Episode 15: Shwetabh Sameer
Yep we are now in Episode #15 (how time flies!).
My next guest is a bright young finance hotshot who’s also a really nice guy and remarkably clear sighted and mature.
So this podcast is about the lessons and skills, both personal and professional, learnt by a CFA charter holder in a fascinating journey from engineering graduate through passive/index investing to behavioural science and applied statistics in a global financial services firm. It’s loaded with tips and perspectives that will be of interest to anyone starting a career and not just in finance.
Listen, learn, grow.
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EPISODE TRANSCRIPT BELOW:
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Binod Shankar:
This is Binod Shankar and you’re listening to the real finance mentor podcast from the realfinancementor.com. The real finance mentor is your go-to resource for insight and inspiration on careers in finance, CFA and more. Now you might think, why this podcast? Well, my goal is to deliver insight and inspiration for your financial career, by making it, one: relatable. I mean this is not theoretical stuff. We zero-in on the critical, practical issues. Number two: authentic. No bullshit, no side-stepping. The topics, guests and questions are all from that perspective. And number three: insightful. Take a Chartered accountant and a CFA charter holder, add 17-plus years as a corporate warrior, mix in 10-plus years of entrepreneurship, throw in a decade of full time CFA training. Add speaking, mentoring, cycling, mountaineering and other endurance activities, and that’s me! Welcome to The Real Finance Mentor, or as I call it: RFM.
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Binod:
Hi everyone! This is Binod Shankar here, the real finance mentor with another episode of the RFM podcast. The RFM podcast is designed to deliver insight and inspiration for your finance careers; and each guest that I bring to the show has something very important to share, that you can learn a lot from.
Today I have got someone with me, who came actually quite highly recommended from someone I regard quite well. He is quite young in his career. But he has gone a slightly different way into finance, and I want him to share his experience and thoughts, and insights with us. Especially for those who are starting their careers in finance.
Swetabh Sameer, who is the guest on the show, is a CFA charter holder, an FRM holder and CIPM charter holder. After completing his engineering from BITS Pilani, which (for those who don’t know actually) is one of India’s prestigious engineering institutes. He worked as a quantitative analyst and then as a senior quantitative analyst in the field of passive investing - by joining the Morningstar Indexes team for over 5 years. He then made a switch to the behavior science team in Morningstar, where he is currently working as an applied statistical researcher. Swetabh is also an active volunteer at CFA Society, India, where he along with other CFA charter holders, engages with regulators in the Indian market, to advocate for investor protection. So, quite an interesting background. Welcome to the show, Swetabh.
Swetabh:
Thanks. Thanks a lot for having me Binod.
Binod:
Now, I’m going to start with asking you a question which struck me the first time I went through your CV. Normally, people do their MBA after engineering degree. Especially, at a place as prestigious as BITS Pilani, it’s like a rite of passage: B. Tech plus MBA. So, what happened to you and, why CFA?
Swetabh:
Yeah! True. True. Most of my friends and classmates back in 4th year, they would have actually two doubts:
One would be to give GRE and apply to the Master’s (degree) in The U.S. or Europe, and
there would be another bunch of folks who would give CAT - which is an entrance examination for MBA colleges, and then go to IIMs and FMS, such colleges in India.
In my case, I just found a new interest, which was finance.
So, in my 4th year, our college allows us to take different sort of electives outside of our engineering. I took two courses of finance, and well, those struck me a lot! So, I was very much interested to explore it further. So, that’s how I got into Morningstar, which is an investment research company. And there, I met a lot of experienced professionals, who had already done their MBA from IIMs or other places. And when I was talking to them, they always talked about CFA a lot and they always thought of CFA as that prestigious program which is very much important. So, I thought, “Well, I have already heard from these experienced folks, so why not get a head start? And why not give CFA?” So, that’s how I started in CFA. And to be frank, well it did have a lot of impact. So, not only did I get very good knowledge in the field of finance, but it also gave me a sense of respect. When we would communicate with clients, they would often talk about it. So, I think, that sense of belonging in the investment community kind of increased when I did my CFA. And essentially, it’s a universal credential as well, everyone acknowledges it. It’s not just in India.
In India, you would know these great B-Schools. But the thing is when you’re talking to people outside of India - when you’re talking people in the U.K., or Europe, or The U.S., they will understand what CFA is. So, it gave me that universal credential which probably an Indian B-School would not have given. So, the first two years in my job, I tried to focus on getting a good industry experience, and try to do certification courses like FRM and CFA.
Binod:
Interesting, you mention that Swetabh. Because, belonging, respect, credibility, of course - knowledge, are somewhat the top reasons why people sign up for the CFA program. Because of immense importance in certain areas.
Now let me ask you a question. CFA is often a challenging journey for many: 3 levels, especially for you, because you come from a non-finance background - an engineer.
So, what were the difficulties you faced and how did you tackle them? What were your strategies?
Swetabh:
Yes. Yes. Especially, when you have a full-time job. There is always that issue of finding out time. So, Monday to Friday you have your daily work, so you essentially have to find time in the night, or on the weekends. And in my case, the kind of environment I was working in, CFA was considered very prestigious. So, there was always that bit of stress and pressure that I need to clear it.
So, I just remember one incident regarding CFA (level) 2 specifically. I was awaiting my results for level 1 in Jan, 2015. So, I was waiting for the results and I didn’t prepare anything for level 2 thinking that, let’s wait for the results and then decide what I need to do next. So, when I got the results in Jan 2015, I kind of, when I looked into the results I was like, “Okay, I just cleared it. Let me just take a break for a month’s time and decide what I need to do next”. So, I kind of waited until march, and when march came, I just looked at the curriculum, and going through it I felt like this is a lot of stuff. And I just have 3 months. So, then it kind of struck me that, well, I have to put a lot of effort to clear this. So, I had two options in front of me, I had already registered. So, either don’t appear for the exam or take the stress and clear it. I had some sense of pride back then. I was like, “Well, whatever challenge that I’m going to take, I’m going to complete that”. So, I went for it, and the consequence was that my social life kind of went for a toss.
So, the things which I did on my end was creating weekly targets for me, between March to May. I would award myself with junk food like coke and pizza. Those were like the presents for me. So, that kind of helped me follow a proper discipline. So, discipline played a very important role in my case. Although, I’m telling you - coke and pizza, of course the junk foods may not be a right option for health freaks. But yeah, in my case, it worked.
And the other good thing in my case was that I was actually staying with like-minded flat-mates. It, kind of created an environment, where someone takes a book of CFA, I would also follow along and I will take my books as well. So, I had two flat mates. Essentially, one was giving his level 3 and the other guy was giving his level 1. So, it was not like we were trying to clear each other’s doubts. It was more of the environment which was created, that we need to study and clear this exam. So, often I guess this may not be true for many people, because they might be either living with a family or alone. So, I guess an important point in that case would be to have a study group where you can go and study with other people. Even if that’s not possible, probably go to a library. Some place, where there is a sense of studying. I guess that will play a very important role to get that kind of discipline.
Binod:
Yes. Thanks for sharing that Swetabh. Although, I must warn the listeners of this podcast, that trying to crack an exam as tough as a (CFA) level 2, in a mere 3 months can be a very tough challenge, and demands massive amount of focus and concentration and dedication. So, I would typically recommend a 3+1 (4 months) or even 5 months to handle something as huge as, as wide, and as deep as level 2.
Now, I want to talk about something I’m going to slightly diverge into Swetabh: about your FR (Financial Risk) manager certificate.
Why the FRM? I mean, it’s not directly linked to what you’re doing, is it? Apart from the obvious, you know - the focus, the topics, the parts, the exams.
What did you find different in the FRM as compared to the CFA? And, when and why would you recommend, that a CFA charter holder also gets the FRM?
Because, I see there are a lot, I mean around in the subcontinent. Where once you pass the CFA or as you’re doing the CFA, you would also go for the FRM. Maybe, just to get another certificate. What’s the real reason?
Swetabh:
True! To be frank, in simple words, even that was the case for me. I wanted to stand out in the community. Everyone around me was yet doing CFA. And I kind of thought that’s something which is common. So, in order to stand out I need to do something else, to show that I can continue building my knowledge and still get that kind of credibility in the field. So, that was the reason how I started with FRM. This dates back to 2015, when I had just completed my CFA level 2 and when I looked at the schedule for level 3 that was just a year later. So, I had a complete one year. And I was thinking, that in order to make the most of that one year, why not give FRM in November? That was the essential reason, and also, few bits of CFA level 2 were covered in FRM. So, that already gave me some bit of confidence that, “Yeah, I can probably clear that”.
But yeah, as far as looking at the entire curriculum and why someone should opt for FRM: I guess, it’s after giving my level 1 and level 2, I kind of feel it’s easier to switch to a risk management side, if you complete your FRM. The kind of topics that FRM covers - things like operational risk, credit risk, market risk, things of that sort. It kind of prepares you for roles such as market risk analyst, credit risk analyst, if you want to work for S&P, Moody’s. So, if you want to work in that kind of field, probably FRM is a better choice for you.
I guess, it boils down to the question: what your end goal actually is. If you want to stay in the investment management field, I guess CFA is always a better option. If you’re still exploring finance, you just don’t know, (uh) whether it’s (it’s) the right thing for you, I would say you should still consider CFA. Because, FRM is a very focused certification. But yeah, if you’re able to find time for both of them, do both of them! But yeah, your social life is going for a toss, for sure, if you’re doing both of them! So, I would recommend to choose either one of them, at least to start with, based on what your actual goal is, in life.
Binod:
Right, it is what I tell most people. I mean, there’s no point in adding badges and certifications at the end of your name. Just try and focus on the area which you like and which you’re good at, and then get a certification linked to that. It will help you, in that way.
Let’s talk about your career now. I mean you could have got into equity research and active portfolio management like most CFA charter holders. But you went into passive investing. So, you’re sort of an outlier. So, my question here is: What fascinated, or even now, fascinates you about passive/index investing?
Swetabh:
I didn’t think much about it, to be frank, back in 4th year. For me, the goal was to get in the field of finance. Because, people around me would be either going for core fields, by going for GRE; or they will join an MBA college.
So, for me it was more important to get in the field of finance first. And in my college, we had this 6-month internship that we needed to complete, to get a degree.
In the field of finance, the first and foremost company that would come on everyone’s list, would be to go to MSCI. For people who actually don’t know about this company, this is one of the famous names in passive investing. They create a lot of global indexes in the field of equity and fixed income, multi-asset. So, I looked at that company and I was trying to figure out what else I could do, because there was a lot of rush to apply to this company and I didn’t have that finance background, unlike many other peers of mine.
So, I looked at the list, and Morningstar was another name. And only few people knew, because it was a new name which was added back then. So, I did some research. I figured out they are actually doing the same thing and they are even a smaller team- where I can learn a lot. So, I decided to be a contrarian in this approach. So, I applied to Morningstar. And that’s how I got into the indexes team. And once I got over there, it kind of gave me a unique flavor of finance industry along with the coding capabilities. So, there were the aspects of quantitative nature as well - in this job. So, I felt this is what I was meant to do. So, the first job kind of helped me set precedence in my career. And that’s how, I think I went along with that. And I, again, it felt a lot interesting- working in that field. The kind of knowledge that I gained, and all the stuff.
So, I think that was the reason how I got into the field of passive investing. And, yeah! In some way, I was lucky to have gained that kind of experience.
Binod:
It is interesting, you know, you mentioned luck. I was thinking as you were speaking actually. I would say there were three ingredients, that sort of resulted in where you are right now.
One is, of course luck! But, second was instinct, right? I mean you knew somehow that your coding and analytical background would be of use in the Morningstar context rather than probably some other field. And, of course – guts! Because, like you said, you didn’t go to the MSCI. You went to Morningstar, which is a little-known name. So, you were like, almost like a contrarian, compared to others. So, I think if you against the flow sometimes, there can be a significant benefit. I think, a mix of luck, instinct and guts resulted in your success!
Now, digging more - into your career. Now, if you read the literature, lot of people will say that with the rise of passive investing, active investing will decline. In fact, if you look around you, the last 20-30 years, trillions of dollars have been pumped into indexes and passive investing. Most CFA charter holders work as fund managers and equity research analysts, at least in the developed world. Now, does this trend towards passive investing mean fewer opportunities for CFA charter holders? What roles would be there, or would be left? And how numerous are they, relatively speaking? So, this is a question that is of significant strategic importance to anyone who is a charter holder, who is beginning the journey. What do you think?
Swetabh:
Yeah. Yeah. So, when you talk about CFA, the first thing that comes to your mind is a fund manager or an equity research analyst, right? But with the rise of passive investing, all of us, we understand that there will be a gradual shift in the future. But then, my question is, a shift to what? In my case, I went in the field of passive investing. And there, we still need a good knowledge in finance. We needed that, in order to build different kinds of passive strategies.
So, I would say, CFA still gave me that kind of exposure on multiple topics like economics, security analysis, corporate finance, asset allocation. And this is something which every employer in the financial industry will prefer. It’s not just in the fund management or equity research field, right? I am sure that, when I talk to other peers of mine, or friends in other companies, they often talk about ML, AI and all that stuff - and they do CFA. Because, they know that they would be well equipped to create those kinds of strategies if they get that kind of financial exposure, which kind of comes from CFA. So, I think, we should not limit ourselves to fund management or equity research roles. I guess, CFA kind of gives you a broad perspective of finance. Of course, there is some bit of specialisation to fund management. But I am assuming that the kind of topics that are being covered in CFA- it’s not going to stop you to get into other fields.
Binod:
I mean, yes. I see, what you’re saying, it does not mean the death of active investing, doesn’t it? Because you still have, I think, a lot of opportunity for active investing in frontier and emerging markets, in alternative investments (like real estate, for example), in ESG- which is becoming a fast-growing trend in at least developed markets. So, I think there’s still significant scope for active investing. But you mentioned during the chat that we had, in terms of machines getting involved, being that someone on the other side. But I think that someone on the other side is increasingly a machine that is simply designed to buy and sell with minimum human intervention, isn’t it? I mean hedge funds like Renaissance, and big names like BridgeWater do it all the time. So, isn’t this again, reducing human intervention and increasing machines? And is that not leading to unemployment?
Swetabh:
Yes. Yes. I guess in the fund management industry they are being challenged to bring a lot more innovation in the kind of products that they are creating. So, I was just reading in a recent article, not sure whether it was the FT or The Economist, but they estimated that there is going to be a drop of like 5-10% in the head count, since the investment management industry is in an influx.
So, I guess it’s imperative for us to know what AI and machine learning are, and what they can bring to the table. And how you can use these kinds of topics, alongside the financial knowledge that you have acquired through CFA or whatever.
So, I guess there’s going to be a lot of themes and products that are going to come in the investment management industry. Like you mentioned - sustainability? That’s becoming increasingly popular these days. Now that we are becoming conscious about our surroundings, and the kind of social impact that we want to bring, so I guess there’s going to be a lot of innovations coming in as a result of passive investing.
Because when we talk about investment, when you just want to get exposure to the markets, you are going to choose a passive investment approach. Because it has lower fees. Great asset management companies like Vanguard and BlackRock have openly talked about this- that they want to reduce the cost and fees so that it’s accessible for all types of investors. So now, for fund managers, I guess it’s important to know what kind of products they can offer to investors, which can actually, address their needs. Do you want to get exposure to AI? Or ML? For funds, you’ll probably choose that one, right? If I am interested in a pharma fund, I will probably choose that. If I am interested in bio-tech companies, I will choose that. So, I guess there’s a lot of innovation and there are a lot of new funds coming in, which, I guess that’s the kind of approach which the fund management industry is actually following.
Binod:
Now this, is a good segue to my next question Shwetabh. Because, you said this before the interview; we had this chat and you were saying that we should embrace the new world and work towards acquiring a new skill set that new opportunities would require. I mean, opportunities like, ESG, sustainability, alternative investments. But also, opportunities in this world of passive investing and automation and machine learning, AI. So, it’s all very fine to say we should embrace the new world and all those things.
But how does that work in reality? Assuming I’m a fresh CFA pass-out, what specific skills should I acquire? Why? And how? How can CFA charter holders and candidates prepare for this new world of increased passive investing? Automation, possibly less opportunities out there, more competition with more people coming into the market. So, what are the thoughts that you have on this?
Swetabh:
If you are in a back office, if you are doing a data entry job, or you’re in the field of accounting, or the general administrative role, you’ll be the first one to get affected because of this rise in passive investing, AI and ML. So, certifications like CFA, of course will give you a head start.
But that’s not enough in this new world. So, I guess there are three important things that we need to look at:
The first thing is having a good knowledge of finance, which you can get through CFA or any other such certification courses.
The second is developing that analytical mindset- so you need to think of different scenarios and you should be able to have that framework how you can solve a particular problem and be able to draw sensible conclusions, and that is only going to come with practice. And that’s why I guess, a very important role would be to get that industry experience beforehand.
And then, the third thing would be how to use the analytical tools that can help you achieve that mindset. So, in my field for example, we use different tools like Python, SQL, EWS cloud services.
So, I guess tech is going to play a very important role in our field. So, it’s better to equip yourself with that kind of skillset.
I am not saying that you delve deeper into that and become a technology expert. I think, what’s more important is that you should be able to know what these things can do. And even a small exposure to such tools can help you a lot in the field. So, I guess if we are able to follow these three points, it will play a quite important role to embrace this new world.
Binod:
And I guess Swetabh- good point. I guess, you know if you don’t have analytical mindset or you don’t have the learnings regarding ML and AI, and things like that, then, I suppose, you probably want to focus on people oriented roles where you communicate closely with investors, and high net-worth individuals and help them reach their goals. I mean any one of these skills either on the soft side or on the technical side, or maybe a blend of this, can help future-proof your career.
Now, I want to specifically talk about your third point in the earlier question, where you mentioned that you’re currently pursuing something regarding data science. Now that’s a fascinating area, a fast-evolving area as well, where there could be opportunities for CFA candidates and charter holders in it. Now, can you tell me more about this course and how has your experience been so far? Are you a data scientist yet, or in progress?
Swetabh:
Yes. In progress, to be frank. I don’t think I would be able to do it so early. It’s always going to be in progress, (given) the kind of innovation that’s coming in the field. Well, regarding the course specifically, I guess, there was this lockdown that happened in march. And the first few weeks of April, I kind of thought, “Well I guess, I have time. There’s no social life for me right now. Why not use the weekend time, and give a better structure to my data science skills”. So, I already had that exposure in my job. But I wanted to structure that a lot.
So, I looked for different courses online, searched for different search programs on Coursera, EdX and all. But then I came across this course which was affiliated to Purdue University. So, it’s a one-year program, which gives me a post graduate in Data Analytics. So, I thought, “Why not just do that”? And it was able to cover a lot of topics like Python, R, machine learning, and it even has a capstone project at the very end to give me a hands-on experience to the kind of problems which companies are facing. So, I am very much looking forwards to complete that capstone project.
I guess the major reason for me to choose this course was live classes. When you look at courses on Coursera or EdX, the problem is that these are recorded videos. So, the level of engagement is going to be pretty low. You don’t have people along with you, around you, who are actually doing the course. So, I think the level of engagement will be a lot higher in the live classes, where it’s even easy for you to clear your doubts midway.
So, yes. I guess, if you think about all these different aspects it can help you decide what kind of course you actually want to take. Do you want to choose something which you can do at your own pace? Then, maybe live classes may not be the right approach for you. But you need to consider aspects like the level of engagement as well as how you can clear your doubts and all. So, I guess those were the two very important points for me, and hence, I chose this course.
Binod:
Yes. I mean quite relevant courses these days for finance folks. I suppose you’d take advantage of the lockdown if you can, and lots of huge variety of online courses in terms of quality and quantity, and in terms of subjects as well. But I suppose it’s about communication as well, right Swetabh? I mean, I’m personally not comfortable listening to a recording, or even doing a live class. I remember, I’d signed up for Andrew Ng’s course in basic AI. I dropped out after the first two classes. So. I’m a drop out in that sense.
But this brings me to a very interesting topic of communication! So, we’ve been talking about technical skills so far- data science, Python, R, SQL etc. Now, we talked about communication before this interview, and you talked about your struggle to communicate. Now, at least communication- it is a critical and often underrated skill among technical people like finance graduates, engineers, who prize qualifications and technical skills more at a younger age, to their detriment of course.
Now, let’s go to your story. What have been your struggles regarding communication, and equally importantly, how have you handled this?
Swetabh:
Yes. I faced a lot of struggles in communication to be frank. It all started when I joined Morningstar, my first job. So, back in my engineering college, when we had to communicate to professors or talk to my friends: If its professors, you just need to write them a mail or submit a draft. So, it was more of a writing skill for you. And when you’re talking to your friends, you can always use your own local language, which in my case was Hindi. So, it was very easy for me to communicate my ideas, my thoughts and all this stuff.
But when I came to Morningstar, my first job, I remember that specific moment when I was on a call with one of my U.S. counterparts. I already had a lot of respect for him; when I was on that call, I just found myself stunned when he asked me a question. I was at a loss of words. So, that was my first hurdle. I still remember that. So, when I saw that in front of myself, I just made an approach that for the next 6 months I am only going to talk in English with everyone in the office. So, I guess that’s how it helped me communicate better. And so, I think communication just comes with practice. It’s more about the practice. You keep on doing it for a long duration and that’s how you’re going to improve your soft skills.
Well, but after that, after those 6 months, an even bigger problem came, which was how to explain the technical concepts to the non-technical people or stakeholders or clients. They don’t care about all those Nitti-gritties. They are only worried about the end goal. So, that was the other bigger problem for me. And, as far as trying to solve that problem is concerned, I tried to understand why I’m facing that issue. And I understand that what we technical folks essentially do is, we try to explain the processes and not the outcome. We generally focus on how we solve the problem rather than what the problem actually is and why we are actually solving the problem.
So, I guess those are the mistakes that I was doing or I am sure many other technical people would also be doing.
So, when I joined the behavioural finance team, I realized how important it is to use the different tools that we have. The team, in my case, they were only using visual aids to tell the problem to everyone. And I was kind of not impressed, that here we are- creating a lot of simulation tools, doing a lot of analysis and all that stuff, and we are just able to use the photos, and charts and all the stuff, just to relay the information. So, I guess it’s very important for us to know, these different tools, and if we are able to tell a story to anyone while presenting. I think, maybe that’s the way to go about it. I’m not saying I’m perfect at it. I’m still struggling with it. I guess, it’s always one step at a time. So, keep taking that one step at a time, as long as you have that desired approach, that confidence. So, once you have that confidence and once you build that kind of framework on how to use these different tools, I’m sure you would be able to communicate a lot effectively.
Binod:
The other issue we talked about in communication was about the whole being tactful part. Can you talk about that in more detail?
Swetabh:
Yes. Yes. So, I guess, in my case the problem was that I was not being diplomatic.
The problem with that is, when you discuss with your fellow employees, you can’t just simply talk about the problem. Of, what I was essentially doing was- I just mentioned to someone that he is wrong, in front of their face. And not everyone will like it. If they are your friends, or those employees who respect you a lot, or if you have a good relationship with them, it won’t be an issue.
But that’s rarely the case, right? In your career, you’re going to meet a lot of people. You can’t simply go and point out the problems right in front of their face. That can often lead to bad consequences. So, there was this problem in my thinking, I guess. I always thought about that, if the approach is not going to work, and I’m simply going to state that. What I realized was that if you ask them the right questions and enquire more about their process- as in what idea they are coming up with, I think that can help address the problems. Because, it might happen that you will get the answer before you even state the problem. So, if you keep on asking the right questions, rather than stating the problem in the first hand, that’s probably one way to solve this problem.
And so, I guess being diplomatic is a very important trait. You still need to be frank about it, but I guess, you need to use these two different skill-sets while trying to communicate with your fellow employees. They are not your friends or your family members, right? So, I guess being diplomatic is a very important skill that one needs to develop.
Binod:
I mean, that’s hugely significant, what you just said now Swetabh. Because, I think hundreds of thousands, possibly millions of youngsters who are used to college/university life where everything is transparent, and sort of fair, suddenly thrust into the world of jobs and bosses and deadlines and presentations, working with strangers. They tend to speak their mind too often, too bluntly; and they learn of course over course of time after they get hit with whatever adverse consequences. And sometimes, of course they go rather extreme. They become too quiet, and they become very pessimistic and all those things.
But I think the key part here is emotional intelligence. Where you not only need to know yourself, but you also need to know others. And know, that no two people are the same. And know, that people can get hurt, and also address things from their point of view. Which is something I learnt in my career over a long period of time, through (of course), trial and error as well. So, I think that’s something that youngsters need to pick up- this whole idea of the fact that how to be tactful; firm, but tactful, and convey your point without offending anyone. That’s called an art actually. You can’t really pick it up like this. (flicks)
It comes with a little bit of experience and some mentoring and some self-awareness.
Now, I want to talk about the CFA qualification and the market. Especially in India, which is a huge market for CFA candidates! There’s a growing perception that too many are passing all three levels of the CFA exam, and creating a glut of CFA pass-outs and declining the respect of the qualification. Especially, now that the examination has become computer based, and now you have level 2 and 3 twice a year as opposed to once a year for the last many decades, and they have reduced the years required to get the charter from 4 years to 3 years, recently. So, there’s also a fear that it may end up like the chartered accountancy market. Where many CAs accept and are paid low salaries, and are working in most of your companies. So, you of course, are based in India, work in India, you are a part of CFA society India (active volunteer), I’m sure you have your thoughts on this. What do you think of this development?
Swetabh:
Yes. Yes. One thing that still stands out in the case of CFA, would be, it’s still standardized assessment like G-MAT or GRE. Everyone understands around the world, which might not be the case with CA. This is probably one kind of a problem.
But I understand. There is some bit of glut that is coming in our field, especially for CFA charter holders. So, I guess, but there is one important thing to mention. So, if there are two people who come for a job and if the employer is equally impressed with both of them, one of them is a CFA charter holder and if the other one is not, I’m sure that they are going to choose the former who has that CFA charter. So, there’s still a lot of credibility to the CFA charter, which is still going to be there.
But regarding the glut specifically, I guess, in order to withstand that, you need to stand out then. And in order to stand out, you need to be different from the other CFA charter holders. And that would be:
to be relevant to the industry
to know what is actually going on in the industry
So, one of my friends whose actual job is to get freshers placed in the financial industry. Well, I had a chat with him. He mentioned that, “You need to understand what’s currently happening in the market. You need to know (say, for example) why did The RBI boost the liquidity in the bond market? You need to know why foreign investments in India are going down”.
So, things like that are very important to know. Because that’s when you’re able to use the technical tools or the knowledge that you’ve gained from CFA, and you’re able to apply to the actual situation, to the actual environment that you’re placed in. And that’s what is going to impress the employers.
So, I guess these are the important skills that you need to develop. And the way to do it would be to keep on reading news, keep on reading different articles, or The Economist or FT- whatever your favorite source of news is. That’s how you’re going to develop that kind of skill set, where you know what’s actually going on. So, if you are relevant to the industry, you will be able to stand out from other folks who are also doing the CFA.
Binod:
Absolutely! I think, people shouldn’t be unduly worried about the so-called glut in the market and oversupply of CFA charter holders.
Because, everyone has a CFA charter, everyone knows about equity investment and portfolio management and bla, bla, bla. But what makes you stand out would be your personality, your soft skills, networking (of course), and of course being up to date. In fact, I still remember, as you were talking, I was thinking about my own experience way back about 26 years ago. I was preparing for an interview with the CEO of a bank. He asked me a question, “What’s happening in the market these days? Can you tell me something relevant to our accounting or finance”? I remember telling him about a recent change in accounting standard for leases, in India. And a few weeks later I got hired. I met the CEO again on my first day at work. He said, “I hired you because out of 150 chartered accountants who were interviewed, you were the only guy who could say something about what happened in contemporary accounting”. So, that got me a job! That got me a job!
Now moving on to- of course you’re volunteering, right Swetabh? I mean, you’re also an active volunteer with the CFA, India Society, with the research and advocacy committee, right? So, that’s interesting because I’m a volunteer, on the Board of CFA, Emirates. I handle career services, and I constantly encourage people to volunteer. You don’t see many people raising their hands. So, how did you get involved? What’s your mandate and why?
Swetabh:
Yeah. Well, it was the power of serendipity, to be frank.
I met with Amit, who works with the CFA Institute and who was also on this podcast. So, I met him, regarding creating a new platform in Morningstar. So, we had a very good relationship. And then he mentioned to me about his workshop on ‘Bounded Rationality’ with Tapmi Institute here in India. It’s one of the MBA colleges. So, there is this annual workshop which tells us about how we can apply heuristics in the field of Finance and how we can make things more intuitive. That actually gave me the exposure to the behavioural finance aspect and later I moved to behavioural finance.
So, that’s how I met Raj, and Raj is the director of the CFA Society, in India. So, that’s how I met him and I came to know about him. One of the days, he just mentioned to me, in one of the conferences, whether I would want to volunteer for the CFA Society. I said, “Yes. Why not”? Because, thinking about it- the kind of experience that I had in the last few months and all, it allowed me to interact with so many like-minded individuals who are CFA charter holder themselves, and are extremely knowledgeable in the area! And now that I think about it, it just gives me that exposure which a new side would do. It’s just, I think, it gives me a focused approach where they talk about all the relevant things which are happening in the financial markets. So, I guess that’s how I got into volunteering for CFA India Society. And I guess, it has been a really good experience. I understand that means, this is a very important bit of networking. To be frank, you get a lot of opportunities to network with fellows who are so great in the financial industry, and you get to learn a lot from them. I’m sure if you’re considering, if you have completed your level 3 and all, it’s always good to find out a way to volunteer for your local chapter. Because, the kind of exposure that you’re going to get from that, I don’t think it’s that easy anywhere else.
Binod:
Yeah, absolutely Swetabh!
Because, I think people underrate the importance of volunteering, right? I mean, when you volunteer, your profile increases. People see you. Especially, since you’re connected to a local CFA Society, that increases your profile and networking opportunities. And sometimes you end up working with senior CFA charter holders, which also has a fantastic mentoring opportunity for you. If they like you, and you work on projects with them. Like I do at CFA, Emirates. I mean, I have about three or five volunteers who are all CFA level 2 or level 3 candidates. We work on different projects and they meet people. They learn how to complete and manage projects, and they learn soft skills and networking. So, it’s a good package overall.
Now, I know this question is probably a bit premature, but the question is: ‘Everyone has some regrets.’ Something they wished they hadn’t done or had done. Like what you call in behavioral finance- errors of omission or errors of commission. I know you’re still young and you know, still 5-7 years into your career, but you’re pretty switched on. I’m sure you introspect and you observe things closely. What has been your biggest career regret so far?
Swetabh:
Well, yeah. That’s a tough question.
If I think about it, I guess that would be that I specialised way too early in my field. And that was- the field of passive investing. Because it’s a very niche field. When I talk about my job with other people who are in the financial industry, even they don’t understand it- what I essentially do. So, it’s quite a very niche field. So, I guess, maybe that’s one of the regrets that I would have- specialising way too early. Because, I fell that the first few years of your career should be something where you try to explore a lot. Try to understand what different opportunities are there for you. So, it’s more of that bit of exploration that you need to do, rather than specialising in the field. Because that kind of narrows down your chain of thought. So, you only start thinking about all the problems in a very specific way.
So, I kind of understood that after my five years with the indexes team. And over the period, I was reading a lot of books, in the last few years. I think, that kind of gave me that exposure which I was thinking about. And that’s, again, it helped me move to a different field- in behavioural finance, later.
So, well yeah. Thinking about it, if I had the chance to do everything again, I would have gained more practical experience, networked with more people, see what opportunities I have that I can explore.
So, it would be more to get that kind of practical experience along with reading books that can help you broaden your field, your viewpoints and all. So, yeah! After learning all these things, this is what I’m doing even today. Keep on reading as many books as you can, because then you will come to know what other things and what other opportunities you would have in front of you.
Binod:
Yeah, absolutely! I think, that’s something else that we have in common Swetabh. Because I am also a voracious reader of books. I mean, I grew up as a single child so books were my best friends then, and even now. And I think I’m down with my 31st book so far.
Swetabh:
Oh my God!
Binod:
But books are extremely helpful because you have them at your convenience and there’s a lot of information that you can learn.
Of course, we’re now reaching the end of this very interesting, insightful interview, Swetabh. So, I’ve got to ask you a very important question. Because this podcast, as you know, is aimed at people trying to develop their careers in finance- CFA, MBA, whatever it is. Now, what are the three, key pieces of advice, based on your experience, that you would tell someone who is at the beginning of their career or is considering their career in finance?
Swetabh:
Yes. I guess there would be a lot of advice that one could give.
But based on my experience, I feel, the one most important point for me was to get a mentor. And if you’re able to get that mentor early in your field, that is going to play a very important role. Because, mentors are those people who give you an unbiased view of different decisions that you’re going to make in your career. So, they give you that view, and they can help you identify your weaknesses and strengths, which is very important. You can’t just get into a field just because you think you want to. You need to know about what challenges you are going to face and all. I think that’s why it’s important for you to have that mentor. And I would suggest not to just ask a manager to become your mentor. I would rather suggest someone who can give you an unbiased opinion. It can be any other colleague of yours, who may be working in a different field, in a different team. But yeah, it’s better that you get that mentor early on in your career.
The second point would be, I’m sure I think I’ve already talked about that in the podcast- it’s networking early. You will come to know about what’s actually going on in the industry. Not only that, it also opens you to a lot of opportunities which are going to be there. In my case, these were essentially investment conferences and volunteering at CFA Society. The kind of exposure that it gives you, again, you don’t have to think that you will do that only because you want to make a job switch. It’s just about making that connections. Because, you have no idea how you’re going to meet other people. That’s how I met you, for example. We didn’t know that we will meet each other. So, I think that’s the power of networking. You can meet so many people who will be relevant to your industry. So, it plays a very important role.
And, I think, third one is being humble and having a continued learning approach. Great minds who I have come across, they always have these two traits. Things change so fast in the industry. So, you need to be acquainted with these skills and stay updated. You know, when I look at people like you, and so many different folks who are head at their companies, or directors, other levels and all- I think, when I look at them, I always have that sense of respect for them and I’m always impressed. Because, they have that kind of knowledge not only in their field, they will also have knowledge on what’s actually going on outside.
So, I think these would be the three key pieces of advice that I could give. But yeah, I’m still in the early phase. Maybe, there will be a few more to come. But it’s more, try to have those experiences over the period.
Binod:
Yeah, that’s very interesting.
So, three points for those who are listening:
always get a mentor
start networking early, and
be humble, and also along with that always have a continued or continuous learning approach.
That also helps a lot in terms of your career.
Thank you so much Swetabh! This has been quite insightful and inspirational I hope, to listeners as well.
Look, we spent considerable time preparing for this podcast, I really want to appreciate your efforts and the time we spent on this. I hope this will be useful to people who listen to this and I hope they take the lessons to heart. Whether it is on technical skills, on soft skills, on career opportunities or career tips. Because this is a podcast that is specifically focused on helping such folk.
Thank you once again, Swetabh! I wish you the very best in your career. You seem to be in the right place, with the right mind and the right skills! The perfect combination! All the best and thank you, once again.
Swetabh:
Thank you so much for having me Binod! Thanks a lot!
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Binod:
This podcast is brought to you by the real finance mentor. Thank you so much for listening and I really hope you found it insightful and inspirational. If you did enjoy this episode, please drop us a review and spread the word. You should check out more exclusive content on therealfinancementor.com and my LinkedIn profile which is: Binod Shankar, FCA, CFA. Let’s keep in touch! Just add your name to the mailing list on therealfinancementor.com, and we’ll tell you about new episodes plus book reviews, upcoming events and blogs. Till the next time, onwards and upwards.
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