Little background. I’m a 24 year-old guy who is starting his career in financial services in the UK. I am originally from Eastern Europe but I did my Bachelor’s in the Netherlands (at a good, but not an internationally famous uni) and then I moved to the UK where I finished a MSc Finance degree in Sep 2013.
I did not have a job upon finishing my Master’s so I spent the next few months basically applying to everything (my interest is in AM/ER, but I could not afford to be picky). Eventually, I secured a Graduate position at the Treasury Department of a large commercial, mutual bank. My programme starts in Sep and honestly I am glad that I finally have a job after the intense search. The position seems cool enough, part of my rotation includes hedging and derivatives, ALM and investing in the money markets. I am also going to be sponsored for the CFA.
While everyone at the bank seems nice and the atmosphere is quite relaxed I have no intentions staying there in the long term. My desire is to break into AM/ER and I am not sure what the best course of action would be. My plan for now is to wait for a year during which I will obtain my L1 and gain some financial experience in Treasury. In the mean time I will continue reading various books on investment and I will start managing my own portfolio with the hopes of getting some practical experience. I am going to keep a journal for all of my investment decisions and the motivation behind them. I am also planning to massively improve my Excel skills and learn how to write ER reports.
After 1 year I will start applying to entry level positions in AM, combined with cold-calling funds and emailing them my CV, cover letter and sample reports. I am basically going to call every single person in the industry until I make a successful career switch or I will die trying.
I was thinking of starting to look for the career switch immediately, however I’m worried that if I cold-call funds for a junior position now and get rejected due to the lack of experience they will not take me seriously if I do it again after a year. So maybe it’s better to wait a bit and use my newfound knowledge as leverage for breaking in?
What do you think of my plan of action? What would you do if you were in my place?
P.S. I have some internship-like experience in AM in my home country, but I did not do much there and since it is Eastern Europe I do not think it is taken very seriously in the UK.
It’s good you have a plan of action and motivation, and it looks like you have done some homework, (as opposed to many other folks here asking for advice).
I would suggest you switch immediately, as soon as you can. “a Graduate position at the Treasury Department” skills does not translate at all to AM/ER, and the longer you stay there, the harder it will be to leave, and stuck in back office roles.
Thank you for your reply. Is there any particular prep material you would recommend? I have a bunch of books on value investing (Graham, Greenblatt, Mihaljevic, Klarman, Lynch, Buffet etc). I also think that Financial Modeling by Benninga and Investment Valuation by Damoradan would be particularly useful. Where do you think my initial focus should be?
Networing is very important to break into AM/ER on the gate. So doing an internship program in AM/ER at a firm you’d like to work for is a huge boost, so look into getting training programs. In my limited experience, you should not stray too far away from your career path in hopes that you will leap back at some point in the future. Start now while you’re still fresh.
I found that most books are not practical to use in the institutional enviroment. Although they are very rich reads. Value investing is more appropriate if you are a Portfolio Manager or a retail investor. Since you’re none of that, you’d want to take it a step at a time and break into an entry research/analyst role. So learning how to model financials is a definetly a plus since you’ll be doing that anyway. Learn how to read economic reports and how they relate to the future of corporate growth by sector. Most of your early career in these departments will be focusing on a specific sector/industry and required for you to know by heart, in order to provide quality investment ideas for your superiors (AM) or writing out published research reports (ER).
The best books at the entry stage that I personally enjoyed are:
The Investment Cheklist
Investment Valuation (3ed)
Valuation: Measuring and Managing the Value of Companies (5ed)
Understanding Micheal Porter
Investment Banking: Valuation, LBOs and MAs
Best practices for equity research analysts
I can’t recommend a modeling book since I’ve only read one and didn’t like it. It was Equity Valuation for Analysts and Investors by Kelleher. It was a very decent book, but the framework for modeling was a little too complicated for my taste. Tjia and Benninga are on my list and look like good reads.
Hey man, thanks for the tips and the book list. What you’re saying definately makes sense. To be honest I don’t think I can land an internship in the UK now since I’ve completed my MSc degree an year ago. However, I can re-apply to Graduate (Trainee) Programmes focusing only on the areas I’m interested in. Last time around I applied to all kinds of Finance positions due to my fear from not getting anything at all and I lost focus. I’m also thinking of taking Breaking Into Wall Street courses so I can gain some modeling exp and put the certificates on my CV.
That all sounds good, but the fastest way to get where you want is:
1- Landing an interview
2- Acing the interview
Of which are best accomplished by:
1- Networking
2- Practicing interviews
You need to understand that the requirments for such roles are usually a passion for the field and willingness to learn. It goes without saying that you should be able to walk the interviewer through a simple DCF and multiples, but nothing huge. You will learn all what you need on job.
You could take the slow lane and leverage your application and interview skills through letters and certificates, but most people I know got pushed through the door and talked their way through the interview.
Finish the CFA exams you mean? No way. He’d be waiting at least two years in a position he doesn’t want to be in. Start applying for a better job ASAP. I think jackofspades it seems as though you know what you are doing. Reapply for all the AM/ER grad programmes again next year.
Try to build up a personal trading history - even if that is virtual. Perhaps join an investment club. It’s good to be able to discuss some personal investment ideas in an interview.
Also, I think your idea of improving your excel modelling skills is a good one. There are books on the subject but I think the best way to start is to print off the latest annual report for a large company (apple, coke, etc) and then transpose it into excel. Go back 5 years with the data and build out a p&l and balance sheet at least. Then you can have some fun trying to model out a forecast for the company’s key variables. If you can get your hands on some good broker research to help you that would be helpful.
Really good advice in this thread, guys. I just have one last question. What are the logistics of going to assessment centers when you already have a job? Usually, the assessment centers last a whole day and they are during the week. I can always call in sick to go to one but this can work only a few times and I would imagine I might need to go to about 5 assessment centers until I land a job. Should I use my vacation days? I guesss telling my manager the truth and asking for a permission to leave is a bad idea, because if they find out I’m trying to move a month after I started I’m screwed with my current job in case I dont find anything.