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Investment Banking vs Asset Management | Know the Top Differences! - YouTube
Channel: WallStreetMojo
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hello everyone hi welcome to the channel
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by clicking the bell ican friends today we
are going to learn a topic a tutorial on
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investment banking versus asset
management many a times this thing
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happens at innovate students with the
with the employees they are not able to
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decide where they should go what is
right for them what exactly will be more
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beneficial for them so they they are
into this dilemma that is it is
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investment banking good or his asset
management good so my one single answer
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to them is what is your passion what you
are passionate about what exactly you
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want to do with your life so it's fine
you still are not clear about that we'll
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discuss that in India in detail see the
very basic of Investment Banking as well
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as the asset management it lies in the
very basic of Investment Banking as well
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as the asset management
it lies in handling the money okay many
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students find they find it very
challenging to make the career choice
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between the two oh into the competitive
salary package both of them offer the
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latest statistic river revealed that
invest banking as well as the investment
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management firm offer the highest
starting salary okay so that is good for
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graduates both are fiercely competitive
industry and they hire the best talents
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from the world's top university most of
the financial graduates or post
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graduates primarily they are MBAs or
they do cfa that is charter financial
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analyst
so let's see the conceptual difference
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between investment banking and asset
management now investment banking if we
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start with Investment Banking first
let's begin and write some points
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related to this and see what is there
inside this universal banking is that
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area of banking which assists in
creation of the financial fin capital in
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in the for its clients and and for the
institutions companies governments or
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other entity basically invest banking is
about providing in exchange of market
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change of money and you can say in
making it available to those who are in
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need of money for financing or expanding
the business from those who have
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this capital and are looking at means
for lucrative investment options so now
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let's see what is there exactly in
investment banking we'll see in the
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chart and let's understand that see over
here Investment Banking includes the
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research portion that is the equity
research Forex research bond research so
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many of those things are involved over
here
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where they make the analysis of the
price that they should pay here there is
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a sales and trading trading of
derivatives bonds Forex so all although
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those are part of the main operational
banking branch so over here the sales
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and trading is done raising of capital
includes your initial public offer
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follow-on public offer rights issue q IP
qualified institutional player placement
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splits reverse rates so all those of
raising of capital is included with your
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it this is this was is a part of the
equity as a part of the debt there is as
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a part of the equity it is called equity
capital market as a part of that it is
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called debt capital market so the debt
capital market basically includes in
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issuance of debentures bonds etc over
here the mergers and acquisitions takes
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place spin-off split off this
divestitures equity cow outs and so on
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and so forth including mergers and
acquisitions then there is restructuring
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and reorganization like corporate debt
restructuring there is a strategic debt
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restructuring and financial and business
restructuring which are at the part of
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the same so the first and the foremost
thing an investment bank they basically
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acts as an underwriting agent okay they
are basically known as the underwriters
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and you can say that they raise capital
via the debt or equity as I told you
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equity capital market and that capital
market involved in other IP or
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management activities like consulting
consolidation book building process
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framing of companies memorandum of
understanding and offer letter along with
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looking after the legal aspects of an
IPO see the investment banking division
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which is known as the IBD over here the
IBD the investment banking division of
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the bank also finds clients for the
public okay
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and the issue for for mutual funds for
insurance companies pension funds so it
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also assists the assist for mergers and
acquisition that is M&A by providing all
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the kinds of you can say additional
services to its clients including
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security research market making and
trading of equities derivatives fixed
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securities commodities and currencies
which is included in our sales and
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trading part an decoded research part
which we just saw in that chart seen
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inversion bank's activity can be further
be classified as one one can be called
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as the buy side
the another one can be called as the
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sell side okay so the buy side as the
name suggests flow is the buying advice
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to its clients which is like mutual
funds hedge funds and unit trust life
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insurance company private equity funds
and so on and so forth and that the sell
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side on the other hand involves trading
of securities for cash and other
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securities by facilitating transactions
or market making along with raising of
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capital through underwriters and
research activities since both the areas
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of functioning are conflicting in nature
you can say it is essential that the
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information does not cross from one side
of the to the other on to another hence
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an information barrier scripted written
in investment bank remember always
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remember one thing that it will be a
barrier over there and the there and it
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has been safeguarded to avoid any
conflict of interest that may develop in
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future let's see what is there inside
the asset management case let's see
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asset management so in case of asset
management the first C asset management
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is in the simplest form can be defined
as the business of handling other's
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money asset management investment
management forms are typically financial
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services company that invests their
clients money into securities if they
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invest in equities but they invest in
commodities they invest in derivatives
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send so on and so forth so there are
various in currencies also so this are
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the products in which they invest
financial asset management firms employ
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professionals who are exported handling
other people's money it involves
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managing money and handling investments
of clients you can say different clients
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have different requirements or I mean
absolutely they have required different
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requirements and a good asset management
looks into particular needs of the
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clients and recommends the investment
products based on the asset allocation
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to the plan see it is an exhaustive
field that involves planning
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recommending reviewing investments of
the plan's beat individual or companies
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handling money is a very tricky job to
require so you to be on a very toes
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always the basic aim of any asset
manager is to invest their money to the
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Avenues and with minimum risk and
maximum return a wealthy individual does
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not have does not have time and
inclination to manage his investment so
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you can say that's where the asset
management comes into picture an asset
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manager has the expertise into that
arena and earning more returns for them
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does enhancing the overall portfolio the
asset management forms also referred to
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as in the investment management
management forms you can see the
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investment uh they are known as
investment management forms employ the
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implement professionals who have
analytical skills and are able to assess
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which investment products would be
beneficial for them for the clients or
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to us to achieve the desired financial
objective within the specified
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guidelines the product in which the
professional invest clients money our
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mutual funds hedge funds pension funds
and retirement funds and so on and so
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forth see asset managers recommend
various products and vehicles of
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investments after doing due diligence
and assessing the risk appetite of their
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clients understanding their financial
goals and amount of the return they
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expect keeping the risk in mind so the
aim is to basically maximize maximize
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the return and you can say asset manager
forms hires the best talent from the top
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Univercities of the world they are
certain prerequisites that are needed
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for hiring which would be a degree in
finance primarily or CFA is really
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helpful or MBA degree will be really
helpful in that case though these
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degrees are not required for entry-level
jobs but as you think work-up of the
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corporate ladder in an asset management
firm these degrees are very beneficial
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the second most important requirement
would be being an expert at number
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crunching and you need to be really good
at number crunching and good with
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mathematics then really this is your
field and you can say analytical skills
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will help you in job along with the
strong communication skill since an
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asset manager profile needs to a lot of
interaction with the client at all the
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times so the job option in an asset
management form is a floor you could be
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you could be employed as a relationship
managers sales manager portfolio manager
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or financial advisor all of which are
extensive planned interactive profiles
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now let's see some of the education
skills that are required in IB and asset
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management let's see in both the
scenario how things may be worked out so
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IB an asset management the first see
the education as well as the skill
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required for both in the fields are the
same the firm looks for the candidate who
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have a flair number of and have a
knowledge in business disciplines and it
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finance economics accounting investment
analytics so candidates seeking to make
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a carrer in investing banking or asset
management should be ready enormously
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a tough competition from graduates from
top business schools and universities a
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degree life MBA is really good for
invest in banking along with relevant
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work experience is a prerequisite for
entry-level position in the form and it
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is extremely difficult to get hired by
major for most of which took four strong
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references from the respective
professional in the field hence neck
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networking over here will play a major
role and in breaking through the large
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corporate players having the right
contacts helps giving you the advantage
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amongst the other since the competition
is really stiff among the firms it also
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considers the internships as an extended
application process to scheme through
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the right candidate the skill set sought
by the company's majorly include like
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financial modeling DCF and strong verbal
and written communication skills
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analytical and problem-solving skills
interpersonal and intrapersonal skills
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negotiation is really a very important
skill that is needed and time management
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and attention to details advanced
mathematical and technical skills will
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be really helpful leadership skills and
go-getter attitude commercial knowledge
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and in-depth understanding of the
subject will really be helpful in case
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of asset management you really need to
be good with mathematics and with
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crunching numbers and CFA would be
really a great thing if you are in
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Europe then CIIA that is certify
international investment analyst it's a
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European version of American CFA so it's
a European version now let's look at
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some of the things regarding the
Occupational Outlook so Occupational
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Outlook is the next point over here this
was our education what is required the
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Occupational Outlook if you try and look
the job prospects in occupational group
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for investment banking as well as the
asset management has always been
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positive more investment opportunities
available with emerging market resulting
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in innovations of newer and very complex
financial products okay and making
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investment portfolios much more
multifaceted
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you can say investment portfolio and and
used earlier the US Bureau of Labour
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Statistics has estimated that entire
finance industry would have a growth of
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close enough to in between 12%
from 2014 to 24 24
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the outlook looks really positive as
well as the competitive for the industry
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which is projected to create new
positions in huge salaries in near time
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though both industry investment banking
as well as the asset management have an
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very uptrend you can say a really
uptrend in the market and they have a
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great career prospect but it generally
is believed that the asset management
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jobs would experience more growth so you
can say there will be more growth over
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here as compared to the investment
banking and the job would experience
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more growth in investment banking job
scenes as well as in the asset
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management since there is a lot to be
explored and new emerging markets where
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they have been opened doors for
investment management jobs also but
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there are some who still believes that
asset management industry is not treated
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as par with the investment bank industry
the top companies which are hiring our
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JP Morgan Morgan Stanley you have
Merrill Lynch Wells Fargo and so on and
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so forth let's see the salary prospect
in this particular end and see what
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exactly is the thing seen case of salary
Investment Banking as well as the asset
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management company are some of the most
top most paying the company of the world
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the median average is quoted around
80,000 for financial analysts which
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increases the manifold after years of
experiences average compensation for an
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asset manager reformed employee has has
increased over the last year up to the
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last decade around around to 2,63,000
in 2014 the investment banking analyst
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at an entry-level can expect anywhere
between 65,000 to 95,000 but this is the
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range along with the bonuses an
experience of 3 to 4 years of
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further increases the package to around
2 ,50,000 which is really a good
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number the pay gap between the
investment banking and asset management
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employees has been huge in 2004 nearly
half of which amounts to 1,68,000
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and 3,15,000 ok respectively if the pay
structure has changed drastically over
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the last decade with the salary gap
being narrowed down to several hundreds
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and thousands of dollars typically
$263,000 for asset management
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employees and $288,000 for
Investment Banking employees let's see
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some of the pros and cons and decide
what to
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choose see the pros and cons in case of
asset management she undoubtedly the
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careers of the invested banking asset
management I saw the most top bakeries
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in the world the salaries and bonuses
are so lucrative that it pulls graduates
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into the industry as for the US Bureau
of Labor Statistics median annual wage
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was close enough to $80,310,
$67,740,
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and $36,200 for financial
analyst financial specialists and all
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occupations in US economic respectively
the figure itself indicates the huge
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salary gap that exists between the
finance industry in all of the
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occupation of which also him indicate
the amount of the workload such
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professional have to undertake see the
senior level investment jobs are
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considered on three financial hubs of
London Tokyo and New York so NY London
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and Tokyo are the three area in which
they are been concentrated though the
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advent of the century and arrival of the
opportunity the emerging markets of the
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job have shifted to other Java graphical
location as well since the major
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concentration of the top level jobs is
still located in this three areas so a
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career in many any of one of the field
needs to be unfitting dedication towards
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one's job and which often neglecting the
needs of our family and friends in
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invest in banking the time you don't
have any family time the walking are
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close enough to 18 hours a day or
16 hours over here you still have a
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managed life
so let's decide which one to choose see
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this is the most difficult question and
cannot have a direct answer it's like
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comparing apples with oranges
so both the careers are very lucrative
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and the offer lot of opportunity for
growth and progress the walking odds are
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taxing and you can say having a
successful career in both of the fields
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however there are key differences which
makes it easier for prospective
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candidates to choose between two
couriers and depending upon your area
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the area of interest see investment
banking employees they really travel a
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lot and there is a lot of travel they
are they are in a limelight they work
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for long hours and you can say which is
not the case with the asset management
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that they have to bring the savers to
the borrows of which itself is a
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mentally stimulating tasks and requires
a lot of responsibility and
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accountability at the end of the
investment banker
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moreover the most key differences in the
salary package of the two is that invest
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in banking professional most definitely
gets higher salaries over here in case
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of investment banking which are
substantial in the long working hours
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absolutely
well asset management professionals
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manage money for individual corporations
at all which implies that they have to
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set a class they have a set of clients
to look after they have to oversee the
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individual needs of all the clients and
provide them with unbiased investment
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advice depending upon the requirements
so they have a balance in their time
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their money including the energy between
the very accounts and work in large
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group comparatively lesser individual
responsibilities compared to the
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Investment Banking pears so to conclude
that a career choice between investment
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bank and asset management you can say is
a matter of a personal choice and
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individual you can say interest so
however both a lucrative career one
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should - should not miss an opportunity
if one gets a break in any of them as it
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is opportunity of opportunities are less
and the aspirants are more so that's it
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for this particular topic if you have
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