Hi Everyone 
In a continuation to the why series :: , we wanted to start this immensely important why finance thread :), i think we already have threads for discussing financial concepts but we needed a more holistic thread to discuss both…
Hi Everyone :)
In a continuation to the why series 
, we wanted to start this immensely important why finance thread :), i think we already have threads for discussing financial concepts but we needed a more holistic thread to discuss both the academic and professional domains of finance
Well the objectives will be simple :)
1. Discussion on different domains within finance and their career prospects
2. Guiding Aspirants regarding the pros and cons doing an MBA in finance
3. Helping 1st year students understand the pros and cons of specializing in this field and whether it maps to their skill set , and their goals
4. Helping people choose the right electives and understanding how these electives map to the professional world
5. Lastly, B-school students can learn a lot more about the field from each other ; in understanding how things are approached in different b-schools; also to learn from each other's internship experiences :)
PS: Please refer to the earlier thread on finance concepts as well http://www.pagalguy.com/discussions/discussion-on-finance-concepts-problems-for-people-interested-in-finance-25022601 . It might help you with the queries you have 😃
I would be regular in this thread. I invite other interested B-schoolers to participate and contribute.
Hope we have a great time learning together :)
PS: I am also a finance enthusiast and a 2nd year student , so i am also here to learn from our seniors and friends from the finance world, lets help each other explore this wonderful field of finance
Hie..Well I am going to do MMS from 2011 to 2013...so in 2nd year...if i take finance...wat would my job profile be like??...Is it the same as a CA/CS?...
Secondly...is CFA necesary for finance??
Thirdly...is finance an interesting sector...are subjects interesting..as like marketing??
I was expecting this thread.....
Nice initiative abhimukh saar...
My majors will be marketing, but I have not decided what would be my minor specialization. I will choose finance or operations..........
I have heard that finance people have monotonous job....how true is that. ?
Hie..Well I am going to do MMS from 2011 to 2013...so in 2nd year...if i take finance...wat would my job profile be like??...Is it the same as a CA/CS?...
Secondly...is CFA necesary for finance??
Thirdly...is finance an interesting sector...are subjects interesting..as like marketing??
I was expecting this thread.....
Nice initiative abhimukh saar...
My majors will be marketing, but I have not decided what would be my minor specialization. I will choose finance or operations..........
I have heard that finance people have monotonous job....how true is that. ?
First of all i want to state that door to finance starts from Financial Accounting , understanding , analyzing , comprehending ,annual financial reports is the first step
The typical managerial activity which is concerned with the planning and controlling of the firms financial resources
Balance Sheet view of the Financial Management
Total Value of the Assets = Total Liabilities
Fixed Assets + Current Assets = Long Term Debt + Shareholders Equity + Current Liability
Fixed Assets + (Current Assets- Current Liability ) = Long Term Debt + Shareholders Equity
each and every step above has immense value in understanding , how is the health of the company , what are the future plans , where are they investing , what are their expansion plans , and the list goes on .......
Corporate Finance , is the field which is offered to MBAs from top b-schools in India , but CA/CS guys dominate this field
Profiles vary from wealth manager to corporate finance ,risk management profiles , to investment banking profiles , finance is a vast pool of large number of domains , cant be answered in a single post
Finance is very very interesting , given one understands it :), its complex not at all monotonous , we will explore further as we move on with our discussions :)
CFA , FRM certifications are differentiators for one's profile , it not necessary but it helps boost one's profile , particularly guys having work ex in other fields prior to MBA
what i entered MBA i had thought that i will take finance as major , but when i studied the subjects i found that it is not easy.
All those who think that they are good at maths can do well in finance are totally wrong believe me ...its just not maths but it is how things are done in corporate world.u have to memorize the methods (no way out --->no innovation) just use ur brain to how would you do it if you were the finance manager and have to allocate funds of a company ...and moreover its not just about fund allocation much more than that-- stocks, valuation,market value, working capital management,leasing , IPO and many more things till ur brain saturates...
it seems boring because u can't apply ur random ideas in finance as in marketing , when u study u have to learn the rules, methods but yes you apply ur learnings when you go for a business plan and projection of financial statements....it is not at all boring when u do such things....it gets really interesting and frankly i made a business plan and i enjoyed it ....although sometimes lectures do get monotonous.
And there are many opportunities in finance and yes you will get a sitting job , it may be monotonous for sometime but surely if you have the potential you can make your way out .its same with marketing , ur efforts will make you stand out. :)
but i would say finance is not for everyone , it is certainly tough to understand and needs efforts 😃 ...CFA is not necessary ,but it is certainly a plus point ....knowledge is what matters in the end .
thread made sticky. 😃
abhimukh dada, i had a doubt about this field. apologies for my ignorance.:)
the finance sector has been glamorized by the high salaries and investment banking profiles offered to the b-schoolers.
especially Farhan Akhtar has been using this glamor in his movies quite a lot.
i wanted to have an insight about the other career profiles which are offered to the finance graduates from b-schools.
e.g. i have heard of corporate finance and financial markets.
what are the other options which are there for the finance graduates?
may be getting rid of my ignorance will help others too.
Well Thanks Abhimukh this is just the kind of thread i wanted to open some time back....just cudnt do so somehow...:splat:
But will be regular on this thread...
Thanks Vibhati for telling me abt the thread
abhimukh dada, i had a doubt about this field. apologies for my ignorance.:)
the finance sector has been glamorized by the high salaries and investment banking profiles offered to the b-schoolers.
especially Farhan Akhtar has been using this glamor in his movies quite a lot.
i wanted to have an insight about the other career profiles which are offered to the finance graduates from b-schools.
e.g. i have heard of corporate finance and financial markets.
what are the other options which are there for the finance graduates?
may be getting rid of my ignorance will help others too.
The Profiles offered are:
At entry level Analyst profiles offered: Difference could be Credit Research Analyst, Equity Research Analyst or Research Analyst, Analyst : Risk Management, Commodity Research analyst
Fund Manager , Wealth Management , Portfolio Management at financial institutions which is a mix of marketing and finance
Management Trainee profiles at the entry level in PSU Banks , from there on Class 1 or Class 2 officers , Associate Vice President is also offered in good b-schools
1.If someone wants to opt finance as major in MBA,what all they can do beforehand so that they can understand the concepts better in a B-school.
Are there some books,magzines,websites?
How different certifications like CFA/NCFM help(not just in placements)?
As i said the accounting is the first step , so one must understand concepts of financial accounting to move to the next step of understanding concepts of finance
I would suggest start off from basics , like reading 11 or 12th class accounting , if one wants to start early
For conceptual knowledge i think reading about the following would help
1.Financial Institutions in the market
Commercial Banks
Insurance Companies
Mutual Funds
Provident Funds
Non Banking Financial Companies
2.Suppliers and demander of Funds
Individuals
Businesses
Governments
3.Understanding financial Markets such as Money Market/ Capital Markets , primary/secondary , debt /equity
4.Understanding financial instruments such Equity Shares, preference shares , debentures , bonds , loans ,Depository Receipts etc
One can search on Wikipedia. Investopedia.com for understanding above and NCFM modules can help you with these concepts as well
CFA and NCFM has lot of difference in terms of focus , CFA is something that starts from accounting concepts , accounting principles , and goes into depth of each and every concept, it is a world renowned certification , with an average pass percentage of 30-35%
NCFM is good for basic understanding of financial concepts pre-MBA, is not of much value add during or Post MBA , where CFA is , you can get more info on the dedicated thread for CFA :)
2.Monica talked about difficulty level of course.Is it that difficult ??
I think any person who has some basic aptitude and interest can understand anything what he/she wants to.I don't have any idea about finance specific.Kindly enlighten us on this.
Difficulty level is subjective , i for one didn't find finance difficult or monotonous at all , whatever i have studied in first year , has been really great :), so its based on perception from person to person, commerce background students have an advantage as they are familiar with the accounting concepts and hence are a step ahead of engineers , but having said that our batch topper in finance is a dentist , so i dont think profile matters over interest :)
3.When we talk about finance..ppl say u like number crunching.Is it just about numbers??
We might study about fiscal,monetary policies,economy,banking etc. also na?.What all we study in MBA(finance) that lots of numbers come into picture
Number crunching is an integral part of finance from understanding annual reports to finding feasibility of a project , everything is based on calculation of numbers 😃
OK lets talk abt FINANCE....its more than fat paychecks, number crunching, Accounting, etc etc. Its also not an easy job if u thought so there's lot in this field which justify the kind of paypackets that are offered but thats a different topic all together. What i am trying to do in this post is explain what fields exist within the Finance umbrella:
First lets take everybody's favourite, Investment Banking, it is a field of banking that assists companies in acquiring the funds they require for their businesses. A firm that specializes in IB is likely to do a fair amount of consulting work on financial matters. They are also capable of tracking the market in order to be able to offer advice to a company about when they should make public offerings as well as to know the most suitable way to manage the assets of the business.
Some of the consulting work an investment banking firm does will overlap with the work performed by a private brokerage. This is because buy-and-sell suggestions and advice is often something they offer to the corporations and businesses they represent.
Many people choose a career in the investment banking industry because the potential for high earnings is great. Investment bankers are one of the most sought after jobs to be found in the world of money markets. A career in this field is exciting, competitive and time intensive. You will travel a lot, work round the clock on a more or less regular basis and some say being cutting edge and even a little cutthroat is required.
Next lets talk about the second most popular finance field known to all, Consulting, it is all about helping organizations improve their performance primarily through the analysis of existing organisational problems and development of plans for improvement.
Consultancies may also provide organizational change management assistance, development of coaching skills, technology implementation, strategy development, or operational improvement services. Management consultants generally bring their own, proprietary methodologies or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks.
There is a thin line of distinction between Business consulting & Management Consulting while the former is more concerned with the short term plans of the organisation the latter is more related to the alignment of the organisation to the long term goals & objectives so as to achieve its vision & mission effectively.
Now lets move to fields which are not so popular first a field which i find very interesting, Merchant Banking, this is one field which primarily involves financial advice and services for large corporations and wealthy individuals.
They invest their own capital in client companies and provide fee-based advice services for mergers and acquisitions, issuing letters of credit, trade consulting and co-investment in projects involving trade of one form or another among other services they provide.
Also they work with other merchant banks and financial institutions with its prominent role being that of stock underwriting, and the bank works in the realm of private equity where securities of a company are not available for public trading.
They also perform international financing activities such as foreign corporate investing, foreign real estate investment, trade finance and international transaction facilitation.
Next is Risk Management which involves assessing and quantifying business risks, then taking measures to control or reduce them. It is often a part of the compliance function.
Risk managers either may be generalists who cover several different areas, or specialists who concentrate on a single one. Within the financial services industry, the major categories of risk include : Defaults on loans extended, Losses on securities inventories held, Losses on investment securities held, Counter party risk (another financial firm failing in its obligations to yours).
Risk management personnel develop, implement and enforce rules and procedures designed to mitigate these risks etc.
Well i think this is enough for now will come up with more in later posts...
Great Thread Abhi
This would definitely provide insights to people
- who want to shift their careers to Finance
- Who have fears about Finance- thinking that its just a maths game
- People who are already working in Finance world- this thread would for sure update them about other subdomains of finance
:clap:
Dav
Well i would like to share some of my leanings while working at Stan Chart during Summers in last 2 months , i was working under the private banking segment(read wealth management : sub-segment Ultra High Net Individuals)
So just brief note about what Wealth Management/Private Banking is
Private banking is an integration of banking, investment and other financial services provided by banks to private individuals investing sizable assets. In addition to providing exclusive investment-related advice, private banking goes beyond managing investments to address a client's entire financial situation. Services include: protecting and growing assets in the present, providing specialized financing solutions, planning retirement and passing wealth on to future generations.
2.The Services offered are
2.1.Saving & Investment Planning
2.2.Liability Planning
2.3.Insurance Planning
2.4.Retirement Planning
2.5.Estate Planning
2.6.Tax Planning
Typical Market Segments
Segment Investable Surplus ($)
Mass market:5000 - 25,000
Mass affluent:25,000 - 1 mn
High net worth : 1 mn - 10 mn
Ultra High net worth: 10 mn and above
Private Banking customers have a dedicated relationship manager (RM) and service manager/officer to advice and service accounts. Many of the private banking clients are owners /promoters of business thus the private banking RM works closely with corporate banking RM to personal as well as business banking needs of the customers. Cross Referrals between private banking and corporate banking business are very important. Along with this Private Banks depends on Banks Treasury and asset management companies that provide them innovative products that provide them competitive advantage
The product offering includes
oMutual Funds
oDirect equity Advice
oPortfolio Management Services
oFixed Income/debt product-government bonds, corporate debts
oDirect Investment to real estate
oInsurance
The Emerging Product offerings due to increasing interest in assets classes like commodities and art
oCommodities PMS
oArt Fund
oEstate planning-Trust and tax advisory services
oReal estate mutual funds
oPrivate Equity Funds
The players who are in this segment
Brokerage Houses
Which provide Portfolio Management Services and Trading & Settlements
Asset Management Companies
providing investment opportunities in Mutual Funds with varying Investment Objectives
Distribution Companies and Portals
which offer Third Party products
Insurance Advisors
providing Add-on financial products
Banks
Non-discretionary portfolio management plus other products
The single-biggest problem to growing wealth management businesses in India is supply, as talent pool for financial advisers is very shallow. Despite the large number of graduates, the talent pool for financial advisers is very shallow, and every firm is chasing them. Demand from clients is there, and there is the right delivery mechanism in terms of an evolving array of products. However, there are nowhere near enough advisers to service this demand. And thus creating large number of opportunities for employment in this field
Great efforts abhi sir
I have a doubt .Is its necessary that a Finance student should know about share market and all .As you mentioned before a finance student should know about :
1. Financial Institutions in the market
- Commercial Banks
- Insurance Companies
- Mutual Funds
- Provident Funds
- Non Banking Financial
If suppose someone is not able to understand share market ,Mutual funds and all or let say dont have interest in that
then whats the solution?
I am working with Royal Bank of Scotland currently and will be joining IMT-Ghaziabad for 1-year Executive PGDM ( offcourse Finance)
I am working on Credit Derivatives.
A Credit Derivative is a securitized derivative whose value is derived from the credit risk on an underlying bond, loan or any other financial asset. In this way, the credit risk is on an entity other than the counterparties to the transaction itself. This entity is known as the reference entity and may be a corporate, a sovereign or any other form of legal entity which has incurred debt. Credit derivatives are bilateral contracts between a buyer and seller under which the seller sells protection against the credit risk of the reference entity
Just some insider news ( many of you must be knowing this already)
RBI has set up a working committee to Introduce Credit Derivatives in India. This is very likely that Credit derivatives would in traded in India by this December. This would imply many more I-banks coming to India and starting operations.So People who are graduating this year, good scope of getting place. There would be lot of offerings from these banks.
( for more details: http://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/35293.pdf)
Great efforts abhi sir
I have a doubt .Is its necessary that a Finance student should know about share market and all .As you mentioned before a finance student should know about :
1. Financial Institutions in the market
- Commercial Banks
- Insurance Companies
- Mutual Funds
- Provident Funds
- Non Banking Financial
If suppose someone is not able to understand share market ,Mutual funds and all or let say dont have interest in that
then whats the solution?
Hi Superlike
The above mentioned are the categories which constitute the financial institutions in India , share market or mutual funds are avenues of investment for an individual or an institution.
I dont think its very difficult to understand , once you read more about them on the internet and try understand their mechanism , i am sure you will get clarity and offcourse if you have doubts or queries , i am sure we can discuss and sort them out here 😃
Great efforts abhi sir
I have a doubt .Is its necessary that a Finance student should know about share market and all .As you mentioned before a finance student should know about :
1. Financial Institutions in the market
Commercial Banks
Insurance Companies
Mutual Funds
Provident Funds
Non Banking Financial
If suppose someone is not able to understand share market ,Mutual funds and all or let say dont have interest in that
then whats the solution?
Hi Superlike
The above mentioned are the categories which constitute the financial institutions in India , share market or mutual funds are avenues of investment for an individual or an institution.
I dont think its very difficult to understand , once you read more about them on the internet and try understand their mechanism , i am sure you will get clarity and offcourse if you have doubts or queries , i am sure we can discuss and sort them out here :)
and Superlike don't you worry Share and MFs are the most easiest part of Finance.
They will serve as basic for many other topics in Finance.
Great efforts abhi sir
I have a doubt .Is its necessary that a Finance student should know about share market and all
If suppose someone is not able to understand share market ,Mutual funds and all or let say dont have interest in that
then whats the solution?
Well to answer ur question i wud say No it is not necessary to understand share market/MFs etc etc its a big enough lake to fish u can take the other corner for fishing...although extra knowledge never harmed anyone.
e.g. i have heard of corporate finance and financial markets.
what are the other options which are there for the finance graduates?
Retail Banking- Savings Accounts/Current Accounts/Credit Cards/ Bank assurance/ Private Banking etc. This is one aspect of Banking where the focus will be more on marketing rather than finance.
Transaction Banking/Business Banking- Current Accounts/ Cash Management Services etc
Corporate Banking- This would involve giving loans to small and medium companies. Involves a mix of finance (role of Credit Analyst) and marketing (role of a Relationship Manager)
Risk Management- More or less completely finance and involves substantial number crunching. Great opportunity if you love numbers and don't really want a client facing role.
Capital Markets/Project Financing- Involves financing of very large projects both on debt side (long term loans/ syndication etc) and equity (M&A;/ Private Equity etc). Again involves a mix of Finance and Marketing
Treasury- Foreign exchange trading/ bond trading/ Correspondent Banking etc.....gr8 job if you really like stock trading looking at international transactions or trying to anticipate the markets.
courtesy : our very own super mod Wayne
source
Respected Seniors,
Please forgive my ignorance but I have a lot to ask about finance,I will be thankful if you could throw some light.
First, where does the retail/commercial banking fits into the picture? Also how easy it is to jump profiles in this domain? Say someone joins as a Mgr in a PSU bank, and then wants to move to Equity Research/Portfolio Management/Credit risk or any other core finance profiles later? Is it possible without getting MBA?
Abhimukh sir, you talked about PSU banks offering AVP profiles at some colleges. Can you reveal the names of those colleges? (Possibly in PM, if not in open?)
My other question is that almost everywhere I look, I find CAs in core finance profiles, with or without an MBA degree. So looking at this fact and that everyone in finance is compulsorily doing CFA, can you tell me which among them holds greater weightage? Also what is the value of a CS qualification in core finance?
My third question is about the Financial Engineering that people keep talking about. I believe it gets you in a "quant" job i.e. an Analyst position with some IB/PE firm. Almost everyone who teaches you FE is based out of US and hence it is inaccessible to lesser mortals like me. So what is the easy way out? Are there any certifications available in this regard? Related talk that keeps emerging is about "Algorithmic trading". What are the entry routes in India?
And my last question, what are the exit routes? Does having finance in your resume damages it beyond repair (like/unlike the IT experience)?. Say at present someone might be sold out on the glamor of IB/Portfolio management profiles, but considering the amount of input it requires/monotonous work, some people might want to exit it in future to do something which comes naturally to them ?
PS: I am sorry for so many questions, I am plain confused about finance.
PPS: I asked this question elsewhere too, but it went unanswered. I'd like to know the names of the texts that are used in a typical (indian) finance program, say I want to take a look at them before I land up somewhere which requires me to do so. Some link will do, or else please post if you can.