The Anatomy of a Modern Financial System

The LIBOR element in this graphic is outdated, but as a whole, understanding the relationships illustrated is important in maintaining a basic comprehension of the financialized economy and its major players. Understand this before anything else.

Source: Wall Street Prep

If you want to go into a deeper dive, Yale has video lectures of Robert Shiller’s Financial Markets course online that outline the system comprehensively, with the inclusion of more material speaking on specific markets-related concepts, rather than just institutions.

https://www.youtube.com/watch?v=WQui_3Hpmmc&list=PL8FB14A2200B87185

Sell Side and Buy Side

As outlined previously, some popular careers on Wall Street are divided between the sell side and the buy side. However, many finance professions do not fit either category. The sell side consists of investment banks and the services they provide, while the buy side is made up of the institutional investors and traders that buy the services and assets being sold. Oftentimes, buy side roles are segregated as “exit-opportunities” for sell side employees.

This is attributed to the fact that many buy side roles require sell side experience to qualify, barring extraordinary circumstances. While the buy side is known for higher compensation and a better work-life balance, the reality depends on the role taken.

However, not all sell side roles are weighed the same, depending on the buy side role:

Private equity, which requires a level of transaction knowledge, oftentimes prefer to recruit out of investment banking where transaction experience is bountiful, rather than equity research or sales and trading.
A sector-focused hedge fund might seek an equity research analyst with experience in the sector while another fund may recruit for a trader of a particular product specializing in a strategy. As an example, a science-focused healthcare hedge fund, e.g., Deerfield Management, might prefer to hire researchers, former physicians, and healthcare equity research analysts over bankers.
A quantitative trading firm or hedge fund can scout sales and trading employees that embody their required technical background.

Deals vs. Public Markets vs. Support

“Deals vs. Public Markets vs. Support” is an alternative categorization model for careers in the financial services industry.

It can be useful to bucket broad roles into categories defining the nature of their responsibilities and the specific element in finance they interact most with. For instance, when one typically reads global business news, they are typically exposed to headlines that deal either with deals (IPOs, restructurings, debt issuances, mergers, etc.), or events in public markets. Depending on one’s greater interest between the two, younger students can narrow down the roles that resonate most with their passions.