Specializing in Finance and Picking Industry Groups
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- เผยแพร่เมื่อ 28 พ.ค. 2024
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Most people in finance love the idea of optionality - the idea that you can keep your options open as you progress in your career. However, specializing early can give you a distinct advantage when recruiting because you'll have a unique skill-set and fewer competitors. Some industries have highly specific analyses that are difficult to learn without years of training.
In this video, we'll talk about specialization in finance and rank the different investment banking industry groups based on how much they might specialize you.
0:00 - Intro
1:53 - Specialization in Finance
3:27 - Industry Groups
5:39 - Goals as a Junior (More Important than Industry)
7:22 - Conclusion
Peak Frameworks is a business career prep service started by Matt Ting and Patrick Fong, who have each spent several years working in investment banking and private equity in New York and Silicon Valley. Matt and Patrick met at Evercore, a top tier investment bank, and over the years have tutored and coached dozens of candidates to land their dream business job.
Matt Ting: / matthewting
Patrick Fong (HBS 2021): / patrick-fong-0b773041
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This was super helpful! Thank you!
Awesome stuff!
Great video. Would love to hear you speak about best practices for attention to detail / organization
I touch on this a bit in the "advice for new bankers video", but main things are: 1. print and check everything out, 2. work slowly and methodically, 3. work off of references whenever you can, 4. get into the mindset that organization and being careful is a skill in itself that you have to train.
th-cam.com/video/nnF3R44tpqo/w-d-xo.html
Great video! I know you come from an M&A background, but could you do a video on moving from LevFin to buyside (PE/Direct Lending/Credit Fund/even VC)? There's so little content out there for LevFin junior bankers compared to M&A...
Really good suggestion! I'll add it to the list and try asking around, but it is a hard topic to cover for me...
Great Video!
Hey Matt, Great videos and really helpful especially for those of us who will be getting started in the industry soon! When you mentioned researching a group's exits for the past few years, how do you recommend going about finding that information beyond just a LinkedIn search? are there specific key words/techniques you've found to narrow a search to alums of a specific group and bank? Thanks!
Nope, would just use LinkedIn and use the search function that enables you to filter for where people used to work. Then just click through all of the 'People also viewed'. Then try to talk to one of them over the phone if possible.
know you have your course and watched your last video, but could you talk about your personal on-cycle buyside recruiting process a bit more in-depth?
Will think about it, thank you for the suggestion! The more detailed version is definitely in the course.
Hey Matt, great video as always. I just happened to remember that in an earlier video, you said that you'd much rather prefer to have done your analyst stint at a top group at a BB (GS/MS) over an analyst stint at a top EB. Could you elaborate a bit more on why you would have rather made that decision? Also, would you have taken a top BB offer (GS/MS) even if you didn't get a top group over a top EB?
Also, would you say that a top group at a top BB still grants significant edge over top EBs if you want to stay in a high-finance career? Does the brand name help when recruiting for top PE/HF funds, or is the top BB only preferable/differentiable if you want to exit finance in the future and pursue other opportunities? As a rising sophomore in college, your insight would really be appreciated.
I'll first say that my language (if it was) shouldn't be so strong. I'd prefer GS / MS over the top EBs, but not by incredibly much. I think they tend to recruit marginally better inside finance and overall better outside of finance. There's still a certain cachet of the GS / MS brand when you're on the buy side because they've been consistently the best investment banks for several decades. I think there is also an intrinsic brand / ego element.
I wouldn't pick all groups at BBs though. I would only do industry group or M&A (so no ECM or DCM). And from a personal preference standpoint, I don't think I would do NR or healthcare for example.
One other factor I think is that IMO there are a lot more relationship hires at BBs. A lot of the top groups at BBs are like 1/3 relationships from what I've heard. I think the overall finance talent pool isn't quite as strong at BBs, so that also impacts recruiting success.
Hi, what to you think of real estate PE, is it possible or common for people to move to general PE or credit within their fund or go to another fund to a different team, or is it too specific and you’ll only be able to do real estate for the rest of your life? Great videos !
I think real estate is pretty specific, it's one of the more specific disciplines in my opinion. I know people who have switched into normal buyout / growth but they went to slightly "worse" roles.
Why real estate investment banking last ?
Could you do a video on private equity from LevFin?
LevFin and ECM don't place as well into PE, but the path isn't any different. Still will have to meet with headhunters, etc. I would personally try to switch to an M&A group after a year or so though.
Hi Matt. Thanks for the video. Whats your take on FIG group and the more interesting divisions under FIG in terms of deal flow. Lastly would FinTech still be under FIG?
FIG is a very strong group at many banks. I don't like it that much because the business models are unintuitive but a ton of rockstars come up through it. Will probably also make it easier to recruit for buyside if you want to stay in FIG (because it tends to be considered unsexy). I think FinTech categorization depends on the firm. At Evercore it was its own group and I think eventually got absorbed into tech.
@@PeakFrameworks Thanks for your response! I plan to recruit for FinTech group post-MBA (for Summer). I have heard some FinTech Groups are based off San Fran Office. How accurate is this. Do you have insights if some FinTech groups sit in NY office?
out of curiosity, what kind of exit opportunities do post-MBA IB associates have (buy side or in general), and what are some of the most ones (for post-MBA IB exit) you've seen in SF/NYC?
A lot exit to the buy side or corp dev. But most of their buy side opportunities are less traditional, i.e. pension funds starting new groups, first time funds, family offices in less attractive geographies.
I think the most common path is probably get one promotion to VP then leave to a client / similar comany to do corp dev.
Hi Matt, do you think specializing in LevFin opens good exit opportunities? I recently accepted an IB offer, but have to choose between ECM, DCM, and LevFin. The bank I’m at has a pretty big consumer arm, so was leaning towards LevFin
If you were picking between two similar banks, would you prioritise number of deals flow over deal size or viceversa?
For recruiting, I think I go with deal flow, because that increases the likelihood that you're on a live deal. It doesn't matter how big the deals are if you don't actually do any deals.
Generally from what I've seen though, the two factors tend to be pretty correlated.
Thanks a lot Matt.
What's your opinion on starting a career out of undergrad between big 5 Canadian banks vs Canadian Pensions (PE specifically) in terms of exit ops?
I think that RBC places the overall best. Then I would probably take CPP PE, then the rest of the Big 5 banks.
The thing is that CPP investing roles are in themselves pretty coveted. Lots of Canadians who were analysts at great US banks will go back to Toronto and work at CPP because there aren't enough buyside jobs in Canada. So I'd think what you want to do longer term. If you want to stay in Canada long term, you might have a better situation if you just go to CPP.
There was a time years ago where I think CPP roles were viewed as definitively more elite, but I think RBC has done a great job of growing their IB platform lately.
@@PeakFrameworks Thanks Matt, so I guess if I want to end up in the US doing PE at a megafund, I'd most likely have to get to a BB / EB office in the US, then recruit from there? Like you'll almost never see RBC/Big 5 or CPP PE exit directly to a megafund's US office(s), is that correct?
Most likely BB / EB office, but you could be in a Toronto one. Goldman Toronto places ridiculously well for example. RBC and CPP still place, but it's more opportunistic. There have been some CPP people on the credit side who have placed into mega funds, but less common for private equity.
for non-boutique banks advising on a capital raise in the MM space, do the banks lend off their own B/S? If so, how much of the total capital do they provide (i.e. 15-25%)? Does there need to be additional credit review if this is the case, and if so, who does the credit analysis? the analyst or does that go to the credit team outside of the IBD?
There is a lot of MM private credit firms that do the lending (Ares, for example)
This is such a specific question... But yes, I think most banks in the MM space will try to lend off their own B/S.
It really depends what % of the capital they provide, they could easily be the sole provider of debt. I'm inclined to think that there are fewer club deals at the MM because dollars are overall smaller. I.e. there are a lot of MM financing banks that will lend the entire capital raise.
All banks and firms are going to do their own credit reviews / analyses. If there are a bunch of firms all lending 25%, they're all going to have to go through their own credit approval process.
This is also true! Though I generally find that the private credit people like Ares, Antares, Golub tend to prefer larger check sizes. Depends what is meant by MM here
@@PeakFrameworks preciate it. The firm I work for does MM lending & IB in one group, with analysts also doing the credit analysis and I was curious if this the same at other companies or if there is usually a separate team that handles the credit review portion
Hey man, do these IB examples also apply to ER?
In terms of categorization, yes. ER tends to be even more silo'ed though. In ER, you're more likely to have a team that covers a very specific sub-vertical like aerospace or farming or Internet.
From a career perspective, ER tends to care even more about specialization than IB. A lot of your career opportunities out of ER will be based on your industry because you've become such a specialist.
what is your monitor bro? Looks massive.
It's actually two monitors! Two 24 inch Dells (U2414H). If you meant the speakers then I have JBL 305ps.
Real estate finance all day!
why?
Do IB's restricted on trading; forex n nifty!!?
Yes, you have to screen your trades with compliance and you can't do short-term trading.
Hi do u thnk itis easier for someone who has done engineering to enter finance
A pure finance / economics degree is probably easiest, but engineering is probably one of the best
@@PeakFrameworks i just got done with my degree in chemical and process engineering but I have alove for finance i am thinking of doing an MBA what do u think
Hi Matt, can you respond or make a video about salary and career differences between NY and LA. Can a first year IB analyst our of school in LA expect to make 150k all in like in NY?
Yo, you should check out the Geography / Recruiting video for a general picture of this: th-cam.com/video/eBc8CtBAH4g/w-d-xo.html
At top firms, I think the salary is standardized across geographies. You can easily check on h1bdata.info. What might differ is your signing bonus (which can be like ~$20k... or more for Centerview). Some signing bonuses account for geographic cost differences.
Answering more directly, yes I think LA you'll definitely make $130-$150k first year at the top firms ($150k is higher end of first year at any city). Main career differences is that a lot more of your work is going to be media focused and there are much fewer buyside opportunities. There are some decent PE opportunities but very few hedge fund opportunities.
Would you say that the different subgroups within industrials (Aerospace & Defense, Transportation & Logistics, etc) have the same level of optionality? What about the different subgroups of Healthcare (such as a Life Sciences group)?
I think most Industrials are pretty similar. I haven't noticed that much of a difference between them. Really comes down to deal flow though, if you're in a group without deal flow it doesn't matter.
For healthcare, it depends on if you're working with EBITDA based businesses. If you're just looking at pre-revenue companies, I think your opportunities would be different.
me also unsure