Six Things Finance Graduates Need to Know

Careers in finance are evolving quickly, and yet perceptions about working in the industry remain outdated. Here are the trends for 2018, according to industry experts.

Recently, LinkedIn conducted an analysis of the most promising finance careers of 2017. With high salaries and excellent career prospects, a job in finance has always been attractive to graduates. Now, as technology infiltrates finance, entirely new roles are being created in the industry and the need for technical and quantitative skills is growing.

In South Africa, the field is highly competitive. And, say industry leaders, it is evolving quickly. There is increasing demand for scarce skills, and this trend will likely continue, particularly in the current economic climate.

This means undergraduate students need to buckle up, as a Master’s degree is typically required as a minimum to work in this industry. Speaking at the University of Cape Town’s African Institute of Financial Markets and Risk Management (AIFMRM) on 23 August, representatives from Rand Merchant Bank, Old Mutual, Liberty, ABSA, and AIFMRM, advised aspiring quants and risk managers what they need to be prepared for.

1. Instability in the economy is not the end

Asked whether instability in South Africa was a career death sentence, the panel was adamant. “I have never seen such a professional drive for quants,” said Greg Mollentz, Head of Asset Liability Management at OMSFIN.

ABSA’s Nico Le Roux, Principal: Rates and Credit Structuring, pointed out the need for some kind of direction in order to sell. “From that perspective, volatility is not a bad thing,” he told students.

A deeper analysis came from AIFMRM’s Obeid Mohamed, who said industry developments post-2008 meant a growing demand for risk managers. “Since then, management has been playing catch-up. Quantitative skills are more important than ever in the risk management space,” he said.

Moreover, he added, it was important to acknowledge the positive role risk managers played. “Risk management is not only about adverse events but also about identifying opportunity and enabling business,” he said. “Banks play a very important role in society; enabling transactions plays a big role in developing society. We must not only focus on the negative side.”

2. New skills are in demand – and they’re evolving constantly

There’s the opportunity to thrive in a rapidly-changing industry, said Co-Pierre Georg, senior lecturer at AIFMRM. Georg cited industry buzzwords: fintech, machine learning, big data, blockchain… “The financial service industry is changing”, he said. “This will result in a fundamental change in how the economy works.” Georg, co-convenor of the new MPhil in Data Science of Financial Technology, hopes to prepare students for this change.

“The demand will soon be inordinate for people with scarce skills that combine finance with modern technology,” he said. “This will be the case in every environment where there is risk, for example where there is sensitive data that needs to be shared.”

According to Georg, machine learning will be a core element of this shift and forms a crucial part of the new degree, where students learn to develop their own artificial intelligence: AI trading platforms or a chatbot for customer service, for example. “This is currently state-of-the-art,” he said. “There has been a massive breakthrough in technology over the past few years.” The flip side, he added, is that every year or two, knowledge runs the risk of becoming outdated – it is essential to remain ahead.

“We are very fortunate to live in a time where we witness this change in the industry,” he said.

3. Stay the distance

It’s not easy to study and work, and sometimes funding is scarce and this places heavy financial demands on students. Lennox Masangane, Counterparty Credit Risk Models Consultant at Rand Merchant Bank, emphasised the importance of staying the distance. “Try to stick it out with your studies for as long as you can,” he advised. “It is worthwhile.”

David Taylor, founding director of AIFMRM, concurred. “In the last 10 years, a master’s degree is the standard qualification you need to get into financial careers, especially if you want to climb the ranks,” he said. He added that the institute works hand-in-hand with industry and government to raise money to help fund students on its MPhil in Mathematical Finance and MCom in Risk Management of Financial Markets.

4. Postgraduate is increasingly competitive

There is an interesting paradox: although numbers decrease sharply from undergraduate to postgraduate level, applications at this level are still fiercely competitive. At AIFMRM, for example, there are just 25 places available each year on its sought-after MPhil in Mathematical Finance. At NYU, said Taylor, there are around 900 applications each year for just 30 places. “We are not quite there yet,” he said. Nonetheless, competition is tough and merit-based. It has even been necessary to move application dates forward by a month to 30 September, so that graduates can have enough time to find sponsorship before they enrol at the end of January.

5. Employers expect you to be work-ready

A challenge, said Taylor, is that employers increasingly expect graduates to be work-ready as soon as they leave university. “Firms are essentially looking for a maturity of mind and attitude in new recruits. The technical sophistication of modern Financial Services roles, the speed at which the environment can change, and the breadth of knowledge and abilities required, means employers want recruits who do not need a year or more of post-employment immersion to begin to contribute in a meaningful way,” he said. “Somehow we have to slide students through a scale into people who sit down in their new jobs and start making money.” He encouraged students to hone their professional skills early and to embrace internship opportunities.

6. Graduates have scope to shape their own career

There is a need for those who dream big, said Georg. “You must have an interest in trying and failing. We want people who want to experiment and change things,” he told students. “My dream is that at the end of next year, we will have students who start up their own companies.”

“We must go from the mindset of trying to get jobs to trying to create jobs.”

Whatever route people take in the industry, it is a fantastic and challenging career, panellists agreed. Without exception, they expressed their enjoyment of their careers. “If nothing else, this is a really fun job,” said Ved Somera, Head of Trading – Equities at Nedbank.

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