Finance Today:
"The role of finance in the business world is largely to help transfer and mediate the movement of money from investors to businesses that need it. Finance makes this possible through the financial markets and the investment vehicles available to both investors and businesses. As a whole, the role of finance has several important uses that contribute to economic growth."
Finance Careers:
Finance Mentor: Scott Jensen
Q. What is your specific job title and position?
A. At Goldman Sachs within New York, I am an Investment Banking Analyst. We cover consumer products and retail companies.
Q. How did you get involved in doing that?
A. I did an internship at the Federal Reserve Bank in New York and then post graduation from BYU-Idaho I returned and worked there for a couple years. Then I returned to receive my masters in finance from Vanderbilt’s grad program. During that time I did extensive networking within the New York Area that was long and grueling. I would do interviews with them in an informal way to learn about their industry and career, and after I knew enough about the industry I ask more questions about what I could do to work for them. I would call people, take them out to lunch, and visit with them after school and work. I wanted to convince people that I was a qualified candidate for the job and company. Different people referred me to their HR groups where I had some interviews and I finally got on interview and offer for a job at Goldman Sachs.
Q. What were some of the questions you asked to learn about their industry and get them interested in investing in you as a potential employee?
A. I talked to a lot of analysts and ask what they do and what is the day-to-day like? What skills are important? When you were in my shoes how did you do it? What advice would you give me if any? I’m interested in getting a full time job, what is the recruiting process like? Are there any openings right now? What can I do to demonstrate to you that I am a qualified candidate? What would I need to do to convince you to pass my resume along to those who are in the position to make hiring decisions?
Q. Being an investment analyst, what do you feel is the best educational preparation for that career?
A. For me it was the accounting and finance courses. I use accounting everyday and I see and work with financial statements everyday. The finance classes that looked at stocks and bonds weren’t particularly helpful for me though it was very interesting. What was very helpful for me was learning how to use excel and running the basics of it, that is extremely handy. So I would say accounting and excel.
Q. What type of higher education have you obtained?
A. I attended Vanderbilt University after my B.S. in accounting and finance. I went to a one-year masters program and obtain my masters in finance.
Q. Throughout all of your education, which classes do you wish you would of taken that would of better prepared you?
A. Well double majored in accounting and economics so after I got done with all of those classes there weren’t too many left for me to take. If I were to do it over again, I would have taken less generalized accounting and finance classes but taken more classes that were specific to what I wanted to do. If I were to college again I would net worked more and learned more about the industry so that I could of taken more specific classes to better prepare me. I would not of double majored; I would of taken more finance courses. I would of not worked and taken out more student loans and gotten straight A’s. Working took away from my study hours and because of that my GPA wasn’t as high as a lot of other people because I couldn’t focus on my studies. I had to explain in my interviews why my GPA wasn’t as high as people from places like Harvard and I told them I had to work all the way through college.
Q. What is a typical day like for you?
A. I usually don’t get in any earlier then 10am and the first hour is going through emails and setting up appointment for the remainder for the day. I work for several hours in Microsoft office, do online research looking through companies information and gathering data in order to prepare presentations for companies regarding financial options such as buying an existing business, selling a business, or merging businesses. I do a lot of personal individual work but I also do a lot of teamwork. My other team members review my work to make sure it is accurate and then we go and present these presentations to those companies. We give them financial advice on what they should do.
Q. What do you like most about your work?
A. The work I actually do is going to be seen my top senior people by some of the top companies in the world. It kind of leaves me in aw knowing that these big companies rely on me, being a person who has been out of college for 2 years, and I am giving financial advice to people who have been running their businesses for 20 years. I don’t feel I belong in the same room as these top executives because they are very successful and rich but it’s a good experience to be on a team where you offer financial advice to these people and they value your suggestions and act upon it.
Q. What do you like least about your work?
A. Because you really want your presentations and work to be correct and top notch, I tend to work a lot of hours. Every week varies, this week for instance I worked an 80-hour a week. A good week is 60-70 hours. Some weeks I’ve worked up to 120 hours a week just because we are working on a big project that has deadlines coming up.
Q. If you could change anything about your job what would it be?
A. Probably my hours.
Q. What talents and skills are crucial for success within your career?
A. I am a firm believer that anyone out of college who has truly worked hard in the classroom, paid attention and went the extra mile to learn the principles about financials along with the industry, can do well. People who take the time to go deep into the details to make sure things are right. The people who are willing to ask questions and learn do really well. The people who are willing to stay an hour after work and learn do a lot better then the people who don’t go the extra mile. Those who are motivated to actually learn and not just earn a paycheck do well.
Q. What are the positions and levels above you and how to do plan on getting promoted to those positions?
A. The bottom rank is an analyst and you are usually that for 2-3 years. If you do well the first 2 years then they will hire you for a third year. So you are basically rehired year-to-year depending on how well you do compared to your peers. Above me is the associate level, which is another 3 years. So typically what happens people work for 2-3 years at another investment banking firm, go receive their MBA and then join Goldman Sachs as a first year associate. If you come straight from receiving your B.S. you start as an analyst. After being an associate for 3 years, and assuming you did well, you will be promoted to Vice President. You are a VP for 5-6 years at which point you then can become a management director. That is basically the top. There are positions above that, however, not many. Those are all executive positions. I was just offered the associates position so I don’t need to go back and obtain my MBA.
Q. As an associate do you have more requirement and responsibilities?
A. As an associate you leave some responsibilities behind and pick up new ones, you are a little bit more in charge of the flow of work, organizing the team, getting things done on time, and checking the work the analysts have done. You are less in the details and a little bit more high level and see the big picture. You go to a lot more meetings and talk a lot more with clients.
Q. What are the typical starting salaries for a starting analyst all the way up to the top management director?
A. The starting salary for a analyst is around $70k. What happens is you get paid that throughout the year and you also get a year-end bonus, which is dependent upon a couple things. First is how well the company did overall, how well your division did, and how well you did compared to your peers. If all those all line up you get a bonus equal to your salary. If those aren’t all lined up you can still get a bonus but its only $10-20k. Every year you are an analyst your salary goes up $10k. An associate salary is somewhere between $120-150k and your bonuses are equal to your salary depending on performance once again. For a VP I’m not really sure and then for a first year management director you can make $1M a year, which includes your bonus. It takes about 9 years to become a management director.
Q. What are some of the toughest situations you have face within this job?
A. You know most of the time it’s the clients you are dealing with. They want things done fast and done right so it can be demanding so its high stress. You end up working a lot of hours. I remember a little bit ago we had 5 days to close a decision regarding selling Burger King for $4B and those 5 days I worked 22 hour days, so that was very demanding and stressful, yet very rewarding when we were finished.
Q. How are the ethics within the investment-banking world?
A. Its interesting because Goldman Sachs gets a lot of negative press and its interesting hearing what people to hear on the outside world when I’m the person working on the inside. Its total polar opposites because we try to be upfront and honest with clients and we try to give them the best possible advice that we can. We go to such great lengths to give them honest advice that it actually hurts our business sometime. If a business hires us to find out if an investment move is a good one, and we do our research and determine that it isn’t, we tell that company it’s a bad investment. In doing so our company doesn’t get paid because that company didn’t make the investment. More often then not we tell companies it’s not a good investment. I think our ethics are great! I’ve never personally seen anything otherwise.
Q. What are the deciding in making an investment decision?
A. We look at the owners and how they will be benefited. If its owned by the public and you can buy shares, we make sure the shareholders will benefit financially. We make decisions are based of how owners will be benefited.
Key Finance Terms:
References:
"The role of finance in the business world is largely to help transfer and mediate the movement of money from investors to businesses that need it. Finance makes this possible through the financial markets and the investment vehicles available to both investors and businesses. As a whole, the role of finance has several important uses that contribute to economic growth."
Finance Careers:
- Commercial Banking
- Corporate Finance
- Financial Planning
- Hedge Funds
- Insurance
- Investment Banking
- Money Management
- Private Equity
- Real Estate
Finance Mentor: Scott Jensen
Q. What is your specific job title and position?
A. At Goldman Sachs within New York, I am an Investment Banking Analyst. We cover consumer products and retail companies.
Q. How did you get involved in doing that?
A. I did an internship at the Federal Reserve Bank in New York and then post graduation from BYU-Idaho I returned and worked there for a couple years. Then I returned to receive my masters in finance from Vanderbilt’s grad program. During that time I did extensive networking within the New York Area that was long and grueling. I would do interviews with them in an informal way to learn about their industry and career, and after I knew enough about the industry I ask more questions about what I could do to work for them. I would call people, take them out to lunch, and visit with them after school and work. I wanted to convince people that I was a qualified candidate for the job and company. Different people referred me to their HR groups where I had some interviews and I finally got on interview and offer for a job at Goldman Sachs.
Q. What were some of the questions you asked to learn about their industry and get them interested in investing in you as a potential employee?
A. I talked to a lot of analysts and ask what they do and what is the day-to-day like? What skills are important? When you were in my shoes how did you do it? What advice would you give me if any? I’m interested in getting a full time job, what is the recruiting process like? Are there any openings right now? What can I do to demonstrate to you that I am a qualified candidate? What would I need to do to convince you to pass my resume along to those who are in the position to make hiring decisions?
Q. Being an investment analyst, what do you feel is the best educational preparation for that career?
A. For me it was the accounting and finance courses. I use accounting everyday and I see and work with financial statements everyday. The finance classes that looked at stocks and bonds weren’t particularly helpful for me though it was very interesting. What was very helpful for me was learning how to use excel and running the basics of it, that is extremely handy. So I would say accounting and excel.
Q. What type of higher education have you obtained?
A. I attended Vanderbilt University after my B.S. in accounting and finance. I went to a one-year masters program and obtain my masters in finance.
Q. Throughout all of your education, which classes do you wish you would of taken that would of better prepared you?
A. Well double majored in accounting and economics so after I got done with all of those classes there weren’t too many left for me to take. If I were to do it over again, I would have taken less generalized accounting and finance classes but taken more classes that were specific to what I wanted to do. If I were to college again I would net worked more and learned more about the industry so that I could of taken more specific classes to better prepare me. I would not of double majored; I would of taken more finance courses. I would of not worked and taken out more student loans and gotten straight A’s. Working took away from my study hours and because of that my GPA wasn’t as high as a lot of other people because I couldn’t focus on my studies. I had to explain in my interviews why my GPA wasn’t as high as people from places like Harvard and I told them I had to work all the way through college.
Q. What is a typical day like for you?
A. I usually don’t get in any earlier then 10am and the first hour is going through emails and setting up appointment for the remainder for the day. I work for several hours in Microsoft office, do online research looking through companies information and gathering data in order to prepare presentations for companies regarding financial options such as buying an existing business, selling a business, or merging businesses. I do a lot of personal individual work but I also do a lot of teamwork. My other team members review my work to make sure it is accurate and then we go and present these presentations to those companies. We give them financial advice on what they should do.
Q. What do you like most about your work?
A. The work I actually do is going to be seen my top senior people by some of the top companies in the world. It kind of leaves me in aw knowing that these big companies rely on me, being a person who has been out of college for 2 years, and I am giving financial advice to people who have been running their businesses for 20 years. I don’t feel I belong in the same room as these top executives because they are very successful and rich but it’s a good experience to be on a team where you offer financial advice to these people and they value your suggestions and act upon it.
Q. What do you like least about your work?
A. Because you really want your presentations and work to be correct and top notch, I tend to work a lot of hours. Every week varies, this week for instance I worked an 80-hour a week. A good week is 60-70 hours. Some weeks I’ve worked up to 120 hours a week just because we are working on a big project that has deadlines coming up.
Q. If you could change anything about your job what would it be?
A. Probably my hours.
Q. What talents and skills are crucial for success within your career?
A. I am a firm believer that anyone out of college who has truly worked hard in the classroom, paid attention and went the extra mile to learn the principles about financials along with the industry, can do well. People who take the time to go deep into the details to make sure things are right. The people who are willing to ask questions and learn do really well. The people who are willing to stay an hour after work and learn do a lot better then the people who don’t go the extra mile. Those who are motivated to actually learn and not just earn a paycheck do well.
Q. What are the positions and levels above you and how to do plan on getting promoted to those positions?
A. The bottom rank is an analyst and you are usually that for 2-3 years. If you do well the first 2 years then they will hire you for a third year. So you are basically rehired year-to-year depending on how well you do compared to your peers. Above me is the associate level, which is another 3 years. So typically what happens people work for 2-3 years at another investment banking firm, go receive their MBA and then join Goldman Sachs as a first year associate. If you come straight from receiving your B.S. you start as an analyst. After being an associate for 3 years, and assuming you did well, you will be promoted to Vice President. You are a VP for 5-6 years at which point you then can become a management director. That is basically the top. There are positions above that, however, not many. Those are all executive positions. I was just offered the associates position so I don’t need to go back and obtain my MBA.
Q. As an associate do you have more requirement and responsibilities?
A. As an associate you leave some responsibilities behind and pick up new ones, you are a little bit more in charge of the flow of work, organizing the team, getting things done on time, and checking the work the analysts have done. You are less in the details and a little bit more high level and see the big picture. You go to a lot more meetings and talk a lot more with clients.
Q. What are the typical starting salaries for a starting analyst all the way up to the top management director?
A. The starting salary for a analyst is around $70k. What happens is you get paid that throughout the year and you also get a year-end bonus, which is dependent upon a couple things. First is how well the company did overall, how well your division did, and how well you did compared to your peers. If all those all line up you get a bonus equal to your salary. If those aren’t all lined up you can still get a bonus but its only $10-20k. Every year you are an analyst your salary goes up $10k. An associate salary is somewhere between $120-150k and your bonuses are equal to your salary depending on performance once again. For a VP I’m not really sure and then for a first year management director you can make $1M a year, which includes your bonus. It takes about 9 years to become a management director.
Q. What are some of the toughest situations you have face within this job?
A. You know most of the time it’s the clients you are dealing with. They want things done fast and done right so it can be demanding so its high stress. You end up working a lot of hours. I remember a little bit ago we had 5 days to close a decision regarding selling Burger King for $4B and those 5 days I worked 22 hour days, so that was very demanding and stressful, yet very rewarding when we were finished.
Q. How are the ethics within the investment-banking world?
A. Its interesting because Goldman Sachs gets a lot of negative press and its interesting hearing what people to hear on the outside world when I’m the person working on the inside. Its total polar opposites because we try to be upfront and honest with clients and we try to give them the best possible advice that we can. We go to such great lengths to give them honest advice that it actually hurts our business sometime. If a business hires us to find out if an investment move is a good one, and we do our research and determine that it isn’t, we tell that company it’s a bad investment. In doing so our company doesn’t get paid because that company didn’t make the investment. More often then not we tell companies it’s not a good investment. I think our ethics are great! I’ve never personally seen anything otherwise.
Q. What are the deciding in making an investment decision?
A. We look at the owners and how they will be benefited. If its owned by the public and you can buy shares, we make sure the shareholders will benefit financially. We make decisions are based of how owners will be benefited.
Key Finance Terms:
- ROI- The earning power of assets measured as the ratio of the net income (profit minus depreciation) to have the average capital employed (or equity capital) in a company or project. Expressed usually as a percentage, return on investment is a measure of profitability that indicates whether or not a company is using its resources in an efficient manner.
- Net Present Value- The difference between the present value of the future cash flows from an investment and the amount of investment. Present value of the expected cash flows in computed by discounting them at the required rate of return.
- Stocks- Represents the original capital paid into or invested in the business by its founders.
- Bonds- A written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition. All documented contracts and loan agreements are bonds.
- Stockholders- An individual, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued. Also called shareholder.
- Government Securities- Bonds, notes, and other debt instruments sold by a government to finance its borrowings. These are generally long-term securities with the highest market ratings.
- Mutual Fund- An investment vehicle managed by finance professionals that raises capital by selling shares, called units, in a chosen and balanced set of securities to the public.
- SEC- Stands for secretary and exchange commission. US federal agency established in 1934 to help protect investors by enforcing securities-realted laws, and by setting mandatory standards for disclosure of financial and other pertinent information about firms who securities are traded over a stock exchange. Its five commissioners serve for staggered 5-year terms, and at any time no more than 3 of them may be from the same political party.
- Stock Markets- A place where shares are bought and sold.
- Initial Public Offering (IPO)- First offering of a firms' stock (shares) on the stock market, at the time it 'goes public.' Because a stock market usually values the stock on the expectations of the firms' future growth and income, IPO's are typically an opportunity for the founders and other early investors to make high profits by cashing their stock holdings.
- Venture Capital- Also called risk capital. Startup or growth equity capital or long capital provided by private investors (the V.C,'s) or specialized financial institution.
- Interest Rate- The annualized cost of credit or debt-capital computed as the percentage ratio of interest to the principle.
- Dow Jones Industrial Average- The most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials.
References:
- http://www.businessdictionary.com
- http://www.investorwords.com
- http://www.careers-in-finance.com/
- http://en.wikipedia.org
- http://www.ehow.com/facts_6182915_role-finance-business-world_.html