The Big Picture: Understanding the Financial Market Landscape. Careers in Finance Conference September 10-11, 2015

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2 The Big Picture: Understanding the Financial Market Landscape Careers in Finance Conference September 10-11, 2015

3 What Happens in a Market? Retail (B2C) Goods are offered to consumers by producers through retailers. Wholesale (B2B) Materials or finished goods are traded between producers and/or wholesalers.

4 What Happens in a Capital Market? Retail Goods are offered to consumers by producers through retailers. Wholesale Materials or finished goods are traded between producers and/or wholesalers.

5 What Happens in a Capital Market? Primary Capital is offered to issuers/borrowers by investors/lenders through intermediaries. Wholesale Materials or finished goods are traded between producers and/or wholesalers.

6 What Happens in a Capital Market? Primary Capital is offered to issuers/borrowers by investors/lenders through intermediaries. Secondary The resulting financial assets are traded between investors and/or intermediaries.

7 Need $$$ Issuers/Borrowers Households Consume Build assets Companies Build business Working capital Governments Provide benefits Build national assets Investors Leverage returns The $300 Trillion Global Capital Market Repayment Capital Assets Cash Flows Loan Sources of Value Financial Assets Value creation Intermediation of Capital Intermediation of Risk Regulated Banks Primary Market Shadow Banks Loans ($55 T.) Secondary Market Commercial Paper ($3 T.) Corporate Bonds ($28 T.) Trade Liquidity Fin. Inst. Bonds ($45 T.) Government Bonds ($58 T.) Securitizations ($10 T.) Corporate Bid/ Equity ($75 T.) Offer Commodities Risk Management Derivatives ($630/$21 T.) Deposits Broker Dealers Mutual Funds Trusts Priv. Invest. Funds Institutions Pensions Insurance SWFs Invest. Mgmt. Have $$$ Investors/Savers Households Excess earnings Inherited money Companies Excess free cash flow Endowments Bequests Fundraising Governments Exports Printing

8 Need $$$ Issuers/Borrowers Households Consume Build assets Companies Build business Working capital Governments Provide benefits Build national assets Investors Leverage returns The $300 Trillion Global Capital Market Repayment Capital Assets Cash Flows Loan Sources of Value Financial Assets Value creation Intermediation of Capital Intermediation of Risk Regulated Banks Primary Market Loans ($55 T.) Shadow Banks Commercial Paper ($3 T.) Corporate Bonds ($28 T.) Fin. Inst. Bonds ($45 T.) Government Bonds ($58 T.) Securitizations ($10 T.) Corporate Equity ($75 T.) Commodities Risk Management Derivatives ($630/$21 T.) Deposits Broker Dealers Mutual Funds Trusts Priv. Invest. Funds Institutions Pensions Insurance SWFs Invest. Mgmt. Have $$$ Investors/Savers Households Excess earnings Inherited money Companies Excess free cash flow Endowments Bequests Fundraising Governments Exports Printing

9 Reinforcing Trends in Financial Markets Bigger and more globalized Aggregated Shift in relative balance of power Disintermediated Disrupted by technology Information (e.g., risk management) Connectivity (e.g., retail investing) Speed (e.g., high frequency trading) Regulated Deregulation (e.g., Glass-Steagall, Big Bang) Re-regulation (e.g., Dodd-Frank, Basel 3)

10 So, Let s Talk Careers A few important highlights Industry is highly dynamic (continuous evolution) Hot today, not tomorrow Capital flows are increasingly global Markets and careers likely to follow trend Career opportunities in all areas of landscape Not only investment banking Opportunities are each very different Roles, skills, lifestyles, intensity, compensation

11 Need $$$ Issuers/Borrowers Companies Build business Corp. Finance Working capital Governments Finding Your Place in the Global Capital Market Provide benefits Build national assets Muni./Project Finance Investors Leverage returns Intermediation of Capital Intermediation of Risk Corporate Bonds ($28 T.) Securitizations ($10 T.) Corporate Equity ($75 T.) Risk Management Derivatives ($630/$21 T.) Deposits Value Repayment creation Brokers/Mutual Funds Broker Dealers Mutual Funds Private Trusts Banking Loan Regulated Banks Shadow Banks Households Sources of Value Priv. Invest. Funds Consume Corp. Banking Primary Market Build assets Hedge Funds Capital Institutions Assets Loans ($55 T.) Transactions Services Credit Risk Mgmt. Pensions Private Equity Investment Banking Cash Adv./Restruc./M&A Flows Financial Assets Structured Products Commercial Paper ($3 T.) Capital Markets Fin. Inst. Bonds ($45 T.) Government Bonds ($58 T.) Equity Research Commodities Derivatives Sales & Trading Insurance SWFs Invest. Mgmt. Have $$$ Investors/Savers Households Excess earnings Inherited money Companies Excess free cash flow Inst. Investment Endowments Bequests Fundraising SWFs Governments Exports Printing

12 Need $$$ Issuers/Borrowers Companies Build business Corp. Finance Working capital Governments Finding Your Place in the Global Capital Market Provide benefits Build national assets Muni./Project Finance Investors Leverage returns Intermediation of Capital Intermediation of Risk Corporate Bonds ($28 T.) Securitizations ($10 T.) Corporate Equity ($75 T.) Risk Management Derivatives ($630/$21 T.) Deposits Value Repayment creation Brokers/Mutual Funds Broker Dealers Mutual Funds Private Trusts Banking Loan Regulated Banks Shadow Banks Households Sources of Value Priv. Invest. Funds Consume Corp. Banking Primary Market Build assets Hedge Funds Capital Institutions Assets Loans ($55 T.) Transactions Services Credit Risk Mgmt. Pensions Private Equity Investment Banking Cash Adv./Restruc./M&A Flows Financial Assets Structured Products Commercial Paper ($3 T.) Capital Markets Fin. Inst. Bonds ($45 T.) Government Bonds ($58 T.) Equity Research Commodities Derivatives Sales & Trading Insurance SWFs Invest. Mgmt. Have $$$ Investors/Savers Households Excess earnings Inherited money Companies Excess free cash flow Inst. Investment Endowments Bequests Fundraising SWFs Governments Exports Printing

13 Eight Key Skills for Success in Finance Financial / business understanding and affinity Curiosity and problem-solving skills Interpersonal and communication skills Team player.ability to embrace diversity Math acumen (especially for more technical roles) Demand for excellence (especially in yourself) Ambition and willingness to work hard Global skills and perspective

14 The Positives of Working in Finance. Best and brightest.colleagues and clients Interesting, challenging work Continuously steep learning curve Meritocracy (competitive, but generally fair) Opportunities for travel Attractive compensation Solid preparation for any career in business

15 .and Some Issues to Consider How important is work-life balance? What do you think about starting at the bottom? How do you perform under competition and stress? How willing are you to work long hours? What are your attitudes towards industry volatility? What are your personal priorities?

16 What to Look For in a First Employer Essentially still in school (getting paid to learn) Not unlike choosing the right academic program Critical characteristics High-quality work (i.e., good courses) Outstanding peer group (i.e., compatible students) Excellent managers and mentors (i.e., great professors) Compatible culture (i.e., feels like a good fit)

17 What s Should You Do Now? Learn everything build vocabulary...be a sponge Finance classes and professors Financial Times (don t be the last to register!) Economist, WSJ, financial blogs, annual reports, other Alums, resource network Commerce Career Services Ask the dumb questions (hint: there aren t any!) Think about what s really right for YOU What kind of work do you think you d enjoy? Where do your skills, interests and values fit best?

18 CIF Conference Agenda Thursday 5:00-6:30 pm The Landscape of Careers in Finance Room 120 6:45-7:30 pm Networking Reception RRH Third Floor Gallery Friday 9:30-9:45 am Introductions and Welcome Room 120 9:45-10:45 am Boutique Investment Banking: Financial Advisory Services 11:00-12:00 pm Asset & Investment Management 12:00-1:00 pm Networking Lunch & Company Information Tables 1:00-2:00 pm Wealth Management 2:00-3:00 pm Large-Scale IB: Advising, Underwriting & Financing 3:00-4:00 pm Young Professionals Panel: Perspectives from the Workplace 4:00-4:15 pm Next Steps

19 Careers in Finance Conference Sponsors Ed Finley College of Arts & Sciences 1987