Finance Education

apgb8 · 29 October 2011

Hi,

i'm just about to finish my final two exams this week in my accounting/finance double major. i have got a job lined up beginning in January next year at a accounting firm.
this semester i've basically done my whole finance section of the major and getting really interested in it. but i currently have this perception that acquiring a good secure job in the industry is quite difficult unless you're right at the top of the class, so i've chose to go down the accounting route because it seems less stressful, they pay for your CA and it was great working there when i had a trial run with them for a couple of weeks.

the CFA program hasn't advertised much nor any finance companies. i've spoken to a stock broker who is very successful but income fluctuates 50% a month! he did honours and he isn't even doing a CFA or anything which i find surprising but this may be the norm in stock brokering...? anyways, i'd just like to know whether i should maybe go into honours in finance, which i'd prefer not to do because i'd love to just start working in business in general ASAP, but does honours in finance give you much advantage or your peers? is the industry very stressful? if i did do my CA and changed my mind/wanted to expand into finance, would my CA qualification hold up in the finance industry?

one last thing-if i do go on into accounting, can anyone recommend any short courses or books (preferably something that could be put on my CV) that i could do over the summer before my job begins that would really help give me some practical education on the industry.

Thanks in advance!

mazzatelli · 29 October 2011

apgb8 said:
Hi,

i'm just about to finish my final two exams this week in my accounting/finance double major. i have got a job lined up beginning in January next year at a accounting firm.
this semester i've basically done my whole finance section of the major and getting really interested in it. but i currently have this perception that acquiring a good secure job in the industry is quite difficult unless you're right at the top of the class, so i've chose to go down the accounting route because it seems less stressful, they pay for your CA and it was great working there when i had a trial run with them for a couple of weeks.

the CFA program hasn't advertised much nor any finance companies. i've spoken to a stock broker who is very successful but income fluctuates 50% a month! he did honours and he isn't even doing a CFA or anything which i find surprising but this may be the norm in stock brokering...? anyways, i'd just like to know whether i should maybe go into honours in finance, which i'd prefer not to do because i'd love to just start working in business in general ASAP, but does honours in finance give you much advantage or your peers? is the industry very stressful? if i did do my CA and changed my mind/wanted to expand into finance, would my CA qualification hold up in the finance industry?

CA won't get you very far if you are after a very high paying job and intending to get into front office of finance (the exception would be investment banking, but competition there with people of comm/law degrees is high). Despite what you think of it being stable, you are also easily replaceable. Just have a look at the Big 4 accounting firms, redundancies happening everywhere, but every year a fresh batch of grads come in and take over the work - because in all honesty - the work is not too difficult. The other rub in accounting firms is the politics. Have a read of all the comments here about big 4 life:
http://audit.wordpress.com/2006/11/10/holy-crap-this-really-sucks/

You'll forever be stuck in back and mid-office roles, you will rarely get a look into say fund management and trading. The guys that populate those roles are all finance, eco, math, compsci, physics etc quantitative folk - very intelligent and have some form of honours, or postgrad qualification.

Lastly, doing honours is good, but depends on what the area of study is. E.g. doing option pricing is good if you'd like to become a market maker. Doing honours on the validity of EMH - well that is a bit of a waste of time.

I guess what I'm saying is, really explore what you want to get into and then move accordingly.
Best of luck

apgb8 · 30 October 2011

mazzatelli said:
CA won't get you very far if you are after a very high paying job and intending to get into front office of finance (the exception would be investment banking, but competition there with people of comm/law degrees is high). Despite what you think of it being stable, you are also easily replaceable. Just have a look at the Big 4 accounting firms, redundancies happening everywhere, but every year a fresh batch of grads come in and take over the work - because in all honesty - the work is not too difficult. The other rub in accounting firms is the politics. Have a read of all the comments here about big 4 life:
http://audit.wordpress.com/2006/11/10/holy-crap-this-really-sucks/

You'll forever be stuck in back and mid-office roles, you will rarely get a look into say fund management and trading. The guys that populate those roles are all finance, eco, math, compsci, physics etc quantitative folk - very intelligent and have some form of honours, or postgrad qualification.

Lastly, doing honours is good, but depends on what the area of study is. E.g. doing option pricing is good if you'd like to become a market maker. Doing honours on the validity of EMH - well that is a bit of a waste of time.

I guess what I'm saying is, really explore what you want to get into and then move accordingly.
Best of luck

interesting. from the blog, he is working a big 4, thankfully i'm not, and secondly he's working audit which is always high hours for some portion of the year.
and by stable with accounting, i'm meaning a more stable income...i always like to know what definite cash flows i have available to me, i wouldn't want it to fluctuate more that 20%, anything more would be quite stressful would it not?
but i see what you're saying in that i should look to what i want to do, truth is, it's difficult to know this since i haven't learnt much about this at uni, and the roles available. i mean i know about investment banking (which covers a lot to which i vaguely understand what what all the roles are), stock broking and financial planning. but like you've probably noticed, nothing specific.
i'm going to be working with small to mid sized businesses next year (advisory), mainly because i'm more interested in managerial accounting if anything, but i guess the key to my question is what roles are there for someone with an accounting/finance double major? i originally did it for some knowledge into my own investments, but now i'd like to explore into finance a little more.
ps: why do this people with "finance, eco, math, compsci, physics etc quantitative folk" fill front office roles? other than the finance and economics (and after doing some economics units, it's hardly difficult nor quantitative compared to finance) i thought compsci and psychics ppl would be pretty useless when it comes to knowing the fundamentals of business and investing. i just thought that having the accounting background helps a lot in analysing stocks on a fundamental basis.

mazzatelli · 30 October 2011

apgb8,

I missed the part about you getting work. Congrats, hope it goes well.

I know its very general and sounds simple, but that first step is very important - knowing what you want to do. You can still work, but if you quickly find you need to switch, if circumstances allow for it, then do not hesitate to make it happen.

Anecdotes:
I have a friend who was just keen to get a job after graduation from a top tier university, because everyone around her was getting one. She ended up at a small accounting practice (tax). 4 years on and she couldn't break into a big firm. Salary at its highest was $45k, though stable. Did her CFA during that time, and only recently was able to move on.

Comparatively, another friend of mine, could not score a graduate position he wanted. He got offers from Big 4 accounting and corporate finance, but wasn't interested in the field. The desire was asset management or trading.
Did his honours thesis on option pricing - is a market maker now. $100k start. Stressful job, but 4 years on, in terms of pay and experience, working at the Big4 could never reach.

When it comes to actual modeling in economics, strong stats is required. If you did the first few units of eco in a finance major, then it doesn't move beyond anything other than basic regression. Quantitative fields in general develop better critical and logical thinking than an accounting major. Its the thought process that matters.

CompSci, look up high frequency trading, they aren't limited only to this application
Physics - e.g. heat differential equations are transferable to PDE's using to price options under Black Scholes

Finance isn't restricted solely to equities markets, there are larger markets like interest rates, energy. You can't apply financial statement analysis to those markets.

Having said all that, if advisory type roles interest you, and you are talented in that field, then definitely pursue the CA. It is always better to be a specialist imo.

apgb8 · 30 October 2011

mazzatelli said:
apgb8,

I missed the part about you getting work. Congrats, hope it goes well.

I know its very general and sounds simple, but that first step is very important - knowing what you want to do. You can still work, but if you quickly find you need to switch, if circumstances allow for it, then do not hesitate to make it happen.

Anecdotes:
I have a friend who was just keen to get a job after graduation from a top tier university, because everyone around her was getting one. She ended up at a small accounting practice (tax). 4 years on and she couldn't break into a big firm. Salary at its highest was $45k, though stable. Did her CFA during that time, and only recently was able to move on.

Comparatively, another friend of mine, could not score a graduate position he wanted. He got offers from Big 4 accounting and corporate finance, but wasn't interested in the field. The desire was asset management or trading.
Did his honours thesis on option pricing - is a market maker now. $100k start. Stressful job, but 4 years on, in terms of pay and experience, working at the Big4 could never reach.

When it comes to actual modeling in economics, strong stats is required. If you did the first few units of eco in a finance major, then it doesn't move beyond anything other than basic regression. Quantitative fields in general develop better critical and logical thinking than an accounting major. Its the thought process that matters.

CompSci, look up high frequency trading, they aren't limited only to this application
Physics - e.g. heat differential equations are transferable to PDE's using to price options under Black Scholes

Finance isn't restricted solely to equities markets, there are larger markets like interest rates, energy. You can't apply financial statement analysis to those markets.

Having said all that, if advisory type roles interest you, and you are talented in that field, then definitely pursue the CA. It is always better to be a specialist imo.

yea, thanks for the advice mazzatelli!
so your friend who didn't get into a bg 4 did her CFA while at a small accounting firm? i couldn't imagine the firm would have paid for a CFA, that must have been expensive!

yea i understand what you mean with other majors having strong mathematical backgrounds and this maths can be applied across a lot of fields, i found that myself doing physics and chem in high school that many economic models and finance models applied similar models to that of physics and chem...by the sounds of it you may have done some physics yourself talking about heat differential equations..?

so in short there isn't a whole lot to offer for someone with both an accounting and finance degree? other than maybe CFO positions? corporate finance was a unit i really enjoyed, surely there's something applying capital budgeting/restructuring out there!? sorry if it seems desperate, but i still think that having advisory accounting under my belt and having a good understanding of corporate finance/finance in general would be a great asset to any business...? don't get me wrong i don't regret doing the finance...it's opened my mind to the possibilities, and if i hadn't studied it i would feel so ignorant about the business world, and i like to do my own personal trading anyway, and it has helped a lot in understanding the theory behind it all.

my last question is this then, what would you recommend me do to not totally eliminate a future in finance? other than keeping up with the markets, is there any part time courses, or anything out there i could do over summer that would give me some good practical knowledge? anything that could go on my CV to impress employers? i'd also like to do something not only for my career but for my own personal trading.

PS- What is your current career in mazzatalli? i'd assume finance? but what particular field if you don't mind me asking?

skc · 30 October 2011

If you want corporate finance you can also consider either retail banks or corporations large enough to have a large finance department (e.g. any ASX 50). Several departments in retail banks may be appropriate - commercial / business banking, internal M&A or special projects team etc. Even the old Happy Dragon had a little known corporate finance tem. The graduate programs of some banks are not a bad start to a career imho.

McLovin · 31 October 2011

apgb8 said:
yea, thanks for the advice mazzatelli!
so your friend who didn't get into a bg 4 did her CFA while at a small accounting firm? i couldn't imagine the firm would have paid for a CFA, that must have been expensive!

The CFA is a cheap course to take about $1000/level (there are 3 levels).

apgb8 said:
so in short there isn't a whole lot to offer for someone with both an accounting and finance degree? other than maybe CFO positions? corporate finance was a unit i really enjoyed, surely there's something applying capital budgeting/restructuring out there!? sorry if it seems desperate, but i still think that having advisory accounting under my belt and having a good understanding of corporate finance/finance in general would be a great asset to any business...? don't get me wrong i don't regret doing the finance...it's opened my mind to the possibilities, and if i hadn't studied it i would feel so ignorant about the business world, and i like to do my own personal trading anyway, and it has helped a lot in understanding the theory behind it all.

I have that exact degree, and there are plenty of opportunities, of course the higher your marks the higher your opportunities. If you have a pass or credit average then don't expect to shot the lights out straight away. I got an analyst position out of uni at the investment bank formerly known as the Millionaires Factory, then I went overseas and worked in i-banking in London and briefly in NY. There's an over emphasis in Australia on what degree someone has and how over/under qualified that makes them for a particular job. In IB you're job is really about synthesising and conveying ideas, an understanding of finance is good but I've worked with guys who had Arts degrees majoring in English lit and were far better bankers than guys with lots of letters on their business card. Be prepared the hours are long (a friend of mines first day at HSBC in NY went for 48 hours) and when you start you don't do much more than grunt work on Excel. Similarly, I know guys in equities sales (at big instos) who barely passed their HSC but are extremely good at their job. Having said that, if you want to become a quant or similar then you'll be way out of your league with an accounting/finance degree.

apgb8 said:
my last question is this then, what would you recommend me do to not totally eliminate a future in finance?

Go and get a job in finance, if that's what you want to do then go and do it. If that means working at the Commsec call centre then so be it, once you've got 18-24 months experience a lot of doors will open. If you get international experience that will make you 10x more marketable when/if you returned to Australia.

apgb8 · 31 October 2011

McLovin said:
The CFA is a cheap course to take about $1000/level (there are 3 levels).

I have that exact degree, and there are plenty of opportunities, of course the higher your marks the higher your opportunities. If you have a pass or credit average then don't expect to shot the lights out straight away. I got an analyst position out of uni at the investment bank formerly known as the Millionaires Factory, then I went overseas and worked in i-banking in London and briefly in NY. There's an over emphasis in Australia on what degree someone has and how over/under qualified that makes them for a particular job. In IB you're job is really about synthesising and conveying ideas, an understanding of finance is good but I've worked with guys who had Arts degrees majoring in English lit and were far better bankers than guys with lots of letters on their business card. Be prepared the hours are long (a friend of mines first day at HSBC in NY went for 48 hours) and when you start you don't do much more than grunt work on Excel. Similarly, I know guys in equities sales (at big instos) who barely passed their HSC but are extremely good at their job. Having said that, if you want to become a quant or similar then you'll be way out of your league with an accounting/finance degree.

Go and get a job in finance, if that's what you want to do then go and do it. If that means working at the Commsec call centre then so be it, once you've got 18-24 months experience a lot of doors will open. If you get international experience that will make you 10x more marketable when/if you returned to Australia.

thanks mclovin.
so the CFA is only $1000 a level with 3 levels? wow, cheap!
also, what do you mean by "if you want to become a quant"..? am i out of my league by means of not having enough maths background?
and also how do guys with arts degrees get into investment banking!? lol

by what you're saying, to be successful in investment banking you just have to be good at what you do, rather than having any sort of experience of degree..?

i would like to go into finance, but my whole reason i went into commerce was to work internally in a business, to be able to successful run and manage businesses and/or adviser how businesses should be run, hence advisory accounting. and at the same time i was hoping that this advisory accounting would work well with say corporate finance ie. capital budgeting, capital restructuring etc.but i have ATM a big interest in finance, but i have a feeling it is far too stressful, and it seems your position is quite easily replaceable (especially if a guy with an arts degree could do your job! lol) and again, my real passion is building businesses, not so much analysing from the outside (which i'd like to do in my spare time though and invest!)

but like you said, if i change my mind i'd like to keep my education up in the area of finance, hence why i asked whether there is anything i could do (like possibly CFA) or other simpler things that would help me if i ever change my mind, or will just help me in my own personal investing....?

mazzatelli · 31 October 2011

With accounting/finance majors, some of the better positions to score are in Investment Banking and Securities Analysis. From there, are good exit opportunities into e.g. asset management, private equity. Be prepared to work the 100+ hours a week for a few years.

There are a lot of "financial analyst" roles out there, a small fraction of them would be what I described above. Most would be mid-office type work e.g. remuneration modeling, management reporting. These have stable income and in general will pay higher than accounting firms.

The unfortunate thing is you will get pigeon holed, especially if you stay in accounting too long and want to move into finance, its highly likely you will have to start e.g. CFA to move in there. Plus, some banks want fresh grads only, so the earlier you jump into these roles the better.

You won't make it as a quant currently, no math and stats background.

It sounds like you have an idea of what you like (advisory), so pursue it!

I guess the point I am trying to make is, people often say "yes, there's opportunities for you to move from x to y'' and quote a few people out of thousands who have been able to make the switch, but the reality is it is often difficult if you are not in early.

My current field is in quant and trading. So, I am slightly biased with quantitative qualifications, did my postgrad in maths.

McLovin · 31 October 2011

apgb8 said:
thanks mclovin.
so the CFA is only $1000 a level with 3 levels? wow, cheap!
also, what do you mean by "if you want to become a quant"..? am i out of my league by means of not having enough maths background?
and also how do guys with arts degrees get into investment banking!? lol

As mazzatelli said, you don't have the maths and specifically the stats to become a quant. Hedge funds and the better instos look for guys with PhD's in mathematics to become quants.

Wrt to the guys with arts degrees, as I said in Australia there is a tendency to view university as vocational training, which it's not. In Europe, and to a lesser extent the US, they generally don't care what degree you have as long as you have a degree and solid marks. In the US almost all top universities only offer undergrads arts or engineering.

apgb8 said:
by what you're saying, to be successful in investment banking you just have to be good at what you do, rather than having any sort of experience of degree..?

Correct. Like I said, your uni degree gets you your first job after that no one cares whether you majored in Alaskan butterfly farming or finance, they just want to see results.

apgb8 said:
i would like to go into finance, but my whole reason i went into commerce was to work internally in a business, to be able to successful run and manage businesses and/or adviser how businesses should be run, hence advisory accounting. and at the same time i was hoping that this advisory accounting would work well with say corporate finance ie. capital budgeting, capital restructuring etc.but i have ATM a big interest in finance, but i have a feeling it is far too stressful, and it seems your position is quite easily replaceable (especially if a guy with an arts degree could do your job! lol) and again, my real passion is building businesses, not so much analysing from the outside (which i'd like to do in my spare time though and invest!)

Look, you really need to get the "what degree do I need to do that job" mentality out of your head. The reality is that it doesn't matter what you do there is always someone ready to replace you. Having said that, IB isn't the local Maccas and if you're good at what you do you won't be replaced. There is a significant cost involved in finding and replacing staff and companies don't invest substantial sums of money trying to find the right people just so they can fire them 12 months later when the next bunch of grads come along. The hours are long, I use to work 9am until 9-10pm and usually 5 or 6 hours on a Saturday or Sunday. When you're doing a deal your hours will spike.

If your interest is in actually being hands on with businesses, then you might consider working in an internal accounting role at an IB. That will give you what you want currently but also mean if at some point in the future you wanted to get more involved in deal making the jump wouldn't be as far.

apgb8 said:
but like you said, if i change my mind i'd like to keep my education up in the area of finance, hence why i asked whether there is anything i could do (like possibly CFA) or other simpler things that would help me if i ever change my mind, or will just help me in my own personal investing....?

Sure do the CFA, but remember from a potential employers perspective, book smart at 21-22 is very different to book smart at 30. There are thousands of accountants who get to their late 20s and are bored with accounting and want to move into finance.

mazzatelli said:
The unfortunate thing is you will get pigeon holed, especially if you stay in accounting too long and want to move into finance, its highly likely you will have to start e.g. CFA to move in there. Plus, some banks want fresh grads only, so the earlier you jump into these roles the better.

Exactly.

tech/a · 31 October 2011

you majored in Alaskan butterfly farming

Took me years to find a Uni that carried this degree.

McLovin · 31 October 2011

tech/a said:
Took me years to find a Uni that carried this degree.

Yes, it can be challenging to find. Almost as difficult as a good course in early methods in Hungarian cabinet making.

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