How to find an investment job after your CFA exam?
Are you one of the many students who take the CFA exams every year? Are you thinking about the career options or looking out for jobs after the CFA exams? Thanks to its wide-ranging curriculum, once you passed CFA exams, you will have a lot of career choices in the finance industry. But today we are only going to talk about investment related jobs (we use CFA jobs thereafter)
If you are trying to make a career switch into the investment industry, your chances are higher after your CFA Level 2 exams. There is no doubt that CFA is the gold standard in the investment industry. Once you have tried to apply for investment roles after exams, you will find that it is so hard to even get interviews. What is missing here?
The big picture of demand and supply of CFA Jobs
These days, having a CFA accreditation is important, but it is not enough. Just need to google it. According to news reports, a record 189,000 people took the CFA exams in June last year (2017). Almost half of those hail from the Asia-Pacific region (Source: Bloomberg). The passing rate for Level 1 was 47%, and that for Level 2 was 47% (Source: CFA Institute) – much better than a decade ago. (Level 1 passing rate was about 35% back then). However, job openings in the field of investments have not picked up much after the Global Financial Crisis.
Amidst the increasing supply of CFA-accredited professionals, investment professionals have highlighted disruptive forces such as the rise of algorithm trading, AI, and massive fund inflows into ETFs. These have directly or indirectly led to certain job losses within the investment industry. Are human analysts or human judgements still required in the future world of investments?
It’s not that bad…
We believe the answer is Yes. Peter Thiel, one of the most successful VCs in the world, mentioned that computers are designed to do the mundane and laboriously repetitive work. In his book Zero to One, he provided an example of how Paypal used a combination of human analysts and algorithms to solve a major problem.
In the year 2000, Paypal was losing millions per month due to credit card frauds. Thus, they tasked mathematicians to solve such problems using algorithms. However, these were not enough to ‘catch’ the fraudsters as fraudsters can exploit ‘loopholes’ in systems. The company went on to hire a team of human analysts to review the suspicious transactions flagged by the algorithm. Result? Payal records first profit in 2002 versus a loss of US 29m a year ago.
Besides financial costs, human beings are also needed to factor in moral costs, social costs, and other externalities. For the future we want to create, there is still a need for humans to synthesize information from various stakeholders.
The constants that are in still in demand
Given the huge amount of CFA graduates versus the limited investment job openings, those who can influence decision makers are likely to secure the job they desire. How can one be in a position of influence? You need a combination of hard and soft skills.
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The skill sets that our mentors at Springboard are imparting into the future investment analysts are good reference points:
(1) doing up an integrated financial model
(2) make a reasonable forecast in your model
(3) understand the dynamics of the underlying industry of investee companies
(4) formulate investment ideas with a clear understanding of various risks
(5) present confidently to a group of interviewers or backers
(6) staying on top of new developments
(7) networking well
Skillsets for CFA Jobs
We rank skillset (1) at the top because financial modelling is the number one prerequisite wanted by most employers we spoke with. This skill involves extracting historical financial statements from a company and then linking the income statement, balance sheet, and cash flow in a fully integrated manner. Next, you need to ensure that your financial projections (ie. future estimates) also flow seamlessly from historical figures. Lastly, the model must look neat, professional, and scalable. A well-done financial model demonstrates one’s accounting knowledge, finance knowledge, and excel skills.
Skill sets (2) and (3) are soft prerequisites, meaning that some employers are willing to train you in the course of your job. However, most employers in the investment field today are spoilt for choice. They will rather hire someone who can “hit the ground running”. i.e. someone well-equipped on the first day at the job. They don’t wish to spend too much time to train the new joiner.
You need skills (4), (5), (6) if you wish to stay on the job, get promoted or be given more responsibilities. Lastly, skill (7) is necessary if you wish to bring in business for your employer (this is valued by most bosses). Even if your scope may not include sourcing for business, with a good network, you will be able to conduct insightful channel checks and source investment ideas and also verify your investment thesis with your peers.
How to test your skills?
Based on a few years of interaction with employers, they don’t test the above-mentioned skillsets individually. One or more stock pitches followed by Q&A will be able to tell a candidate’s competency. By asking the right questions, employers could easily access your competency and investment acumen.
Where to start?
In the face of major disruptive trends, even employers are evolving to survive. As a job seeker, you should be proactively looking for courses, programs and events that can equip you with these skills.
Such skills may be found in Skillsfuture portals, Springboard Talent Management, SGX events, or our partner’s training events. With the Singapore government’s ongoing support for skills upgrading and learning, you can have a head-start on this journey.
We would like to thank Valerie for her contribution to this article. She has been a sell-side research analyst at HSBC and Standard Chartered and continues to work in the field of investment. She is a senior mentor at Springboard Talent Management. Springboard is a platform that nurtures young professionals intending to enter the investment industry. She is in the midst of developing practical curriculum with veterans in the field of real estate investments, private equity, and fintech. If you wish to get more career advise, please feel free to write to val AT springboardtm.com.sg.
How we can help you sharpen critical skills for junior investment roles
Model Like a Pro Build your financial model just like a pro!
Research Like a Pro Research and Pitch your stock idea like a pro!
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