Brian Chiappinelli '92 gave a talk titled "The Great Divide: Understanding the 'Buy Side' and the 'Sell Side'" on October 21. The event was part of the new alumni-led Hamilton Investment & Finance Series which aims to prepare students for interviews, internships and careers in financial fields. The talk provided an extensive introduction to the variety of careers available on the buy side and the sell side, and emphasized the importance of Hamilton's liberal arts education to the students' success in finance, regardless of their majors.
According to Chiappinelli, the buy side consists of a group of investors with almost $37 trillion globally. These include both tax-exempt investments such as retirement savings as well as taxable assets such as savings accounts. Owners of the money range from individuals to foreign governments and include corporations and their pension funds, insurance companies, and large banks. College endowment managers are also buy side investors who own a share of these investments. According to Chiappinelli, this massive amount of funds has serious economic as well as political and social implications.
Advisors, brokers, mutual fund managers and portfolio managers are among those responsible for the allocation of these funds, said Chiappinelli. In their search for returns, they invest in sovereign debt, corporate bonds, equities, and currencies. They can also allocate their money to commodities such as gold, oil, corn or timber, or even to private companies or real estate. On the operational side, custodians, broker dealers and accountants are responsible for tracking and managing the money. Chiappinelli also explained the wide ramification of diverse types of investments using the example of corn. He mentioned that the increase in oil prices, which led to increased demand for corn-based ethanol, has driven up beef prices because corn is also used as feed. This illustrates the interconnectedness of different markets and is another reason why liberal arts students have an edge in the job market through their ability to "connect the dots."
On the other hand, the sell side includes originations, research, sales and trading, and asset management. Investment banking, which falls under the originations department, is responsible for bringing new products to the market mainly by helping companies go public. Bankers also actively broker mergers and acquisitions in return for fees and other profit sharing incentives. Research falls on the sell side and is responsible for giving investment recommendations on public stocks. Sales and trading takes positions on stocks to actively trade them at the request of investors whereas asset management involves the distribution of funds and the overseeing of investments.
Chiappinelli gave examples where buy-side players have sell-side operations. An example of such scenarios is the Ontario Teachers Pension Plan which manages the teachers' money, and at the same time invests in infrastructure projects in Canada. He added that several sell-side agents have also grown to cover buy-side operations and cited Goldman Sachs as a prominent example.
Then Chiappinelli described the skills and credentials that are most common on the buy side and sell side. Critical thinking and an aptitude for problem solving, combined with high energy and strong communication skills are the recipe for a successful career in the financial industry. Finally, he highlighted the importance of knowing oneself, adding that changing careers is common and is in fact a sign of a healthy attitude towards work.
-- by Tamim Akiki '08
According to Chiappinelli, the buy side consists of a group of investors with almost $37 trillion globally. These include both tax-exempt investments such as retirement savings as well as taxable assets such as savings accounts. Owners of the money range from individuals to foreign governments and include corporations and their pension funds, insurance companies, and large banks. College endowment managers are also buy side investors who own a share of these investments. According to Chiappinelli, this massive amount of funds has serious economic as well as political and social implications.
Advisors, brokers, mutual fund managers and portfolio managers are among those responsible for the allocation of these funds, said Chiappinelli. In their search for returns, they invest in sovereign debt, corporate bonds, equities, and currencies. They can also allocate their money to commodities such as gold, oil, corn or timber, or even to private companies or real estate. On the operational side, custodians, broker dealers and accountants are responsible for tracking and managing the money. Chiappinelli also explained the wide ramification of diverse types of investments using the example of corn. He mentioned that the increase in oil prices, which led to increased demand for corn-based ethanol, has driven up beef prices because corn is also used as feed. This illustrates the interconnectedness of different markets and is another reason why liberal arts students have an edge in the job market through their ability to "connect the dots."
On the other hand, the sell side includes originations, research, sales and trading, and asset management. Investment banking, which falls under the originations department, is responsible for bringing new products to the market mainly by helping companies go public. Bankers also actively broker mergers and acquisitions in return for fees and other profit sharing incentives. Research falls on the sell side and is responsible for giving investment recommendations on public stocks. Sales and trading takes positions on stocks to actively trade them at the request of investors whereas asset management involves the distribution of funds and the overseeing of investments.
Chiappinelli gave examples where buy-side players have sell-side operations. An example of such scenarios is the Ontario Teachers Pension Plan which manages the teachers' money, and at the same time invests in infrastructure projects in Canada. He added that several sell-side agents have also grown to cover buy-side operations and cited Goldman Sachs as a prominent example.
Then Chiappinelli described the skills and credentials that are most common on the buy side and sell side. Critical thinking and an aptitude for problem solving, combined with high energy and strong communication skills are the recipe for a successful career in the financial industry. Finally, he highlighted the importance of knowing oneself, adding that changing careers is common and is in fact a sign of a healthy attitude towards work.
-- by Tamim Akiki '08
