Career in Finance: "Ask Me Anything" Q&A with our Student Community (Part 1)

Welcome back to The Deal Room. We are taking, because it's summer, a slight change-up in the format for the next two Deal Room podcast episodes. And the reason why is because we love to mix it up, but full transparency, Stephen's away in New York for a period, and then there's probably holidays going on. So we are humans after all, and we like to tell the truth. And it's the truth that's part of this episode series because we get to interact with lots of different students from lots of different backgrounds from all over the world. And often I think for students, it's quite hard to ask a future employer the questions probably that you want to know answers to. Whereas our role at AmplifyMe is to really help educate young people as to make the best career decisions for themselves. And as much as that is through our technology and our simulations, a lot of that is just talking honestly about what it's like to work in these roles, the good, the bad, and the ugly. And so through these next two episodes, we have gone to our community who are currently on the Summer Analyst Training Program with us, and we asked them, what questions would you like to ask myself and Stephen if you could? And we've listed out five we're going to cover in this episode. And then we're going to do another 5 in the next episode. So, without further ado, let's get into it, Stephen, and take the first one. So, perhaps I can kick it off with someone asked, so this is a blend. We'll give shoutouts for sure to some of the students. Some are anonymous. Some have names. The first one was anonymous. It was, I missed out on the Spring Week. Am I doomed?

Oh, well, yeah, I've got a question for you actually, Anne. Did you do a Spring Week?

No.

Are you doomed?

No.

No, I didn't do a spring week either, and I don't think I was doomed. I think there is this, there is this incredible competitiveness, and especially if you're doing a business and finance or finance and accounting course, and you see your peers snapping up spring weeks and then getting onto internship programmes, and you feel like if you're not on the train, You've fallen off the train. You might never be able to get on again. But look, when you're 18, 19, 20, yes, it's really, really encouraged to start getting some direction in your career and start to think about what you love and what you don't like doing so much and starting to project forward and thinking, all right, could I see myself going into work every day and doing this thing? But We don't expect people to have all the answers. We don't expect people to be absolutely set on a particular route within finance. In fact, that's precisely why we do the Summer Analyst Training Program and a lot of the free materials that we provide. We want you to experience lots of different areas of finance in order for you to have a much more a much more evidence-based decision about the stages of your career. So if you were busy in your first year at university having fun, that's okay. Doing well academically, that's okay. If you missed out on a spring week, well, look, you know, there's, there's one line in a CV that you don't have that someone else might have. There are so many other lines that you can fill with other experiences, with extracurricular, with your academic performance. and then you can just go on and smash it in your internship if you get it, if you manage to get an internship. And then look, if you miss out on internship, there's still plenty of opportunities. Careers are extremely long and they are not determined by a 19-year-old version of you. Thank goodness. And, and what, yeah, what, what do you have to add to that? Am I, am I on point here?

Oh yeah, totally on point. And one thing I was going to say is I think there's probably a misconception about what you do on a spring week. And a spring week is quite different from a summer internship, which you typically do the year after, and equally then from a placement year or an off-cycle and a grad ultimately offer. And so the spring weeks are fairly, uh, they're quite broad, fairly general. It's a little bit about getting to know the business and things like that and different desks and what they do. So I don't think you're particularly disadvantaged I mean, you, you're, you're not in that recruitment pipeline to convert immediately, but I think a lot of the time it's a misconception because people think I've missed a trick here. There's some secret sauce that they've learned on the job in that one week that isn't necessarily true. And I know some banks, I think Barclays is one, I think their spring week might be 2 days or 3 days. So these aren't super intensive exercises here. And so, yeah, I just want to reassure people that from that side, you can definitely close that gap if there is one that exists on the, the more technical elements of knowing about banks and roles and things like that.

Cool. What about question number 2?

Yeah, so this comes from Ollie, Ollie Waters, and he asked, what is the timeline of career progression in IBD? Because we've talked about it, I think, in previous episodes, analyst, associate, and working our way up, MD and so forth. But what's the associated timeline and is that different in different areas of the investment banking division?

Yeah, it's a really good question, Ollie. Thank you so much for that question. So in IBD, the world of investment banking, there's very, very few shortcuts. There's not a lot of cheat codes that you can jump up to the next level within a particular period of time. There is definitely the case of doing your time, putting in the work, proving yourself, and gaining the requisite level of experience that you need in order to move up to that next level of experience. So the typical, the typical staging posts are between 2.5 to 3 years, or 2 to 3 years between analyst and associate, associate and associate director, or VP, whatever the bank calls it, 2.5 years from, or 3 years from VP, maybe a little bit longer to MD. Now, probably the most important inflection point is between VP and MD because you go from being an executor that's taking direction to having to generate your own revenue for the bank. And that is when a lot of people, you know, that's, that's the ceiling that a lot of people hit. Because if you are really good as an analyst or an associate and you have good technical skills and you know your way around an M&A transaction, you can be really useful to the bank up until a point. But when you want to try and jump to an MD, you need to be more than just technically proficient. You need to be really good with clients, you need to have your own network, etc., etc. So it's not as cut and fast that you do 3 years analyst, 3 years associate, 3 years VP, and then you're up, you know, it gets a little bit more flexible.

Is it common? So, sorry, just to ask, is it common then you could just stay at that level and your pay still go up because you're a technician, not a sales generator or business deal flow generator?

Yeah, we all, we all know that in almost every corporate environment, people that are good as they're coming up through the ranks aren't necessarily the same people that should be managing directors, team leaders, strategic heads, et cetera, et cetera. What tends to happen is you will get a smattering of directors that haven't made it any further that are just staying there. But either from the bank's perspective or from the individual's perspective, if you, if you see the ceiling coming, you're probably best getting out and trying to find a higher ceiling somewhere else. So if you've been a director for 4 or 5 years, it's not looking like you're going to get that next jump. Well, try another bank where there's a few more MD roles available, or try going in-house. Where you can rise up in a, in, within an organization doing corporate finance. So there are options available to you. The first 6 or 7 years, relatively standardized progression. You can, the very, very best can probably accelerate 15 to 20% quicker than normal, but no more than that.

And would this explain then why some jump from bulge bracket to boutique, for example?

Exactly. And, and obviously you have to go where the opportunities are. I've got a friend who was in exactly this position, director, and trying to knock on the door of managing director, and he couldn't see any of the managing directors leaving anytime soon. So he got out and tried another route where there was a little bit more upwards progression. So that's when you start getting really strategic about your career. But in the early years, Ollie, Uh, you just have to get on the train and, uh, and just, and just work really hard. All right. Question number 3, I'll ask you one now. So what, this is from Serban. Good to, uh, good to get your question, Serban. What steps can I take as a fresh grad to stand out in an ever increasingly competitive grad and undergrad environment?

Yeah, very, it's a common question. It's one I guess that stands out at every, every step. So from the spring to the summer to the grad, the, the competition element is definitely there. At the grad stage, I think you've got to look, and this is where it will be down to the individual, what do you have on your resume already, what role do you aspire to be in, and what gaps exist. And then it's about what can I consciously now go out and do in order to fulfill the criteria of the job spec that I want to obtain? Because ultimately what you're aiming for is like a hand in glove, your CV, that role, and it should be unquestionable. I always think that as a hiring manager, what they're doing is they're looking for excuses not to progress you, not looking for good things to progress you. It's always like, oh, what's wrong? And it's, it's almost quicker to say that's not right, that's missing. So if you can address all of those parts and then you can go away and think about, okay, so what do I need? Do I need to improve some communication skills? And therefore, I go to Toastmasters, or I get a job in a service sector role where I'm dealing with all different types of customers, having confrontations, thinking on my feet, dealing with stress, multitasking, that sort of thing. Is it technical? And I need to do a course. There's plenty online of training providers that do technical short micro courses, things like that. Do you need to upskill to fill those voids? Um, and then also going back to your life experiences, and I always say this to students, not belittling what might seem not obvious because it's non-finance and thinking, okay, what could I extract out of those that perhaps then I can highlight and flag that make me unique? Andrew, who's our head of corporate partnerships and a former you know, head of hiring at one of these big US firms. He's always like, well, what, what's going to stand out and make you unique? And what to make yourself unique, it doesn't necessarily need to be like this fantastic moment of truth where you're like saying, I won a gold medal at the Paris Olympics in 2024. It can just be something that's genuinely quite interesting. But if you can tie that uniqueness of that element to an appropriate transferable skill to the role, then you know you've hit the right tone, I think.

Yeah. I mean, I, I, I couldn't agree more. I think the technical elements and the boxes that you need to tick, so many people would have ticked them in terms of your experience, your academic qualifications, et cetera, et cetera. That uniqueness, again, I, I like to say a lot when I'm talking to students that Finance is a human industry and you are dealing with a human and a human is having to figure out whether you would fit socially and obviously technically within an organization. I remember one of my friends got an internship at JP Morgan. I remember this back when I was at university and he said the reason why he got an internship is because he said that he spent a summer sheep farming in Scotland and that was the story that he told. and it was hard. It was rainy. It was, it was really, really physical labour. And the, and the director that was hiring, that was, that was doing the applications, absolutely loved it. So yeah, stand out, do something a little bit different. It doesn't have to be, as you say, an Olympiad or, or whatever it might be. All right, here's one for you. This is one that I have no, no insight on. How much programming experience do I need to be a quant, says Prabhav.

Okay, so yeah, I could take this on, and my knowledge comes from actually a previous episode. If you were to go back on our channel that I did with our head of engineering, Milind Deep, and he went through literally for an hour and deconstructed actually 10 different roles that form a quant team. So I think that's your first step of understanding how much of the application of programming is required. Now what I've done is I've just brought up that post as a, as a memory kind of jog to myself of, or to jog my memory of what were those 10, and I've picked out 4 for illustrative purposes. There's basically a quant analyst, quant trader, quant developer, and quant researcher. And I would say loosely, you could probably rank them in programming is the most required to the not least, that's probably underplaying it a little bit, but not required so much. So at the top, you've got a researcher and developer. So the developer, developers build and implement this, this sophisticated computational algorithms, analytical tools that quant analysts and traders are actually using. So fundamentally, they require the strongest programming skills. So Python, R, C++, MATLAB, all the good stuff. The researchers develop new financial models or improve existing ones. So this is sort of things like forecasting, valuations, trading strategies. So they need to have fundamental understanding of the code and be able to manipulate and optimize. Then you start moving though up, so you can kind of break it, the devs and the researchers who are working intimately with the models, and then there's the user of the models. There's the analyst, the trader, and then ultimately the PM, who probably has the lightest touch on the actual programming side. That's the pilot, if you like. So he's not so bothered like a mechanic under the bonnet fixing the plane. He's just piloting the ship and making the decisions of where I'm going at that point. So the analyst would develop complex models and algorithms. So derivatives pricing, risk management, algorithmic trading. The trader is using the quant models for things like high-frequency trading. So you're basically just, you're there, you're the gunman now. Now you're just going fire, fire. And the analyst is looking at, well, how is that firing hitting the target? Is it performing well? Are you getting the type of response that you want? And then they're going back to the researchers who are looking at the full big dataset and the developers are making the changes. It's kind of the most simplistic way I could kind of express the use of languages within that. Multifaceted role team.

Yeah, thank you. Yeah, hopefully Prabhav, that helped. I can guarantee you that my Excel skills don't even touch the, touch the surface of what you need to be a quant. And it's obviously a very high threshold and a great job if you can get it. Final question for this episode, with the rise of algorithmic trading, Is there a threat to traditional roles? Obviously, this is more on the sales and trading side as well. So I'll hand this over to you, Ant.

Yeah, it's again a very common one, and rightly so, particularly in the current context of discussions about AI and job displacement and things like that. Now, from a large corporation perspective, you're very cost-conscious. And if you can automate, you will. And so the increase of stringency on the regulatory front has also led to more, even more automation. And so I think the best way to look at this is someone like BNP Paribas, who was in the news only a few weeks ago. So yes, there are fundamentally probably less human-based sales and trading staff. However, even on that front, there's still a difference between low touch and high touch. Low touch being what can be automated by an algorithm essentially and can execute or make a market for a certain product, i.e., a price, as against to something that's less liquid or more exotic. And you, or if you're dealing in very large size and you want to then talk to the human to have a, some personal reinsurance, that ability to have trust, the ability to exercise that's beyond the more binary type of execution factor. The other thing is that you could argue humans then that are still involved in that process become even more valuable because they become even more that relationship factor as the inefficiencies get arbed out of the market through technology. It's almost like, well, what's the differential factor? Often it's a relationship that's led by humans. And so there's probably gonna be more scope for kind of power, if you like, amongst the few, the human traders piloting these systems. But my example with BNP is simply the roles are just changing. And I think there's a really good phrase that NatWest Markets, head of trading said, it's not that the jobs are disappearing, they're just changing. So the volume of jobs in itself is still there. It just means that students they're looking for, the people they employ, need to be more quantitatively minded. So that's different to me talking about a quant dev researcher analyst at a hedge fund. What they're looking for are people who can just work around datasets, can manipulate them, probe them, and identify and use them in the correct way. And ultimately, a lot of the technology front end for the user is about the transmission of power to the buyer side, the user side. And so there's more money to be made. You're going to have to have better architecture in the systems. But ultimately, yes, that's why I would always encourage someone even thinking of sales and trading, as much as there's qualitative skills that are absolutely essential, I would definitely have a baseline programming competency because that will be incredibly useful and it will also make you more applicable to roles beyond just that, where you could work on the asset management on the buy side, for example, in a trading seat where you have data, data-sensitive people who work very closely with PMs, for example, who all would, would sit within a trading umbrella. So yeah, hopefully that makes a bit more sense.

Yeah, thank you so much, Anthony. I think this, that concept of the translation function between the technology and the human at the end of the loop, and I think it's always nice to realize that whenever there's a technological revolution, more jobs are created than lost. Let's just keep remembering that. But thank you. Thank you for that explanation.

All right. Well, look, we'll wrap up this first episode. But remember to stay tuned for next week in part 2, we will answer questions like Stephen's worked at a big investment bank in both New York and London, so we can talk about any technical cultural differences. What attributes would people look for in a junior analyst? So could give you some insight as to what to work on. And then have you ever been shouted at and why? Uh, I don't even know where to start with, with that one.

I think in a work context, let's, let's keep it to work.

Um, but yeah, we, we will get into all of that in round 2. So until then, thank you, Stephen, and, and see you next time.

Thank you, man.