Investment Banking Vs. Investment Management:Everything You Need to Know
Let’s talk investment banking vs. investment management. While both the processes essentially involve overseeing the transfer of funds from investors to companies, you must understand how they differ from each other. This is critical for individuals with an investable wealth of over $5 million, in particular. Our book, 7 Secrets to High-Net-Worth Investment Management, Estate, Tax and Financial Planning, contains in-depth information about investment management. If you’re interested, we can send you a free copy to help you better understand the world of investment.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Moreover, you can have a one-on-one conversation with a financial expert.We boast exceptional investment expertise and decades’ worth of experience working with affluent individuals with liquid assets worth $5 to $500 million. After addressing all your concerns, we will guide you on your wealth management journey by helping you make smart investment decisions.
Now, let’s start our discussion on investment banking vs. investment management.
Investment Banking vs. Investment Management
Investment banking is like deal-making. Investment bankers work with large companies as high-level analysts and consultants, assisting them with capital raising strategies. On the other hand, investment management is about asset allocation and investment decisions. This means that investment managers work on behalf of their clients to ensure they devise intelligent investment strategies and direct funds to equities, property, or debt securities.
Let’s discuss both in detail.
Investment bankers are responsible for assisting corporations with their financial needs. Large companies and governments partner with these professionals for the facilitation of financial transactions and capital or funds. Examples of these transactions include:
• Debt issuance
• Mergers and acquisitions
• Underwriting of new securities
• Initial public offerings
The main roles of investment bankers include conducting research on equity and security and making recommendations for the purchase, selling, and holding of assets. Investment banking companies also make the market by bridging the gap between buyers and sellers and providing liquidity.
In general, investment bankers begin their journeys as associates or analysts. With time, they climb the ladder and work their way up to the role of a managing director or vice president.
The scope of investment management is broader than investment banking. Professionals in this field deal with a wider client base. In addition to corporate firms, they work with:
• Pension funds
• High net worth individuals
• Insurance firms
• Mutual funds
Investment managers also enjoy more flexibility in terms of moving the funds around. Moreover, they can use a variety of ways to make money for their clients. They work with different types of funds, including gold and silver. These funds can be directed to:
• Hedge funds
• Debt securities
It is important to note that investment management involves fewer risks because of flexibility as compared to investment banking. Investment bankers have to deal with a lot of risk in the face of a financial crisis.
A market witnessing a fall in the price of securities may require investment managers to be extra cautious while making investment decisions. Nevertheless, they will still have options. On the flip side, investment bankers will either wealth advisory and capital-raising assignments or they won’t.
Interested in working with an investment manager?
Make sure you choose one with proper qualifications, training, and experience to ensure a pleasant experience. We understand that interviewing multiple professionals and choosing the right one for your individual needs can be overwhelming. This is why we urge you to request a copy of our book, 7 Secrets to High-Net-Worth Investment Management, Estate, Tax and Financial Planning.We are happy to give it away for free because we genuinely want to help you make smart financial decisions.
Is Investment Management a Promising Career?
Yes, investment management can be a promising and lucrative career.In fact, in the finance world, this profession offers some of the highest starting salaries. As long as an individual is ambitious, hardworking, and smart, they can expect their salary to grow quickly.
The US Labor of Bureau Statistics reported that the median annual salary of investment managers was $83,660 per year in 2020. According to Glassdoor, the average base pay for an investment manager in the US is $97,067 per year.The lowest they get paid is $51,000 and the best professionals earn up to $184,000.
Thanks to the introduction of new financial products, there is a growing need for knowledgeable and skilled professionals who have proper information about geographic regions. Strong employment growth can be expected. Tech-savvy professionals may find it easier to stand out from the crowd and land a good position after entering the investment management field.
Apart from the money, a career in investment management is quite satisfying. The role requires you to do a lot of problem-solving, which ultimately brings gratification. Even on days when you don’t get it right, you get the satisfaction of learning a lesson well.
To find out what investment managers do, feel free to book an appointment with our team. We will answer all your questions regarding investment banking vs. investment management.
Is Portfolio Management a Part of Investment Banking?
Portfolio management is not a part of investment banking. Let’s understand the difference between the two.
As mentioned earlier, investment banking revolves around raising funds for clients. On the other hand, portfolio management (also known as asset management) refers to managing the investments of a client.
In simple words, clients bring the money with them, asking portfolio managers to manage it for them. In the case of investment banking, clients do not have the money for an expert to manage. This is why investment bankers are supposed to raise capital for the clients.
Based on this understanding, it is clear that investment banking warrants more inputs since the expert is expected to bring business. Portfolio management allows you to learn more about investments.
If we talk about education, a portfolio manager has a lot to learn. While getting the right qualification is the key, they can do well with just an undergraduate degree in science, computer science, technology, or biology. They can also enroll in an MBA school and specialize in finance. Moreover, a course in portfolio management will give them brownie points.
Aspiring portfolio managers should also upgrade their education when they deem it appropriate and seek an internship to get some experience.
On the other hand, investment banking is more about corporate finance and business. Hence, investment bankers must possess an in-depth understanding of financial models and business, in general. They should go for an MBA in finance and do an internship in investment banking. An internship in an investment bank makes it easier to get hired for a full-time gig.
For further details on portfolio management,give our experts a call today.
Is it Hard to Get into Asset Management?
Asset management is about investing clients’ money into assets like bonds, stocks, equities, and real estate. The manager gets a fee or a percentage of assets under management. They may also get commissions for conducting market analysis and creating an investment portfolio for their clients.
Asset managers focus on optimizing the portfolio of their clients with an aim to increase their gains and reduce their losses.Our exclusive guide presents all the important information about investment portfolio enhancement in a comprehensible manner.
While managing the portfolio performance, asset managers ensure that all strategies are aligned with the client’s unique needs, financial situation, and risk appetite. They encourage people to take safe risks to protect their financial serenity in the long run. Our guide discusses all the must-make shifts to help affluent individuals enhance their portfolio’s performance.
Furthermore, asset managers try to maintain a balance between profits and risks. Their strategies and action plans aim to help clients preserve wealth so they can leave behind a financial legacy. If this topic interests you, please get in touch with us to get a free hardcover of our book, The Art of Protecting Ultra-High-Net-Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.
Without further ado, let’s explore the possible paths to get into the asset management field.
Working for a Small Mutual Fund or at a Local Bank
For people who want to enter the professional world quickly, working for a local bank or trust or a small mutual fund is the best option. Small mutual funds do not require you to get an expensive degree. If you have a graduate degree in finance or economics and a passion for making a name for yourself in the asset management field, you will be good to go.
Working for a Wall Street Firm or Big Mutual Fund
Some aspiring asset managers dream of managing millions and billions of dollars at a wall street firm or big mutual fund. However, before you take this route, you will need a degree in economics or finance from a well-known institute.
You can also apply for an MBA at a first-tier business institute or get advanced certifications if you have relevant experience working in small firms.
Start Your Own Asset Management Business
Starting your own asset management business is a big feat, which is why you should do it only when you have extensive market knowledge and expertise. You must also know how to run most, if not all, things smoothly.
To launch your own firm, you must first pass the required securities examinations. After that, you can start a financial advisory firm or work as an assistant for someone who has launched one. Before you go down this road, make sure you have an excellent ability to sell. Without it, you won’t be able to gain clients’ trust. The better your selling abilities are, the more you will be able to polish your skills to use the available money to make more capital for your clients.
As an aspiring asset manager, you can take any of the three career paths. Just make sure that you know what your qualifications are, what skills you possess, and how serious you are about pursuing a career in asset management.
Get in Touch with Financial Experts at Pillar Wealth Management
We hope that you understand the investment banking vs. investment management topic clearly now. We will be happy to clear any confusion and answer your questions regarding these roles. Please feel free to book a consultation with us.
Pillar Wealth Management is known for its multidisciplinary team of financial experts who are dedicated to helping individuals who want to invest $5 million to $500 million. Our wealth management expertise and exceptional customer service are the cornerstones of our success. We will give you trustworthy advice and guidance regarding investment management to minimize your costs and risks.
With us having your back, you can take steps towards a financially secure future. The best thing is that we do not believe in a one-size-fits-all approach. We will assess your financial situation and understand your needs and investment objectives to develop an effective plan.
Let’s join hands on the journey to successful wealth management!
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