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Investment Banking Jobs: Financial People

This article briefly outlines a number of different “financial people” and their roles in financial industries.

Overview of Investment Banking Jobs

There are many “financial people” within the scope of investment banking jobs, each with a role in the world of finance. Since the financial industry is supervised, or “regulated,” their role reflects what they are legally licensed to do.

The Financial People: Types of Investment Banking Jobs

Investment Advisor

Most people know what a stock broker does, even if they only have a basic understanding of investment banking jobs. An investment advisor is someone who is licensed to buy or sell financial securities.

This includes stocks, bonds and mutual funds. An investment advisor must pass the Canadian Securities Course (CSC) and the Conduct and Practices Exam, both administered by the Canadian Securities Institute, to be allowed to buy and sell securities. Investment advisor only “provide advice” and make recommendations to their clients. They must have a client’s instruction or permission to act.

An investment advisor is usually a person who buys and sells on behalf of other people. Most investment advisors are “registered representatives” who actually work for an “investment dealer,” a company that “takes positions” or buys and sells securities for itself, or “for its own account.” This is an important distinction, because this means that your investment advisor’s company could be selling the stock you’re buying or buying the stock you’re selling for its own profit. Investment advisors earn their income from commissions on the securities that they buy and sell. Investment dealers also “underwrite” or assist companies in issuing securities for a fee. They “distribute” these securities through their sales force. The investment advisors receive a commission on the “new issue” securities that they sell to their clients.

Mutual Fund Salesperson

Another position in our list of investment banking jobs is a mutual fund salesperson: someone who is licensed to sell mutual funds only. They cannot sell stocks or bonds.

Usually, they work for a bank, a mutual fund company, or a mutual fund dealer. Mutual fund sales people receive a salary or a fee for selling funds from mutual fund companies. They can also receive a “trailer” or a percent fee for servicing clients from mutual fund companies.

Financial Planner

The role of a financial planner is less clear. Most people understand that the role of a financial planner is to develop financial plans for their clients. This would include examining the client’s financial situation, goals and time horizon. The financial planner would then recommend a financial plan, including suggested investment alternatives.

Unlike most other investment banking jobs, financial planners are not regulated by governments unless they work for a regulated financial services company. There is no requirement that financial planners, financial consultants, or financial advisers complete a particular training program. Anyone can adopt this type of title on their business card. There is a recognized designation, “Chartered Financial Planner” (CFP), which involves completion of a lengthy program and adherence to a Code Of Ethics. Anyone who uses this designation has completed this course and abides by the Institute’s Code of Ethics.

The real distinction in this area is the compensation of the financial planner. Some financial planners work only on an hourly fee basis, providing their advice independently for direct compensation from their clients. Other financial planners receive most of their income from commissions for selling financial products to their clients. The real way to differentiate between financial planners is to ask them about their compensation. There is nothing wrong with a financial planner receiving commissions, as long as it is disclosed, but it does make the advice provided less independent.

Investment Analyst

An investment analyst is someone who analyzes financial data and makes investment recommendations. An equity analyst analyzes stocks and stock issuers. A credit analyst analyzes bonds and bond issuers.

In terms of investment banking jobs, an investment analyst usually works for an investment dealer or a financial institution involved in investment management. An investment analyst who works for an investment dealer writes investment reports for clients of that firm. An investment analyst who works for an investment management firm makes recommendations to the the firm’s investment managers who actually select securities for their portfolios. Some investment analysts work for independent investment research firms or bond rating agencies, where clients pay a fee for the analysts’ research. There is no mandated training program for financial analysts, although the industry standard is the “Chartered Financial Analyst” (CFA) designation. Anyone using the CFA designation has completed a three year course and adheres to the Standards of Conduct and Code of Ethics of the Institute of Chartered Financial Analysts, which is based in the United States.

Investment Manager

An investment manager, money manager, or portfolio manager is someone who manages investment portfolios. This activity is regulated by each province’s security regulator.

An investment manager may work for a large financial institution, such as a bank, life insurance or trust company, managing its portfolio or providing management directly to third party clients. Managing money for other people is called “investment counselling.” Under provincial securities law, firms providing this service must have a “portfolio manager” registration and must license their advisors as “Portfolio Manager – Advising Representatives” (under National Instrument 31-103). There are educational and work experience; CFA charter and 12 months of relevant work experience or the Canadian Investment Manager designation and 18 months of relevant work experience.

Managing investment account without requiring client approval for actions is called “discretionary” portfolio management, which means that the investment manager will manage the portfolio independently, according to an established investment policy. The investment managers that most people are familiar with are mutual fund managers. These are investment managers who manage a pool of money called a “mutual fund.” The mutual fund company who sponsors the fund either employs the manager or appoints an external investment manager.

Overview of Investment Banking Jobs

Investment banking jobs cover a wide range of financial institutions, tasks, and markets. Regardless of your interest, finding a position that interests you shouldn’t be particularly difficult. If you’re looking to hire any of these financial people, be sure to check their investment history, qualifications, and management strategies.