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Sink or Swim? The 8 Things New Joiners in Finance Need to Learn in Their First 6 Months

Sink or Swim? The 8 Things New Joiners in Finance Need to Learn in Their First 6 Months

By Rob Ellison

Right now, thousands of young people are getting to grips with their new career in the world of finance. We can’t help wondering how they prepared themselves… Did they binge-watch “Industry”? Did they get “practical insight” by trading DogeCoin through the night? Did they spend the summer decoding the pages of the Financial Times with the help of a financial dictionary? None of these feel like particularly useful ways to navigate the beginning of a career in finance… How can we help them make a better first impression? I’ve been in the same position - progressing from intern, to graduate recruit and finally Managing Director over a 20-year career in banking. Many among the team here share a similar experience so I challenged them to create a guide that would help these young people to navigate their first 6 months in finance by answering the following question:

Where there’s a fit, we’ve also picked out the best Finance Unlocked content that lines up with these learning objectives. We’d love to help you to graduate your young padawans to functioning finance professionals. Get in touch if you want to learn more.

#1: The Basics

#1: The Basics

This year’s batch of interns and graduates have missed out on so much lately, it’s impossible to know what they’ve been filling their heads with to try get a head start on their new finance career, and from which sources. That’s why it’s more important than ever to maximise their opportunity to learn from trustworthy sources about the very basics of the industry they are joining. First, build a stable foundation with a strong understanding of the purpose of financial institutions. What is finance? What is a bank? What is a fund manager? What do people who deal with money all day actually do and, critically, why are they doing it? For that matter, what actually is money and where does it come from? That’s a good start. Then you can begin to delve into the more practical aspects. What is a balance sheet? What are debt and equity? How are they different from stocks and shares? What is the time value of money? How do interest rates lie at the heart of almost every financial transaction? What’s the difference between an interest rate and a yield curve?

Finance Fundamentals - Video Playlist

What is a Bank?

How a Bank Works

Competent

What is a Bank?

Rob describes the fundamental activities of a bank, builds a theoretical bank balance sheet and shows how liquidity and capital perform their vital functions.

Robert Ellison01:10:55

What is Equity? (1/3)

Equity Markets

Foundational

What is Equity? (1/3)

‘Equity’ has many meanings. In this discussion, James focuses on the most common financial market reference. In this video, James explains what shares and shareholders are, and how a shareholder can trade shares.

James Eves06:01

Mergers & Acquisitions (1/2): Valuations Introduction

Corporate Finance

Competent

Mergers & Acquisitions (1/2): Valuations Introduction

Valuations are undertaken to determine how much an asset or a company is worth either today or in the future. Jo explains how to approach these valuations and the key metrics typically used to assess a company’s value.

Josephine Tan10:33

Bank Capital Post Financial Crisis

How a Bank Works

Competent

Bank Capital Post Financial Crisis

In this video, January examines the new regime for bank solvency subsequent to the financial crisis of 2008, taking a closer look at the ever evolving regulatory landscape for bank capital and hybrid instruments.

January Carmalt11:16

What is an Investment Bank? (1/2)

Financial Sectors

Foundational

What is an Investment Bank? (1/2)

An investment bank is defined by what it does. In this video, Bill discusses leading investment banks, how they operate and how they were regulated prior to the 2008 financial crisis.

Bill Gallagher09:29

Banking/Markets Regulation Introduction

Regulation

Foundational

Banking/Markets Regulation Introduction

Regulation is always changing. In this video, Peter explains the evolution of bank regulation and how it will change in the future.

Peter Eisenhardt23:25

What are National Champion Banks?

Debt Markets

Foundational

What are National Champion Banks?

James chronicles what national champion banks are, their origin and some of the positives of domestic banking consolidation. The term is seen as a return to a “home-country first” approach.

James Eves04:37

The History of Bank Capital Requirements

How a Bank Works

Foundational

The History of Bank Capital Requirements

Tim outlines the changes that have been made to capital requirements for the financial institutions, starting with the publication of the Basel Capital Accord in 1988.

Tim Skeet18:02

Bank Capital and Liquidity

How a Bank Works

Foundational

Bank Capital and Liquidity

Tim explains the difference between Bank Capital and Bank Liquidity - a critical distinction that is all too often misunderstood.

Tim Skeet14:31

#2: The Lingo

#2: The Lingo

“I’m axed in half a yard.” “The client’s looking for a bridge. They’ll term out with a revolver in due course” If these sentences make no sense to you, the first few weeks in your new finance role will be totally baffling. There is a huge amount of jargon and slang which is day-to-day language in all banking and financial services organisations, but is semi-magical nonsense when you hear it for the first time. You almost need to learn a new language before you can even begin to operate in this industry. Beyond basic financial terms which you should be familiar with, such as “bonds”, “equities”, “balance sheets” etc, people throw around slang terms like “bar”, “axe”, “hedge”, “cable”, “bookie”. Even worse, many of these words have completely different meanings in real life, adding to the sense of confusion. Beyond that, many mathematical terms get thrown around very casually, for example, “yield curve”, “derivative”, and “basis points”. It all adds up to the feeling that you don’t have a clue what anyone is talking about, and that’s a very sobering, confidence-sapping experience. Henry, our CEO, started out in a hedge fund and he recalls:

But it needn’t be that way. If graduate and apprentice hires are prepared with the right level of fundamental understanding, they will be able to get the gist of most conversations happening around them. This is all the more important in 2021, as remote working cannot give the opportunity for the immersive learning experience that past intakes have benefitted from. Then when life returns to normal, will they be ready for a real finance environment?

#3: Role-specific skills

#3: Role-specific skills

In any area of finance, there are specific skills and knowledge needed, not necessarily covered by your general training.

Says Prasad Gollakota, CFA charterholder and head of content here at Finance Unlocked. Grads and apprentices don’t need to show up knowing how to do the job, that’s what their training is for, but we can make them infinitely more confident if we arm them with a skills headstart, ready to progress.

#4: How not to go to prison

#4: How not to go to prison

Unfortunately, many young people have been inspired to work in finance by films like the Wolf of Wall Street, which glamorised a gung-ho attitude towards financial law and professional integrity in general. Working in finance is nowadays much less like what you see in those films, and new starters need to realise on day one how serious their organisation is about sticking to the law, and promoting a culture of integrity. Compliance training is much maligned and often dismissed as pointless and boring. Perhaps because of the way it’s traditionally delivered. It needs to be made more engaging, more interesting, and better contextualised than it has been in the past to ensure that it really sticks.

#5: History

#5: History

Speaking of context, you’ll be missing a lot of it if you weren’t around for the global financial crisis. 2008 changed everything, especially regulation in banking and financial markets. 21 year old grads today were 8 years old when the financial crisis happened so they stand zero chance of having any idea of what happened, and what changed as a result. Most of their context probably comes from watching The Big Short. The financial crisis was an extremely sobering experience that everyone in your organisation older than 35 lived through. There’s a whole load of finance you cannot understand if you don’t understand the financial crisis. Once grads are comfortable with the language people are using and what’s going on around them, the best context they could ever get is a real lesson in what happened during the financial crisis, how things changed so radically, and how close to the edge of armageddon we actually got. Once you understand that, then so much more of what’s happening around you will make sense. Knowing this stuff doesn’t just help a grad or apprentice to situate themselves in the context of their new workplace, it is essential knowledge for the leaders of the future.

Learn financial history on Finance Unlocked

The Failure of Lehman Brothers (1/2)

Financial Crises

Foundational

The Failure of Lehman Brothers (1/2)

The collapse of Lehman Brothers stands today as the largest bankruptcy in American history. In this video January highlights the reason behind the collapse of Lehman Brothers and where did it go so wrong.

January Carmalt10:11

The 2008 Financial Crisis

Financial Crises

Foundational

The 2008 Financial Crisis

In this video, Richard explains the circumstances leading up to the infamous 2008 Financial Crisis. He provides a systemic overview of the crisis by focussing on the timeline of events and the financial ecosystem.

Richard Boardman34:21

Financial Crisis - Misconceptions

Financial Crises

Competent

Financial Crisis - Misconceptions

Many contrasting view are held about the causes of the global financial crisis. Kevin explains his view on the matter and why it differs to the popular opinion.

Kevin Gardiner09:45

Lessons from the Financial Crisis

Financial Crises

Competent

Lessons from the Financial Crisis

Closer analysis of the systemic nature of institutions, particularly around their willingness to finance each other, proved to be the trigger to the evaporation of confidence in banks during the crisis. Richard provides his perspective as to why the confidence in banks declined during the historic event, and focuses on Investment Banks, the Repo Market and Special Purpose Vehicles.

Richard Boardman12:00

A Perspective on the Irish Financial Crisis

Financial Crises

Competent

A Perspective on the Irish Financial Crisis

Michael introduces his series on the Irish financial crisis, starting a decade prior. He provides an account of Ireland's monetary and fiscal policies and the country's movement towards the single currency.

Michael Torpey13:07

Iceland: A Case Study

Financial Crises

Competent

Iceland: A Case Study

Iceland became one of the first victims of the 2008 Financial Crisis. In this video, January uses Iceland as a case study to examine the impacts of ambitious balance sheet growth and inadequate central bank oversight.

January Carmalt11:09

Market Bubbles Introduction (1/4): Introduction

Financial Crises

Foundational

Market Bubbles Introduction (1/4): Introduction

In this first part of the series on market bubbles, Peter explains what market bubbles are and how they form by referencing Hyman Minsky's five stages of a market bubble.

Peter Eisenhardt03:33

The Asian Crisis

Financial Crises

Foundational

The Asian Crisis

Asian specialist Sharmila Whelan provides an overview of what is generally considered the worst crisis ever to hit emerging markets. A series of currency devaluations lead to negative economic affects that were felt across the world.

Sharmila Whelan20:08

The Great Depression

Financial Crises

Foundational

The Great Depression

Peter provides an overview of the effects and causes of the 10-year great depression, which began with the stock market crash of October 1929.

Peter Eisenhardt16:07

#6: Who matters most?

#6: Who matters most?

The finance world is a very hierarchical place. Grads or apprentices are at the bottom of a very long ladder, and as such can be given something to do by almost everyone around them. Knowing who to prioritise helping is an essential skill to avoid burnout in your first few months. This means understanding the hierarchy and what a person’s job title means for their level of seniority. Who should you prioritise, a Managing Director or a Vice President? It’s easy to slip up when job titles are so counterintuitive. No, a Vice President is not the second most senior person in the organisation, it’s someone who’s really only just moved into a leadership role. They know the pecking order, and so should your grads and interns.

#7: Why is everyone doing what they’re doing?

#7: Why is everyone doing what they’re doing?

The question you always want to ask when starting out in finance is “Why?” However, asking these “Why?” questions is a very dangerous thing to do. Why? Because, the truth is, pretty much everybody has a very thin veneer of understanding of “why?”. Don’t get me wrong here, most people have a great understanding of what their role is and what they need to do to succeed in it, but very few finance professionals have a good understanding of the deeper "why". And it’s not a great strategy to go around embarrassing your new colleagues and bosses by asking the most difficult questions. It’s frustrating because, "why" is what you really want when you start out in any new field because understanding "why" is the most illuminating. It’s much better to try to get an understanding of the deeper why questions by studying with the real experts: people who can explain deep questions well.

#8: Your role in the great project of your generation

#8: Your role in the great project of your generation

We have 10 years left to save the planet, according to Christiana Figueres, the lead U.N. negotiator of the Paris climate agreement. And the huge role that banks and other financial institutions have to play cannot be overstated. A thorough grounding in ESG is essential for anyone entering the industry (or anyone already in it, for that matter). If you want to help make them thoughtful, creative and aware, then help them understand how they as finance professionals can really move the dial. If your main interest is in sustainability training, be sure to check out our sister platform, Sustainability Unlocked.

Whether you’re running an internship programme, a grad scheme, or are an aspiring finance professional yourself, I hope this article has given you some insight into the challenges of starting out in the industry. Stay tuned for more content useful for aspiring finance professionals and the teams who nurture and develop those new to the business. Get in touch if you would like a demo of Finance Unlocked with a member of our sales team. Or if you are an individual, click "join now", above.

Deliver the best possible finance education to your new joiners - contact us to today to learn how.

Deliver the best possible finance education to your new joiners - contact us to today to learn how.