Highest Paying Entry Level Jobs – The highest paying finance jobs can be very rewarding, but the truth is that not all finance jobs are created equal. Some backgrounds cost more than others.
Through this article, we will explain 7 different aspects of finance that do completely different things. We go through what you do in each field, what skills you need to succeed and the opportunities for income. All entry numbers in the section headings are entry-level possibilities. You can do more as you gain experience and move up the ranks, which we’ll cover below for some of the more structured areas of finance.
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Investment banking is one of the highest paying professions in the financial industry. They hire straight out of college where a 21-22 year old graduate can make ~$160k in their first year. So what do investment bankers do?
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For example, when Amazon acquired Whole Foods in 2017, Goldman Sachs investment bankers advised Amazon on the acquisition and Evercore investment bankers advised Whole Foods on the sale. This is known as mergers and acquisitions (“M&A”). The process of a company buying another company or selling itself is very complex, and companies must hire investment bankers to advise them during the process. Investment bankers help them plan transactions, negotiate terms, determine value (price tag), etc. You can think of them as real estate agents in this sense, except instead of brokering real estate between buyers and sellers, they broker. companies.
Large companies often need more money to finance their expansion than they have in their bank accounts. Take Tesla for example. Despite being a public company, Tesla spends a lot of money and needs more money than they have in the bank to expand their expansion plans. So they have to raise money. But where do they get the money? That’s where investment banks come in. Investment banks help companies raise the money they need from investors.
As major investment banks help large companies process transactions that are often in the billions of dollars, a small transaction fee of just 0.5% of a transaction’s value can be worth tens of millions of dollars. Naturally, since investment banks get a ridiculous amount of fees for the work they do, they also pay their investment bankers a ridiculous amount of money. It is one of the most lucrative careers anyone can have in finance.
Here’s what you can expect to achieve at each level if you’re at one of the major investment banks (eg Goldman Sachs, Morgan Stanley, J.P. Morgan):
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Not everyone who works in investment banking earns this amount. Only real investment bankers at investment banks get this salary. Other employees, such as supervisors and support staff, earn much less.
Private equity is arguably one of the highest paying financial professions anyone can have. A starting salary for a private equity professional (known as “Associates”) is often $200,000-$300,000 for a 23-25 year old!
Each year, only a few hundred people around the world are accepted into the top private equity firms. But once you get in, you make a lot of money. So what exactly do private equity firms do?
Private companies are investors. They invest in companies. It is similar to what you do when you buy shares in the stock market. But instead of just buying part of the company with stock, they buy the whole company. It’s good. They buy entire companies, often costing billions of dollars. They make money when their investment does well.
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Many large private equity firms use an investment strategy known as a leveraged buyout (“LBO”). They use leverage (financial leverage with debt) to buy out the original owners of the company. Hence the name, leveraged buyouts. We explain this investment strategy in more detail here.
The hedge fund investor role is one of the highest paid financial jobs. You can earn even more than private equity professionals in a year. This is because 1) hedge funds have lower costs than private equity firms and 2) hedge funds receive their return premium (HF equals PE interest) much earlier than private equity firms. Successful hedge fund managers earn millions to billions of dollars a year. In fact, most of those on the Forbes billionaires list are hedge fund managers: Ray Dalio, Ken Griffin, Steven Cohen, Bill Ackman, David Einhorn, Larry Robbins, etc. The list goes on.
Simply put, hedge funds are investors. They invest in publicly traded securities or things that are traded in the market and can be bought by anyone to the public. Equity funds invest in shares. Covered loans invest in debt. Other hedge funds invest in commodities or currencies, for example. Nevertheless, they tend to invest in things that they can easily buy and sell in the market.
If you’re a hedge fund investment professional, you’re basically researching investment opportunities for whatever your hedge fund focuses on. So if you work at an equity hedge fund, your job is to invest in stocks. It’s just like buying stocks for your personal portfolio, except you’re doing it with billions of dollars and you’re making a lot of money doing it.
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The word “stock” is just a fancy word for “stock,” so collectively, stock research means “stock research.” What the job really looks like. You research stocks. Entry-level analysts earn about $130,000 in their first year, making it one of the highest-paying finance jobs in an entry-level role. But wait a minute. Doesn’t this sound a lot like the work of a stock hedge fund?
You often do the same things as investment professionals at hedge funds: review stocks, read company reports, analyze financial data, talk to management teams and industry experts, etc. Although the work is the same, you do it in different positions. .
In equity research, you publish your research in a report that your company sells to clients. You work for your customers and educate them about different parks. You are selling your homework. This is why equity research is also known as “sell-side research”.
And unfortunately, selling your research reports to clients is not a viable business model like investment management. A company doesn’t earn as much as someone who manages and invests other people’s money. As a result, equity research analysts tend to earn significantly less than hedge fund investment professionals because their companies make less money than hedge funds. It has less to do with their own abilities and more to do with how much profit their employers make.
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The good thing about stock research analysis programs is that they often participate in the duties of a hedge fund investment analyst. Entry-level equity research jobs give you a great learning experience and create a solid foundation that can launch you into a career in hedge fund investing.
Fundraising is a very important task in investment companies. Simply put, investment firms (i.e. hedge funds, private equity firms) manage other people’s money. The more money they control, the more they make. And fundraising is the process they go through to find the money they manage. Do you see the logic here? No raising money, no money to manage, no investing, no trading.
This is why finance plays a very important role in hedge funds and private equity firms. This is a job that requires a combination of sales skills and financial analysis skills. Entry-level fundraising analysts earn around $100,000 to $120,000 per year.
You are a kind of salesman in the sense that you are trying to sell your company’s services to potential investors. You are trying to convince them that your company is a good investment institution that can make them more money. You have to convince them to give you millions and millions of dollars to invest. This requires strong interpersonal skills and the ability to think about the whole and tell a big story.
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But you also need strong financial analysis skills because you will be talking to investors about investment opportunities, companies your company has invested in, investment performance, etc. Just like insurance salespeople know their stuff about insurance, you need to know your stuff about economics. For this reason, many leading hedge funds and private equity firms hire investment banks or private equity firms for their fundraising tasks.
To be fair, the pay is not as high as investment professionals at these firms. But it’s still very profitable compared to other professions, and it gets higher and higher as you get older.
Private wealth management (“PWM”) primarily provides wealth advisory services to high net worth clients. Your customers are wealthy individuals or families. And you advise them how to manage their property. All from
