Morgan Stanley 9781582078908, 9781582078892

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★ MORGAN STANLEY ★

MORGAN STANLEY ★

'%%. :9>I>DC

★ INSIDER

★ MORGAN STANLEY’S COMPETITIVE STRATEGY AND INDUSTRY POSITION ★ ON THE JOB: ROLES AND RESPONSIBILITIES ★ CULTURE, COMPENSATION, CAREER PATHS ★ THE RECRUITING PROCESS

SCOOP: FRONT-LINE REPORTS ★

Insider

Guide Morgan Stanley

2009 EDITION

Morgan Stanley

WetFeeT 1518 Walnut St. Suite 1800 Philadelphia, PA 19102 Phone: (215) 546-4900 or 1-800-926-4JOB Fax: (215) 546-9921 Website: www.wetfeet.com

morgan stanley 2009 Edition ISBN: 978-1-58207-890-8

Photocopying Is Prohibited Copyright 2009 WetFeet. All rights reserved. This publication is protected by the copyright laws of the United States of America. No copying in any form is permitted. It may not be reproduced, distributed, stored in a retrieval system, or transmitted in any form or by any means, in part or in whole, without the express written permission of WetFeet. The publisher, author, and any other party involved in creation, production, delivery, or sale of this WetFeet Insider Guide make no warranty, express or implied, about the accuracy or reliability of the information found herein. To the degree you use this guide or other materials referenced herein, you do so at your own risk. The materials contained herein are general in nature and may not apply to particular factual or legal circumstances. Under no circumstances shall the publisher, author, or any other party involved in creation, production or delivery of this guide be liable to you or any other person for damages of any kind arising from access to, or use of, its content. All illustrations by mckibillo

Morgan Stanley

CHAPTER

1 2 1 Morgan Stanley at a Glance

5 The Firm 6 Overview

9 Industry Position 9 Organization of the Firm 11 The Bottom Line

Morgan Stanley

conte 2009 EDITION

3456 13 On the Job

23 The Workplace

33 Getting Hired

14 Investment Banking Analyst and Associate

24 Lifestyle and Hours

34 The Recruiting Process

24 Culture

16 Trader

25 Workplace Diversity

36 Preparing for Your Interview

17 Institutional Salesperson

26 Compensation

36 Interviewing Tips

27 Travel

37 Grilling Your Interviewer

18 Private Wealth Management Adviser

40 Investment Banking Lingo 44 Recommended Reading 45 The Numbers

27 Training 28 Career Path

19 Information Technology Analyst

39 For Your Reference

30 The Inside Scoop

nts

46 Key People and Places

Morgan Stanley at aGlance

1

At a glance The Firm On the Job The Workplace Getting Hired FOR YOUR REFERENCE

Morgan Stanley

Morgan Stanley at a Glance

joining the firm, your career path is determined by your interests and your performance. We evaluate each employee individually, and work with you to determine your projects, assignments, and progression.” “We’re structured and organized here, and looking for people who quickly get what we do and how we do it, and can start producing in that framework.”

Headquarters

In the Interview

1585 Broadway New York, NY 10036 Phone: 212-761-4000 Fax: 212-762-0575 www.morganstanley.com

•

Expect both qualitative and quantitative questions. Do your homework! Interviewers want to see that you have background knowledge of both the company and the industry.

•

Don’t be shy. Morgan Stanley has a competitive culture so it’s okay to strut your stuff a little. And come armed with plenty of intelligent questions. One insider told us he likes to talk only 25 percent of the time during the interview—guess what percentage that leaves for you?

•

Demonstrate the ability to focus on bottomline results.

Primary Competitors Insiders mention Goldman Sachs most often as top competition, but Citigroup Global Markets and Merrill Lynch also stand out in a group of major competitors that include American Express, Brown Brothers Harriman, Charles Schwab, Fidelity Management and Research, JPMorgan Chase, Lehman Brothers, MasterCard, Nomura Securities, UBS Financial Services, and Visa. Other competitors include ABN AMRO Holding N.V., A.G. Edwards, Credit Suisse Group, Deutsche Bank, E - Trade Financial Corporation, Mellon Financial, and Wachovia Capital Markets.

Key Differentiating Factors •

One of the oldest, strongest, and most prestigious Wall Street firms

•

A major underwriter and adviser to the technology industry

•

Not to be confused with JPMorgan Chase, though there are old family ties

In the Recruiter’s Words “We make a commitment to each employee to challenge you and to provide you with the opportunities to grow and learn within the firm. After 

W E T F E E T I N SIDER GUIDE

What Insiders Say “Being lazy and sitting on your hands won’t get you very far. To be recognized you have to show a willingness to learn, a willingness to go out on a limb. If they ask for X and Y, give them X, Y, and Z.” “Your internship could lead to a staff position, and a lot of people wind up staying in that same area. Don’t get pigeonholed. Explore other areas of the business as well, and choose one you truly love.” “People who have huge egos may find it difficult to succeed here, at least starting out. It’s fine to develop your ego here but it’s tough to come in with one.” “We hire bright, motivated candidates who have a strong interest in business and finance. We are eager to meet candidates from all backgrounds and disciplines. Training teaches you the basics, so technical financial skills are less important to us than your intelligence, character, and ability to work as part of a team.”

At a glance

The Career Ladder •

•

MBAs enter as associates; how long they stay in that position before they’re eligible to become a VP varies depending on their skill set. All new members of the information technology division enter as analysts, regardless of degree.

Year

Number of employees

2008

48,256

2007

55,310

2006

53,218

MBAs and JDs Estimated starting salary

$140,000

Signing bonus

$50,000

Performance bonus (July to Jan.)

$55,000

Relocation

Depends on need

Undergraduates Estimated starting salary

$100,000

Performance bonus (July to July)

$35,000

Signing/relocation bonus

Depends on need

Note: Compensation numbers are WetFeet estimates based on discussions with industry and company insiders; Morgan Stanley does not release this information.

On the Job

Personnel Highlights

Anticipated Compensation, 2007-08

The Firm

•

Undergraduates enter as analysts—those entering research are called junior associates—and typically stay two to three years.

The Workplace

Source: Fortune 500

Getting Hired FOR YOUR REFERENCE

WETFEET INSIDER GUIDE



The Firm

2

Overview....................................... 6 Industry Position.......................... 9

Organization of the Firm.............. 9 The Bottom Line..........................11

At a glance

Morgan Stanley

Overview

FOR YOUR REFERENCE

Getting Hired

The Workplace

On the Job

The Firm

Morgan Stanley has proven it can withstand

both the stampede of bulls and the lumbering of bears. The giant investment firm saw ups and downs during 2003 and 2004. But it demonstrated resilience and mended the fence after the tech bust, a sluggish economy, stock scandals, lawsuits, and the far-reaching impact of 9/11. The company’s finances were on the upswing, it made some positive changes at the top, and it was winning big business. But then came the credit crunch and subprime mortgage crisis late in 2007. The final quarter of 2007 went very poorly for Morgan Stanley and most of its competitors. It was so poor, in fact, that after Morgan’s first-ever quarterly loss of $3.6 billion, CEO John Mack declined to accept his annual bonus. The first six months of 2008 did not show much improvement. Morgan produced $2.6 billion in revenue from operations compared to $4.7 billion the previous year, a whopping decrease of 45 percent. This fumbling came on the heels of a $9.4 billion writedown on securities mortgages in 2007. Now the hope is that Morgan can continue the tradition of resiliency. If they bounce back this time, it will be with Mack calling the shots. When Mack took over, he had four primary objectives: to ensure the right people were in place and working on a united front; to create a feasible strategic plan to enhance profitability; to focus on client satisfaction; and to ensure positive working relationships with regulatory and public officials and key constituencies. In a July 2008 online article, Financial News argued that Mack has been successful on three of the four fronts. The one initiative in question is whether the proper strategic plan is in place. Mack explained his desire to take more risk as the new CEO in order for Morgan to increase profitability. Whether that was the best plan of attack is still undecided. But some already have strong opinions. 

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“I believe Morgan Stanley doesn’t understand risk management,” said Ladenburgh Thalmann Financial Services’ banking advisor Richard Bove in a June 2008 story in Forbes. Morgan’s investment banking franchise is still a power—perceived by many to be the second strongest behind Goldman Sachs—and it has bulked up its retail brokerage business and assets and alternatives in fund management. So far, this strategy has helped Morgan’s bottom line. Without a doubt, Morgan Stanley still remains one of the most respected investment banks in the world, despite its current struggles. It serves a healthy buffet of financial services through its three divisions: institutional securities, global wealth management, and asset management. In addition to traditional corporate investment banking such as underwriting and mergers and acquisitions assistance, the firm offers retail brokerage, which includes financial planning and investment advisory services, and premium services for wealthy individuals. Its asset management division provides both individuals and institutions with investment products and services. The Discover Card business was spun off as a separate entity as part of Mack’s strategy to focus on its trading and money-management divisions. Despite being hard hit by the mortgage crisis, Morgan maintained a strong reputation. It ranked 21st on the Fortune 500 list, down from 20th in 2007 (but still besting a 30th-place ranking in 2006) and ahead of top competitors Merrill Lynch (30) and Lehman Brothers Holdings (47). However, Goldman Sachs (20) did sneak one spot ahead of Morgan. Morgan’s popularity with job seekers also remains solid—especially among MBAs. Every year, research firm Universum ranks the most desirable employers on the basis of where MBA candidates say they’d most like to work. In 2008, Morgan Stanley ranked 15th, with 6.47 percent of MBA students putting the company on their top-five list overall. Morgan also ranked fourth in the financial services category.

Goldman Sachs

1

Google

2

JPMorgan

3

Morgan Stanley

4

McKinsey & Company

5

Lehman Brothers

6

Merrill Lynch

7

Citigroup

8

American Express

9

UBS

10

Management Changes

Recent Wins…

WETFEET INSIDER GUIDE



FOR YOUR REFERENCE

Clearly there were losses in late 2007 and early 2008, but Morgan did claim some victories. In May 2008, the Morgan Stanley Infrastructure Partners (“MSIP or “the Fund”) successfully closed $4 billion of equity commitments, exceeding its target of $2.5 billion. The fund raised its capital globally in North America, Europe, Australia, the Middle East, and Asia allowing Morgan to further diversify its portfolio and invest in more real assets. In April 2008, Morgan Stanley Real Estate was also able to raise $2.5 billion in equity commitments—63 percent caming from clients outside the U.S.—for the Special Situations Fund III (“Special Situations”). The fundraising aimed to take advantage of a drop in asset prices following the collapse of the U.S. subprime mortgage market. Special Situations provides real estate companies with prominent investment opportunities in the deleveraged market with pre-IPO capital.

Getting Hired

The market’s recent ups and downs have led to high turnover at the top of Morgan Stanley. One of the most notable changes was the naming of a new chairman and CEO after Philip J. Purcell resigned (or less kindly, was pushed out) in June 2005. The ousting came when eight former Morgan Stanley executives known as “the Group of Eight” called for Purcell’s removal. He eventually said it was in the best interest of the company that he step down and was replaced by John Mack, a 30-year Morgan Stanley veteran who had been an executive with the firm until he left in 2001. The disastrous final quarter of 2007 forced even more changes in the executive suites at Morgan. No longer around is former copresident Zoe Cruz, who was thought to be Mack’s successor. Cruz, who had been a Morgan lifer, was expected to be first woman CEO on Wall Street. Instead, critics of the move say her former mentor, Mack, made her the scapegoat for the company’s huge losses due to the subprime mortgage crisis. Cruz was forced to resign late in 2007.

The Workplace

Source: Universum’s IDEAL Employer Survey 2008 – American MBA Edition

On the Job

2008 Rank

The Firm

Company

Not long after, former coheads of institutional sales and trading Neil Shear and Jerker Johansson left the company as well. Executive vice president and chief financial officer David Sidwell retired at the end of 2007 and was replaced by Colm Kelleher, who was serving as the head of global capital markets. Christopher Carter, formerly vice chairman of institutional securities, succeeded Kelleher as head of global capital markets. Head of commodities John Shapiro is also set to retire at the end of 2008. All in all, Morgan has a relatively new look in 2008, and it probably needs the fresh faces to turn around the company. One of Mack’s first hires after the 2005 shakeup was James Gorman, the former head of Merrill Lynch’s retail brokerage business. Gorman was hired to be president of the individual investor group and became a Morgan copresident in December 2007. Gorman now oversees the institutional securities group. Walid Chammah was also named copresident in December 2007 and oversees the wealth management and asset management groups.

At a glance

10 Most Desirable MBA Employers, Financial Services

At a glance The Firm On the Job The Workplace Getting Hired FOR YOUR REFERENCE

Morgan Stanley And Losses… It should be no surprise that Morgan Stanley’s biggest and most public loss stemmed from the credit crisis. The firm was forced to make $9.4 billion in write-downs late in 2007. The company’s slumbering production forced an elimination of 1,000 jobs in February 2008 and a scaling back of its U.S. residential mortgage business and closing of the Advantage Home Loans unit in the U.K. In May 2008, Morgan eliminated 31 management and directorial-level positions. It was estimated by midJune 2008 that 4,000 dismissals had already been made across the company. Amazingly, it was nowhere near the worst of the Wall Street powerhouses. Merrill Lynch lost an estimated 5,000 employees, UBS 7,000 and Citigroup 16,000. And then there was Bear Stears, which was absorbed by JPMorgan and left almost its entire staff without work. Amid all this trouble, the last thing Morgan—or any financial firm for that matter—needs was more negative publicity. Unfortunately, a Morgan Stanley London-based credit derivatives trader incorrectly valued his positions and left the company with a $120 million loss in revenue. Morgan Stanley said it discovered the error in May 2008 and it became public not long after. The firm was forced to make a “negative adjustment” to its revenues as a result. The rouge trader was suspended pending an investigation. Morgan also had a former managing director in Asia busted for insider trading in July 2008. The financial institution also agreed to pay $50 million in July 2008 to settle claims of unpaid wages nationwide. The settlement covered all financial advisors, trainees, production managers and sales managers who live outside California and were employed with the firm between September 1, 2002, and April 21, 2008. Controversy really seems to follow Morgan a tad bit more than some of the other Wall Street firms. In 2004, Morgan Stanley and the Goldman Sachs Group tentatively agreed to pay $80 million to settle regulatory accusations that tactics used in awarding new stock offerings in 1999 and 2000 pumped extra 

W E T F E E T I N SIDER GUIDE

air into the stock market bubble. Each firm agreed to pay $40 million in the proposed settlement with the U.S. Securities and Exchange Commission. The probes included allegations that the securities firms accepted kickbacks in the form of higher commissions from investors who got the coveted IPO shares. In July 2004, the Associated Press reported that Morgan Stanley agreed to pay $54 million to settle a sexual discrimination case rather than stand trial on the federal government’s accusation that it denied equal pay and promotions to women in a division of its investment bank. The settlement, which covered around 340 women, was the second largest the U.S. Equal Employment Opportunity Commission had reached with a company, and the first with a major securities firm. In addition, according to a consent decree the company signed with the commission, Morgan Stanley—which did not admit to any wrongdoing—agreed not only to pay the money required by the settlement, but also to spend $2 million on diversity programs overseen by an outside monitor to improve the chances that women would succeed there. The company was also obligated to provide antidiscrimination training for managers and employees in the division that deals with stock trading for institutional clients.

Morgan Stanley has been hit especially hard by the

View from the Top Morgan Stanley is a publicly owned corporation headquartered in New York City. Nevertheless, the firm is approximately 25 percent employee-owned and still retains its partnership culture in the upper ranks of many divisions. John Mack is chairman and CEO of Morgan Stanley; Colm Kelleher is the executive vice president, CFO, and cohead of strategic planning; Walid Chammah and James Gorman are copresidents.

On the Job

struggling economy, particularly during the second quarter of 2008. They have failed to keep pace in the industry rankings with competitors and fell several spots in most categories. Only in high-yield debt and securitizations did Morgan show improvement from the same period last year out of all the debt capital market rankings. Morgan’s M&A practice was especially hard-hit. Once the industry leader—Morgan was first in most M&A categories in 2007—it fell in both “worldwide” and “U.S. announced and completed transactions” in the second quarter of 2008. Goldman Sachs didn’t miss the opportunity to stake its claim as the new industry leader in M&A work.

The Firm

Organization of the Firm

At a glance

Industry Position

The Workplace

Morgan Stanley’s Industry Rankings, Second Quarter 2008 Rank ’08

Rank ’07

Proceeds ($M)

Market Share (%)

Top Firm

Global debt, equity/equity-related

7

6

149,555.4

4.9

JPMorgan

Global collateralized debt obligations

3

10

3,304.3

9.3

Citi

Global high-yield debt

3

9

3.9

1,649.9

JPMorgan

Global common stock

4

4

15,025.4

7.6

Citi

Global equity/equity-related

4

2

22,585.3

8.0

Citi

Global convertibles

6

4

7,559.5

8.9

JPMorgan

Global IPOs

6

2

4,797.2

6.9

UBS Source: Thomson Financial, June 27, 2007

Getting Hired

Category

Mergers & Acquisitions Rankings, Second Quarter 2008 M&A Category

Rank ’08

Rank ’07

Rank Value ($M)

Top Firm

Worldwide announced

6

1

292,191.1

Goldman Sachs

7

1

254,971.6

Goldman Sachs

3

1

80,970.4

Goldman Sachs

U.S. target completed

4

2

169,428.0

Goldman Sachs Source: Thomson Financial, June 2007

WETFEET INSIDER GUIDE



FOR YOUR REFERENCE

Worldwide completed U.S. target announced

At a glance The Firm

Morgan Stanley View from the Middle

View from the Bottom

Since January 1997, Morgan Stanley has been structuring and restructuring its divisions along product lines, aiming to integrate its diverse businesses and benefit from the synergies a merger promises. The company’s businesses fall into three divisions: institutional securities, global wealth management, and asset management. For a detailed organizational chart, go to the firm’s website: www.morganstanley.com/about/ company/governance/orgchart.html

The amount of teamwork at Morgan Stanley depends in large part on your area and job function. Investment bankers work almost exclusively in teams. In sales, you work with others only as necessary to satisfy client needs. Research is traditionally solitary work, which has become even more so due to new regulations separating research from investment management. An analyst can expect to have significant interaction with clients and salespeople. But teamwork depends as much on your office as your area of work: Insiders report that regional offices can feel much more relaxed and collaborative than the New York headquarters.

Getting Hired

The Workplace

On the Job

Institutional Securities •

Investment banking: financial advisory services, capital-raising, and corporate lending

•

Sales, trading, financing, and market-making activities: equity securities and related products; fixed income securities and related products, including foreign exchange and commodities

•

Other activities: benchmark indices and risk-management analytics; research; principal investments

Second Quarter, May 31, 2008

$2,436 $488 37%

8%

Retail Brokerage •

Clients: individuals; small- to-midsize businesses and institutions

•

Products and services: brokerage and investment advisory services; financial and wealth planning services; annuity and insurance products; credit and other lending products; banking and cash management; retirement plan services; trust services

Asset Management

FOR YOUR REFERENCE

Diversified Revenue Sources*

•

Global asset management products and services: equity, fixed income, alternatives

•

Three principal distribution channels: a proprietary channel consisting of Morgan Stanley’s representatives; a nonproprietary channel consisting of third-party broker-dealers, banks, financial planners, and other intermediaries; institutional sales

10

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55% $3,625

Total Net Revenues = $6,510 million

Asset Management Global Wealth Management Institutional Securities * Net revenue composition excludes $39 million of intersegment eliminations. Source: morganstanley.com

The Firm On the Job The Workplace

The Bottom Line

At a glance

Expect a highly competitive atmosphere, particularly in your first few years. Investment banking is a success-driven industry, and the bottom line matters—a lot. Workloads are intense, but tend to lighten once you hit the VP level.

hold for a couple of years, Morgan Stanley may be a good choice. But you will not be alone: Competition is fierce for positions at 47th and Broadway, so take a look at all the options the firm offers. Remember, corporate finance is not the end-all and be-all. Consider lesser-known and less glamorous positions within the company. For example, many feel like research is a hidden treasure. It may not have the sex appeal of being an investment banker, but it has its perks. You can also think about asset management, a relatively new addition to the on-campus recruiting effort. Not as many people know about these jobs. Do your research, set your sights, and hone your sales pitch until it’s razor-sharp. That’s the Morgan Stanley way, and mastering it is your first step toward getting inside.

Despite the recent poor results, Morgan is one

Getting Hired

of the world’s top financial institutions. And while employees may not admit it openly, we get the sense that once inside Morgan Stanley’s numerous but well-guarded entry portals, they feel like the chosen few—those good enough to make it into the club.

INSIDER SCOOP “The firm breeds incredible people. They do incredible deals. When you tell someone you work at Morgan Stanley, they’re impressed.”

FOR YOUR REFERENCE

Whatever most interests you in investment banking, you can do it here—and people will return your phone calls. Clients choose Morgan Stanley for its prestige, muscle, and ability to deliver. The same applies to job seekers. If you’re assertive, want to be rewarded financially for your contributions, and don’t mind working hard and putting your personal life on WETFEET INSIDER GUIDE

11

On the Job

3

Investment Banking Analyst . and Associate.............................. 14 Trader......................................... 16 Institutional Salesperson............. 17 Private Wealth . Management Adviser.................. 18 Information Technology . Analyst........................................ 19

At a glance The Firm

Morgan Stanley

Investment Banking Analyst and Associate

FOR YOUR REFERENCE

Getting Hired

The Work place

On the Job

Investment bankers provide financial and

strategic advice to corporations, government agencies, and, in some groups, to local public entities. Morgan Stanley has industry groups like technology, for example, and product groups like mergers and acquisitions (M&A). Senior bankers cultivate strong relationships with top corporate management. Less experienced bankers (probably you, at least at first) do a lot of research and listening so they can better understand a company’s strategic objectives, provide what they hope is innovative financing to meet those objectives, and begin cultivating relationships within the upper ranks. Being an analyst is a good way to try out investment banking for a few years, since you’re not expected to know a great deal before you begin. You will, however, be expected to learn quickly, write

Being an analyst is a good way to try out investment banking for a few years, since you’re not expected to know a great deal before you begin. quickly, and swim in deep waters with corporate leaders. The analyst position is a good job for the selfdirected, but challenging for those who need a less severe learning curve. 14

W E T F E E T I N SIDER GUIDE

The associate position is the starting point. Once you’re in, it’s an uphill climb until you join all the other exhausted managing directors struggling for breath at the top of the mountain (or decide to abandon this trek for greener pastures). At first, associates may perform work similar to that of analysts, but as you gain experience, you’ll be expected to take on significant client responsibility and serve as the senior bankers’ right-hand person. Typical responsibilities for both analysts and associates include: • Underwrite initial public offerings or secondary stock offerings •

Issue debt

•

Advise on M&As

•

Assist in the solicitation and execution of assignments

•

Prepare presentations to maintain ongoing client dialogue

•

Conduct research and financial analysis

•

Build spreadsheet models

•

Draft offering memorandums

•

Assist the deal team in managing day-to-day logistics of an assignment

Duties specific to associates include: • Foster client relationships •

Produce market risk analyses

•

Develop planning approaches

•

Develop and update audit documentation

6:45 a.m. Stumble into shower after only four hours’ sleep.

8:30 a.m. Arrive at work. Attend division meeting. Gulp coffee to prevent head bobs.

1:30 p.m. Conference call with IPO client to discuss revisions to road-show presentation. Principal promised the client CFO that the documents would be shipped yesterday for approval, but forgot to tell anyone. Sneak out of the call to fax slides immediately.

10:30 p.m. Begin working on additional “pictures” for road show. Principal wants to show pictures to client as possible alternatives to the current batch. They would be terrible alternatives, but they sure make the current ones look better. Grumble loudly and create lots of little straw men. 1:30 a.m. Finish slides and have color copies printed for meeting tomorrow with IPO management. Stumble home in a daze. This IPO will be over soon.

gETTINg hIrED

2:00 p.m. After the call, talk with principal about other issues that came up. Have to say, he does have some good ideas for graphs that will make the story more compelling. Guess who has to come up with the new graphs, though.

ThE WOrk PlacE

11:00 a.m. Finish making revisions and continue working on an M&A project. Email library to download proxies from similar deals.

9:45 p.m. Find the error and get the model running. Calculate how many trips to Sun Valley the next bonus check could buy. Bag the teacher idea ‘til after the next bonus.

ON ThE JOb

9:00 a.m. Make corrections to an IPO road-show slide presentation. Principal has decided there are too many words per page. Remove extraneous sentences. To play it safe, add them to the notes section.

9:00 p.m. While eating dinner and talking to a friend on the phone, accidentally bump the keyboard and get “#REF!” throughout the spreadsheet. Becoming a teacher is starting to sound appealing.

ThE FIrm

7:45 a.m. Snooze on the subway for a few more fitful minutes.

7:30 p.m. Those lucky enough to leave early tonight are gone. Put in a new CD, adjust headphones, and crank a little harder on those numbers.

aT a glaNcE

a Day IN ThE lIFE OF aN INVEsTmENT baNkINg aNalysT

FOr yOur rEFErENcE

4:00 p.m. Stomach is growling ominously now. Take ten to pick up a pick-me-up—a smoothie and a super-grande coffee. Back at desk, start to work on valuation model for new M&A spin-off deal.

WETFEET INSIDER GUIDE

15

At a glance

Morgan Stanley

Trader

FOR YOUR REFERENCE

Getting Hired

The Work place

On the Job

The Firm

This category includes traders and sales-trad-

ers in equity, fixed income, and worldwide markets. Salespeople do what you’d expect: They sell ideas— about buying stocks and bonds, for instance—to institutional customers to generate business (and commissions). A trader will buy and sell securities for a client or for the firm’s own account (this is called proprietary trading). A sales-trader acts as a liaison between the institutional salesperson and the trader. It’s up to sales-traders to help clients buy and sell larger quantities at advantageous prices. Some traders function as market-makers, buying and selling securities out of the firm’s inventory to facilitate trades for customers in OTC (over-the-counter, typically small) securities where markets are less liquid than on the exchanges. In the fixed-income area, a market-maker may be referred to simply as a trader.

A Day in the Life of a Trader 6:15 a.m. Arrive at work. Spread the paper out and reread the article about interest rates that didn’t make sense on the half-conscious ride downtown. Drink another cup of coffee. 7:00 a.m. Listen to the equity division’s morning meeting while checking Bloomberg for any big movements in the overseas markets. Soon after, get a cheat sheet that summarizes important meeting highlights. Tape up sheet so it’s visible all day. 7:30 a.m. Drink another cup of coffee. Attend morning meeting for fixed income. Analysts drone on about economic data releases and the bond market, then they all weigh in with comments on the new municipals, corporates, and Treasury auctions. 8:00 a.m. Everyone back at their desks and phones. Don’t want to miss any important news. 16

W E T F E E T I N SIDER GUIDE

Minutes count—sometimes even seconds make the difference. 9:30 a.m. Gulp a warm soda, consult trade research reports, finish the soda, scan the broker screen. Execute orders given “on the open.” Call clients with trade executions. Receive order to buy 200,000 shares of a stock “not held.” Make announcement to the rest of the floor and try to shop the order around. Maybe the firm would sell some out of its own account? Someone several seats away impolitely disabuses everyone of that notion. 10:00 a.m.Drink another soda. Place part of the order with a client at the current market price. Start buying the balance in smaller lots. 10:15 a.m.Talk to a friend about dinner plans. Hang up when someone yells that he has a seller for 50,000 shares at my price. 10:25 a.m. Think about calling friend back. In midthought, four people bark in my direction simultaneously. Scramble to make sense of what they’re saying—traders don’t like to repeat themselves. Answer them, never really disengaging from the ongoing stream of numbers on the broker screen. 12:30 p.m.Complete order. Lunch delivery arrives. Try not to spill ketchup on my keyboard. 1:30 p.m. Crisis as new kid on the desk confuses “buy” with “sell.” Drink another soda. Correct the situation and even make a small gain. Impress on kid how rare a save like that is. (In truth, feel sorry for him; everyone’s been there.) Guide him through the trade research reports, but not for long—need them for this next trade.

5:00 p.m. Head to the gym for a much-needed endorphin release.

6:30 p.m. Head out the door.

Institutional salespeople at Morgan Stanley sell

8:30 a.m. Back at the desk. Start calling certain clients with this morning’s news, in hopes of being the first to relay it. Note: Traders and salespeople need to know much of the same information, which is why both often attend the morning meetings. 9:30 a.m. Market opens. I’m hoping clients will remember my charming face, competence, and excellent service, and will correspondingly direct all their trades through this desk. Sometimes they call with orders; usually they just call the trader directly. Continue making less time-sensitive calls throughout the morning. 12:00 p.m. Road-show luncheon at the Plaza. With Morgan Stanley’s guidance, the WETFEET INSIDER GUIDE

17

FOR YOUR REFERENCE

the firm’s security offerings to large institutional clients such as pension funds, hedge funds, mutual funds, and insurance companies. Associates enter either the institutional equity or fixed-income division and then join a product specialty (or desk) within that division. Candidates are usually expected to have at least their Series 7 (FINRA license for a general securities representative) and Series 63 (required for most individuals who solicit orders for any sort of security in that state) licenses. At the beginning, associates usually work with a senior salesperson and share responsibility for a specific group of institutional client accounts.

8:00 a.m. Fixed income’s morning meeting. Here the analysts comment on economic data releases and the bond market’s likely reaction. They also have lots to say about new offerings in municipals and corporates. Jot down the stuff on the corporates.

Getting Hired

Institutional Salesperson

7:30 a.m. Tune in to the equity division’s morning meeting. Analysts comment on companies that have reported earnings. Then they change their buy and sell recommendations—usually they just add or delete an adjective; they seldom change the actual verb. Lots of chat about newspaper articles that might raise questions from clients. A capital markets rep talks about the progress of certain corporate finance deals, the shape of the subscription book, and the timing of a certain issue.

The Work place

5:45 p.m. Return to desk, make a small dent in mountain of mail and literature, and wrap up the day.

6:45 a.m. Arrive at work with coffee and The Wall Street Journal.

On the Job

4:45 p.m. Clean up mess on the desk. Enjoy a quiet, uninterrupted phone call to my cellular provider. Patiently explain for the 13th time that I need the plan with coverage in Europe.

A Day in the Life of a Salesperson

The Firm

4:30 p.m. Make sure all confirms match tickets. Heart palpitations resume. This time it’s not the caffeine. Check the floor to see if the confirm on 50,000 of the 200,000-share buy order fell under the desk. There it is. Resume breathing.

At a glance

3:00 p.m. Call friend back to arrange dinner plans. Hang up on friend again. Make several calls to confirm “good ‘til cancel” orders.

management of this company has streamlined its presentation on strategy, past performance, and future growth prospects, shortening it from three hours to a little more than 30 minutes. Know with a sinking heart that the sales pitch is still too convoluted to get investors excited about buying shares in the upcoming IPO.

Getting Hired

The Work place

On the Job

The Firm

At a glance

Morgan Stanley

1:15 p.m. Share these thoughts with other people on the desk. Get stuck with writing the first draft of a memo aimed at shortening the presentation even more. 1:30 p.m. Spend afternoon making maintenance calls, arranging a one-on-one meeting with the IPO company on behalf of a client, and finding out from the trader how many clients executed trades today. 4:30 p.m. Clean up four-by-four area of desk. Call a client to confirm plans to see the Knicks game tonight. 5:15 p.m. Run to the gym for a quick workout before schmoozing. 6:00 p.m. Grab dinner before heading to the game. Maybe these good seats will convince the client to buy on the IPO after all.

Private Wealth Management Adviser Morgan Stanley’s securities business is divided

by type of client: institutional or individual. The individual securities business is then divided into investor advisory services, independent investor services, and private wealth management. Investor advisory services and independent investor services are the brokerage part of the business, serving almost 4 million clients with a sales force of nearly 10,000 brokers. Private wealth management (PWM) is a separate group specializing in financial advice and services for high-net-worth families and foundations. The role of a PWM investment adviser is to build relationships with wealthy individuals—often senior management of the firm’s corporate clients—and then manage their assets using Morgan Stanley’s range of securities investment and trading services, complex hedging strategies, and in-depth research products. Analysts work both as a group to support general PWM projects and individually as apprentices to senior PWM professionals. All new PWM associates start with a four-month classroom training program in New York. After training and certification exams (Series 31, 7, and 66), associates join their particular office, are assigned to work with experienced investment representatives, and immediately begin to build a book of business.

A Day in the Life of a PWM Associate FOR YOUR REFERENCE

4:00 a.m. Alarm goes off. No time to snooze. 4:45 a.m. Drive to work. Parking is expensive, but it’s worth not waiting 30 minutes for the bus at this time of the morning. 18

W E T F E E T I N SIDER GUIDE

8:00 a.m. Start making calls to prospects. Always try to make calls in the morning and late afternoon, because that’s when most people are at their desks.

1:00 p.m. Write letters to prospects who aren’t responding to phone calls. Thankful for the letter-writing workshop during training—it’s hard to stand out from the crowd on paper.

5:30 p.m. Time to think about heading home—it’s been more than 12 hours. One day, there

trades, corporate mergers, new financings—require an exchange of information, either within Morgan Stanley or between the firm and a client. Morgan Stanley’s information technology division makes the collection, exchange, and analysis of this information possible.

INSIDER SCOOP “You’re not in a support role here; you definitely influence the bottom line.” As Morgan Stanley continues to expand its use of technology, the IT division’s recruiting goals have increased. The division’s formal career program has a wide range of opportunities for undergraduates, MBAs, and advanced-degree candidates. Some positions require significant programming experience and knowledge of specific languages or platforms; others are open to candidates with less-technical backgrounds. In general, a position in this department means your office would work closely with the strategic project management office to determine how to translate client needs into system requirements and designs. Most new trainees join the distributed systems group, the mainframe group, or the technical service group. WETFEET INSIDER GUIDE

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FOR YOUR REFERENCE

4:00 p.m. Good time to make phone calls again. Prospects are at their desks, wrapping things up for the day. They may even answer the phone themselves.

Most financial transactions—stock .

Getting Hired

12:00 p.m.Lunch: PB&J sandwich at the desk. Tweak the to-do list.

Information Technology Analyst

The Work place

9:30 a.m. Research leads gleaned from papers this morning. Check to see if another Morgan Stanley investment adviser already covers any of the prospects—I can’t call prospects already covered by one of my colleagues. If no one’s on them, get approval to approach the client.

9:00 p.m. Time for bed. Queue up The Office on my DVR. May be the best invention ever. I’ll probably be asleep before it’s over.

On the Job

7:30 a.m. Plan to-do list for the day. Never very realistic, but it’s good to have goals.

will be dinner out with clients to look forward to. But for now, it’s back to the homestead.

The Firm

5:30 a.m. Scan The Wall Street Journal for leads. Pay particular attention to CEOs retiring and to buyouts of companies that leave executives flush with cash. Then check Bloomberg for any morning stories that aren’t in the Journal.

At a glance

5:00 a.m. Got milk. Eat cereal at desk while listening to morning research call from New York. It’s 8:00 a.m. there—this is when I really pay the price for living in San Francisco.

aT a glaNcE ThE FIrm ON ThE JOb ThE WOrk PlacE gETTINg hIrED FOr yOur rEFErENcE

Morgan Stanley Within each group, trainees work on projects for one of six information technology areas: • Engineering •

Application development

•

Service

•

Enterprise risk projects

•

E-business technology

•

Coverage group (the liaison between IT and the rest of Morgan Stanley)

1:30 p.m. Ten new emails arrived while at lunch. Reply, reply, reply. 2:00 p.m. Brainstorming session with new project team for research delivery system. Everyone is expected to contribute. Sometimes the newest analysts have the best ideas for how to structure the program or write the scripts. 4:00 p.m. The afternoon’s a good time to code. Put headphones on and turn off email notification. Better to keep focused and concentrate.

8:15 a.m. Arrive at work with The New York Times in hand. While computer boots up, head to the cafeteria for coffee.

5:30 p.m. Hands are cramped from typing. Decide to find a team member and discuss that usertesting plan for the intranet application. Go looking for a conference room with a whiteboard on which to sketch out the plan.

9:00 a.m. Finish coding what was left over from last night. Want to get this out of the way before the meetings and phone calls start.

6:30 p.m. Productive session. Swing by the VP’s office to see if he wants to shoot some hoops. Plan to meet him at the gym in 15 minutes.

a Day IN ThE lIFE OF aN IT aNalysT

10:00 a.m.Status meeting. Report to manager on progress of new intranet application for research division. She suggests that one of the other trainees can help plan the usertesting session. 11:00 a.m.Back at my desk. While morning coffee is still in effect, work on impact analysis for intranet application. If all the implications for the new program are understood before coding begins, there’ll be a lot less anxiety during rollout. 1:00 p.m. Head out for a quick lunch with two other group members. It’s good to step away from a project sometimes—things seem clearer after a bit of fresh air.

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At a glance

The Firm

On the Job

The Work place

Getting Hired

FOR YOUR REFERENCE

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The Workplace

4

Lifestyle and Hours..................... 24 Culture........................................ 24 Workplace Diversity.................... 25

Compensation............................. 26 Travel.......................................... 27 Training...................................... 27 Career Path................................. 28 The Inside Scoop......................... 30

At a glance The Firm On the Job The Work place Getting Hired

Morgan Stanley

Lifestyle and Hours If you’re a trader, the market hours govern your

workday, so yes, you get to have a life. If you’re a salesperson, you’re probably pretty content. (You’ve got to love eating out and coping with some highmaintenance clients, but hey, it’s still a life.) If you’re a research analyst, you sometimes manage to have a half-life. But if you choose to be an investment banker, you’re going to be without a life for quite a while. Most banking analysts can expect to be called in to work at any time, from any place. And they should be ready to pull all-nighters. At higher levels, the hours improve because of the continual influx of fresh faces eager to pay their dues burning the midnight oil. While the hours might be long, the intensity will level off in a couple of years. Across the firm, the high-pressure lifestyle does have some benefits. One insider says, “Everyone is very supportive, very understanding. When you’re jamming, people really want to help you out. I’ve made best friends here.” Hours will vary, depending on your division and the projects you’re assigned. For investment bankers, the first two or three years as an analyst or associate often take their toll. You’ll be lucky to leave at 8:00 p.m., and sometimes you won’t leave at all. Working the occasional Sunday is expected as well. Many insiders say the worst part is the unpredictability. You may plan on dinner with friends, but an hour later you’re still at work getting slammed. It can be frustrating after a while.

FOR YOUR REFERENCE

INSIDER SCOOP “Sometimes this industry can feel like a fraternity rush, where management wants to make you go through the same initiation, the same pain they did. It’s like a medical residency, but it doesn’t always wind up teaching you more.”

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So what makes it all worth it? One insider tells us, “You’re in an elite group of people, so even though you’re sacrificing in the short term, in the long term you’ll be in a position no one else is.”

Culture “Hardworking.” “Considerate.” “Teamwork.” “Self-starting.” These are some of

the first words insiders say when asked to describe the culture at Morgan Stanley. Dig a little deeper, and you’ll find one overarching theme: Morgan Stanley’s people are about breaking the curve. Simply performing your duties won’t win you any big bonuses. Doing just what’s expected may allow you to keep your job, but moving up will be a challenge. More effort and drive are required.

INSIDER SCOOP “One thing I like is that management tries to break down barriers and makes a concerted effort to do collaborative projects. So we tend to talk to analysts in a lot of other sectors. People are pretty enthusiastic about it.” Nevertheless, personalities are intense. The lifestyle is intense. And as such the competition for jobs is fierce, with many recruits falling into the overachiever category. Job seekers who aren’t comfortable tooting their own horn may find this star culture a little daunting. On the other hand, if you’ve always known how to steal the spotlight, Morgan Stanley is a great place to strut your stuff. Obviously you’re going to get a lot of egos. You get that at all the big firms. It’s the nature of the business. If you’re working in a group outside of investment banking, you may have a kinder, gentler experience. But in general, the atmosphere is congenial. One insider says of her early days, “Everyone was extremely nice. People would come up and introduce themselves if they saw that you were new to the office.”

Although Morgan Stanley, like its peers, has

In February 2008, Hispanic Magazine named Morgan Stanley one of the top 10 companies for Hispanics to work for.

In January 2008, The Women President’s Educational Organization recognized Morgan Stanley for the firm’s commitment to the success of women’s business enterprises.

•

In 2006, Morgan Stanley scored a perfect 100 percent on the Human Rights Campaign Foundation’s annual Corporate Equality Index.

Opportunities for Women Despite the well-publicized settlement of a $54 million sexual discrimination lawsuit in July 2004, that same month then-CEO Philip Purcell told the Associated Press that the company was proud of its commitment to diversity. As part of the lawsuit, the company reported that, beginning in 2004, it would spend $2 million per year on diversity training and antidiscrimination programs. Insiders say the happiness and success of women at Morgan Stanley depends in large part on the division they work in. According to some, sales is a meritocracy and apparently a very good place for women to be, whereas M&A is considered a more difficult environment. Insiders also report that the technology group has an unusually high male-tofemale ratio. One tech insider says, “When I first came in, there were no women except the support staff and me.” Yet the company has made strides in its recruitment of women, which accounted for 34 percent of new recruits in 2002, vs 26 percent in 1999. As it is, alternative work arrangements (AWAs) are now available for women—and men, if applicable— trying to balance family and work, and job sharing is also possible for those with a certain amount of WETFEET INSIDER GUIDE

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FOR YOUR REFERENCE

•

•

Getting Hired

not been known for its diversity, in recent times it has enhanced efforts to seek, train, and hire qualified minorities. These increases have gained the company positive notice: • In May 2008, Asian Enterprise magazine named Morgan Stanley as one of the “Top Companies for Asian Americans” for the fifth straight year. • In the spring of 2008, Conceive magazine named Morgan Stanley one of the “Top 50 Companies” for fertility and adoption.

In January 2008, the Human Rights Campaign Foundation named Morgan Stanley one of the “Best Places to Work for GLBT Equality.’ ”

The Work place

Workplace Diversity

•

On the Job

“very professional, polite, organized;” it’s also “extremely regimented, stuck on whether you’re an associate or vice president and what your career track should be. That can be oppressive.” Be that as it may, Morgan Stanley is an elite place with elite opportunities for people who have big goals and know how to play the game.

In February 2008, Hispanic Enterprise magazine named Morgan Stanley one of the “Top 50 Corporations for Supplier Diversity.”

The Firm

“It’s Wall Street,” says an insider. “No one comes here— if they’re honest—without the idea of making a lot of money or getting famous.”

•

At a glance

Morgan Stanley is also conservative. Perhaps it’s a little less clubby and old-boy exclusive than it used to be, but the firm is still fairly button-down. One insider says it’s

aT a glaNcE ThE FIrm ON ThE JOb ThE WOrk PlacE gETTINg hIrED FOr yOur rEFErENcE

Morgan Stanley seniority. In I-banking, regardless of how flexible the firm’s policy is, it’s always a dicey matter getting maternity leave and handling the demands of being a working mother. Women everywhere face falling behind in business, merely because many have to take time away from the office. Morgan Stanley is probably neither better nor worse than other firms, nor any closer to figuring out all of these work/life balance issues. Things are improving, though, as the firm was named to Working Mother’s 2007 list of the “100 Best Companies for Working Mothers.” Research has more women than most divisions and more flexibility in the upper ranks. But getting there is very difficult, insiders say. The career track to becoming a full-fledged research analyst is a long one, and turnover is low, indicating a highly desirable working environment.

quick through this perk, with patience you’re likely to profit over time. For salary details, see the “Morgan Stanley at a Glance” chapter at the beginning of this Insider Guide.

VacaTION Employees typically receive three to four weeks of vacation per year. Because activity in sales and trading is fairly predictable, vacations can be scheduled with some certainty. Many employees schedule vacations in August because it’s usually a slow month.

> tIP The NYSE is open the day after Christmas and the day after Thanksgiving. As the new kid on the block, you’ll be expected to cover for the more senior people, most of whom take those days off.

coMPensatIon Compensation,.as.with.most other factors,

varies by division. Traders usually receive a salary and a bonus, and most salespeople enjoy the same. Over time, your bonus can represent a large percentage, or even a multiple, of your base salary. In some divisions, such as private wealth management, investment advisors are compensated on the basis of the percentage of client assets under management. The upside is great, but so is the risk. Investment bankers are on a bonus system, and as in sales and trading, the bonus can be substantial. It’s derived from a pool of division revenues, but it’s also meant to represent your contribution relative to the total. So although you’d expect that the more big deals you bring in, the higher your bonus will be, you’ll find this is true for senior officers more than it will be for you. One of the advantages of working for a public company is that you have the chance to earn shares of Morgan Stanley stock; the number of shares you receive is based on salary. And though on an analyst’s or associate’s salary you won’t get rich 26

W E T F E E T I N SIDER GUIDE

One of the big drawbacks to an investment banking career reveals itself at vacation time. Murphy’s Law dictates that just as you’re about to leave on your trip, the dormant deal will become active, and you’ll have to cancel your plans, come back early, or spend more time on the phone than on the beach. After all, new pitches are being made even during the slowest months, and if a project or client becomes active, you’re expected to be on it. No banker buys nonrefundable tickets or pays for hotels in advance.

PErks There’s the usual range of investment banking perks, such as free dinner after 8:00 p.m. and on weekends, and a free cab ride home. Probably the biggest perk for undergraduate hires is the Kaplan-run GMAT prep course that Morgan Stanley pays for and holds onsite. Free prep courses are also available for employees (usually in research) who want to sit for the CFA (certified financial

At a glance

Training The company has formal training programs and

•

Management skills

•

Technology training

•

Financial product training

“Some things that seem like perks at first just exist because you have to be here so much. It gets old after two or three times.”

For the most part, though, you’re expected to dive in headfirst and swim. People are around to help, but don’t expect someone to hold your hand through every experience. At the same time, Morgan Stanley does believe strongly in continuing education, and career advancement depends partially on the education you pursue after you are hired.

INSIDER SCOOP “I have several friends who’ve traveled to Paris and Milan on IPO road shows; it can feel very glamorous. Though to be honest, they’re working so hard they don’t have a lot of time to enjoy the traveling.”

Your first year at Morgan Stanley is considered your training year. All analysts start with a four-week classroom training program that consists of accounting, finance, and computer classes taught by a combination WETFEET INSIDER GUIDE

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FOR YOUR REFERENCE

Undergraduates

Getting Hired

with a salesperson to have dinner with a client. Salespeople may travel quite a bit if their clients are based outside New York. Investment bankers also travel a lot to see clients and prospective clients. Research analysts travel extensively during the Institutional Investor marketing season (from January through May, they court institutional investors to secure votes in the pub’s annual analyst rankings). Then there are the road shows—brief and exhausting whirlwind tours to tout an IPO or other underwriting. Road-show entourages usually include management of the company making an offering and the investment banking team, and can expand to include the research analyst and the salespeople marketing the deal. These shows travel to large cities in the U.S. and Europe, where you stay in nice hotels and eat in fancy restaurants. But don’t expect to take in the local culture. Shuttling from airport to cab to hotel and back again makes every city seem the same, even the most exotic ones.

The Work place

Traders generally do not travel, except perhaps

INSIDER SCOOP

On the Job

Travel

a firmwide orientation session followed by specific programs that vary by group. But on-the-job training dominates at Morgan Stanley. The firm maintains four training centers worldwide—in New York, London, Hong Kong, and Tokyo. In addition, programs are offered in many of its U.S. and international branches. Training includes classroom instruction, business speaker presentations, self-study (including desktop computer sessions), and one-on-one coaching and feedback. More than 250 classes are offered each quarter, in four general categories: • Professional skills

The Firm

analyst) exam. And since Morgan Stanley donates money to several museums and cultural centers in Manhattan, your Morgan Stanley ID card will gain you free admission to some and discounts at others. A word of caution, though: Don’t get too excited about this perk if you’re in investment banking— you’ll seldom have time to use it.

At a glance The Firm

Morgan Stanley of professors and Morgan Stanley management. Tests are occasionally given, and grades are shared with each analyst’s group head. Not to worry, though: “It wasn’t like if you failed, you were going to be fired. It’s more to gauge your progress, to make you study,” says one first-year analyst. During this formal training period, incoming analysts are encouraged to get to know each other. The four weeks are peppered with social activities such as hanging out at clubs or bowling.

FOR YOUR REFERENCE

Getting Hired

The Work place

On the Job

INSIDER SCOOP “At the end of training, they took us to the Hamptons for a day. It was this big old mansion, and we had the run of the tennis courts, beaches—everything. It was a really good way to connect with all the people you’d met during training and make plans to keep in touch.” Once you’re on the job, you’ll see a wide range of transactions and services and learn a lot about how investment banking works. The training books tell you how the business works on a conceptual level; from the inside, you’ll see it from the bottom of the ladder. Do a good job on those bottom rungs—topranked analysts are chosen for third-year positions (maybe in other offices), in which they’re more likely to be tapped for the most interesting work.

MBAs The formal training program for associates is similar to the undergraduate program, and it has a similar mix of classroom time and fun social events. It begins with an initial session during which associates take the Series 7 and other required exams. Also, senior management and bankers from various divisions talk to you about the work they do. The program for sales and trading lasts three months and includes registration exams, trading simulations, and presentation workshops. Most formal training programs are held in New York. 28

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Career Path Opportunities for Undergraduates If you’re graduating from college, an analyst position can be a great way to get banking, research, investment, or operations experience. Morgan Stanley actively recruits college graduates for its analyst positions and college juniors and seniors for its intern programs. Check with your university’s career resource center for open positions. Applications are also available online. However, keep in mind that regional offices often recruit locally and on their own. So if your university doesn’t have a specific affiliation with Morgan Stanley, you may still want to contact offices in your area to see what they have to offer. The analyst position is for two or three years only (except for equity financing services), at which point you are expected to leave to get an MBA or pursue other job opportunities. If you really want to stay longer, ask about the accelerated career path, an extremely selective program for those who want to become associates without going to B-school first. Another undergraduate position is financial advisor, which has a three-and-a-half-year program. The first two years you get a base salary between $24,000 and $48,000, depending on your experience and prior earnings. You earn straight commission after those first two years, so be prepared to ramp up your efforts. According to one insider, there is healthy income potential even during those base salary years—sometimes as much as six figures. The income potential can be a broad range, and is limited only by your own desires. One thing is certain, though: To make those big bucks, you must be comfortable, efficient, and effective on the phone, since that’s how you’ll spend the majority of your time. No one expects you to know everything about the job before you begin—particularly if you have a liberal arts background, which is fairly common—but insiders say that related background knowledge is very helpful.

You need a knowledge of finance and math, and you must be intuitive with numbers.

OPPOrTuNITIEs FOr mbas

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gETTINg hIrED

Morgan Stanley, like many other investment banks, uses a summer internship program to screen potential full-time hires among both undergrads and MBAs. You may apply to be either a summer analyst or associate. Many summer associates get offers and a majority accept, leaving fewer positions available for full-time candidates who did not work at Morgan Stanley over the summer. This is the inside track. The beach may look mighty tempting after so many months at school, but if you’d rather have a great job than a great tan, this is the way to go. Insiders, including one who didn’t get an offer, speak highly of the summer program and are quick to point out that even if you decide to go elsewhere after graduation, you’ll get points for having that Morgan Stanley summer position on your resume. Applications become available in September for the following year, so begin the process early.

ThE WOrk PlacE

summEr OPPOrTuNITIEs

ON ThE JOb

The Morgan Stanley associate program offers MBAs a career path in areas such as equity research, investment banking, and investment management. Each area provides a formal training program in the basics, followed by on-the-job development, which includes several rotations or assignments during the first two or three years. Beyond that, the sky’s the limit for associates. In investment banking, you’ll move up the ranks by positioning yourself for a promotion every three to four years. In research, junior analysts start under one senior analyst; with experience, they gain responsibility for their own list of stocks and begin publishing reports. In sales and trading or private wealth management, advancement is more directly tied to performance rather than time on the job.

The company relies heavily on its training programs for final placement, so it can be harder to get a job if you were trained elsewhere. However, in I-banking, lateral hires from other firms are possible, particularly if you have the industry or product expertise the firm is currently looking for. In sales and trading, those without an MBA can get hired if they’ve developed a strong client base at another firm. And PhDs, other advanced-degree holders, and industry experts can find opportunities in the research division. The same goes for research analysts from other firms, especially as these folks increasingly act as free agents, switching firms and selling their services to the highest bidder. Candidates with an advanced degree interested in IT must apply to the information technology analyst program.

ThE FIrm

For a list of the areas where the company accepts undergrads, check out the firm’s recruiting website: www.morganstanley.com/careers/. To get contact information for your regional office, go to www.morganstanley.com/global_presence.html.

OPPOrTuNITIEs FOr OThEr aDVaNcED-DEgrEE aND mIDcarEEr caNDIDaTEs

aT a glaNcE

> tIP

At a glance

Morgan Stanley Power People

The Work place

On the Job

The Firm

π International Flavor The firm’s largest foreign offices are in London, Hong Kong, and Tokyo. Worldwide, the company has more than 600 offices in 30 countries. Fluency in the local language

may be required—it certainly can’t hurt! In London, the company’s European headquarters, fluency in a second European language is also helpful.

International Opportunities

INSIDER SCOOP

The firm is growing internationally, so if you have relevant experience in foreign markets, you’ve got a valuable asset. It’s not uncommon for high-performing analysts and associates who started in the New York office to transfer to an international office after a year or two.

“When people hear that I work at Morgan Stanley, they say, ‘Oh wow!’ Goldman is probably the only other firm that elicits that response.”

The Inside Scoop What Employees Really Like

Getting Hired

Brand Value

FOR YOUR REFERENCE

Some insiders say the best part of a job with Morgan Stanley is the opportunity to work with an extremely motivated, bright staff. This has its benefits when the workload increases—working with top-quality employees in a safe and congenial environment lets you relax, knowing your hard work won’t go to waste. In general, Morgan Stanley’s people impress everyone with their intelligence, presentation, and background. The only drawback is that they sometimes seem to find themselves just as impressive as you do.

Morgan Stanley is, in the words of one insider, “a kick-ass name.” In addition to its social currency, the company’s leading position in the industry can carry a lot of weight on a resume, since, according to insiders, the firm takes integrity very seriously, earning respect throughout the industry. One banker says that once you’ve worked at Morgan Stanley, “you’re golden.” Some will tell you it’s worthwhile to take any job to gain the Morgan Stanley imprint. Doors to wherever you choose to go next will open wider and more readily. “It’s the name everyone grew up with,” says a former Morgan Stanley employee. “It definitely gets you in the door.”

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Location, Location, Location One of the many anomalies of finance is that you don’t have to be physically on Wall Street to be on the Street. Morgan Stanley’s midtown Manhattan

“It’s the name everyone grew up with. It definitely gets you in the door.” —Robin Roccapriore, former Morgan Stanley insider location on Broadway between West 47th and 48th streets makes commuting more convenient than heading downtown to actual Wall Street. Says one insider, “It’s easy to get to from where we live on the Upper East and West Sides of Manhattan. Compared with the people I know who work downtown, it’s a lot easier.” And if you like theater, music, and good restaurants, the revived Times Square location makes nightlife easy

out for each other, the cutthroat mentality of some Morgan Stanley divisions may not be to your liking.

INSIDER SCOOP

School of Hard Knocks

Getting Hired

One banker says Morgan Stanley “manages by attrition.” The message “You may be better off elsewhere” comes through loud and clear if you aren’t performing. Exceptional dedication to the job is expected, as are very long hours. To be an I-banking analyst or associate here is considered hard-core compared with other firms. The attrition rate is accordingly high for new analysts who have trouble with the pay-your-dues atmosphere or who find out that banking is not what they bargained for. You can either work extremely hard and enjoy the rewards, or fall short of company goals and start looking for another job.

The Work place

of the sheer thrill of working on, as one insider puts it, “marquee deals” that are the talk of the industry and make waves in the mainstream media. As a new analyst tells us, even first-year hires are bound to see plenty of action, “I’m a first-year, and I’ve already worked on two major deals!”

This battleship does not turn on a dime. Morgan Stanley has more than 45,000 employees spread throughout three divisions and 30 countries worldwide. The resulting layers of management and red tape are unavoidable and pervasive. “It’s a huge behemoth,” says one insider. “It has a lot of bureaucracy, a lot of politics. If it were a little leaner, it would work more effectively.” Says another, “The bureaucracy can be a bit oppressive at times.”

On the Job

“If you like theater, music, and good restaurants, the company’s revived Times Square location makes nightlife viable, especially when the workload lightens and you’re not chained to your desk.”

U.S.S. Morgan Stanley

The Firm

“You do find some ‘me first’ kind of people who won’t put their projects aside to work with you.”

The Sweet Deals Morgan Stanley has its fingers in a lot of honeypots, and you’re likely to receive exposure to a variety of high-level deals, which range into the hundreds of millions—even billions—of dollars. Employees talk

At a glance

and viable, especially when the workload lightens and you’re not chained to your desk for quite so many hours. You may find a different atmosphere at the regional offices, where the management at that location really influences the extracurricular activities.

Watch Out! No More Mr. or Ms. Nice Guy FOR YOUR REFERENCE

“People here are…well, how shall I say this… competitive,” says a second-year associate. “It’s very fast-paced, and no one’s at their best [under constant stress].” In other words, if you’re looking for a warm and collegial work environment where everyone’s looking WETFEET INSIDER GUIDE

31

Getting Hired

5

The Recruiting Process................ 34 .

Preparing for Your Interview....... 36 Interviewing Tips....................... 36 Grilling Your Interviewer............ 37

At a glance The Firm On the Job The Wor place Getting Hired FOR YOUR REFERENCE

Morgan Stanley

The Recruiting Process “It’s imperative to get on the interview list at your

school early,” says one recent hire. If Morgan Stanley doesn’t recruit on your campus, it’s still possible—and even more important—“to meet people at receptions, talk to them later, set up informational interviews in New York City, and call alumni from your school.” Regional offices can also recruit in their own districts, so you may need to contact them directly. The summer associate recruiting process is particularly speedy, another insider says. Often the process begins with an on-campus interview, followed closely by an intense day of formal interviews, which some insiders refer to as “Super Saturday.” The firm will often contact you after the first interview to either invite you back for a second round or to say “No thanks.” Second-round interviews are usually at Morgan Stanley’s New York headquarters but may also be conducted at regional offices. There may be a third round, depending on how thorough the second round was. The process for full-time associates is similar, but may move a bit slower. Interviews are notoriously rigorous. Offers and requests for a decision can come within a few days, so be prepared to come back swiftly with your answer.

INSIDER SCOOP “Morgan Stanley was grueling…11 interviews in one day. They really grilled me and tried to get my wheels spinning.” Because Morgan Stanley is actively expanding outside the U.S., any international experience you have is valuable. During the interview process, you should highlight foreign citizenship (or a work permit, if you have one), any foreign languages you speak, or any relevant international contacts you might have. 34

W E T F E E T I N SIDER GUIDE

Undergraduates Recruiters are looking for what one insider calls a passion for finance, so any past experience in the financial industry is helpful. Read about the industry, and try to set up informational interviews with friends of friends so you can ask all those questions you’re too embarrassed to ask when it really counts. Remember, your interviewer talks to many candidates, almost none of whom have full-time work experience. One recent veteran of the interview process says, “Know the strategy of the firm and how it’s different from the others. Both Morgan Stanley and JPMorgan asked me about this in their final rounds.”

INSIDER SCOOP Do your homework. I find that people are very focused on interviewees’ background knowledge—not only of the firm but also the industry as a whole. Don’t simply rely on the fact that you are bright. Even if you’re interviewing for a job outside of a client-facing role, dress to impress. Amy Chestnut, a recruiter with MacArthur Associates in Philadelphia, says, “Even for an IT role, you want to look polished,

“Even for an IT role, you want to look polished, as if you could be in front of clients or other colleagues. Buy a nice suit. Morgan Stanley is not as laid-back as other IT firms.” —Amy Chestnut, recruiter, MacArthur Associates, Philadelphia

mbas

ThE FIrm

summEr INTErNs

gETTINg hIrED

mIDcarEEr caNDIDaTEs

ThE WOrk PlacE

Morgan Stanley, like many other firms on the Street, has maintained its recruiting for summer internships despite recent layoffs. The firm would not provide estimates for summer hiring, but in the 1999–2000 recruiting season, the firm hired approximately 300 college sophomores and juniors, and first-year MBA students for formal internships in a variety of divisions. The program is an extremely effective way to get your foot in the door for full-time employment—which means that competition for these spots is growing. The key to landing one of these prized positions is to make an early start. Some of the recruiting is done on campuses in conjunction with the company’s full-time recruiting process. So if you’re a student on a campus where Morgan Stanley recruits, start looking for announcements in the fall.

ON ThE JOb

MBAs on campuses where Morgan Stanley recruits have as good a shot as any for an associate position at the firm. MBAs who did a summer internship at Morgan Stanley or even at one of the firm’s competitors are well on their way. If neither of these descriptions fits you, there’s more work to be done. Start early and network, network, network. And did we mention to start early? Informational interviews are a good way to get your foot in the door and sell yourself, but you’ll have to find a willing contact in the department you care about, because the firm doesn’t give them as a rule. Try calling recent alumni or giving other contacts a shot. The worst they can say is no, and if they do, just call someone else. Your goal is to get somebody at the firm to attach your face and name to your resume and to get you on the interview schedule. Also, during your first year of school, take advantage of the second-years, who can give you valuable insight into the firm and specifics about the people with whom you may interview. Keep in mind that they’ll probably have no impact on recruiting, but they can help prepare you to face those who do.

person for each area, so consider calling anyone you know at Morgan Stanley and asking for a contact in the specific department. Or you can contact the human resources department and ask about current needs in your area of interest. However, insiders confirm what common sense has already told you: You invariably get better information from people who work where you hope to be, since much of the firm’s recruiting energy is dedicated to entry-level candidates.

aT a glaNcE

as if you could be in front of clients or other colleagues. Buy a nice suit. Morgan Stanley is not as laid-back as other IT firms.”

Presumably, by midcareer you’ll be focused on a certain type of position or area of the firm. Your best bet is to contact someone within that target group. There is probably no single designated recruiting

> tIP FOr yOur rEFErENcE

If Morgan Stanley does not recruit at your school, send your resume to the recruiting manager for the division you’re interested in, then follow up. You’ll find help in the “Recruiting Contacts” section at the end of this Insider Guide. WETFEET INSIDER GUIDE

35

At a glance The Firm On the Job The Wor place Getting Hired FOR YOUR REFERENCE

Morgan Stanley

Preparing for Your Interview Here’s what you desperately want to hear after

your first-round interview with Morgan Stanley: “We’d like to bring you to New York to meet a few more people.” But if you do move on to the next stage of the grilling process, you may wish you hadn’t been so lucky. Interviews with Morgan Stanley can be downright antagonistic, with questions designed to make you nervous and uncomfortable. The trick is to appear unruffled. If the interview is two-on-one, and both interviewers keep firing questions at you, remain calm and try as best you can to answer each question in turn. They want to see how you react under pressure. Assuming you’re serious about the company, practice your interviewing skills with other companies before your Morgan Stanley interview so that your performance is smooth and polished. You’ll want to emphasize the following qualities: • Strong quantitative and analytical skills: This is where you tout your spreadsheet experience. •

Dedication, hunger, drive, and the willingness to give up your personal life for this job.

•

Gumption (chutzpah, if you’re already from New York)—the supreme self-confidence that an interviewer is looking for in the “stress” interview.

•

Sales and marketing skills: Even bankers who never sit on a sales desk or make a trade need these; investment banking is ultimately about selling.

•

The airplane test: Would your interviewer prefer to jump out the emergency exit window rather than sit next to you for a lengthy plane trip? I-bankers put in long hours with their coworkers; it’s essential for you to be a good personality fit.

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W E T F E E T I N SIDER GUIDE

Interviewing Tips 1. Know how to answer the question “Why Morgan Stanley?” with specifics that show you’ve done your homework. It’s up to you to take control of the interview and get your answer across. If the interview is ending, and you haven’t worked in your points yet, try something like, “Before we close, I’d just like to tell you why I am interested in this position specifically.” 2. Use your time wisely. In on-campus recruiting, an interviewer may see 10 to 12 people in one day, and you only have 30 minutes to sell yourself. Anticipate common questions and think through your answers, trying to turn each answer back to why you’d be a sound choice for this position. 3. Practice, practice. You want to be so rehearsed that you don’t sound rehearsed. Before your interview, take each point on your resume and find a way to direct that detail toward your overall aspirations and goals. The details of your history should form a polished story, and its logical conclusion should be a job with Morgan Stanley. It helps to practice out loud by having a friend grill you. 4. Be clear about the work ahead. While it’s conceivable that you may sit in—almost invisibly—on meetings with CEOs as an analyst or associate, most of your time early on will be spent on more mundane tasks: proofreading documents, coordinating pieces of a larger deal, writing up notes from meetings, crunching number after number, doing research, and even executing lunch orders. 5. Bring your own list of questions. This is your chance to turn the tables and find out what

Grilling Your Interviewer

•

What type of international exposure have you had?

•

What qualities make an effective banker (or trader or salesperson) at Morgan Stanley?

•

What is the deal flow in your group? How does it compare with the deal flow in other groups?

•

Have you worked on any new or innovative products?

•

Can you give me an example of a deal in which you’ve combined investment- and commercialbanking services for a client?

•

In which direction do you see the restructuring of the European financial services industry heading in the next five years?

•

Historically, Morgan Stanley is well respected for its integrity. Do you think the firm’s reputation has been affected by the scandals of recent years?

•

As the industry consolidates and more banks offer one-stop banking, how will Morgan Stanley distinguish itself?

Interviews can be downright antagonistic, with questions designed to make you nervous and uncomfortable. The trick is to appear unruffled. If the interview is two-on-one, and both interviewers keep firing questions at you, remain calm and try to answer each question in turn.

WETFEET INSIDER GUIDE

37

FOR YOUR REFERENCE

What will my role be in this position?

Getting Hired

•

The Work place

7. Discuss your tangible achievements. You may be asked to give an example of an accomplishment from your previous work or school experience. If you’ve worked at a company before, think about a task or project you executed well. Did you improve a time-consuming process? Did you have the opportunity to work on a project that was a stretch assignment for you?

On the Job

tions, especially if you seem genuinely interested in the answers. Prepare a few questions of your own about Morgan Stanley. In the meantime, here are a few to get you started.

The Firm

Interviewers are impressed by intelligent ques-

6. Cite specific examples of your teamwork ethic. Add details about how you fit into an organization that had its own way of doing things and how you succeeded in that environment.

At a glance

you want to know. Spend some time before the interview thinking about questions related to the company and your prospective role. Reading articles from key industry periodicals may give you some ideas of what to ask.

For Your Reference

6

Investment Banking Lingo.......... 40 Recommended Reading.............. 44

The Numbers.............................. 45 Key People and Places................. 46 .

At a glance The Firm

Morgan Stanley

Investment Banking Lingo

of the company the president owns as well as his salary. It even gives current sports scores, Vegas odds, cartoons, and philosophical quotes about the market.

To become an investment banker, you must talk

Buy side refers to institutional buyers of securities, specifically asset management firms, mutual funds, and pensions. At an investment bank, you’re working on the sell side, providing research and selling securities to investors. Your clients, the investors, are on the buy side.

the talk. What follows is by no means a complete list of the terms you’ll encounter on Wall Street, but it’s a good start. Some of these might help you in an interview; others won’t. Know them anyway.

On the Job

Bake-off A meeting in which Hermès-tied and -scarved bankers—trailed by analyst minions furiously scribbling into Treos—parade into a company’s boardroom one after another to pitch their underwriting or advisory services for the company’s upcoming deal. Also known as a “beauty contest.”

The Wor place

Bulge bracket The top five to ten full-service investment banks on “Wall Street.” It’s not a fixed set—firms move into and out of the bulge bracket over time. The name derives from the top bracket on a tombstone ad in The Wall Street Journal. (See also: Tombstone)

FOR YOUR REFERENCE

Getting Hired

Bloomberg Also known as Pandora’s box or the black box. This funky little computer, used daily by almost every investment banker, is a one-stop shop for a wide range of company, economic, and market news, provided you can learn its idiosyncratic navigational commands. Bloomberg (the name of the company that sells the service) was one of the first providers of real-time stock quotes, news feeds, and economic reports. Other online services have been encroaching on its turf, but some banks still prefer Bloomberg’s “closed” system and encourage using it in conjunction with other Internet resources. Bloomberg gives you published estimated future earnings for specific companies and can graph performance. It tells you how many shares

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W E T F E E T I N SIDER GUIDE

Buy side and sell side

Chinese wall The boundaries that separate research, corporate finance, and sales and trading, to prevent transmission of inside information. The wall may be physical (different departments on different floors of the same building, or trading on Wall Street and corporate finance in midtown), or it may be an intangible series of procedures to control documents. When a research analyst is told of a deal, usually right before it’s announced to the public, he is “brought over the wall” and is restricted from commenting on the stock. (See also: Insider Trading)

Commercial banking The opposite of investment banking. Commercial banking sells its services to the public. For example, if you have a bank account with Bank of America, you’re a commercial client.

Comps Also known as comparable company analysis and competitive pricing analysis, comps are an endless part of an analyst’s work. Comps are spreadsheet models that compare the vital financial statistics of companies in the same industry, such as Nike, Reebok, and Converse. Comps help bankers value a company’s financial position by comparing data such as current stock prices, earnings, and financial ratios. An analyst can expect to run comps for just about every deal.

Roughly, “Cover your posterior region.”

Deals

Derivatives

This is the time after 8:00 p.m. when you choose to stay at work just because others—particularly senior others—are there, even though you don’t have anything to do. The significance of this around bonus time is unclear. (Do not ask during your interview how much face time is required.)

Hedge fund

High yield

A process in which the bankers and their lawyers sit down with management and their accountants to ask them every conceivable question that may uncover potential risks. If the bank issues a security to a company with undisclosed risks and that business falters, investors could lose a lot of money and the bank could be sued. Lawyers also ensure that there are no surprises regarding potential lawsuits, patent infringements, and so on. (See also: CYA)

High-yield bonds, also called junk bonds or junk, are bonds to which Moody’s or Standard & Poor’s gives low ratings. They produce high yields, unless they go into default. (See also: Investment grade)

One of several processes for selling an offering, this one is designed to be highly objective. Interested investors place bids indicating the number of shares they want and the price they’ll pay. The deal closes at

Don’t crack any jokes about insider trading around bankers. Investment bankers are privy to a huge amount of information that cannot be acted on. Imagine, for example, that you were part of the team advising IBM in its acquisition of a publicly traded software developer. Knowing that IBM would be offering a 30 percent to 50 percent premium over the going market price for the company’s stock, you could buy a couple of hundred (or thousand) shares and sell them after the deal goes WETFEET INSIDER GUIDE

41

FOR YOUR REFERENCE

Dutch auction

Insider trading

Getting Hired

Due diligence

The Work place

Hedge fund is the term used to describe certain private investment partnerships. Since unlike mutual funds that are sold to the public they are not tightly regulated by the SEC, hedge funds can engage in various unconventional investment strategies, thereby hoping to provide an opportunity for people with lots of assets to hedge their bets on market performance. There are consultants who specialize in reviewing hedge funds and disseminating the information to potential investors. A share of profits/losses is allocated to all partners based on their percentage of ownership; the general partner is paid an additional incentive fee.

On the Job

It may be the only thing you remember from calculus. But it’s also a financial instrument with no inherent value other than what it derives from some other underlying asset. For example, one type of derivative is an interest rate cap. Let’s say a company has a floatingrate loan. In order to manage its risk, the company might purchase a 7 percent interest rate cap from the issuer for $200,000. The issuer assumes the risk of an increase above 7 percent. If interest rates exceed 7 percent, the issuer pays for the excess cost. If rates stay below 7 percent, the issuer pockets the whole $200,000. Other types of derivatives include swaps (the swapping of variable- for fixed-rate cash flows) and reinvestment products.

Face time

The Firm

Deals are deals, but investment bankers are ultimately neither buyer nor seller. For them, a deal is the process and completion of a security issuance or acquisition/ merger of a company. The number of deals completed in a year is one of the most important measures of success for both the bank and the individual banker.

the lowest price at which all the shares would be sold. Bid too low and you don’t get any shares; bid too high and you risk driving up the price more than necessary. So far, they haven’t caught on.

At a glance

CYA

At a glance The Firm

Morgan Stanley through, making a tidy profit. If you’re caught engaging in this illegal activity, you may be banned from the securities industry for life, fined, and/or thrown in jail. See the movie Wall Street for a Hollywood portrayal of insider trading. (See also: Chinese wall)

LTM

Investment banker

Brand name for a durable clear plastic; also refers to tangible versions of tombstones (see: Tombstone) encased in Lucite that are distributed to members of the deal team. Lucites are highly coveted tchotchkes among bankers, and firms compete to see which can create the cleverest designs. You may need to keep your pillshaped, jewel-cut, and working-slot-machine Lucites at home to protect them from covetous coworkers.

A term used by outsiders. If you’re in the business, you’re a banker. The opposite is commercial banker.

FOR YOUR REFERENCE

Getting Hired

The Wor place

On the Job

Investment grade Low-risk bonds, as determined by Standard & Poor’s (AAA to BBB) or Moody’s (AAA to Baa). Both provide independent credit ratings, research, and financial information to the capital markets. (See also: High Yield)

IPO An initial public offering occurs when a privately owned company sells shares of stock to the public for the first time, which are then publicly traded through a stock exchange. In 1999 and 2000, being “preIPO” was a bigger draw than “dental plan” in San Jose Mercury News job postings. In 2009, “dental plan” is more than holding its own.

LBO The term leveraged buyout was more widely used in the 1980s, but the activity is still alive and kicking. An LBO happens when a company is purchased using very little equity and a lot of debt. Let’s say you buy an ailing automobile for $100, using $10 of your own cash and a $90 loan from your parents. You agree to pay your parents back the full $90, plus 1 percent interest per month until the loan is paid off. You then proceed to sell the wheels for $10 each, the muffler for $8, the stereo and speakers for $25, the engine for $50, the axle and drivetrain for $17, and the body to the junkyard for $5. You give your parents back their $90 plus two months’ interest ($1.80), and you still have $53.20 left over, which is a 532 percent return on your initial $10 investment. An LBO is significantly more complicated, but the result is that the bank in charge makes a handsome profit. 42

W E T F E E T I N SIDER GUIDE

Last 12 months. For example, a senior banker may say to you, “Get me the company’s LTM revenue and earnings numbers.”

Lucite

M&A Get used to this shorthand; virtually no insider bothers saying “mergers and acquisitions” (despite what you may have seen in the film Working Girl).

Make the quarter When a publicly held company meets or beats an analyst’s quarterly or annual earnings estimates.

Municipal bond Debt security issued by local or state government body; “muni” for short. The interest is generally exempt from federal taxes—and sometimes local and state taxes as well, particularly if you live in the issuer state.

NASD The Financial Industry Regulatory Authority is the largest non-governmental regulator for securities firms doing business in the U.S. FIRNA was created in July 2007 when NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange were consolidated.

NASDAQ The NASDAQ Stock Market is a decentralized network of competitive market makers, or firms that stand ready to buy or sell securities at publicly quoted prices.

Over-the-counter securities are not traded on an organized exchange like the New York Stock Exchange. A broker-dealer will “make a market” for OTC securities.

Printer

Pitch book

Secondary offering When a publicly traded company offers more stock on the market. Any offering after the company’s IPO is a secondary offering. Also known as a follow-on.

Red herring

If you read The Wall Street Journal—which you should do regularly if you’re interested in investment banking—keep an eye out for the big box

The preliminary prospectus on a deal. Printed along the side of the front cover, in red ink, is a notice indicating

The amount of credibility a securities analyst has with respect to a particular stock. Usually earned by making accurate calls on the stock’s price movement. The analyst with the most share of voice is often called the ax on a stock.

Synergy In doing an analysis of one company acquiring another, a banker may say that a company makes $50 million per year, and that a company it hopes to acquire makes $20 million per year, but together they’ll make $100 million. The idea is that neither company can reach its full potential on its own, but by linking with a well-positioned strategic partner, both parties achieve the stuff that dreams are made of.

Tombstone

WETFEET INSIDER GUIDE 43

FOR YOUR REFERENCE

Share of voice

Getting Hired

Investment bankers spend as much time pitching deals as they do actually working on deals. Every time one of the calling officers (top two or three levels of bankers) meets with the management of a potential client, he takes along a slide presentation or bound stack of bullet-point pages and charts, called a pitch book. It discusses the client’s industry and why your bank is the best one for the deal. The pitch book is one of your initiation rites as an investment banker. You’ll learn a lot about a company and an industry, and you might even meet someone cute in the copy center (where you’ll be for long, long hours). The downside? Insiders tell us that putting together pitch books can be pretty dull and repetitive, especially for low-on-the-totem-pole analysts. If you’re an associate, you’ll be writing and designing a pitch book, while the undergrad analysts put together the charts and graphs, compile the statistics, and make all of the edits.

The Work place

A company that prints financial documents for a deal. Young bankers and lawyers spend a lot of time here before a deal, checking and rechecking the progress of a prospectus or proxy statement.

A sales trip around the country (and sometimes other countries) with the upper management of a company during the month or so before the company’s securities issue. The company management, investment bankers, and research analysts on the deal team will visit institutional investors to tell the story behind the company and convince them to buy into the offering. At times, this means breakfast in San Francisco, lunch in L.A., an evening flight to Denver for meetings the next morning (spending the night at a posh hotel), then on to Chicago, and so on. Exhausting, but a lot of good meals and a chance to see some interesting new faces.

On the Job

The price-to-earnings multiple is a very important ratio on Wall Street. It can tell you if a stock is over- or undervalued relative to its historical performance and relative to other firms. To get it, divide the market price of a share of common stock by the earnings per share of common stock for the last 12 months. A forward PE uses estimated earnings in the denominator.

Road show The Firm

PE multiple

that it is preliminary. A road show (see below) starts once a firm is cleared by the SEC to “print the reds.”

At a glance

OTC

At a glance The Firm

Morgan Stanley advertisements in Section C declaring, “Company X completed the issuance of X hundreds of millions of shares (or dollars of debt),” and then listing all of the investment banks involved in the deal. The size and grouping of the bank names show the level of involvement each had on a particular deal. The largest name on the left side of the tombstone is the lead manager—the bank that did most of the work and received the lion’s share of fees. (See also: Lucite)

On the Job The Wor place Getting Hired

In an industry stricken by failing companies, Morgan Stanley also struggled early in 2008. But there were some positive signs for the behemoth financial institution. A 58 percent decrease was actually a small step forward.

Source: The New York Times, June 19, 2008

For Further Study •

Worthless securities. The issuing company has gone bankrupt or defaulted.

Explore the recruiting section of Morgan Stanley’s website at www.morganstanley.com/about/careers/

•

White shoe

•

Check out the company’s 2008 annual report at www.morganstanley.com/about/ir For a detailed—and opinionated—look at life on the derivatives trading desk at Morgan Stanley, pick up a copy of former trader Frank Partnoy’s book FIASCO: The Inside Story of a Wall Street Trader (Penguin USA, 1999).

Wallpaper

Anachronistic but still often-used characterization of firms that see themselves—or would like others to see them—as upper-crust and above activities as distasteful as hostile takeovers. The term comes from an Ivy League tradition of wearing white buck shoes in elite fraternities and clubs.

Recommended Reading Only the Men Survive: The crash of Zoe Cruz Once expected to the be the first women CEO on Wall Street, Zoe Cruz was painstakingly ousted by the current Morgan Stanley CEO, John Mack, who just so happened to be her former mentor and friend. Source: New York Magazine, April 27, 2008

Morgan Stanley Chairman Wins ReElection FOR YOUR REFERENCE

Morgan Stanley Reports 58% Decrease in Profit

Despite an effort by investors to unseat Morgan Stanley’s John J. Mack, the company’s chairman and CEO remained in charge by surprisingly winning in overwhelming fashion.

Source: The New York Times, April 9, 2008

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W E T F E E T I N SIDER GUIDE

•

Morgan Stanley employees read these magazines and trade publications regularly: Barron’s, The Economist, Financial Times, Fortune, Forbes, International Financing Review, Institutional Investor, Investment Dealers’ Digest, Investor’s Business Daily, Red Herring, The New York Times, and The Wall Street Journal.

At a glance

The Numbers Morgan Stanley Financial Highlights 2006

1-Year Change

Net revenue ($M)

28,026

29,839

(6%)

Total noninterest expense ($M)

24,585

20,736

19%

Net income ($M)

3,209

7,453

57%

Earnings per share (basic) ($M)

3.13

7.38

(58%)

Return on equity ($M)

8.9%

23.5%

(62%)

Total assets ($M)

1,045,409.00

1,120,645

(7%) Source: Morgan Stanley Annual Report for fiscal year ended November 30, 2007; WetFeet analysis

The Work place

Net Revenue by Business Category Category

2007 ($M)

2006 ($M)

1-Year Change

Institutional Securities

16,149

21,110

24%

Global Wealth Management Group

6,625

5,512

20%

Asset Management

5,493

3,453

59%

Intersegment Eliminations

–241

–236

–2%

On the Job

2007

The Firm

Category

Getting Hired

Source: Morgan Stanley SEC Form 10-Q for fiscal year ended November 30, 2007; WetFeet analysis

FOR YOUR REFERENCE

WETFEET INSIDER GUIDE

45

At a glance The Firm On the Job The Wor place

Key People and Places John Mack, chairman and CEO Colm Kelleher, executive vice president, CFO, and cohead of strategic planning Walid Chammah, copresident James P. Gorman, copresident Karen Jamesley, global head of human resources

Recruiting Contacts Below are addresses and department designations for submitting your resume. Morgan Stanley encourages students to apply for positions within the firm using its online application form at www.morganstanley.com/careers/recruiting/. Morgan Stanley 1585 Broadway New York, NY 10036 Attn: Recruiting Manager

Departments Equity Research Financial Control Group Fixed Income Global Operations and Services Information Technology Institutional Equity Investment Banking Investment Management Private Wealth Management Public Finance Strategic Planning

FOR YOUR REFERENCE

Getting Hired

Morgan Stanley

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W E T F E E T I N SIDER GUIDE

Recruiting Contacts Outside the U.S. For inquiries to any of these addresses, indicate your department of interest in your cover letter. Asia Pacific: Recruiting Manager Morgan Stanley 30th Floor, 3 Exchange Square Hong Kong, SAR Japan: Recruiting Manager Morgan Stanley Japan, Ltd. Yebisu Garden Place Tower 20-3, Ebisu 4-chome Shibuya-ku, Tokyo 150-6008 Japan Europe: Recruiting Manager Morgan Stanley 25 Cabot Square Canary Wharf London E14 4QA United Kingdom

Major Offices Morgan Stanley has more than 600 offices in 30 countries. For a complete list, visit www.morganstanley.com/about/offices/.

Resumes & Cover Letters Killer Consulting Resumes Killer Cover Letters & Resumes Killer Investment Banking Resumes

Financial Services Careers 25 Top Financial Services Firms Careers in Accounting Careers in Asset Management and Retail Brokerage Careers in Investment Banking Careers in Venture Capital

Industries and Careers: Specific Careers in Advertising and Public Relations Careers in Pharmaceuticals Careers in Brand Management Careers in Consumer Products Careers in Entertainment and Sports Careers in Health Care Careers in Human Resources Careers in Information Technology Careers in Marketing Careers in Nonprofits and Government Agencies Careers in Real Estate Careers in Retail Careers in Sales Careers in Supply Chain Management

WETFEET INSIDER GUIDE

FOR YOUR REFERENCE

INTERNATIONAL CAREERS 25 Top Global Leaders A.P. Moller-Maersk The International MBA Student’s Guide to the U.S. Job Search

Industries and Careers: General Industries and Careers for Engineers Industries and Careers for MBAs Industries and Careers for Undergraduates Million-Dollar Careers Green Careers

Getting Hired

Financial Services Companies Deutsche Bank Deutsche Bank in Asia Goldman Sachs Group JPMorgan Chase & Co. Merrill Lynch & Co. Morgan Stanley UBS AG

Career Management Be Your Own Boss Changing Course, Changing Careers Finding the Right Career Path Negotiating Your Salary and Perks Networking Works! Survival Guide for Women in Business

The Work place

Job Hunting Getting Your Ideal Internship Job Hunting A to Z: Landing the Job You Want Job Hunting in New York City Job Hunting in San Francisco

Consulting Companies Accenture Bain & Company Booz & Co. Boston Consulting Group Deloitte Consulting McKinsey & Company

On the Job

Interviewing Ace Your Interview! Beat the Street®: Investment Banking Interviews Beat the Street® II: I-Banking Interview Practice Guide The Wharton MBA Case Interview Study Guide: Volume I The Wharton MBA Case Interview Study Guide: Volume II

Consulting Careers 25 Top Consulting Firms Careers in Management Consulting Careers in Specialized Consulting: Information Technology Consulting for PhDs, Lawyers, and Doctors

The Firm

Ace Your Case - Consulting Interviews Ace Your Case® I: Consulting Interviews, 3rd ed. Ace Your Case® II: Mastering the Case Interview Ace Your Case® III: Market-Sizing Questions Ace Your Case® IV: Business Strategy Questions Ace Your Case® V: Business Operations Questions

At a glance

WETFEET INSIDER GUIDES series

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TURN TO THIS WETFEET INSIDER GUIDE TO EXPLORE ★ HOW THE FIRM STACKS UP AGAINST THE COMPETITION.

★ WHAT A TYPICAL DAY IN THE LIFE IS LIKE FOR PEOPLE ON THE JOB HERE.

★ HOW THE FIRM IS ORGANIZED, FROM TOP TO BOTTOM.

★ WHAT EMPLOYEES LOVE MOST—AND LIKE LEAST—ABOUT WORKING FOR MORGAN STANLEY.

★ WHICH MORGAN STANLEY DEPARTMENTS AND GROUPS ARE STRONGEST.

★ HOW TO LAND A JOB AT MORGAN STANLEY, WITH TIPS FROM COMPANY INSIDERS TO HELP YOU ACE YOUR INTERVIEWS.

★ HOW THE CULTURE DIFFERS FROM THAT OF OTHER WALL STREET FIRMS.

★ ABOUT THE WORKPLACE, WITH INFO ON LIFESTYLE, HOURS, TRAVEL, AND TRAINING.

WetFeet has earned a strong reputation among college graduates and career professionals for its series of highly credible, no-holds-barred Insider Guides. WetFeet’s investigative writers get behind the annual reports and corporate PR to tell the real story of what it’s like to work at specific companies and in different industries. www.WetFeet.com

★ MORGAN STANLEY ★

pursue a career in financial services—if you can get your foot in the door. The firm is known for its expertise in corporate investment banking, investment management, retail brokerage, and credit services (through its Discover Card division), among other areas, and it offers a variety of career paths, but gaining entry is tough—if you do get in, you’ll enjoy status as one of the chosen few. Want to know more? WetFeet’s career experts have done intensive research and interviewed company insiders to start you on your way.

Illustration by mckibillo

>> Morgan Stanley is one of the strongest banks on Wall Street, and a great place to launch or