Engineers are switching their career to finance from a technical field. Financial institutes are also opted for the technical students over other because of the analytical & logical skills. How an engineer can get into Investment banking & what are the additional skills required for this. Explore more about this article.
Currently, it is not uncommon to see engineers plunge into the finance industry in droves. For instance, 60% of the students in my batch for CFA training were engineers and most of them were mechanical engineers. 90% of those engineers cleared the exam like a cake walk, especially in subjects like Quantitative Methods (QM) and Economics where other students (non-engineers) were having a more turbulent journey.
What after that?
It all comes down to where your interest lies; don’t jump into the investment banking industry just because of the aura surrounding it. Remember, all that glitters is not gold. You will have to work hard, take a cut on your salary and prove yourself. So only if you have an inclination towards stocks and various investment instruments, you should consider reading ahead. If you have followed various financial news channels, you might have picked up some basic financial slang but that will not be enough. You might have to start all over again by finding out the right education that can clear your financial concepts from the beginning. You can either do it by doing certifications like the CFA or learn basic financial modelling. This will give you a solid base to launch into the investment banking arena. No one can guarantee whether you will earn more than your current job in engineering but I am sure if your passion is finance then it will be worth the pain.
Advantages for an Engineer
1. Engineers are looked on favourably by investment bankers
because of their technical aptitude.
2. Investment banking employs a lot of calculus and
programming which engineers can pick up easily
3. Engineers from their respective domains are able to bring in their
respective expertise. For e.g. A chemical engineer may know
a lot about chemicals which will help him/her conduct equity research
for chemical companies.
How to get started
CFA or Financial Modeling: You can begin to build your financial knowledge base by preparing for the prestigious CFA exam or learning financial modelling. Financial Modeling is an ideal beginner’s course since it will teach you the basics of investment instruments and investment analysis tools.
Good Prep Provider: Get hold of a good authorized prep provider who is authorized to provide training for exams like CFA and try to get NSE certified financial modelling certifications. This is crucial because the prep provider will be able to guide you better since you are new to this industry.
Get a Relevant Job: This will be a difficult task at first but once you clear your CFA level 1 exam you will be able to get jobs at small equity research firms. It doesn’t matter if you start small, you will eventually build upon as time passes by.
Keep Increasing Your Knowledge: Don’t just relax with one certification, keep building your knowledge base. While you are pursuing CFA, you may also start clearing some NSE modules on capital markets. Many companies in India encourage their executives to clear the capital market modules of NSE.
Start Trading Fundamentally: Everyone trades but start trading on stocks using the long-term perspective and write down your analysis for the reason you choose the stock. This will help you during your interviews when you are grilled on
your practical knowledge.
Make A Real-Time Model: Once you have completed your financial modelling course start building a model on a stock of your choice and keep developing it. It will be a big plus point when you apply for a job
All being said its time for you to take the call. If you are too satisfied with the big fat cheque you get every month and are uncomfortable switching then probably finance may not work for you.
“ However if you are willing to struggle a bit and do what you wanted to do all your life then it’s now or never, mate!”
– Allen Aravindan, CFA level 3