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Life on the Job
Career Myths Debunked: Private Banking
It’s not all about networking and fancy dinners with clients! A career as a successful private banker requires a constant commitment to building meaningful client relationships.
Myth: Living the high life
Mentioning that you enjoy wining and dining clients is a common myth that will not win you any favours with the interviewer. Rather, you should portray yourself as a hardworking and diligent individual with an entrepreneurial mind-set.
Graduates are expected to handle all the administrative matters (which include account openings, trade reconciliations, investment presentations, etc.) and this is no different from roles in sales and trading or investment banking. Put simply, you have to do the grunt work until you have proven yourself.
So what is so exciting about private banking? Why are so many graduates eager to enter the industry?
If you enjoy interacting with clients, understanding their needs and tailoring solutions to meet those needs, then this is an industry well-suited for you. Along the way, you will receive exposure to different product groups, develop your relationship management skills, and eventually manage your own book of clients.
Managing your expectations
This is a crucial interview question that might make or break your chances of scoring the internship or job. Let’s play out a scenario that usually happens:
Interviewer: Where do you see yourself in 2-3 years’ time?
Graduate: I would like to become a junior private banker at the end of 2-3 years.…
Interviewer: (Stares at the graduate with wide eyes/shakes his head/looks stunned – either one or a combination of all these)
Private banking is a whole different ball game from the rest of banking. Private banks work with high net worth clients, and these individuals are sophisticated investors who demand the highest level of service.
It takes time and maturity to earn their trust and convince them to entrust their assets to you.
Therefore, for most graduates, the initial years will be for you to ease yourself into the industry. You have to build your own networks, increase your product knowledge, work alongside a senior banker, and develop the necessary skillsets that will allow you to transit from the graduate programme to a more permanent role in the organization.
Breaking into the industry - Graduate programmes
This is the most prestigious way of entering the industry. All top-tier banks have such programmes, though they each differ in some ways. Some are front-office private banker programmes (i.e. you are groomed to be a junior private banker) while others are product programmes (i.e. you become a product specialist in FX, Structured Products, Active Advisory etc).
One is not better than the other, and ultimately you should decide according to your interest and where you see yourself in the years to come. Other benefits of a graduate programme include international rotations (I’m writing this from Hong Kong), mentorships, support for CFA & CAIA exams, etc. Most banks place great emphasis on these programmes, and they actively help their graduates to do well.
However, competition for a coveted spot in these programmes is tough. The number of positions on offer is limited, and cost pressures are likely to cause this figure to dwindle further in the coming years. Hence, it is important to differentiate yourself and stand out from the crowd in order to increase your chances.
Below are some ways you can do so:
- Internships are of utmost importance. It will be ideal if you have multiple internships in private banking, as this underscores your desire to join the industry. Having a broad understanding of the business will also help you tackle interviewers who like to ask about the structure on a private bank.
- Be prepared for your interviews – research the industry and the bank you are interviewing for as extensively as possible. You should also find out what differentiates the bank from its competitors. Lastly, convey to the interviewers your passion for the business, and your well-reasoned motivations for wanting to do private banking.
A little about myself: private banking was my dream job since NBS days. I did my wealth management internships with BNP Paribas, Standard Chartered and Julius Baer before joining the Barclays Graduate Programme. Contrary to the belief of some, the level of competency required and the competition that you can expect during the recruitment process is no less intense than with other front-office roles.
Hence, it is critical to work towards identifying your career objectives as soon as possible, and put in the effort to work towards securing a job in the industry.
The journey from your degree to the hallowed halls of the big names in finance will not be easy. But with the right support, knowledge and determination, you can eventually reach your goal!
Career Myths Debunked: Investment Banking
You don’t need to be a mathematical genius to succeed as an investment banker, but you do need to be prepared to put in the long hours!
Myth 1: Living the high life
Most fresh graduates come into the industry with the expectation of embracing a lavish and extravagant lifestyle, but that is usually a misplaced dream. There is a need for lots of hard work if you are to thrive or even survive in the industry, and the real work that you are doing might not be as glamorous as it might seem from the outside.
Myth 2: You need to be very smart
Investment banking is about being smooth with numbers. Most of what you do usually requires only high school math and basic logic. Addition, subtraction, multiplication, division and maybe some simple percentages are usually the required skills.
But you do need to be detail-oriented and make sure that you don’t make mistakes on those numbers that you are putting down in your spreadsheets or slides. Microsoft Excel and Powerpoint are mainstays.
Truth 1: You’re on call 24/7
With demanding clients and bosses, you can never really make plans for your weekends. You are always on the lookout for the next e-mail that might lead to changes in assumptions in your Excel models, which will in turn lead to further amendments in your PowerPoint slides.
Truth 2: Soft skills are needed
Soft skills – communication, negotiation, and interpersonal skills – are very important. It’s advisable also to brush up your presentation skills.
As a junior, you are required to set up meetings and conference calls, and responding to multiple e-mail requests from internal teams and clients. In a day, lots of your time will be spent writing and talking to various stakeholders.
Breaking into the industry – internships and graduate programmes
Most bankers would want to hire people whom they have worked with, and especially so for fresh graduates. Hence, that is the usual route for people to break into the industry.
If you are able to perform well and impress your seniors and superiors during an internship, you stand a good chance of conversion to an analyst upon graduation. Preparation for interviews is an essential step towards getting an internship in the investment banking team.
Alternatively, some banks do not hire analysts directly into their investment banking team, and you will need to go through their graduate programmes to stand a chance of working in the investment banking team.
Why do it?
Given all the long hours and sacrifices that you would have to make in your personal life, why would someone decide to join investment banking?
For me, it is all about the exposure and network that you can get right from the junior level. That is something that you will not be able to achieve in other professions. If you want to get into fields like private equity, hedge funds, or venture capital – or go to a top business school – investment banking is definitely one of the best ways to do it.
Career Myths Debunked: Equity Research
Specialisation is key to a successful career in equity research. Also, good stock recommendations aren’t the only thing you’ll need to worry about!
Myth #1: Anyone can do research by compiling information from the internet
While the definition of research is very broad-based, the scope of research in the sell-side is very well-defined, and requires information beyond what can be gleaned from the internet. An analyst can typically start out his/her career in equity, fixed income or economics.
Myth #2: The job requires you to research anything under the sun
Equity research analysts on the sell-side are focused only on a particular sector of stocks (e.g. property, banks, energy, consumer sectors, etc.), as opposed to understanding multiple sectors.
Specialisation is a necessity, as job success hinges on providing detailed and accurate company and industry knowledge, trading ideas, and company management access.
Myth #3: Your job involves placing good stock recommendations
Good stock recommendations are an important outcome for sell-side equity research analysts, but there are other important aspects:
- Detailed financial modeling for the companies (and sectors) being covered
- Generating good stock ideas — buy, hold, sell ratings
- Writing industry or company-specific reports
- Marketing the content of your analyses to institutional clients
- Meeting management to understand more about a company’s business plans
Myth #4: Sell-side research makes money through investment management
While making stock recommendations is a part of the job, the sell-side research practice does not trade on their stock ideas. Rather, it generates revenues indirectly, primarily through commissions when the buy-side trades through the sell-side trading desks.
Breaking into the industry
Vying for a front office job in a financial institution, or landing an equity research analyst role is not easy. There are however, preparatory steps that can enhance your chances.
Aim for a decent GPA. While your GPA is absolutely not a make-or-break to get a career in finance, a good GPA definitely helps to get past the résumé gatekeepers and gain an interview opportunity.
Actions speak loudly. Whatever the area of interest for your career, pursue active steps to strengthen your overall credibility. For example, if your passion is in trading, display your keen interest by joining stock competitions.
Keep trying and do not give up. Despite putting in hard work, finding a good internship or job can be hard. Sometimes, the results can be beyond our control, but the only way is to keep learning, keep trying and be patient.
Good things will come to those who work for it, all the best!
Career Myths Debunked: Asset Management
Not all asset management jobs are equal, and don’t be too quick to show off your stock ideas during a job interview!
Myth #1: everyone will be a fund manager
This is probably the biggest misconception – asset management is not just about portfolio management. Likewise, global markets is not strictly sales and trading, while investment banking is more than just corporate finance.
Broadly speaking, an asset management house needs salespeople, investment specialists, and product managers.
A salesperson is the “eyes and ears” of the company, crafting and pitching investment solutions to intermediary or institutional clients and assessing the market demand. An investment specialist is usually a hybrid of a sales and investment role with an in-depth understanding of certain portfolio strategies and investment styles (although this role is only for experienced hires).
A product manager structures investment products for a salesperson to sell and they typically develop in-depth knowledge of related regulations through liaising with regulators and legal counsel.
Different roles will require different types of skill sets. If you insist on just being an investment analyst or fund manager, you might be killing your opportunity to join an asset management firm which offers other roles.
Whatever the role is, be prepared to handle the leg work as a junior.
Myth #2: all asset managers are the same – they just manage money.
Yes, asset managers manage money. However, it is not true that every asset management house is the same. Asset managers differentiate themselves through their business models.
Understand their key focus and capabilities: Are they targeting to become a one-stop investment solutions provider – traditional active management, ETFs, real estate investments, etc.? Or are they predominantly a fixed income manager or equity manager?
Bear this in mind when researching the company.
Interview question: So you want to join an asset management house, what investment idea would you recommend now?
There is no right or wrong answers to your recommendation.
On a day-to-day basis, the objective of investment professionals is to make informed decisions on taking long or short positions in investments. Time will tell whether they made the right calls – if the market meets your expectations, then you are right today. If not, you are wrong.
The first rule is: don’t panic. Don’t be too quick to “show off” your best stock ideas either. Your interviewer(s) could be analysing macro factors instead of companies for a living.
Set the stage for everyone by giving a brief introduction of your best stock idea. Discuss what led to your stock recommendation, as well as macro factors and potential risks that would affect your analysis.
Be ready to answer any questions thrown by the interviewers testing your thought process. Your ability to share your ideas clearly will demonstrate your level of interest for investments.
A clear, logical and structured thought process is what most interviewers are seeking here. Your ability to communicate your investment idea in a concise manner is important too. There is no other way around this, so prepare, prepare, and PREPARE!
Stepping Stones to a Permanent Career
Your best bet is to join internship and/or entry-level analyst programmes offered by major banks. Either one is a good representation of what you actually will do in asset management.
Both programmes also encompass a wide variety of roles to match their varied business needs to the wide-ranging interests of students.