skills in financial modeling within Excel; strong skills in PowerPoint

*Able to build and maintain strong business relationships with an array of financial market participants, including infrastructure and project finance debt issuers

*Understanding and experience in securitization and commercial bank lending transactions, markets and practices is an asset

Additional required expertise and knowledge for these specific areas of underwriting:

Merger & Acquisitions:

*Understanding of the dynamics of corporate merger and acquisitions transactions and strategies is highly desirable

Project Finance:

*Knowledge and expertise in project finance, tax equity, sale*leaseback, ownership flip, term debt, and sub debt structures

*Knowledge of tax accounting and tax law

*Knowledge of Percentage of Completion accounting and Revenue Recognition procedures

Public Finance:

*Understanding of the basic provincial and municipal bond structures to develop and analyze long*term new money and refunding financing.

*Practical knowledge of fixed income securities markets and derivatives markets is a plus.

*Understanding of the various structures and legal requirements of credits facilities for municipal and provincial entities

*Familiarity and experience with public agency procedures and processes is a strong positive.

*Ability to review, understand and analyze government fund accounting.

Interest in Public Policy is preferred.

Structured Finance:

*Strong understanding of derivatives models including market conventions, exotic options and market practices regarding bespoke valuation and hedging.

*Experience performing quantitative analysis with a research team or in cash flow structuring group.

*A passion for analyzing complex derivative transactions, such as CDOs and CMBSs

*Portfolio risk analysis is imperative.

*Experience using Bloomberg, Numerix and other derivative pricing platforms is a plus.

*Experience in securitization or commercial, consumer or real estate lending is preferred

*The desire to read & understand high volume legal documents is required

*Knowledge of bankruptcy is preferred

ESTIMATED RANGE OF SALARY:

An extremely diversified range of salary levels for this functional area of investment banks. A range of $50,000 to almost $1 million or more in some cases, including bonuses and commissions.

*Experience and qualifications dictates salary levels and rises in the following ascending order: analyst, associate, manager or managing director

*Expert financial modeling skills and quantitative analyzing skills with a strong mathematics educational background will generally be paid more. This is especially true for those who work in the capital markets and structured finance.

EDUCATION, CERTIFICATION & LICENSES:

*A Bachelors degree in Finance, Accounting, and Business Administration is essential.

*Individuals with a Bachelors degree in Mathematics, Statistics, Computer Science, and even Actuary Science, are favoured in structured finance and capital market underwriting

*Masters degree in Business Administration, Finance, Economics, and Mathematics are required for senior positions

*Public Finance: Bachelors degree in public administration is preferred.

*Derivatives Fundamentals Course and Options Licensing Course with a Derivatives Market Specialist designation (DMS) in structured finance, and capital market underwriting in some cases

*Accounting Designations: Certified General Accountant (CGA), Certified Management Accountant (CMA), Certified Public Accountant (CPA), Chartered Accountant (CA) are recommended

*Finance Designations: Chartered Market Technician (CMT), Certified Investment Management Analyst (CIMA), Chartered Financial Analyst (CFA), are recommended or required by many investment banking firms

SELECTION

Now that you have a somewhat clearer understanding of the various divisions and career opportunities within finance (and investment banking in particular), we hope that you apply the self-knowledge that you developed in the Self-Reflection section to select a field in finance that best suits you. If one of those fields lies in the pages you just looked through, then you should now have at least a somewhat better idea as to what duties you may need to prepare for and what levels of education you may need to obtain to reach your career ambitions in that said field.

To this end, the next and final section of this career planner will provide you with more information regarding the various designations that exist in the financial industry and the various processes to attain each designation. To learn what designation is best for you, refer to the Education, Certification & licences section of your chosen field to see which ones best suit your chosen career path.

It is our hope that upon perusing the information below (alongside the information you just reviewed) you will have a more complete understanding about what your future holds in store and how you can claim it!

TRAINING DIRECTORY

Note: Some of these designations are available in both Canada and the US, while others are only offered in the US. Who knows where your career will take you, so we figured we would stay safe and offer information on designations from both sides of the border.

Canadian Securities Institute Designations:

The CSI offers a variety of respected designations that are highly prized in the Canadian market place; those include: Chartered Professional (Ch. P), Fellow of CSI (FCSI)™, Derivatives Market Specialist (DMS), Canadian Investment Manager (CIM)™ and Financial Management Advisor (FMA).

Each designation has their own extensive requirements to obtain them, but to learn more, see: http://www.csi.ca/

Certified Financial Planner® (CFP®):
Those with the CFP® designation have demonstrated competency in all areas of finance related to financial planning. Candidates complete studies on over 100 topics, including stocks, bonds, taxes, insurance, retirement planning and estate planning. The program is administered by the Certified Financial Planner Board of Standards Inc. In addition to passing the CFP certification exam, candidates must also complete qualifying work experience and agree to adhere to the CFP Board’s code of ethics and professional responsibility and financial planning standards. (Definition sourced from http://www.investopedia.com/)
For more information, see: http://www.fpsc.ca/

Chartered Financial Analyst (CFA^®):
This designation is offered by the CFA Institute. To obtain the CFA charter, candidates must successfully complete three difficult exams and gain at least three years of qualifying work experience, among other requirements. In passing these exams, candidates demonstrate their competence, integrity and extensive knowledge in accounting, ethical and professional standards, economics, portfolio management and security analysis. (Definition sourced from http://www.investopedia.com/)
For more information, see: http://www.cfainstitute.org/

Certified Fund Specialist (CFS):
As the name implies, an individual with this certification has demonstrated his or her expertise in mutual funds and the mutual fund industry. These individuals often advise clients on which funds to invest in and, depending on whether or not they have their license, they will buy and sell funds for clients. The Institute of Business & Finance (IBF), provides training for the CFS, and the course focuses on a variety of mutual fund topics, including portfolio theory, dollar*cost averaging and annuities. (Definition sourced from http://www.investopedia.com/)

Chartered Financial Consultant (ChFC):
Individuals with the ChFC designation have demonstrated their vast and thorough knowledge of financial planning. The ChFC program is administered by the American College. In addition to successful completion of an exam on areas of financial planning, including income tax, insurance, investment and estate planning, candidates are required to have a minimum of three years experience in a financial industry position. (Definition sourced from http://www.investopedia.com/ )

Chartered Investment Counsellor (CIC):
Given by the Investment Counsel Association, this is a designation which CFA charter holders who are currently registered investment advisors can study for. The focus of the CIC program is portfolio management. In addition to proving their high level expertise in portfolio management, these individuals must also adhere to a strict code of ethics and provide character reference letters. (Definition sourced from http://www.investopedia.com/ )

Certified Investment Management Analyst (CIMA):
This designation focuses on asset allocation, ethics, due diligence, risk measurement, investment policy and performance measurement. Only individuals who are investment consultants with at least three years of professional experience are eligible to try to obtain this certification, which signifies a high level of consulting expertise. The Investment Management Consultants Association offers the CIMA courses. (Definition sourced from http://www.investopedia.com/)
For more information, see: http://www.imca.org/

Chartered Market Technician (CMT):
To achieve this designation, an individual must pass a series of three exams offered by the Market Technicians Association (MTA) and agree to adhere to the MTA code of ethics. Individuals with the CMT designation have a demonstrated expertise in the field of technical analysis. Often CMTs will work for hedge funds and money management firms. (Definition sourced from http://www.investopedia.com/)
For more information, see: http://www.mta.org/eweb/StartPage.aspx

Certified Public Accountant and Personal Financial Specialist (CPA and PFS):
Those holding the CPA designation have passed examinations on accounting and tax preparation, but their title does not indicate training in other areas of finance. So, those CPA holders who are interested in gaining expertise in financial planning in order to supplement their accounting careers need to become certified as personal finance specialists (PFS). The PFS designation is awarded by the American Institute of Certified Public Accountants to those who have taken additional training and already have a CFP designation. (Definition sourced from http://www.investopedia.com/ )
For more information, see: http://www.aicpa.org/

Chartered Life Underwriter (CLU):
This designation is issued by the American College and those who hold it work mostly as insurance agents. The CLU designation is awarded to persons who complete a 10-course program of study and 20 hours worth of exams. The course covers the fundamentals of life and health insurance, pension planning, insurance law, income taxation, investments, financial and estate planning, and group benefits. (Definition sourced from http://www.investopedia.com/)

Chartered Accountant (CA):
Being a Chartered Accountant is a valuable designation to put beside your name regardless of your career path, but by combing a Charter Accountant designation alongside your financial degree (and other financial designations and certifications) is a killer combination in the eyes of just about any employer in this competitive market place.
To obtain this designation, you will have had to complete all the appropriate university courses (or equivalent training), before being admitted into the CA training program where you will take part in a kind of multiyear apprenticeship. Specifically, you will gain work experience in a CA Training Office under the supervision of experienced CAs. As well, during your training you will be continually assessed on your development by CA board representatives, before finally submitting to a three day Uniform Evaluation (UFE) to gauge your knowledge and place you on the next step to your CA designation.
For more information, see: http://www.cica.ca/index.aspx

CMA (Certified Management Accountant):
Similar to a CA, a CMA is a valuable asset to place in your CV. CMAs focus primarily on managerial accounting and are usually often found in industry. Following university graduation, CMA candidates write a two-day CMA Entrance Examination that tests business knowledge, analytical thinking and written communication.
If you pass, you enter through series of successive phases in the CMA Strategic Leadership Program that will take 24 months to complete and include substantial practical work experience in the field. A final examination and assessment take place at the end of this program before one attains their CMA designation.
For more information, see: http://www.cma-canada.org

CGA (Certified General Accountant):
The CGA incorporates aspects from both the financial and management streams of accounting. While not as prestigious as the other accounting designations, the CGA offers practical tools for those interested in the accounting field. Attaining this designation is much more flexible than the other accounting designation and can be started while attending university.
For more information, see: http://www.cga-ontario.org/

ARB Team

Arbitrage Magazine

Business News with BITE

Liked this post? Why not buy the ARB team a beer? Just click an ad or