The Wolf of Wall Street is a movie adaptation of the autobiography of Jordan Belfort, a real-life investment banker on Wall Street, who led a band of young wannabes on a drug-fuelled raid of America’s richest one percent in the mid-90s, to create a fortune by selling stocks. The film both glorifies and condemns the subject – Jordan Belfort (played by Leonardo DiCaprio) for his rags to riches story from a talented struggling salesman to a successful investment banker, influenced by vices, only to eventually end up in prison for the pump-and-dump schemes that made him rich. While it is hard to separate fact from fiction in the movie, it has certainly managed to convince people around the world that investment bankers can be crazy and unscrupulous.
What does an investment banker do?
An investment banker works in various positions, and the nature of work depends on the position held starting as an analyst up till managing directors in the top echelons.
- Analyst: This is an entry-level investment banking position for which fresh graduates from the best B-schools are hired. A majority of the analyst’s work is grunt work or admin work that involves researching companies, and creating financial models in Excel and PowerPoint, for communicating ideas to prospective clients.
- Associate: An investment banking associate is usually an analyst with about 2-3 years of work experience. An associate oversees the work of his/her juniors, i.e, a bunch of analysts, and also communicates with the clients to gather requirements. At times, an associate might need to work alongside analysts and guide them in preparing pitch books and financial models.
- Vice–President: A vice president (VP) is a mid-level position that’s responsible for ensuring communication with clients on the progress of deals or transactions, and supervision of building of right financial models by analysts and associates.
- Director: A senior vice president directly communicates with the clients and acts as a viaduct between the clients and team in lower ranks.
- Managing Director (MD): This is the top most position in the investment banking hierarchy that’s also responsible for the bank’s profitability. The MD needs to be aware of the progress of all bank deals, and the impact of the politico-economic situation on bank operations. Most of his/her time goes into meeting new clients, prospective investors and relationship building.
What is a typical day like for an investment banker?
The work of an investment banker varies from day-to-day, and most of the work is done by the lowest echelons of the bank’ hierarchy, i.e., analysts and associates. Having said so, it is one of the most time consuming, stressful jobs. However, those who succeed in surviving through the adjustment period are often rewarded with long and lucrative careers. A typical day for an investment banker would most possibly seem like this:
Mornings serve as a prelude to the work in the later part of the day. The analysts and associates are mostly busy in checking their emails, and attending preliminary meetings.
Work is usually slow-paced and more systematic, relaxed as compared to the evenings.
Analysts and associates research on companies and cater to requests from senior management, usually the vice president.
The post-lunch sessions will see work in full-swing on the active or ‘live’ deal. The analysts can be seen rushing to piece together all the details and send updated financial models, pitch books, and presentations to their team’s associates and vice president, after the team’ meeting discussion with the client. Merger and acquisition (M&A) deals involve moving tons of money, and thus the bank cannot afford to commit little mistakes compromising anything.
The evening work entails review of morning work by associates and senior staff, and subsequent revisions by analysts. Several hours are spent in sifting through the material and creating comments, mostly revisions to pitch books. Analysts make revisions to pitch books and other materials by utilising the services of software, photoshop, and PowerPoint experts. This hectic cycle of revise-comment-rectify might recur twice or thrice before the night closes in. Speed and stamina are assets required of associates and analysts to ensure edits are done correctly within stipulated time.
As the debate on whether the Wolf of Wallstreet is real or not continues, it does provide some key lessons on the financial industry and investing. Most importantly, it teaches that representatives of financial firms tend to sales professionals, not financial ones. While these representatives are trained to sell investments, they are not really educated on the investment risks, and their suitability for a client’s portfolio, etc. The emphasis is on pushing products like mutual funds to the clients and get rewarded with commissions for generating sales. They would care less about improving the financial health of its clients. In such circumstances, online investment after some self-study of the products is a safe idea. Invest in mutual funds through reliable online platforms like Finserv MARKETS that offer a range of top-rated mutual funds in the fund market.
At Finserv MARKETS, you can open a free mutual fund account with no brokerage involved, and invest in mutual funds that suit your risk appetite and investment goals with zero commission. With the mutual fund account, you can opt for systematic investment plans (SIPs) of top-rated mutual funds offered by players like DSP, Aditya Birla, HDFC, L&T, etc., and also receive detailed portfolio summaries and insights into the performance of your investments.
Thus, the main takeaway from The Wolf of Wall Street is that financial services representatives are often better at selling than managing finances. You must be aware that there may be wolves who seem genuinely interested in helping you but really just want to close a sale.
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