1. Get out of the Comfort Zone – We Chartered Accountants always create a burrow for hiding from the subjects or areas apart from Tax, Accounts and Audit. A Global Finance firm expects you to not only read an Indian Business Newspaper, but also be abreast with the changing developments across the globe. ‘Globe’ does not only mean the US or China, but the rest of the Emerging Market Economies as well like Brazil, Turkey, Indonesia, South Africa and the other developed economies like Japan, Greece, UK, Middle-East and so. Because, a finance professional has to always create an ‘Alpha’, which is impossible without the proper reading. Know how the economies operate and get the facts checked! That is probably the primary reason why the Campus Placements have a limited portfolio to offer apart from Finance Accounts, Corporate Finance and Taxation.
2. A vaguely used term called ‘Finance’ – Everybody in the house uses the buzz called ‘Finance’ without knowing the actual area of interests. Finance is a broad terminology and includes Accountancy, Internal Audit, Equity Research, Investment Banking, Risk Analysis, Portfolio Management and for that matter – even Tax! Know your interests well before you apply to any of these portfolios.
3. Equity Research – A fresher generally get hired for a Sell-side Research. Before we get into the department, let’s understand the analysis procedure followed by the research houses. It not only conducts Balance Sheet analysis, but Economic Research too constitutes a major part of the Research. Majority of the data pertaining to the Financials of the company are available on the Financial Database like Capitaline, Prowess, Bloomberg, Capital IQ, FactSet. So Economic Research as you would make out would constitute the ‘Brainwork’ of the department. It includes a considerable amount of Statistical work like Hypothesis Testing, Regression Analysis, Time Series Analysis – which our profession lacks. We all know that the Indian markets have now drifted from a Regression Analysis to a Time Series Analysis. Hardcore Statistical modelling on Matlab, R, Python is what is required to get this analysis done. Let us understand further, that our competitors shall be from the background of Economics and Statistics. If you’re working as Research Analyst for a global house, you’ll have your peers from London School of Economics, Wharton, Princeton, Delhi School of Economics or maybe St. Xaviers! We need an extra edge to be able to compete them. In today’s time, every company has their own Research Reports / Recommendations coming up. From JP Morgan, Goldman to Sharekhan, Ventura, Zerodha – everybody has their own research division. Does that mean ‘More Jobs’? Maybe! But that also means, that your research is less valued than it was before.
4. Investment Banking – Now this is pursued to be the most lucrative sectors, but did you know – that a CA is even hired for the Internal Audit Department of an Investment Banking firm. Which means, that it is more inclined towards the Back-End Function. With the changing market conditions, valuations getting expensive, possession of deals in the hands of only few – How sustainable do you think this sector is? Investment Banking firms generally hire candidates from a MBA background for the front-end jobs. Why? They assume that if the clients are IIM-A grad and if our banker is from IIM-A too, they’ll be comfortably placed in the deal. Moreover, the MBA College acts as a Brand-Name in any given deal. Irrational? Yes! But that’s the way it works. Further, the systems still works on the ‘Bonus’ culture, if you’re good – you’re hired, else fired! You need to outperform all the peers every Year and Quarter to get that fat bonus into your pocket. This leads to plenty on and off-the-job stress.
5. Bottom of the Pyramid – We all know that the Indian Economy is set on the growth trajectory for at least the next 15 years and the GDP is expected to touch $5-Trillion despite the COVID-19 crisis. But do we get all that cream? Let us not forget the fact that there are bosses working above us as well. They are all very well placed already. Where would we be in the next 15 years? MD / Chairman of any major Bank or Financial Institution? Let’s be practical. We already have missed a bus when the markets breached 45000 levels pre-COVID and still assuming missed the 28000 levels as well. Let us give it a thought to it as well. No doubt we can always switch our careers, but is our system designed in such a way which allows an abrupt switch?
6. Degrees is not equivalent to Knowledge in this industry – Having earned a CA degree or a CFA Charter or both, does not guarantee that you have now become a tycoon of the markets! Even I was surprised by the fact that a Commerce graduate has a deeper insight of the markets and on the other hand, a CFA Level 3 Candidate has no clue of how the Options work in the real world. Be obsessed with Knowledge than the Certifications, that’s the Rule!
This article has no intentions of demoralizing any professional. But practically, this industry is the most volatile one with the least job security. If we’re unlucky to face the next recession, we’ll be the first ones to be thrown out compared to our Audit / Tax peers. Let us not forget the risks pertaining to every industry before stepping our First Foot forward.
The author is an Investment Manager and a Professor of Finance at NMIMS, Mumbai. He can be reached at email@example.com