Where do y'all see IB, HF, and PE in 5 and 10 years?
I'm only a high school student, but having to apply for colleges soon I have to pick a career path. IB being something I want to do, where do y'all see the whole IB, HF, and PE in 5 and 10 years. I know the bonuses have dropped and it's been harder to get a job in this sector, but do y'all think it will get better in the coming years or keep getting worse? Also, I live in Houston, so insight on Energy and Oil IB would be helpful to!
(Getting better as in higher bonuses/all in compensation and easier job opportunities)
P.s. Sorry If I worded this wrong, it's late!
Since you in the same position as me (beside being in another country), I thought I can share my thoughts with you. I think I-banking is pretty much at his low right now, and if we learnt something in history, it is that everything which goes down, goes up again.
Also I think that PWM in Asia will boom (especially China and India), if you're like me and speak Tamil (or even better Hindi) and/or Mandarin (studying this in school right now), you might have a better chance breaking in it, than getting a I-banking offer.
You are in high school, please shut up about things you don't know.
sources:
If you are in High School, have fun, learn a lot, make friends, do stuff you like, have new adventures and focus on getting into college first. Then in college do the same and then worry about internships like after sophomore year. Then you can focus on learning powerpoint/excel and being paid for it in a bank...Take it from a (relatively) older guy...
I can tell you right now that PWM has not boomed in Asia, and I live here and talk to these folks a lot. Theoretically it should, since rich people are going to want someone to manage their capital and since they are "unsophisticated" one can theoretically ply them with a bunch of junky high margin products and generate lots of fees.
That's not happening - or not to the extent that banks thought it would. The numbers of private bankers in the region is high and growing but fees are very low. The Chinese and Indians (I cover both markets for my gig) HATE to pay all kinds of fees and they both come from low trust societies and entrepreneurial environments (ie. why trust an outsider when I can do it myself.. or I made all this money, am rich and well connected, I don't need some dude in a tie to tell me what to do). I know a number of veteran private bankers who have complained about this quite a few times. Clients can be very high maintenance as well.
One story went that a client who my colleague met in the morning (in Taipei) wanted to buy his mistress in Shanghai some limited edition Hermes Bag or something and demanded it be from HK since it was much cheaper (taxes?) and authentic (there have been cases of staff in China switching goods at official stores). So she finished the meeting, went to HK (where she is based), bought the bag on her credit card, flew to Shanghai, dropped off said bag at mistresses's apartment, flew back to HK. One day. Not a normal day, but just an example.
Good Luck
Edited to add (in response to the above poster) - local language skills are ABSOLUTELY needed if you are going to be a client-facing salesy person in private banking. Definitely in greater China. You might get away with it in India (ie. speaking English) but they will want Hindi or something else as well... Because, well they want you to be trusted and build a relationship with the client. If you are on the processing or investment side, you may get along well without as much language skill. Ie. Choosing/structuring/designing products, like portfolios etc. But even then, banks want to look local. This means they will hire people who are local looking and sounding as graduates, especially... The rate at which HK has localised ever since I arrived over 6 years ago is incredible (I'm sure those that have been here longer can vouch for that). The scene has changed a lot...
You clearly aren't very good at your job if you think wealth management isn't booming within Hong Kong Here are just some articles to prove that:
http://www.bloomberg.com/news/2014-04-08/ubs-hired-88-wealth-advisers-i… http://www.theepochtimes.com/n3/803257-is-chinas-money-pouring-into-hon… http://www.marketwatch.com/story/ubs-global-asset-management-will-it-be…
In Hong Kong, there are still many people who do not speak an ounce of Chinese that are heads of their departments. Speaking the language is always a plus, but in no way is a substitute for coming from an ivy league or having family connections of some sort. Furthermore, Hong Kong banks have not truly localized- actual Hong Kong educated individuals make up less than 5% of incoming analysts for IBD, S&T, PWM, ER.
Instead, they hire mainland students from targets such as Tsinghua, Beida, Fudan, etc. Hardly any people from HKU, CUHK (unless you count back office functions)
Read this:
http://www.wallstreetoasis.com/forums/where-will-the-finance-industry-b…
Ah - my first real interaction with a troll and a first year analyst at that. Fun!
I note that the Bloomberg article is a classic one. Its first point is hiring of people - lots of them. That costs money. The second point is that AUM has grown a lot in the region for UBS. fair point. At what fees? Note how there is no mention of profitability in the unit, and that's what matters at the end of the day. Clients in this part of the world negotiate hard on fees and since many are family business types, they will leverage their potential to drive business to other parts of the bank to work that angle. It's quite silly to think that they will not do that or won't drive a hard bargain when everyone want to work with them (ie. manage their money).
http://www.bloomberg.com/news/2012-07-31/asian-millionaires-firing-bank…
An old article but one that illustrates my point.
I think you have taken my definition of "becoming local" quite literally (ie. HK'ers are running the show), which is not what I meant. This part of the world has become very local markets driven very quickly - there are far fewer western types in all roles. If a unit covers China - they want native mainland Chinese, if it covers Taiwan, they want you to be Taiwanese etc etc, almost regardless of the business (IBD, AM, PWM etc). Speaking the language is pretty much needed nowadays to get in to places like HK, especially in a personal business like private banking. Even though the lingua franca at these places might be English, your clients or your counterparts where you are hunting for a deal may not speak it and/or may not prefer to speak English.
There are plenty of people from local countries (China, Taiwan etc), who are well educated at Ivy Leagues, who are hungry, have good grades and are well networked. And if they are not well networked, then they are local (ie. Chinese, Taiwanese, Korean, Indian, Indonesian etc) who are happy to either start their careers in HK or move over from NYC/LON etc.
It does not matter to the OP who the head of the division is because they are not serving clients day to day. The guys at the top are running businesses and having people answer to them and not dealing with clients on the nitty gritty stuff on a day to day basis. They need to make a P/L and make the bank (and themselves) look good and will favor local Asian candidates, either from Ivies or the Chinese/other elite universities mentioned.
Take a chill pill yo.
OP - hope this helps.
I can't comment on IB and PE, but I am bullish on HF going forward. Spreads are tight and everything's so rich now and eventually things must ease, and HF will shine relative to real money... at some point
There will still be investment banks, private equity funds and hedge funds in 5-10 years. I wouldn't worry too much about where your imaginary career is headed right now. If you go to Texas A&M or UT-Austin, you will have plenty of chances to get into O&G banking or something else in the field.
UT > A&M in that regard... think the UT name and network is significantly stronger in Houston finance
Could be, I'm no export on that but I know both have strong ties to the O&G field.
I hate this website.
Excellent post by @"DickFuld" that he wrote in 2013.
I'd also add there are also a number of structural and regulatory influences happening domestically that "could" radically change the dynamics of the US credit market - most notably direct impact of regulation from Dodd Frank and new leverage "guidance" being dispensed from the OCC.
Without going into the full specifics, the high level net effect is that it will not only reign down on the capital leverage (i.e. balance sheets) from the credit producers (i.e. the banks, CLO firms, etc.) but it will change the amount of leverage available to the credit consumers (i.e. institutions, PE firms, etc.).
Traditional LBO's that are getting done at 5 by 7x debt multiples (implied 10-12x total enterprise values) are now being guided down by the OCC towards 3 by 5x or 4 by 6x. And that's before we get a swing up in the cost of capital (its inevitable, rates can't stay this low forever.....at least i don't think).
So if broadly speaking, you are taking a 10-20% axe to implied enterprise values in a new credit "regime" thanks to Dodd-Frank and other regulatory measures, where does that leave mark to market equity valuations?
Now, to be fair, Wall St usually has a pretty high financial incentive to get around these issues, and maybe they will again.....even if these regulations seem like common sense.
Lastly, its worth noting that all the recent debt issuance/refinancing has a maturity wall that has been extended but NOT eliminated. One wonders what the next wave of debt issuance/refinancing looks like in a newly structured environment (be it 2016-2020)........and if its in a "higher" interest rate environment (which it almost has to be), it will have a massive impact on net incomes.
Ultimately, one could argue that in a less "financially leveraged" environment, base earnings in the S&P shouldn't eclipse $75-85/share absent meaningful economic growth (well north of 3%), which using a long-duration multiple of 14x puts a fair value level closer to 1100.
Again, this doesn't mean we go there.....but those are some of the "risks".
HF- CalPers announced pulling 40% of their $ from HF in the coming years. Why? Easy. Low returns. On aggregate, when you have thousands of funds doing similar things trading the same paper with each other at 2 and 20, you pay a lot of fees and don't really generate a lot of alpha, with the exception of the top echelons of HFs.
IB- As loathed as they are, everyone needs them. IBs are not going anywhere. You need sweatshops cranking out pitchbooks in order to raise money for a variety of purposes. Its a necessary evil.
PE- EBITDA multiples are currently at 11x, the space is drawing in a lot of funding recently. The money is pouring in and valuations are pretty high. How long will the run continue? who knows. PE is cyclical by nature but average fund lives of 5-10 years make the swings manageable.
My advice to you---- Enjoy high school. Enjoy your underclassmen years. Cross the job bridge later, you have 50 years to work. maybe 4 more not to.
PS. At least your not me. Bernanke really boned me with a balance sheet the size of LTCM
another high school kid going into college thinking he knows stuff and says he's interested in IB but has no clue about it. Mindless zombies I tell ya.
While I do agree that he shouldn't be overly concerned about adult life just yet and focus on having fun and being a kid at least he is asking questions and trying to educate himself. I wish I had some of his forethought when I was in high school.
most people posting here have no clue. ignore 99% of what you read on this thread.
Et distinctio et consequuntur aut qui et doloremque. Accusantium et quidem atque excepturi commodi cupiditate. Est labore tempora hic deserunt eius nisi nemo. Aut rerum error dolorem blanditiis magni ut. Voluptates necessitatibus tempora vitae dolores ut porro.
Dolores modi et sed doloribus. Ad consequuntur illo quam vero sunt tempora quam. Mollitia voluptatem illo sequi eius natus. Inventore veniam eveniet est corrupti ratione accusantium. Qui magnam eveniet tenetur est et. Debitis et qui qui debitis adipisci.
Odio fugit blanditiis saepe fugiat ut. Et cum dolorum dolorem blanditiis voluptatum vero perferendis. Temporibus exercitationem voluptate quisquam dolor. Deleniti distinctio aut qui quibusdam iure.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...