Help on going into business sector

When you switch to banking, are you expecting to start from scratch or leverage off your engineering experience?

There is little to leverage upon. Hence, very few people with 6-7 years engineering experience move over to finance.

What is the difference between hiring you versus a fresh grad? Hey, the fresh grad with finance related discipline + relevant internship may even have an advantage over you!. Plus, he/she is younger. Expect a lower pay. Willing to work harder.

So, put yourself in the role of the employer. What is your advantage? Why should they hire you?

Now, what do you think of your chances of switching to banking?

We all have hopes and the grass is always greener on the other side. When you put everything down and think of it practically, your chances are minute.


1 possible path: Take a MBA

Cons:
1. Are you willing to risk derailing your career, sacrificing resources to pursue a path that is not guaranteed?
2. In such a climate, do you know how many qualified MBAs are looking for jobs but can't find?

Stick to your engineering career. At least it is stable.

Originally Posted by kamiru

Hey, no offense at all. Yeah i was wrong for not researching enough. I dun mind paycut and wanna start as a new role. But i was thinking, lets say i am determined to be a financial analyst. Would the company accept me with my engineering degree? This is the question i am asking.
If not, i need to take a Msc in business administration in order to work in that position.

Financial Analyst as in those who conduct research for institutional investors or banks?

OF COURSE NOT! Do you really think you can just march in with zero financial knowledge and start being a financial analyst? So your future employer is going to teach you how to tell the difference b/w a cashflow statement and P&L on your first day of work?

If you want to head down the financial analyst route, you need to first take a Masters in Applied Finance / Financial Engineering / Mathematical Finance etc, after that go find Finance related employment for at least 2 years, then qualify to sit for CFA certification.

Then maybe you have a slim chance of being a financial analyst in the investment world. Another possibility is to go for a BBA Finance and then apply for corporate type of finance roles, but I doubt the pay will be higher and worth the time and money for the BBA.

Yet, I'll feel I have done something good by being a helpful Singaporean and guiding him along. Disclaimer, as always, this is what I know based on one internship, one job and a whole bunch of time spent searching for a job in and reading about the industry. All based in finance.

Kindly excuse the spelling errors as I am using Notepad to draft out this response.

Part 1: General Overview of the Industry.

To me personally, finance can be broken up into two sides and into two banking divisions. The two sides are sell side and buy side and the two banking divisions are commerical banks and investment banks. (I'm not too sure whether commercial is the term. If not, someone correct me). Just think of the sides as functions and industries and the banks as the players who serve those industries.

In the sell side, you have merges and acquisitions (M&A), initial public offering (IPO) and the sales in Sales and Trading (S&T). These are all what we know as financial services. Everyday, there are a bunch of companies in the world wanting to do something financial, be it take over a smaller business, try to raise revenue or seek the best prices to trade a good. These companies need banks to somehow facilitate what they want to do. Thus, these banks are selling (origin of the term) their services to these other companies so that they can do what they set out to do.

Specific example: Suppose you are a trader and you decide to buy $1 million of Google stock. You have the $1 million but where they heck are you going to get GOOG. Is it going to just drop from the air? No. You have to engage someone on the sell side to help you acquire the GOOG.

Next the buy side. They comprise of companies in Private Equity, Hedge funds and Asset Management. Why are they called the buy side. A simple answer is that they have a whole bunch of money and they DECIDE WHAT TO BUY. A commonality of the three types of companies I mentioned earlier is that they choose what to invest in some sort of market, examples include the foreign exchange market, the equities market, the commondities market or the oil market. They stand in their ivory towers, look down at Wall Street, see how dollars move from here to there and stake their claim by puting money where they think it is profitable.

While it may not be obvious to the original poster, it should be obvious now that people on the buy side need the services of the people on the sell side and the people on the sell side make money by providing services for people on the buy side.

Moving along, banks in finance are divided into commercial banks and investment banks. Some names of commercial banks are DBS, OCBC, UOB, HSBC, Standard Chartered. Some names of commercial banks are Goldman Sachs (my favourite ), Morgan Stanely, JP Morgan, UBS. To me, someone who mentions that he works at any of the first three should strike fear into the listener as that person stands at the gateway of where most money is transacted. (Just some imagery for those who know what I'm talking about)

What is the difference between commercial and investment banks? I am not too sure about this. However, if I would answer, I would say the following: Investment banks deal with the people with the big money. These people are not those who go to an ATM deposite machine at AMK Hub to deposite $400. No. These people are those who walk into an office, say that they got $10 million lying around somewhere and would like it to be invested into a certain way. Investment banks are not concern with the logistics of money, that is, how will it be transfered, whether a cilent will default on a loan, why is the interest of this car loan is high. They are concern with making more money out of a lot of money.

Part 2: Recommendations on breaking in.

So, how would an engineer break into finance. Since, I don't have the luxury of time to answer this question and since my boss is coming back from this coffee break at which point I need to show him an intra-bank arbitrage trade opportunity, I'll keep my answer short and concise.

If you choice is to enter finance right now, given your credentials and background, the two viable options I can think of is a private banking role at DBS, UOB or OCBC or a brokerage role at a place like Phillip Capital. The former will put you in front of clients (NOT the rich clients dealt with by investment banks) teaching you the logistics of money that I mentioned just now. The latter will put you in a position where people with money will call you (again clients and traders) and command that you carry out certain instructions of the form "Buy 1000 of XXX at XXX".

If you choice is to enter finance later, then pursuing a MBA or a Master in Finance will serve you well. As I can tell from what you wrote earlier, along with the comments by others, you don't have an idea of the flow of money. In the grand scheme of things, finance is all about how money moves around the world. At a microscopic level, we may only think of a guy with $20,000 of savings in a bank account. All right, not much movement there. But at a macroscopic level, we have the transaction of money when a trade is complete, the acquisition and then redistribution of shares when an IPO is given out, and the payment agreed upon but made later when a barrel of oil is purchased. No place would want someone, though he may have work experience, if you can't graspe concepts of how money can be acquired and then made more of.

Attached this to the top, to better qualify the source.

So, I decided to take a few minutes from work time at my hedge fund to give the original poster a helping hand. Yes, I sense the vagueness in his enquire.

...very much indeed for giving us a free guide. God bless.

Originally Posted by quantdonny

Some names of commercial banks are Goldman Sachs (my favourite ),

Errata: It should have read "Some names of investment banks are Goldman Sachs"

Hi quantdonny,

Thank you for giving your views, although I don't quite agree with the way you have described the financial world (I think it's too narrow, more like sub sub financial sector), I do appreciate that you took time to comment.

Originally Posted by quantdonny

If you choice is to enter finance right now, given your credentials and background, the two viable options I can think of is a private banking role at DBS, UOB or OCBC or a brokerage role at a place like Phillip Capital. The former will put you in front of clients (NOT the rich clients dealt with by investment banks) teaching you the logistics of money that I mentioned just now. The latter will put you in a position where people with money will call you (again clients and traders) and command that you carry out certain instructions of the form "Buy 1000 of XXX at XXX".

An engineer who admits that he know nothing outside of engineering does not have much of a chance in a private banking role. Consumer personal banking still probable and brokerage role is possible but unlikely.

But the key thing is he's wanting to get out of engineering not because he has any liking as a banker, but because of what he percieves as being underpaid with slow increment progression. To enter into the banking world as a consumer banker will likely mean major financial damage in the short term considering he's had 7 years of engineering experience.

Of course there is always the slim hope of worming your way through to PB, IB & other FO roles, but the fact remains he needs to take some serious damage for at least the next few years.

Originally Posted by QXP

Thank you for giving your views, although I don't quite agree with the way you have described the financial world (I think it's too narrow, more like sub sub financial sector), I do appreciate that you took time to comment.

Hey QXP,

You're welcome. You commenting on my post as sub sub financial sector is modestly accurate. Yes, I know that local banks do have M&A roles (though I'm not entirely sure what market they engage in considering the fact that BB banks are in Singapore to stay) and that each role and function of any party (say, prop trading in investment banks) in finance runs deeper than what I mentioned. Still, just thought a 5 min introduction would be helpful to the original poster.

Oh yeah, and about that. I would place the chances of him getting any sort of role in FO must lower than the two alternatives I suggested. If, I recall, he is coming from a Poly background. The route to FO is pretty standard if you look from the point of view of qualitification. That is, graduate top 70% from local Uni or top US Uni and become Morgan Stanley's 2013 class of analyst.

Thus, I feel that branding might be another issue he might face. There is not much of a strong academic background he can offer when he signs up for the job. Thus, he needs to settle for the lesser, or lower-tier places, local banks and not investment banks. Correct me if I'm wrong, I feel that Private banking is the most generic out of the lot. Hence, my initial suggestion of that.

As for his potential pay vs the damage he'll suffer, that is his personal decision. It's highly likely that his pay entering finance as a junior will be lower than the pay he is getting now. MBA jump into workforce as associate, probable. MO jump into FO, possible. But engineering into finance at higher or equal pay, yup, agreed with you. He will be making less.

Originally Posted by quantdonny

Attached this to the top, to better qualify the source.

So, I decided to take a few minutes from work time at my hedge fund to give the original poster a helping hand. Yes, I sense the vagueness in his enquire.

Good efforts but entirely inaccurate description of commercial / investment banks. Someone from a hedge fund should know better.

Originally Posted by Unregistered

Good efforts but entirely inaccurate description of commercial / investment banks. Someone from a hedge fund should know better.

I'm still learning. But yes, point noted. I'll have to reread what I wrote.