Investment Banking vs Investment Management | Know the Top Differences
Hello. Everyone hi welcome to the channel. Of Wall Street mojo I welcome all of you to the 2-tone of investment banking versus investment, management. I'll. Show, you a picture over here try. To make some analysis of that you. Can see this guy is trying to save some money right. So that. Is what is something related to investment management let's get into the nitty-gritty of this particular, too-tall, and topic. So invest in banking and Investment Management are two of the most sought-after careers, for business and finanza undergraduates. It. Is a promising, in a high profile career with a great box and bonuses, however, it would not be possible to make an informed choices, without. Understanding what. Each of them stands for and the nitty gritties of what exactly do they have to offer as a career so. Let's get into it what, is Investment, Banking see. Investing banks are the financial institutions, they are engaged in underwriting. I will show you in terms of Excel. And get, some details, jot, it down so we'll, by forget this into Investment, Banking and, this one into Investment Management will put the points of difference. Investment. Bankers are usually involved in terms of advisory. Services, like IPO. FBO. They. Are involved in underwriting, then. They are also involved. In terms of issuance. Of Qi P and, rights. Issues, so basically all this are related. To issuance, of of capital. And, they. Facilities. And acquisition. M&A. Is on basically. On both the buy side and the sell side of the deal and the corporate, restructuring. Also along with a wide ring a range of other function in short when a corporation. Is needed of need of financing, it seeks helps of, rest, bankers to be able to efficiently, execute, this major transaction, it is an intensely, competitive field, and arguably with, some of the best box in the industry so what is Investment Management, see. It is also known as you. Know in, the market it's also known as emc, asset management company, so it's known as asset management fun, or AMF. Management. Up it's also known as the portfolio, management it involves assisting individuals or institutional, investors, and they find suitable investment avenues. To help achieve. Their, growth objectives the neutrals who seek assistance of investment, managers. Or asset managers are usually BHN eyes that's the high net worth investors the. Role of an asset manager is to assist with. Making, investments. In equities fixed, income securities, I will just write a couple of things in in, equities.
Then. They also invest in fixed, income securities, they. Also go in terms of what. We call as, real. Estate they're, like hedge funds among the other instruments so some prefer to call a spy site so that is, the place. Where you invest money on behalf of your clients as an asset manager basically required to buy investment products in keeping with the wealth creation the need for the clients, now. Let's get into the portion, where we'll, have to look at some. Of the data regarding the education, so what, are the education, and skills required in both the scenario if. We talk about Investment Banking ideally an individual, should not only have an expert knowledge of Finance but. Must also possess excellent. Business skills and exceptional, networking, abilities to make it a success, in the field as. Most of the finance oriented, certifications, don't focus on networking, so, you can say networking, is one big thing. In investment, banking when we are talking MBAs. Are naturally. But. The best fit so you can say MBA is the best degree for, when. We talk about investment banking and given. The kind of the networking opportunity, have as at their disposal undergrads, in in. Finance and investment related areas might have higher relevance, to the domain but those from the other disciples, can also be considered given they possess the desired skill the set typically. In Investment Banking internships, are very, more competitive, than the entry-level positions, as compared, to some of the entry-level positions, in your finance see. Most of the investment bankers do start out as an, analyst and Investment, Banking associate, before graduating, to the position of VP or director. Or the managing director. So. For. The very first thing you can say that MBA is the is, the way get, to get into IP but there are other degrees like CA in India, you. Can say, CFA. Also helps it is one key area but the, relevance is close enough to only 8% for. M&A, or in Investment Banking and. There. Are some other, degrees of like, a, certified. Investment. Alternative. Investment, associate see, I, see. Ie I something, sort of certified. Alternative, investment, associate CAI that is for hedge funds basically or, you, can say private equity and, what. Are the skills required set for IP C you need an excellent analytical. Abilities in AI for details you, need an advanced mathematical, skills and proficiency, in in technical aspects client, management skills and negotiation. Abilities, par. Excellence, then the most important, that you need to have is financial, modeling skills in Excel VBA and macro skills. Evaluations. You should know like DCF. Valuation and, so on and so forth and you should, be good at preparing PPD, and and so on and so forth so, these are the couple of skills that are required when you talk about the our investment, banking area but when we talk about Investment Management the undergrads in finance economics or, business and, investment. Analysis would be a better fit for the for this particular field today. There is a much higher preference for technically, proficient candidates. And our relevant. Professional, certification. Can certainly help boost their career so if you want to get into Investment Management than you you, may basically. Require a CFA. That has chartered financial analyst, which is the, USA pay scores or designation, and it, can be a distinct advantage in terms of acquiring expert, knowledge of accounting, and portfolio, management and security. Analysis which can be of immense, used for an asset management there's. Another degree that's also called SEMA that, means certified, investment, management analyst, which is again also very helpful. There's. A degree called CI ia that is certified international investment, analysis, which is analyst. Which is basically. Known more in Europe so it is it is United States version and CI, ia is a version of Europe so, you can also opt for that and. Certification. Can be another high relevant certification, for those looking to make a in asset management so what are the skills that are essential for for. The for this kind of job you. Need an extraordinary, mathematical. Skills, because over here thing. Is that you need mathematics. As you as a key thing over here ability. To take macro, view and, you. Make simplified, investment, decision and then. After you need an ability to plan and meet long term financial objectives. Let's. See the employment, outlook in both the scenario, so. When we talk about employment, outlook both. Of these fields offer some, of the finest vocational, prospects, with number of high-profile, of openings, being, made available every, year so as the financial, industry, continues to grow at a more and more less steady of space in, fact as for an estimate, of US Bureau of Labor.
Statistics Financial. Industry is set to experience a close enough to eleven, person I mean this is just an outside. Date I'm just writing eleven percent of. Job growth between Twitter 2012, and 2022, so till about a decade ago investment, banking was the undisputed, choice, of career in finance offering. A rare growth opportunities. And the near glamorous, appeal given. The kind of the high-end deals like, brokered by investment, bankers, on. The other hand asset management was clearly not as competitive as a field but, things have undergone a sea change since and today asset, management is considered on par with the investment banking in every, sense of the word and in. Investment. Instruments, become, highly, sophisticated, and, a diversity, of the investment options continue, to emerge it. Has become increasingly difficult, for a Chennai's and institutional, investors to identify, suitable. Investments. Okay, so that, that is one one bigger curve of kind and as a result there has been a steep rise in the demand for asset, management professionals, with the right kind of expertise, and, technical proficiency required, to develop and implement effective, investment. Strategies, to meet the objective of the clients C. Due to the increasing, competitive, market the, employers prefer to hire certified. Or accredited. Professionals. In asset management roles for the benefit of added. Credibility. And, expertise, in the given area on, the other hand the demand for investment banking professional, has also steadily, gone. Up in the, past in the last few years and fortune, 500 companies, continually, look to enhance that expertise in this field, let's. See the salary aspect, of. Half. Investment, banking and management, investment management nearly a decade ago investment, banking position offered some of the industry's, best compensation packages, and, asset. Management was, nowhere near in the terms of this figures however. Things have undergone change drastically NS, Murthy study by new financial. A think-tank. The average, paper. Employees, for investment, banks fell about close, enough to 25, person, from. 2006, 2014, to, an estimated, close. Enough to 2 lakh. $88,000. This is all in terms of dollars. This. Amount. Will be in dollars this one will be in dollars so. Whereas, for the same period it grew about closer to 22% for, global, asset. Managers - an estimate - 2 lakh 63,000. There's.
Two Lakh 88,000. And this was 2 lakh. 63,000. This. Is not this not only sums up the equation for, the two of the fields but also shows a distinct, pattern of an increasingly, competitive pay package for. Asset managers as compared, to the investment bankers, everything. Said and done despite, a slight downturn in the post credit crunch era the job market for investment banking stays afloat and continues, to offer some of the finest pay packages, right from it the entry-level, positions. To set the things in a perspective even, banking. Interns even. The banking interns can earn close enough to. $70,000. - close enough to. $80,000. So, that's a pretty good number oh this. Is it's for the internal we are talking about and once they join as an analyst it goes up anywhere between close enough to one hundred and fifteen. Thousand, dollars to one. Lakh thirty, thousand dollars with. Nearly around thirty thousand as bonuses. They get thirty thousand as bonuses, when. We are once they accumulate, around three years of experience as in the banking associates, the package goes up to around you. Can say. 2. Lakh +. So. This, are some, of the numbers that are related to ib, and IM so. There. Are a couple of details that we have talked about now the fourth thing that we going to discuss is called the pros and cons so the. Pros that, we are going to discuss for IP now see, we would we would attempt to study the pros and cons of both dis couriers to be able to arrive at a better comparison so. What are the pros of investment-banking professional, they, are among some of the best compensated. Professionals. Engage in brokering complex, corporate, drills so there is a certain amount of glamour that is involved, in this, particular. Area. And there, are there, is a high compensation, that is also involved. Because. Of the high, demand and the, high. Profile it is it involves, and it, is exciting choice of car you see. Right from the entry level of associate, or analyst position with major market makers they receive hefty, packages, I mean hefty pay packages and the growth prospects that's, absolutely. It is high the growth prospects. Are high and. You. Can save with a fewer years of hard work they can rise up to the positions, of Vice President, and Managing Director, in a uniform, so, the growth is quick. Most.
Of The investment banking roles are cut off for go-getters as they are supposed to be out there and develop a great clan relationship, help, build our consensus, between both the sides in in any major corporate, deals and put, their negotiation, skills into work wherever. Needed of course they are enough perks, and bonuses to make all the hard work, I mean. Worth, it I mean it is worth it so, negotiation. Skills also play a very important role over here and you. Also improve, your networking, in this particular, area, your. Client. Relationship, also, improves, you. Are you get in touch with the top 10 eyes of the, country and around, the globe so. You, can say it's really a go-getter, thing but, there are some cons also which we should not neglect so. Let's get into the cons area of what exactly we are talking about here so, as goes without saying that it is an intensely, competitive field, with in higher risk reward component. Then most of the other careers in finance no. Doubt the parks are great but, on the downside, brokering. Major corporate deal this is no mean task and, you. Might be able to take it so you can see the things are around is, really tough, there is a cutthroat competition out. And it. Comes as no wonder, that it's more of the work alcoholic. Job than an average person with. Nearly 75, 200. Hours that you need to pitch in there, dude that is really, a great, deal of PC that you need to pitch, and with, the person the people are working a really insane working for 75 to 100 hours a week I mean that's, what a Tesla, owner. Elon. Musk is working you know amok musk is working hard like anything he works like 75, 80 90 hours a week, so. Even. In investment banking you need such number of hours to work and you're, you don't get time to relax and your. Personal, life is complete, less I mean, you don't you don't have really personal life and. There. Is extraordinary. Strain, that could you know basically adversely affect, the physical and mental well-being of an individual, see. The post credit crunch era Investment Banking has a witnessed, a kind of a downturn, all the, major corporations, continue to be on the lookout for a competent, professional however, major market slump could make things, worse for them I'll just give you a short example of 2008. A mortgage. Meltdown, if people. Have. Any idea regarding it so, at that time there was a clear or drop in the. Prestige. Of investment, bankers, now. Let's talk about the pros of. Investment. Management, see. Although traditionally, not considered, as a very attractive career option all of, that has changed in, the past few years as we, have discussed, in the course of this article the demand, for asset management continues, to grow and could very, well outpace. The investment, banking career as it choice both in terms of pay PAC's and growth so you can say over here the pay PAC's are again good and, the. Growth level, is also, high as, opposed. To the investment banking asset management is, viewed as more, of a secure, option so you can say you don't need to be worried about over here things because, over here you're like today, you are there tomorrow you're not there if announcement. Come you're, gone they may fire you if your, work isn't good or if you are not able to crack the deal you're. Gone tomorrow but over your things have been you know more much more secure, manner since their emanation is based on the amount of funds they manage this is a greater level of security and amount of risk is there see. Workers are definitely much more better over here there, you have a proper. Personal, life and this is one of the advantage, of the working in asset management role which makes it a little easier to, lead a balanced, life if. You talk about cons despite. Being a relatively secured career option these days professional. Certifications, like CFA, and SEMA, can do a world, of good in, terms of career growth how, about most of them most. Of these certifications, are comprehensive. In nature, especially. See affair and it, requires diligence study, on your part not, everyone, might be able to earn this professional, designation. So, to. Achieve this, particular, thing, there, are cons you. Can say that CFA, and SEMA. Are really, tough, courses, and you. Have to undergo such. Rigorous. Trainings. And rigorous, level. Of work, life so it has it it, has become increasingly, complex, field in the recent years and. An asset management professional, is supposed to have an advanced mathematical. Skills, which. Is not. Available with everyone so. Advanced mathematical, skills is one, big task and technical. Expertise in ish instead, of only an overall knowledge of the financial instrument and methods of investment so without being a technically, proficient you, it could, be difficult to grow as a professional let's. See on the work-life. Balance, so. If we talk about in terms of the. Work-life. Balance while. Making a choice of a career apart from the other consideration, including perks bonuses.
In Growth aspect it is always, important, to find out whether a specific kind. Of a role would offer you the idle work-life balance or not investment. Banking roles have a rather poor reputation as far as possible being able to manage work against a possible life is concerned the. Work hours are long intensive. And with, little time to relax for dedicated professional, while. You might consider, being. Called a work, alcoholic, as more. Of a compliment, it may not be easy to get around as I have discussed, already 75, 200, hours is the number a week. For, a for yours, on end and it is sure to take to all on your health and you, post life could take a backseat. In a slightly unhealthy manner -. Or does uneven kind of a work/life existence, you should consider making necessary, lifestyle, changes to ensure healthy. Existence, along with. A prospective career. Investment. Manager management, is more of a blissful choice, of a career in this sense not only the prospects continue to improve the, workers, are more or less balanced, for most, of the relevant job roles this. Makes it clearly better choice, as compared, to the investment banking as far as the work-life balance is concerned however. In the years to come there is no guarantee that this delicate balance would, be there I mean. This delicate balance would. Not be under threat but, even that is unlikely would. Be on the par with Investment Banking therefore it continues to remain more of a balanced career option so, basically everyone has the same person so what should we choose so I have an answer for that despite. All their, professional, advantages, and disadvantages. It may not be. That easy for you to make all important. Choice of career of course, an initial analyst of this area seems to suggest that Investment Banking is meant for the dynamic, and fast-paced, individual, who can exceptionally. Good and at, not only number crunching but developing, and managing valuable, client relationship, it. Is more of a role which demands you to go out of your way to get the job done and it certainly, pays off if you, end up on the right side for. Individuals with a keen interest in aptitude, for finance, but not so much on ongoing approach, Asset. Management's, could emerge, as a better choice developing. Short, and long term investment, strategies, and implementing, them to achieve the financial objective, of wealthy, clients may not everyone's, be cup of tea but, it is certainly does not sound bad I mean although some considered to be a somewhat, comfortable, choice as compared to the investment banking it is more of a point of view that of than a fact of course. It offers a better work-life balance when within with, on par career prospects, and perks but, that's not all to look for in a career you. Need to identify your calling. While. Trying to measure it with more, or less of an objective criteria, to make sure that. It works for you in the long run the, most important, thing is that you should be able to relate to the kind of a job role that, you are aiming for or be able to make it a six yes in the long term as they. Say, head. Is above the heart for a reason, but, what. Are we without a little emotion, thank. You everyone.