Investment Banking vs Asset Management | Know the Top Differences!

Investment Banking vs Asset Management | Know the Top Differences!

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hello everyone hi welcome to the channel
of WallStreetmojo or watch the video till the end and also if you are new to
this channel then you can subscribe us by clicking the bell ican friends today we
are going to learn a topic a tutorial on investment banking versus asset
management many a times this thing happens at innovate students with the
with the employees they are not able to decide where they should go what is
right for them what exactly will be more beneficial for them so they they are
into this dilemma that is it is investment banking good or his asset
management good so my one single answer to them is what is your passion what you
are passionate about what exactly you want to do with your life so it’s fine
you still are not clear about that we’ll discuss that in India in detail see the
very basic of Investment Banking as well as the asset management it lies in the
very basic of Investment Banking as well as the asset management
it lies in handling the money okay many students find they find it very
challenging to make the career choice between the two oh into the competitive
salary package both of them offer the latest statistic river revealed that
invest banking as well as the investment management firm offer the highest
starting salary okay so that is good for graduates both are fiercely competitive
industry and they hire the best talents from the world’s top university most of
the financial graduates or post graduates primarily they are MBAs or
they do cfa that is charter financial analyst
so let’s see the conceptual difference between investment banking and asset
management now investment banking if we start with Investment Banking first
let’s begin and write some points related to this and see what is there
inside this universal banking is that area of banking which assists in
creation of the financial fin capital in in the for its clients and and for the
institutions companies governments or other entity basically invest banking is
about providing in exchange of market change of money and you can say in
making it available to those who are in need of money for financing or expanding
the business from those who have this capital and are looking at means
for lucrative investment options so now let’s see what is there exactly in
investment banking we’ll see in the chart and let’s understand that see over
here Investment Banking includes the research portion that is the equity
research Forex research bond research so many of those things are involved over
here where they make the analysis of the
price that they should pay here there is a sales and trading trading of
derivatives bonds Forex so all although those are part of the main operational
banking branch so over here the sales and trading is done raising of capital
includes your initial public offer follow-on public offer rights issue q IP
qualified institutional player placement splits reverse rates so all those of
raising of capital is included with your it this is this was is a part of the
equity as a part of the debt there is as a part of the equity it is called equity
capital market as a part of that it is called debt capital market so the debt
capital market basically includes in issuance of debentures bonds etc over
here the mergers and acquisitions takes place spin-off split off this
divestitures equity cow outs and so on and so forth including mergers and
acquisitions then there is restructuring and reorganization like corporate debt
restructuring there is a strategic debt restructuring and financial and business
restructuring which are at the part of the same so the first and the foremost
thing an investment bank they basically acts as an underwriting agent okay they
are basically known as the underwriters and you can say that they raise capital
via the debt or equity as I told you equity capital market and that capital
market involved in other IP or management activities like consulting
consolidation book building process framing of companies memorandum of
understanding and offer letter along with looking after the legal aspects of an
IPO see the investment banking division which is known as the IBD over here the
IBD the investment banking division of the bank also finds clients for the
public okay and the issue for for mutual funds for
insurance companies pension funds so it also assists the assist for mergers and
acquisition that is M&A by providing all the kinds of you can say additional
services to its clients including security research market making and
trading of equities derivatives fixed securities commodities and currencies
which is included in our sales and trading part an decoded research part
which we just saw in that chart seen inversion bank’s activity can be further
be classified as one one can be called as the buy side
the another one can be called as the sell side okay so the buy side as the
name suggests flow is the buying advice to its clients which is like mutual
funds hedge funds and unit trust life insurance company private equity funds
and so on and so forth and that the sell side on the other hand involves trading
of securities for cash and other securities by facilitating transactions
or market making along with raising of capital through underwriters and
research activities since both the areas of functioning are conflicting in nature
you can say it is essential that the information does not cross from one side
of the to the other on to another hence an information barrier scripted written
in investment bank remember always remember one thing that it will be a
barrier over there and the there and it has been safeguarded to avoid any
conflict of interest that may develop in future let’s see what is there inside
the asset management case let’s see asset management so in case of asset
management the first C asset management is in the simplest form can be defined
as the business of handling other’s money asset management investment
management forms are typically financial services company that invests their
clients money into securities if they invest in equities but they invest in
commodities they invest in derivatives send so on and so forth so there are
various in currencies also so this are the products in which they invest
financial asset management firms employ professionals who are exported handling
other people’s money it involves managing money and handling investments
of clients you can say different clients have different requirements or I mean
absolutely they have required different requirements and a good asset management
looks into particular needs of the clients and recommends the investment
products based on the asset allocation to the plan see it is an exhaustive
field that involves planning recommending reviewing investments of
the plan’s beat individual or companies handling money is a very tricky job to
require so you to be on a very toes always the basic aim of any asset
manager is to invest their money to the Avenues and with minimum risk and
maximum return a wealthy individual does not have does not have time and
inclination to manage his investment so you can say that’s where the asset
management comes into picture an asset manager has the expertise into that
arena and earning more returns for them does enhancing the overall portfolio the
asset management forms also referred to as in the investment management
management forms you can see the investment uh they are known as
investment management forms employ the implement professionals who have
analytical skills and are able to assess which investment products would be
beneficial for them for the clients or to us to achieve the desired financial
objective within the specified guidelines the product in which the
professional invest clients money our mutual funds hedge funds pension funds
and retirement funds and so on and so forth see asset managers recommend
various products and vehicles of investments after doing due diligence
and assessing the risk appetite of their clients understanding their financial
goals and amount of the return they expect keeping the risk in mind so the
aim is to basically maximize maximize the return and you can say asset manager
forms hires the best talent from the top Univercities of the world they are
certain prerequisites that are needed for hiring which would be a degree in
finance primarily or CFA is really helpful or MBA degree will be really
helpful in that case though these degrees are not required for entry-level
jobs but as you think work-up of the corporate ladder in an asset management
firm these degrees are very beneficial the second most important requirement
would be being an expert at number crunching and you need to be really good
at number crunching and good with mathematics then really this is your
field and you can say analytical skills will help you in job along with the
strong communication skill since an asset manager profile needs to a lot of
interaction with the client at all the times so the job option in an asset
management form is a floor you could be you could be employed as a relationship
managers sales manager portfolio manager or financial advisor all of which are
extensive planned interactive profiles now let’s see some of the education
skills that are required in IB and asset management let’s see in both the
scenario how things may be worked out so IB an asset management the first see
the education as well as the skill required for both in the fields are the
same the firm looks for the candidate who have a flair number of and have a
knowledge in business disciplines and it finance economics accounting investment
analytics so candidates seeking to make a carrer in investing banking or asset
management should be ready enormously a tough competition from graduates from
top business schools and universities a degree life MBA is really good for
invest in banking along with relevant work experience is a prerequisite for
entry-level position in the form and it is extremely difficult to get hired by
major for most of which took four strong references from the respective
professional in the field hence neck networking over here will play a major
role and in breaking through the large corporate players having the right
contacts helps giving you the advantage amongst the other since the competition
is really stiff among the firms it also considers the internships as an extended
application process to scheme through the right candidate the skill set sought
by the company’s majorly include like financial modeling DCF and strong verbal
and written communication skills analytical and problem-solving skills
interpersonal and intrapersonal skills negotiation is really a very important
skill that is needed and time management and attention to details advanced
mathematical and technical skills will be really helpful leadership skills and
go-getter attitude commercial knowledge and in-depth understanding of the
subject will really be helpful in case of asset management you really need to
be good with mathematics and with crunching numbers and CFA would be
really a great thing if you are in Europe then CIIA that is certify
international investment analyst it’s a European version of American CFA so it’s
a European version now let’s look at some of the things regarding the
Occupational Outlook so Occupational Outlook is the next point over here this
was our education what is required the Occupational Outlook if you try and look
the job prospects in occupational group for investment banking as well as the
asset management has always been positive more investment opportunities
available with emerging market resulting in innovations of newer and very complex
financial products okay and making investment portfolios much more
multifaceted you can say investment portfolio and and
used earlier the US Bureau of Labour Statistics has estimated that entire
finance industry would have a growth of close enough to in between 12%
from 2014 to 24 24 the outlook looks really positive as
well as the competitive for the industry which is projected to create new
positions in huge salaries in near time though both industry investment banking
as well as the asset management have an very uptrend you can say a really
uptrend in the market and they have a great career prospect but it generally
is believed that the asset management jobs would experience more growth so you
can say there will be more growth over here as compared to the investment
banking and the job would experience more growth in investment banking job
scenes as well as in the asset management since there is a lot to be
explored and new emerging markets where they have been opened doors for
investment management jobs also but there are some who still believes that
asset management industry is not treated as par with the investment bank industry
the top companies which are hiring our JP Morgan Morgan Stanley you have
Merrill Lynch Wells Fargo and so on and so forth let’s see the salary prospect
in this particular end and see what exactly is the thing seen case of salary
Investment Banking as well as the asset management company are some of the most
top most paying the company of the world the median average is quoted around
80,000 for financial analysts which increases the manifold after years of
experiences average compensation for an asset manager reformed employee has has
increased over the last year up to the last decade around around to 2,63,000
in 2014 the investment banking analyst at an entry-level can expect anywhere
between 65,000 to 95,000 but this is the range along with the bonuses an
experience of 3 to 4 years of further increases the package to around
2 ,50,000 which is really a good number the pay gap between the
investment banking and asset management employees has been huge in 2004 nearly
half of which amounts to 1,68,000 and 3,15,000 ok respectively if the pay
structure has changed drastically over the last decade with the salary gap
being narrowed down to several hundreds and thousands of dollars typically
$263,000 for asset management employees and $288,000 for
Investment Banking employees let’s see some of the pros and cons and decide
what to choose see the pros and cons in case of
asset management she undoubtedly the careers of the invested banking asset
management I saw the most top bakeries in the world the salaries and bonuses
are so lucrative that it pulls graduates into the industry as for the US Bureau
of Labor Statistics median annual wage was close enough to $80,310,
$67,740, and $36,200 for financial
analyst financial specialists and all occupations in US economic respectively
the figure itself indicates the huge salary gap that exists between the
finance industry in all of the occupation of which also him indicate
the amount of the workload such professional have to undertake see the
senior level investment jobs are considered on three financial hubs of
London Tokyo and New York so NY London and Tokyo are the three area in which
they are been concentrated though the advent of the century and arrival of the
opportunity the emerging markets of the job have shifted to other Java graphical
location as well since the major concentration of the top level jobs is
still located in this three areas so a career in many any of one of the field
needs to be unfitting dedication towards one’s job and which often neglecting the
needs of our family and friends in invest in banking the time you don’t
have any family time the walking are close enough to 18 hours a day or
16 hours over here you still have a managed life
so let’s decide which one to choose see this is the most difficult question and
cannot have a direct answer it’s like comparing apples with oranges
so both the careers are very lucrative and the offer lot of opportunity for
growth and progress the walking odds are taxing and you can say having a
successful career in both of the fields however there are key differences which
makes it easier for prospective candidates to choose between two
couriers and depending upon your area the area of interest see investment
banking employees they really travel a lot and there is a lot of travel they
are they are in a limelight they work for long hours and you can say which is
not the case with the asset management that they have to bring the savers to
the borrows of which itself is a mentally stimulating tasks and requires
a lot of responsibility and accountability at the end of the
investment banker moreover the most key differences in the
salary package of the two is that invest in banking professional most definitely
gets higher salaries over here in case of investment banking which are
substantial in the long working hours absolutely
well asset management professionals manage money for individual corporations
at all which implies that they have to set a class they have a set of clients
to look after they have to oversee the individual needs of all the clients and
provide them with unbiased investment advice depending upon the requirements
so they have a balance in their time their money including the energy between
the very accounts and work in large group comparatively lesser individual
responsibilities compared to the Investment Banking pears so to conclude
that a career choice between investment bank and asset management you can say is
a matter of a personal choice and individual you can say interest so
however both a lucrative career one should – should not miss an opportunity
if one gets a break in any of them as it is opportunity of opportunities are less
and the aspirants are more so that’s it for this particular topic if you have
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2 thoughts on “Investment Banking vs Asset Management | Know the Top Differences!”

  1. Great vedio, I am an charter accountant. What could be the best way to get in investment bank. Should I start CFA?

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