Fancy working in an investment firm? Aside from gaining knowledge about what investment firms are about and how they operate, it can also be valuable to understand their hierarchy. Different investment companies have their structures; however, some standard features exist in most of them.
In this article, we will show you the order of a typical investment company. First, let us define what an investment company is.
What is an Investment Firm?
An investment firm is a company that manages the money of its clients by investing it in stocks, bonds, and other assets. The firm makes money for itself and its clients by earning a return on the investments it makes. Investment firms come in all shapes and sizes, from large banks to small startups.
Many different positions are available within an investment firm, each with its responsibilities. And as we said above, different investment companies will have their unique structure. But below are some of the common roles you may find in a typical firm.
1. Managing Director
A managing director is an investment firm’s most significant and influential position. They decide the company’s goals and work to achieve them. They are responsible for supervising the company’s other positions and ensuring growth.
Managing directors are only involved in deals when they are crucial. Instead, they reward and remove ineffective executive directors and directors.
Interestingly, the board can also replace the managing director if the firm is not doing well. A managing director can earn up to $1 million or more in a good year.
2. Executive Director
While the managing director manages the firm’s overall performance, the executive director manages various parts of the firm’s operations. The executive director typically reports to the managing director.
The executive director can do everything the managing director can except make final investment decisions. The managing director relies on them to make those decisions.
An executive director position is often responsible for supervising the managers that run the specific business divisions, but not always.
It is not uncommon for executive directors to earn as much as $500,000 or more yearly. But sometimes, it is also possible to make a lot less, especially in a down market or recession.
3. Director
A director at an investment firm is responsible for completing pitch books and managing client relations. They work with the executive directors to identify new business opportunities and conduct the necessary due diligence to support them. They also operate a team of associates who provide research support for the firm’s investment decisions.
A director at an investment firm must have a deep understanding of the financial markets and be able to communicate this knowledge to internal and external stakeholders effectively.
They must work with other team members to achieve the best possible outcome for the firm and its clients. Directors in an investment firm can earn up to $200,000 as a base salary, but the bonuses are where they really make their money.
4. Investment Associates
An investment associate is responsible for supporting the senior staff in an investment firm. They coordinate the work of analysts and communicate between senior staff and them. They also provide research and analysis support to the senior team. Associates can make around $150,000 yearly.
5. Analysts
Analysts perform extensive due diligence on securities before they are bought or sold. They investigate a company’s past performance, record, and finances to determine the risk and security of the investment.
Analysts compile detailed reports outlining their findings about the financial instruments they are examining. Their results form the basis of investment decisions, including whether or not to buy it and at what price. An analyst often makes between $80,000 – $120,000 a year.
There are many different positions available in an investment firm. Each role requires a different set of skills and knowledge.
However, all positions require excellent communication, analytical, and problem-solving skills. If you have these skills, you may be well-suited for a career in the investment industry.