It seems fairly obvious, but I’ve found that many students overlook this important consideration when prepping for interviews – especially for service sector firms. By preparing for this question, you’ll develop a better understanding of how the role you are interviewing for aligns with the firm’s overall business model.
So… if you’re interviewing with Citizens or People’s United, an important measure of bank profitability is “net interest margin” which is interest income (from loans) minus interest expense (from deposits.) Loan growth contributes to interest income and fee income from ATMs and securitization/lending is an additional source of revenue. As a credit analyst Bentley students will assess the risks of loans.
Fee income is particularly critical in professional services organizations (think Big 4) where audit income is dwarfed by consulting (advisory) income. In this practice area, consultants are billable assets. At Fidelity or J.P. Morgan Private Wealth, however, it is fees on assets under management (AUM) that generate revenue. Bentley product managers and wealth advisors will be expected to contribute to the retention and growth of fee-generating assets under management.
It is equally important to understand how firms lose money. If you’re interviewing with insurance firms (Liberty Mutual, Travelers, John Hancock, Hartford, Sun Life, etc.) know that insurance claims impact profitability. If you’re interviewing with Synchrony Financial, minimizing credit card delinquencies and charge-offs is critical. In these industries, Bentley financial analysts, risk analysts and pricing analysts are common roles.
Understanding how a company makes and loses money allows you to appreciate how integral your role as an analyst is to the company’s business model.