Investment Banking v. Asset/Investment Managment: Pros & Cons

artfuldodger23's picture
Rank: Baboon | 111

Hey Guys,

Lately I have been considering pursuing either of the routes but I would like to know more to solidify my choice.I was wondering what the true difference(s) are between investment banking and investment/Asset Management and what are the pros and cons of each.

Thanks

Comments (34)

May 18, 2012

It really depends on you and your interests - whether you are interested in the buy side from a big bank perspective or whether you are interested in sell side transaction execution, advisory work, and experience. AM is a fine career path is if it is on interest to you and in terms of prestige, it is definitely towards the better side of the spectrum. I don't know enough to speak to bonuses, but base pay is usually similar to IB and S&T, but the hours are slightly better in AM.

May 18, 2012

Search for BlackHat's "Life at a Top Asset Manager" thread, it'll answer most of, if not all of, your questions.

May 18, 2012

Not really sure what you mean when you say "Asset Management". You want to be a buy-side research analyst? Given your actuarial background, you might be a better fit doing asset allocation and risk management in an asset management. Then again that defeats the purpose of going for an MBA.

IBD is only relatively easier. You can just follow the typical recruiting schedule (going to networking sessions, do on-campus interview, networking with alumni, all that stuff) and interview until you get offers. Really the focus is hashing out your "story" and why they should consider you as a long-term hire (well in reality very few will last in each class that makes it to the very top). Associate-level IBD doesn't exit to PE as easily, you can do corporate development as an exit op.

If you want to do fundamental research at Asset Management firm, that, to me, is quite difficult. First of all, your insurance policy valuation experience can be helpful for you to understand insurance sector, but that's really it. Second of all, if you want to get into the Fidelity and Wellington of the world, you will be competing with kids whose pre-MBA experience is IBD and PE. So you must crank out some killer stock pitches. Take advantage of all the resources available at your school for a career in investment management.

BB and big AM and mutual funds (like BlackRock, Fidelity, etc.) should be able to sponsor internationals, not sure about boutiques, I will let the other monkeys speak to that.

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May 18, 2012

ttt

May 18, 2012

they are different. is there a question?

long-term goal of most IB analysts is PE, stay in banking, corp development/finance at a large company, business school or any combination thereof.

long-term goal of those in IM would usually be to become a portfolio manager and run your own book. from junior levels there are lots of potential exits, from more senior (post-MBA) levels this is a long-term sustainable career, not really a stepping stone (unlike banking).

May 18, 2012

Probably IB > AM since Ibankers are more "well-rounded" (i.e., prob more extracurriculars in college, better soft skills, etc.) than AM'ers. In AM, unless you're on sales, is all about making the right call. This is especially true for buy-side AM where it doesn't matter as much that you don't have soft skills and matters more that you are making them money through your research.

May 18, 2012

Here's what I would do

1) Google "investment banking"

2) Google "Asset Management"

May 18, 2012

redacted

May 18, 2012

Investment Management or Asset Management is the management of huge portfolios of various asset classes. As an analyst you'll help identify undervalued stocks, bonds, or other asset classes that meet the minimum requirements as stated in the fund's prospectus.

So yo do alot of comps, modeling, stock valuations, with the objective of finding undervalued assets with upside potential. Less hours and exit opps are in hedge funds, mutual funds, and sales and trading.

Investment Banking is completely different. As a banker you assist companies with raising capital from the debt or equity markets (bond offerings, IPO's, convertible bonds, etc), and also provide advice and due diligence on M&A and divestiture transactions. Some banks also do a lot of trading in the equity and fixed income markets, but this is more of a secondary revenue stream, and IMO really not considered core Investment Banking.

May 18, 2012

Lower hours, lower base pay than IB at entry-level. That's all I can say.

May 18, 2012
A Posse Ad Esse:

Lower hours, lower base pay than IB at entry-level. That's all I can say.

this is not true.. base pay is the same in AM as IB.. guy in GSAM and GS IBD both get 70+10

May 18, 2012

Be aware that what a 'banker' does and what a first year analyst does are tow different things.

And to this "Some banks also do a lot of trading in the equity and fixed income markets, but this is more of a secondary revenue stream,". Trading has been the primary revenue generator for the last few years.

May 18, 2012
Jimbo:

Be aware that what a 'banker' does and what a first year analyst does are tow different things.

And to this "Some banks also do a lot of trading in the equity and fixed income markets, but this is more of a secondary revenue stream,". Trading has been the primary revenue generator for the last few years.

True it's been a primary revenue stream, but isn't considered core IB. Core IB would be your Debt and Equity UW.

Either you sling crack rock or you got a wicked jump shot

May 18, 2012

Try the M&I website for a cursory look at what IB does and what AM does. THere's more infor for the former, but at least it's a start if you dont know anything.

May 18, 2012

Hi Igynuo,

I am an actuarial analyst in a large insurer and I am thinking about a similar path as you into transitioning into Asset Management with an MBA in the long-run. I was just wondering if you think your actuarial background helped to get you into a top 5 business school or not?

Thanks!

May 18, 2012

To a college kid - the BB role is more prestigious
To anyone in high finance - the AM role is more prestigious
To everyone else on the street will think you work at a retail bank so it doesn't matter

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May 18, 2012

the difference is at an IB they squeeze the life out of you and toss you in a landfill. IM firms are looking more for the future, to invest in your development so you stay a lot longer.

May 18, 2012

Not if you are referring to all-in comp.
GSAM is not the general case either.

May 18, 2012
LAWM:

Not if you are referring to all-in comp.
GSAM is not the general case either.

They aren't referring to all in comp. They are referring to base.

But in general I would expect the base to be the same but the bonus to be much lower. Depends on the role as well (are you making the investment decision or are you more or a middle office role within AM).

May 18, 2012
StryfeDSP:

Search for BlackHat's "Life at a Top Asset Manager" thread, it'll answer most of, if not all of, your questions.

Thanks, there's a ton of information on that thread.

May 18, 2012

This is exactly the motivation and research ability that will get you to MD at Goldman Sachs in 5 years. Keep up the good work

May 18, 2012

Yeah I was talking about base pay like I mentioned above in my post.. in most cases of course all in comp will be higher for IB analysts than AM analysts.

in terms of hours, it definitely ranges based on your fund/position.. what aspect of AM are you interested in??

May 18, 2012
Sunbeam:

The short answer is "yes" but be prepared for a lot of second-guessers until you establish a track record. If you fail to produce results within 18 months - you'll be looking for an IB job!

What do you mean?

May 18, 2012
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