REFLECTION PAPER
Reflection Paper
Introduction
I am a student of global financial management studies at the Regents Business School in London. I actually believe this school is the best choice for training and all other finance-related disciplines. My objective is to work in the financial markets after graduating from university. Some of the areas that I want to focus on include wealth management, private equity, private banking, and the hedge funds. In other words, I am focused on developing a career in the investment banking concentrating on the high net worth individuals across the world. To gain the core competencies required for the career field, I am required to undertake several internships. They are meant to expose me to the field and to enable me link the theoretical lessons to the actual practice. I had a rare opportunity to work with an investment bank over the last summer and from this experience, this paper has been prepared. The objective of this reflection is to show how the actual practice links with the theoretical lessons learnt in class. The paper will also focus on the differences between the two perspectives but most importantly, the paper seeks to make recommendations on how the industry can help the students in gaining the required competencies in preparation for employment. The paper is presented in the Gibbs reflective cycle format (Gibbs 1988).
I joined an investment bank at the beginning of the last summer here in London. The process of joining the institution followed the normal recruitment practices where the investment bank invited applications for the internship positions available in the research analysis department of the organization. My position was the junior analyst position and my duties encompassed managing the weekly financial markets analysis focusing on equities, bonds, and the exchange traded funds. I was also responsible for any other form of research that was required by my boss and that entailed extensively dissecting a particular company’s financials or even focusing on industrial studies, especially when the company was considering investing in a particular financial asset. This experience helped me to gain wide knowledge about the industry but most importantly, the experience gained form the industry was important in ensuring that I learnt how to link the theoretical lessons with the experiences in the field.
The first lesson that one gets from the industry is that the investment banking industry is a highly competitive industry. I realized that there are people working in the entry level positions of the industry yet these people have already acquired their masters level studies certification. Up the corporate ladder, it is very hard to find a practitioner without at least two degrees in the field. While this is a worrying and a rather disappointing observation for a person without even a first degree, it is also encouraging and at the same time challenging simply because, one feels the urge to work harder and achieve more.
It is worthy to note here that joining the industry begins with a role in research or in sales and trading positions. The exposure to research is one of the roles that I consider important to any person aspiring to work in the industry. The very first reason is that through research, a person learns how to identify a good investment irrespective of the industry on which one is researching. Secondly, the exposure to the research analyst role in the investment banking industry helps one in learning how to read, interpret, and understand the financial markets (Rosenbaum and Pearl 2013). There is a tag in the industry, which involves learning about where a company hides its dirt in the financial statements. For the reader’s consideration, it is important to note that a company could be reporting growing profitability but without knowing how the company does it, it is difficult to determine if the company is a good investment. Relating this experience to the class experience, the introduction to the financial statements analysis classes was an important basis for conducting the analysis of the company. The other important classes that contribute to successful making of a research analyst is the knowledge of how the financial statements are prepared. It is important because when conducting comparative analysis of two or more companies, the first point is to ensure that the financial statements are comparable (Healy and Palepu 2012). At times, enhancing comparability as defined under the generally accepted accounting principles requires the recasting of the financial statements. Notably, at times the reported profits may appear different after the recasting of the financial statements, which explains why the exercise is important.
I did not work with the sales and trading teams. The rules require the separation of the selling and the banking sections of investment banking to protect the investors from speculative trading activities of the trade. Nonetheless, I interacted with my senior in the organization who began his career from a sales and trading background in the same industry. The major importance of beginning from the sales and trading platform is the fact that the investment banker learns how to communicate with the clients. Most importantly, one learns how to communicate an idea or a particular strategy to a client. How well a person communicates the idea to the client may be the single most determinant of whether or not a person succeeds in joining a career in private banking or any other undertaking that involves dealing with high net worth individuals. It is an area in which I am highly interested and consequently, I would like to have my engagement in a sales and trading position. Combined with the experience that I have gained form research, I believe that such an opportunity will help in ensuring that I am competitive for the job market. Most importantly, an opportunity in the sales and trading position in investment banking will help me in learning how well I am cut out for opportunities in the industry in addition to ensuring that I put to practice all the lessons that I have had on the sales and marketing classes that I have taken at Regents Business School.
The organization that I was working with publishes information about its senior employees and this includes their education background, their professional qualifications, and their experience in years. I sought to understand why the organization published this information on their website and the answer that I got from my senior relates to the fact that it has to build its credibility by confirming to the investors that it has the educational, professional, and experience capabilities require to manage multimillion funds that the organization manages. The investors, especially the high net worth investors, often need to know that the persons they are entrusting their funds are well experienced and knowledgeable to be called a person’s financial advisor. In fact, associating with a fund manager that successfully posted positive returns or one that outperforms the market performance acted as a compliment for the manager of the organization.
The understanding of this information led me to understand the concept of behavioral finance where the behavior of the investors is influenced by various industry related factors. In this case, for instance, the investors believe that a fund manager with good performance record of accomplishment is likely to report good performance even when the financial markets may struggling globally owing to the events in the Chinese markets and claims of corruption in various companies in the UK. The other factor that was closely linked to the concept of behavioral finance is the observation that the investors literally hunt for fund managers who have academic qualifications form an Ivy League college. The Ivy League colleges are associated with excellence and considering that the high net worth individuals believe that these colleges house the best brains globally, the fund managers tend to build their image by having employees from these colleges on their payroll.
Other than the academic qualifications, the analysis of the professional qualifications of the industry players revealed that majority of the practitioners had professional papers in either chartered financial analysis (CFA) or the chartered alternative investment analyst (CAIA) charter. My senior in the research department indicated that having the CFA or CAIA qualification was one of the most important qualifications required of any person joining the industry. In fact, the CFA qualification was held so high that a person with a CFA and without a degree certification in the finance related fields would rank higher than a person with a degree in finance and at times even those people with a master’s of science degree in finance and other business related professions. It is so because the industry is considered to be concerned more about recruiting professionals instead of focusing on recruitment of people with several degrees. One of the reason why the CFA Charter is regarded highly in the field is the fact that CFA is considered to be more comprehensive as compared to the degree curricula offered in colleges. In fact, the supervisor brought the issue of the industry struggling with finding talent among the many half-baked graduates that many colleges around the world produce. Consequently, the supervisor recommended that I should consider enrolling for the CFA exams as soon as I am able to do so.
I asked supervisor about either enrolling for my master’s degree or taking the CFA exams. He indicated that as of now, the industry prefers those with CFA qualification to those with master’s degree certification and though both qualifications are important, it would be important to start with the CFA before considering the master’s degree. Based on the information about the professional qualifications, I resolved that I needed to enroll and take my studies in CFA. However, the enrollment requirements need a first-degree certification. Considering the CFA syllabus, I believe that my background in global financial management studies will enable me to find is easy to study and succeed in the professional papers. I plan to start reading early for the papers in order to pass the exams when considering that pass rate in this professional exam is lower than many other professional papers globally.
The last major experience that I gained from my engagement with the investment bank as a research analyst encompassed the issue of how research in the field is structured. In college, we write many assignments based on research. However, much of the information that we use in our assignments come from Google search and at times, this information is drawn from sources that are not verifiable. However, conducting research while working as a professional research analyst in the investment banking industry takes on a whole new scope and perspective, especially when we consider the fact that one uses actual data from the company’s investor relations section. Secondly, a lot of information is drawn from the capital markets and mostly this information relates to the market price of the various securities. The difference between this research is the fact that one has to separate the personal opinions from the facts of the case and justify the opinions accordingly. Most of the reports also require a professional opinions which is completed by the signature of the CFA at the bottom of the report. The reason for this is that there are many investors out there who depend on the professional advice form the research analysts and they use this information to make actual financial commitments involving millions and even billions of money. It means that if we made the investors to rely on misrepresented information and they incur losses in the course of investing with us, then the firm is highly likely to face legal suits, which can be extremely damaging on the reputation of the organization. Consequently, all information gets verified before it is released from the organization and this is the very factor that draws the major difference between the professional reports and the reports that we produce for academic purposes. However, this does not mean that I dismiss the academic research. Instead, I believe that without the exercises on research I would never be able to complete an assignment in my role as an intern in the junior research analyst position.
Feelings
Evaluation
The engagement with professional investment bankers was an exhilarating experience for me. The experience allowed me to view the practice side of what I study. The experience in the field helped me in drawing the links between the practice of an investment banker and the lessons that we get in class in the global financial management course. The most important experience that I had during the internship is the engagement in the preparation of the weekly and monthly market commentaries most of which were published without any editing on the company’s website and on some of the dailies in the country. I consider this the most important experience simply because the opportunity gave me the chance to have a feeling of what it takes to produce the market commentaries that we read every now and then. Additionally, it gives me a good feeling knowing that I can still go back to the reports that I produced since they are still available on the company’s website. Though these reports are the proprietary property of the organization that I was working for, my supervisor did mention to me that I could use those reports to show the work that I was doing with them in case I required to do so in the process of searching for a job.
Analysis
When I applied for the junior research analyst position in the investment bank, I did not know what to expect. In fact, I did not fully understand what the position entailed and I just wanted the experience of working as an intern in an investment bank. Looking back, however, the experience represents one of the most important stages in my life. It came with a lot of lessons. Firstly, I learnt of what the industry looks for in terms of employability skills. I learnt of where I will start after graduating from college and at least I know better about the important role that the various courses that I take under global financial management studies in the university. In the past, I would have dismissed the importance of the financial theories that I learnt in class but with the new experience, I know the importance of various theories, including the theory of behavioral finance, financial modeling and valuation models, such Gordon’s dividend model. I now have a better understanding of the Sharpe’s ratio and the capital assets pricing model. I have a better understanding of the portfolio management theories and I can constructively apply them in an actual business environment.
Conclusion
In conclusion, this paper discusses my experience as an intern in the junior analyst position at an investment bank. My dream has always been to work with an investment bank dealing with wealth management, private equity, opportunities in hedge funds. I take my studies in global financial management studies and as far as I am concerned, the content taught under this course prepares the students for careers in the field and all the content is relevant. However, as a student and aspiring investment banker or private banker I learnt that I need to take exams in CFA as this will position me for a career in the industry and also ensure that my credibility is enhanced. I feel that the industry is very supportive to people who show the passion to practice as financial analysts, private bankers, and in other finance related careers. Based on the experience therefore, I believe that the course that I am currently taking enhances my employability and enables me to identify opportunities in the field.
Recommendations and Course of Action
Based on my experience during the period when I took the internship, there are several improvements that I would like to see both in the field of investment banking and from the academic perspective. The recommendations and course of action are as presented below;
For the college, I recommend that the administrators engage more practitioners from the industry to speak to the students about investment banking and other fields of finance where there are attractive career opportunities. This will help the institutions and the practitioners in the field to bridge the gap that make the practitioners to at times conclude that the students or graduates from our colleges are half-baked. Honestly, form my experience I do believe that the debate on whether the graduates have the requisite skills is just a misunderstanding between the practitioners. The course of action requires the school administrators to lobby the industry for such a collaboration.
The second recommendation is that the industry players should consider playing the mentorship role for the students in college who aspire and are passionate about joining the field. From my experience, I would have been better informed if I had my supervisor at the Investment bank as my mentor and this is why I maintain contact with him and ask all the relevant questions about financial management and about the industry. The course of action for the industry should the organization of forums in which the practitioners interact with students more often. This will enable the practitioners to identify the passionate students and also for the interested students to get mentors from the field.
Reference List
Gibbs, G., 1988. The reflective cycle. Kitchen S (1999: An appraisal of methods of reflection and clinical supervision. Br J Theatre Nursing, 9(7), pp.313-7.
Healy, P. and Palepu, K., 2012. Business analysis valuation: Using financial statements. Stamford: Cengage Learning.
Rosenbaum, J. and Pearl, J., 2013. Investment banking focus notes. New Jersey: John Wiley & Sons.
