Episode 3: Biharilal Deora
We are back with Episode #3 of The Real Finance Mentor podcast by Binod Shankar. In this episode, we chat with Mr. Biharilal Deora, otherwise known universally as ‘BD’. BD is someone you must listen to.
Chartered accountant. CFA charter holder. Credit analyst. Private banker. Academic. Mentor. Asset manager. CFA board member. I’ve known him for nearly a decade. BD is super versatile and very clear in his thinking and he has an authentic and compelling story to tell, full of practical, valuable tips.
Anyone planning a career in finance will benefit enormously from this episode. Listen. Learn. Grow.
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EPISODE TRANSCRIPT BELOW:
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Binod:
This is Binod Shankar and you're listening to Real Finance Mentor podcast from therealfinancementor.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. This is not theoretical stuff. We zero in on the critical practical issues. Number two, authentic. No bullshit, no sidestepping. The topics, guests and questions are all from that perspective. And number three, take a chartered accountant CFA charter holder, add 17+ years as a corporate warrior, mixing 10 years of entrepreneurship, throw in a decade of full-time CFA training, add speaking, mentoring, cycling, mountaineering, and that's me. Welcome to The Real Finance Mentor, or as I call it, RFM.
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Binod:
Welcome to episode number three, and my guest today is someone I've known for over a decade, the one and only Biharilal Deora, otherwise known universally as ‘BD’. And I don't think there's anyone in the CFA community in India or Asia, probably even the world, who doesn't know BD or Biharilal. He's a chartered accountant and a CFA charter holder. So that's two things that we have in common that draws us closer together. He's also a very active volunteer in the local CFA Society and on a regional and global level as well. And he's working right now in an alternate investment fund called Abakkus Investments, as what he explained to me as the chief executive officer of everything else but investing. Right, BD?
Biharilal:
Yeah.
Binod:
So with that introduction, you want to tell me, or tell the listeners, I know your background very well. Tell listeners a little bit about your career so far briefly.
Biharilal:
Thank you, Binod, and like you mentioned, I started as a chartered accountant. And in fact I had an All India rank when I did my chartered accountancy. I had a 15th rank in the CA final. And I was very confident that I'll get a job in finance, but when I appeared for interviews, I couldn't get a placement in campus. And that's when I started thinking, saying that, "Look, I am a rank holder chartered accountant, but something is missing for me to get into finance. What is it?" I couldn't find an answer at that point in time because I didn't knew about CFA. And that's where I started.
Biharilal:
So to begin with... in the first year, I worked in copyrights.
Binod:
Copyrights.
Biharilal:
Yeah, yeah. I worked in the copyrights and trademarks division of a CA firm trying to see if we can apply for copyrights for clients. I then thought it was useful and maybe it would have helped, but eventually it comes back to rescue you and I'll come to that point. And then we did some software audits to see what are the softwares which accounting guys use, they have a trail and you can audit them or not.
Biharilal:
A year later I realized that I might move to a different corporate job and I joined the Reliance Industries in a Surat. It's a plant over there, so financial accounting and savings and everything, you calculate. Three months, maybe less than 100 days, I realized that this is not for me, because I realized that someone who is a graduate is doing the same work, what I'm doing, and he's doing a better job than me. So I realized why waste your CA? And then I moved.
Biharilal:
So at that point in time, I didn't know how to apply and what to apply. I had a friend who had joined IIM Kozhikode and he said, "Why don't you go to these websites of these companies and you just go and apply there?" So I applied to one of those companies and fortunately I got a call. I still remember vaguely I had to go out of lunch break and take that call.
Biharilal:
But instead of asking me about my qualification, I mean they obviously knew my qualification, but they asked me a very simple question. "Think that if you have to make a model estimating the parking income of a company in Surat, how will you do it?" Now, I have never thought about it. This was a random question, and I didn't know what to answer. And then I said, "Okay, maybe you will start with the RTA data, you'll figure out how many vehicles are there, maybe assume a growth rate and then have some projections from there. You will take as an assumption saying that, look, 50% of vehicles are at home, 50% vehicles come to market, and then you will find capacity of those parking lots, and maybe five days occupancy, not seven days, and then have rated them and calculate something."
I don't even know whether I was right or wrong, but I don't think that's what the interviewer was checking. What he was checking was the thought process, that if you are given a problem, which is out of the blue and sudden, can you still apply your mind and come up with some steps, which you can do.
Fast forward, in that research job I realized that there's something called CFA, which everybody is doing and I should also do it. And that's when I registered myself for CFA. I registered in somewhere around the February, the last deadline, and immediately after I got engaged and my marriage was in the same week in which the CFA exam are there. So obviously in India marriage is a big thing. You pay a lot of money.
Binod:
How do you time your exams with marriage? I keep hearing this from friends of mine. Anyway, moving on.
Biharilal:
Let's assume the exams are lucky for us to get married faster, or the fact that you are given exam helps you to get a suitable bride faster.
Binod:
Suitable bride. Yeah, one of those things.
Biharilal:
But I couldn't give exam in June because of marriage. And in December I had joined a new company, Fidelity. And so that time also I couldn't give exam. And so I decided that now I have to do it irrespective of what it comes, and I decided to do it in 2007. And that's when this whole issue with the exams in India started. So I had actually to ... in my exam leave, I got to know thing that the exams are not happening and we were trying to book for Sri Lanka and a lot of other places, Dubai being one of them. And then finally exam happened, Level One there. For Level Two I had to go to Singapore to give exams. And I finished my Level Three over there.
Binod:
How was the CFA journey in terms of, tell me more detail because you passed over to the whole thing like a breeze or something, probably it was a breeze for you, but Level One, Level Two, Level Three, briefly tell me what are the challenges and how you cracked it.
Biharilal:
So two things struck me in Level One at least, or at least in Level Two. Look, being a CA or being a chartered accountant, you're on the other side of the table. Your focus is more on how to calculate ROE, how to calculate profitability, how to calculate net profit, gross profit, whatever numbers you want. Or how to calculate a particular ratio. You never apply your mind on how to analyze that particular thing or what it means for the other party. Once you start your CFA journey, you're to leave how to calculate, because how to calculate will be given to you by a software or a model. You're to start working on how to analyze that. So a classic example, so ROE of two companies is 20%, which company to choose? Then you look at DuPont and figure out, okay, which company is more operationally suitable, or if the ROE is increased from 20 to 25, why it has increased and why it has not increased?
Biharilal:
Everybody knows how to calculate the current ratios. But what people don't know is that if the current ratio of both the companies the same, look at quick ratio or acid test ratio and figure out which company is better [crosstalk 00:07:57].
Binod:
Isn't it drill down, look at interpretation, analysis.
Biharilal:
So that interpretation aspect is what is embedded within CFA. So what people say that FRA is more difficult, but it's difficult if you're not studied accounting before. If you've studied accounting before then you will precisely focus on those pointers and you will love it. So as a CA I would have never imagined that I can mentally give you a direction of a ratio depending on the change in LIFO are FIFO and thing like that. But as a CFA, you mentally can calculate saying that, "Look, this portion would go up, this portion will go up, the net impact is ..."
Binod:
You're able to connect the dots faster.
Biharilal:
So in that aspect, a CA always helps, or any accounting degree for that matter, always helps you because you're already done the groundwork and then you can start applying that thing. Fortunately, I was working in fixed income domain. So we were doing these modelings and these things ourselves, so you can apply a lot of those in there.
Binod:
But going back to the question, what are the lessons you learned in CFA, as in what are the challenges you faced and how did you crack them?
Biharilal:
One, obviously realizing that as you go from Level One to Two to Three, the level of learning changes. Level One is more basic, more grounded, anyone can do it, not necessarily coming from a commerce or a science or other background. Level One is more testing whether you have an analytical bent of mind. Level Two is whether you can stick to the whole thing and you can deep dive into valuation and widen enough your domain, irrespective of whether you are from fixed income, you still have to learn equity, or if you're an equity you still have to learn fixed income. So you get multi asset class exposure, which you may or may not like it, but you still need to learn from that perspective.
And then suddenly comes Level Three when you realize that all your mugged up formulas and calculations are no longer working, and now you have to explain it to someone else on what you think. And while you may know how to calculate, and obviously as Indians also we are very good at calculation, but when it comes to writing, we fail miserably. We don't do a good job at it. And I was very confused on how I should do it because I knew that my writing was not good for sure.
Binod:
I don't know whether you know, but in CA, you always write the answers, and the CA final exam as I remember I was one of the first to raise my hands to ask for additional piece of paper, and everyone looked at me as if I was a genius. And that is the mentality we have, right?
Biharilal:
The more number of papers.
Binod:
The more you write, the more sheets of paper you ask, the smarter you must be.
Biharilal:
So I'll give you an example. In CA, you have 3 stages, you have Foundation, you have Inter and you have Final. Knowing my Foundation exam, you need to score 200 to 400, four papers. So I scored 233 but I still failed. So I was the only one in that area, Surat, who failed with a total about 200.
Binod:
How come?
Biharilal:
Because I had 70 in all the other subjects, but I had 33 in Economics. And I was so upset saying that, "Look, this is not done, and all my friends saying, "How can you fail?" And I failed. And then I realized, "I have not done something right. Maybe I've just filled up papers which are not meant for examiner. I need to communicate in their language." Six months later I passed. I didn't realize it then that it was a blessing in disguise, because next time I gave exam, I got a rank, because all the guys who were with me, with competition, they obviously were six months ahead. So since I was in a different batch, I was able to perform. So sometimes some of these things work in your favor, even when you don't know how it's going to happen. Failure sometimes is good.
So at least CA taught me that failure. So in CFA at least I was prepared, saying that, "Even if I fail I can do." And if you're prepared for failure, you will prepare more. Right?
Binod:
True. Correct. Correct. Exactly.
Biharilal:
Whether it's practice exams or discussing with colleagues or whatever you want to do. So in Level Three, what I realized that I'm not good at writing. So I went to my manager, and he had appeared for Level Three, I think, two years before. And I asked him what to write and how to write and said, "Why don't you write papers and then come back to me and I'll check it for you and I'll tell you this is what you should write?"
Binod:
You really have managers like that, do you?
Biharilal:
We were lucky.
Binod:
You were lucky to have [crosstalk 00:12:02]-
Biharilal:
We were lucky we were in Fidelity and the manager was like that. But he actually helped me think that, "Look, what you're written doesn't make sense from a portfolio management perspective. What you've written is a theoretical answer. It doesn't have the keywords or it doesn't have that thing." And then I obviously practiced multiple times and then passed Level Three. That was the time when we had a new kid, so my daughter was born on December 2008, so a lot of those nights and stuff and I had a full time job. My wife had taken a break. So what I realized that I need to stretch a bit. So I used to wake up at let's say 5:00 AM, study till 5:00 to 8:00, then go to office and come back in an evening, again, stretch it for two hours or something. Otherwise there is no way you can do it along with the job.
So the important point in CFA is not about how much you study, it's about the discipline. If you study for full six months or eight months, you can't really cramp together everything and say, "Okay, I'll do it for two weeks and then I'm done." It's not one of those things. You will require a lot of those, time spent in synthesizing different topics.
Binod:
And conceptual understanding takes time.
Biharilal:
So I have a different strategy in reading. What I do is, look, if you have 5 books, so I'll go through all of them in five days. I will just read through it irrespective of whether I understand or not. So I'll at least get 10% of it. The next time I read it again, I take the same time, I get additional 10%. And that's how I tried to do multiple times rather than doing one time in detail. That has worked for me. For some people it works, some people it doesn't work. But at least I follow that strategy.
But I did CFA, and then I realized that this doesn't stop here. It's an ongoing process. Then I realized that you are a tip in the ocean. So then I did my CFP the next year. Really, if you have done CFA, CFP is a cakewalk. So I did that.
Binod:
Correct. That's Chartered Financial Planner?
Biharilal:
Certified Financial Planner.
Binod:
Certified Financial Planner. That's in the US, isn't it?
Biharilal:
That's in the US. Around the same time, IFRS rules were changing. India was adopting to IFRS and I think globally everybody was adopting to IFRS. So I realized that this IFRS is something coming up, and so I said, "Okay, let's get something in IFRS," so I did IFRS.
Biharilal:
Now, everything which I did, at that point in time, it was not useful for me, because I was working at the US market. I was looking at US gaps. So IFRS had no meaning for me. But I did it saying that eventually if something is going global, it's going to come back and require me to do it. So why not better prepare in advance? So my manager said a beautiful thing at that point saying that all careers looks elevated, but only in retrospect. When you're doing it, it doesn't look, but five years down, you will know that because I did this, this, this, this, you are a better person or you are prepared for the job.
Binod:
I'm going to go a little bit and talk about CA because it's a qualification that propelled me initially, and I'm sure you as well, in the early part of our career. So, you mentioned helping in CFA because obviously the solid accounting foundation helps when you go to FRA and equity analysis part of the CFA program. But in your career, how did the CA help you?
Biharilal:
So two things. It's a fall back option for us because you are regulated, you are supposed to have audits. So you get the mental insurance in your mind saying that, "Look, if nothing works out, you can open your own shop and practice and you're going to at least get something to feed your family or survive [crosstalk 00:15:29]." So one it is obviously it gives you a little bit of time. But more than that it gives you a ability to read any complex law or situation and then analyze into simple steps. And it makes you more consistent or maybe respect timelines. Because once you miss a deadline for filing a return, you miss it.
So it teaches you some of those things. You can handle volume of data, 300, 400 pages and stuff, you can handle complex citations and grasp it, and you can adhere to deadlines.
Binod:
Income tax at 1961, one of the famous examples of the vast amount of complex information you digest.
Biharilal:
And CFA is nothing like. CFA, you start with a single line and then you start multiple thinking, okay, where else it has impact. So it is not summarized. It is expand on something. CA is more reverse. You have multiple things and you concise it and here you are concising and you're expanding it. So technically, these are two different sides. And if you are on the first side, obviously you can do the second side.
Binod:
So does it mean or to summarize the help or how chartered accounting helps is it helps you develop an analytical mindset, number crunching ability and probably ability to handle large sets of data.
Biharilal:
Yeah, that's aptly put.
Binod:
Okay. Now, let's talk about of course the other qualification that both of us have in common, which is the charter, the CFA charter fair. Now, obviously you are now in fund management and you're going to spend a lot of time there. But overall, how has CFA helped in your career?
Biharilal:
Two things I realized. Once you do a CA, you always have this whole comparison versus CA versus MBA. What if I had done an MBA? MBA have these good presentation skills and they have this alumni network, so called golden triangle where you need to get in and break through. And I realized that, look, even if you do like an IIM Ahmedabad, Harvard or INSEAD, any of these cool business school, you're going to have a limited alumni network. If B-school is 50 years old and 1000 peoples are graduating every year, that ends up like 50,000 people in 50 years. They may be very senior, but again, your circle is limited.
Binod:
That's the number.
Biharilal:
So I realize that people do MBA, not because of knowledge, but they do it because of the alumni network. They want the community where they can belong. And then I realize that CFA is one of those places where the community is not just local but it's global. Irrespective of you have done it from, from India, from Dubai, from US, from UK, from Italy, everywhere, CFA is same. So the community is much more than what you can imagine. You have 250,000 members across like 180, 90 countries. So that's the community which you have at your [crosstalk 00:18:05].
Binod:
It's interesting. I never thought of it that way. So you went by the numbers, huh?
Biharilal:
I did it that way. Seen that, look, if I do an MBA, I mean I'm not going to add any knowledge after doing CA or something, but maybe I can add on to what you have. And most of my career breaks, whether it is from moving from Bombay to Bangalore, getting into the research or getting out of research, getting into academics, getting out of academics, including my current role in Abakkus, have largely happened because of my CFA network or CFA knowledge base. I didn't plan to start as a credit analyst, but then when I ended up starting as a credit analyst, I realized that CFA has a lot to offer. You can apply a lot of global practices locally, et cetera, et cetera.
Similarly, when I moved from this to a wealth management or a family office management kind of role, I realized that CFA gives you all those tools which you need in a context of wealth management. When I moved from there to academics, again, I had my CFA to rescue. They have these beautiful PowerPoints available to all the faculty for free so you can use some of them. And then the current job, Abakkus, I mean, it's just happened the same way. I mean, me and Sunil, the founder, we have been working together as a volunteer for a long time. And when he was starting, he just asked me, "Do you want to join?" I have never formally worked with him, nor does he has my appraisal or any of the other details, but he has seen working me in and a volunteer and he knows what my skill sets are.
Binod:
It goes back to the power of networks.
Biharilal:
It goes back to the power of networks. So when I started volunteering back in 2009 when I became a member, I didn't realize that it'll eventually happen that way, but it just happened. So sometimes you just keep on doing things and eventually they come back to your rescue.
Binod:
Right. So now you're going to stop talking about you for a change, because if we talk about you, there's a lot to talk about, okay maybe another podcast episode for that, BD, but I also know that you're very much involved in volunteering for CFA Institute in career-related initiatives, in of course hiring and mentoring youngsters, young finance professionals. So something that I wanted to ask you, because you are in Mumbai, which is the financial capital of India, you deal with a lot of people, a lot of youngsters you deal with, right, as well. So what are the top three gaps or skills gaps that you see in youngsters, and maybe you can give some order of priority, and then you can tell us more detail what you see, give some color around that.
Biharilal:
I mean, I think I'll take a detour a little bit, but at least in Indian culture, we used to have these four brackets. We used to have this Brahmacharya-Ashram, so 25 years you study, then you have Grihastha Ashram, where 25 years you get married and settle, then you have Sannyasa Ashram, where you take detour from your day-to-day and let your kids manage, and Vanaprastha Ashram where you completely move out of this thing. So I think since our mythology says that 25 years is education and the next 25 years, well, we also have a mental block somewhere. We say that once you're done with one education, you don't study any more. So we have this qualification or something as a full stop, as a milestone. We don't think of qualification as a journey. That's why continuing education is so difficult for us.
So the problem is most, at least, what I see in youngsters is they think this as a milestone. So Everest might be a milestone, but that doesn't necessarily mean you'll stop climbing mountains. You are to continue doing that.
Binod:
Well, actually, interjecting here, I thought the same. When I qualified my CA at the age of 23, I honestly thought that was it. I wrote my name, Binod Shankar, Chartered Accountant under that maybe 500 times, and I said, "What else is there to learn in life? I have grasped all what is there to learn in life." But now looking back, I-
Biharilal:
It's an ocean. It's an ocean.
Binod:
Exactly. It's how naïve and how foolish I was.
Biharilal:
In risk management we have something called blind spot. We say there are three things. There is a knowledge domain where you know that you know something. So for example, you know that you know mountainering. You also know that you don't know how to fly planes, but you already know that. And in our entire life, we try to move from things we know that we don't know and we try to move that into knowledge domain. If you don't know how to, let's say, speak Mandarin, we'll try and learn that. If you don't know how to swim, you will learn that.
But it's only about things which that you don't know. We never think about things which you don't know and you don't even know. And that is where the huge aspect will work. That is where talking to people will work. So this whole lack of constant upgradation, or so-called learning attitude as you call it, I read a famous book called Learn Or Die. So it's not do or die any more. It's learn or die. Either you constantly upgrade yourself, or either you are finished. Somebody else will come with a lower salary, with a better skill sets, with a more faster efficiency, and is going to replace you out.
Binod:
I think first point was short-term thinking and second was the lack of constant upgradation. The ability or tendency of people to stop once they finish CA or CFA and not move further, why do you thinks it's happening? You think is because of sheer laziness? Or what is really stopping them?
Biharilal:
Laziness, obviously, is a more crude word, but let's put it this way. Once you do your CFA or CA or any of those, you start thinking, "What's in it for me?" And unless you can't find the immediate answer of what's in it for me or how it is going to help me, you don't go forward.
Binod:
So basically you're saying the people see the benefits are so far out that they don't really invest now.
Biharilal:
Right. So for example, if you are into fixed income and I ask you to take a portfolio management class in equity, you can't see far enough saying that, look, once you become a CIO, you will have to handle both the classes, hence better to learn right now. You will immediately only focus on your current job and what the next job. You will not focus on 10 jobs later. While it's difficult to plan 10 years down the line, five years down the line, but you have to shape your career saying that, "Look, eventually everybody wants to become a CEO, CIO or some C-level role. And C-level role is not just one domain. It's multiple domains. And right now we are unable to think about that for a futuristic goal. It may not be completely visible to you right now, but ideas to add on skill sets to begin with, right? They may come to your rescue any time, right? You never realize that you have a big client who is Mandarin and suddenly you speak Mandarin and you get the deal, or for that matter, Japanese or you get a link of any other activity. So if you are good swimmers and your client is also a swimmer and you suddenly start talking about Michael Phelps, that's the deal.
Biharilal:
So it's about connecting, and connecting comes from learning, if you know things. So for example, how many times you go to a conference and you meet someone, say, "Hello, I'm BD” and he might not remember, but if you said, "Do you remember the recent FinTech evolution which happened?" Or some interesting drone startup or something else which just hits you and you'll remember and you will recall that thing. So you will have to have that recall value. And in order to have recall value, you have to learn something new, which may not be relevant for you right now, but it will come to your rescue.
Binod:
Right. What other gap do you see in youngsters these days?
Biharilal:
I had the same expectation, think that, look, "I'm a rank holder, so people should just hire me off. Why don't they hire me off?"
Binod:
They should knock on your door and say, "Please take this job, please."
Biharilal:
So I had moment of realization in my ... So when I was applying for this campus interview, this is a hilarious story. One of these PSUs was taking an interview.
Binod:
Public Sector Undertakings for those who don't know what PSU is.
Biharilal:
So the state-owned enterprise was taking my interview. There were like six people and we're just chit chatting in general. And then about 20 minutes down the line, he said, "I have a question for you." So I said, "Tell me. What?" He said, "I'm confused who is interviewing who." That's what the moment when I realized that some of those places, you don't have to be communicative. And some places, you have to be communicative. So I was essentially communicating more to a person who doesn't like more communication. But the moral of the story is you will have to learn different styles. You learn two different styles of communication, analyzing, presenting different ways.
Biharilal:
Now, as a fresher, I don't expect you to have all those things ready when you graduate, but if you are a charter holder, or if you have cleared Level Three and you tell me you don't know how to do valuation, that's not acceptable. You know how to do valuation. It's just that you are lazy enough to put that valuation in Excel and try it out. I gave you that example of the estimating income of the parking lot. They were not trying to find out whether I'm right or wrong.
Binod:
It's the thought process they were interested in.
Biharilal:
They were trying to find out my thought process. So don't worry about making a model and making a projection and saying that, "Look, what if I'm wrong?" Just make it. If you have five presentations which were made on YouTube or five pieces on recent news which you have written, at least that will tell people saying that you can write well. Have you met anyone who claims that, "I'm not a good writer, I'm not a good presenter, I'm not good communicator, still hire me?" Nobody says that, "I'm not good." Nobody, right? But nobody says otherwise also that, "I am good because look at my samples."
Binod:
But people do say that, "I'm passionate about finance." But then every Tom, Dick and Harry says they're passionate about finance.
Biharilal:
So here's my question. How do you know that you are passionate?
Binod:
How do I know that you are passionate otherwise?
Biharilal:
Right. Do you have a certificate which says that, "I am passionate?" How do you prove that you have passionate?
Binod:
So how do I prove that I am passionate?
Biharilal:
The simple point, see, if you are passionate about something. So for example, if you're passionate about cricket, you will know pretty much everything about cricket, no matter which track record, which one I ask, you will know about it. If you're passionate about cars, you will know entire new models, right? I don't have to tell you, saying that, "Look, it's 12 o'clock in the midnight, why don't you sleep? Why are you tracking your cars? Why are you tracking Formula One race?" If you are passionate, you know more. If you are passionate, you have details.
Biharilal:
So if you say, "I am passionate about finance," "Right, you are passionate about finance. Tell me three stocks which I can buy and I can sell." Zip. Then you are not passionate about finance, right?
Binod:
So what should someone do to demonstrate his passion?
Biharilal:
So very simple. If you want to develop passion in a certain area, so for example, you say, "I'm passionate about equity research," simple thing, go ahead and prepare three recommendations, prepare two or three models, prepare two or three notes on why you like a company or why you don't like a company and present those. See, your CV as a fresher has no details on what I can ask you. But if you have a company which you researched upon, at least you have something which I can ask you questions on. And at least I can analyze whether you are right or wrong. Unless you give me an opportunity to interview, I can't interview. So in order to prove that you are passionate, you will have to start doing something.
Biharilal:
Now, that doing could be posting one article a day on LinkedIn, it could be posting financial literacy presentation, it could be preparing excellent models, it could be anything. There is no defined list. Now, here is a shortcut to do it. Go to a job description, look at what are the key skill sets it is. If the job description says you need to have good writing skills, do you have five writing samples? If it says you have analytical ability, have you done anything which shows your analytical ability? It says good presentation skills. Have you done any videos on anything which shows your presentation?
Binod:
So basically demonstrate what you claim as your traits or skills or competencies.
Biharilal:
See, my point is even if I hire you as the equity analyst, what is the first thing you're going to do? You're going to come and recommend stocks to me. Why not do that before and that I have more experience. So you have to start presenting. I mean, you have no downside to this. If you do well and people don't like project, you still have projects. You can showcase them on your profiles or otherwise.
Biharilal:
And the last thing is when it comes to thinking about courses or projects or applying, don't be short-term. Even in networking, even in terms of meeting people or burning bridges, have a long-term objective. Finance is a very small set of people. These are the same people you will meet time and again. So the more relationships you can aspect on that, the more it will be easier for you.
Binod:
I thin we're going to talk about that very soon, right? That particular aspect of things. So we talked about the top three gaps, BD, you saw in youngsters. I think one was short-term thinking when it comes to jobs and networking. Second was lack of constant upgradation or learning attitude. And third was poor communication and presentation skills. I think now we should talk about how can they close the gap, because you mentioned some ways in which they can close the gap, but what else can they do in terms of ...
Biharilal:
Look, like I said, all the careers looks elevated only in retrospect. So if you were to go from place A to B, you can take a train, you can take a bus, you can walk, but eventually you will reach there as long as you are determining that you want to get to place B. So be patient, whether it is switching roles, switching profiles, switching locations, be patient.
Binod:
I think that's what a lot of people lack these days. They want instant results.
Biharilal:
Yeah. So, small example. When we started our firm, we looked out for research associates. We posted this on the job line and we got about 400 CVS which were all CFA candidates and stuff. And we said, "Okay, there's only one condition. You will have to work part-time as accountant, you are to post on our accounting entries, and part-time research. And we are willing to take you as a fresher and we will pay you a stipend of 20,000 rupees, which is roughly about $300 a month. These are the three conditions you have: part-time accounting, part-time research, you will be an associate, and you will get with a stipend."
Biharilal:
You wouldn't believe it; none of the candidates, and none of them agreed.
Binod:
Right. Why? Why do you think they disagreed? Why do you think [crosstalk 00:31:38].
Biharilal:
Because everybody wants to become portfolio manager and list on day one. Now, it's a different story that then we ended up hiring a fresh chartered accountant. We saw her work in six months. We doubled her salary and we removed accounting profile from her portfolio. But then to begin with, you have to say that, "I'm willing to get an entry." You are going to directly work with the research team which was raising money at the very initial phase, but nobody wanted to take a chance. Everybody wants a set profile, a set of [crosstalk 00:32:07]-
Binod:
Senior analysts and CIO or portfolio manager, et cetera, et cetera.
Biharilal:
But that's not going to happen. I mean, everybody has to do some dirty job before they get there. So be patient. The second is, obviously, network as much as possible. So for example, if you want to switch to private equity profile, join private equity groups online. Attend private equity conferences, know what is happening in private equity. I heard a colleague back in my Credit Suisse days, he was from Haiti. He was from a company called Polaris. And he was deputed to CS. And he told me saying that, "Look, I've done my Level Three, but whenever I go to interviews, I just fail at the consultant level only. I'm not even getting a chance to meet the company." So I said, "What are you good at?" He said, "I'm good at technology because I track that and I'm a technology guy." So I said, "Why don't you start writing a newsletter on what's happening in technology maybe once a month across the world. What's the new technology? What's Microsoft doing? What's Accenture doing? What's IBM doing?"
And he started tracking that thing. And obviously track IT companies together. And a couple of months later we met and he said, "Now I am at least reaching the final stage of interview where the question is whether they have a better candidate than me or whether they are experiment." Eventually got into a decent or large, I would say, large, sell side firm. Then he didn't like that job and eventually he moved to a private equity fund and then later on more to us or somewhere else. But the point is, it's a time and tried tested formula. If you network with people, talk to people, attend relevant conferences and do whatever is relevant, you will get wherever you want to get.
Binod:
And you're very good at networking. I think you should have a certificate in networking. You could draft the curriculum and probably deliver some of the classes yourself.
Biharilal:
Anything on networking, I would recommend you to read a book called Give and Take. It's by a author called Adam Grant, I think. It's a very famous book and essentially talks about kinds of people and why you should help someone or ask for help.
Binod:
There are givers and there are takers.
Biharilal:
Givers and takers. I met one of the CIOs in Mumbai and he said, "I don't talk about business with anyone unless I have met him at least seven times."
Binod:
Seven times.
Biharilal:
Seven times on different occasions without a formal agenda. If I've met someone at least six to seven times in a different time, like event or somewhere, then I talk to him about business. Otherwise, no point.
Binod:
Which means if you're sitting at home, there's no chance of meeting this guy.
Biharilal:
Which means that if you meet for the first time and take my card and next day you send me your CV, I'm going to delete it. So don't do that.
Binod:
Very clear hint for listeners of this podcast. Guys, do not send CVs to BD without meeting him at least seven times. And I'll tell you the office address later.
Biharilal:
And the third is, at least these days with the help of technology, or at least social media, networking has become more easier. Now, I know companies which ask you for your social media profile address just to check what person you are. Are you an extremist? Are you adventurous? Are you humorous? And what content you see, what personality traits you have. If you already extremist or very aggressive, you may be good for a sales role, but you are not good for analyst role. If you're very thoughtful, then maybe you're good for an analyst role. So they do track your social media profiles.
Now, if you tell me that you are passionate about finance, and the only thing on your social media profiles I see is fashion magazines or something else, probably there is a mismatch somewhere. So try and have online visibility or an online profile which matches with what you've written on the CV in terms of content writing, in terms of videos, in terms of tweets. I don't know if you've heard of something called alternative credit score? Now there's a company called Lenddo in Philippines. And what they do is they try and find your credit score based on your social media accounts. Now, all they do is they check all your emails and LinkedIn and Facebook and everything and they say, "Look, what kind of emails are you getting? If you have top 20 business leaders in your network or if you follow them, probably you are a better person than the rest of them. If you have mostly telemarketers in your connects, maybe you're [inaudible 00:36:13]. What kind of emails are you seeing? What kind of newsletters are you receiving?"
So they try and analyze your content and give you a credit score. What is the probability that you will default if you don't have a prior credit history? And it has worked well. It has worked well for people who are more into writing, more into business, following networking and meeting right people. They show up a higher score than the rest of them. So that's what I would say, I'm mean, use social media to your advantage. Not just transactional. Social media is like a relationship. It's not one time that you connect with someone and then you just forget it. You also have to add value to them.
Biharilal:
And remember, people don't like you. People like your content. If your content is good, people like you. So for example, I like Warren Buffet, but I've never met him. And I like him because I like his content. I don't like him. I like his content. And I equate content with him. So if I like your content, I'll like you. If I don't like your content, I won't like you.
Binod:
I keep saying this. A lot of youngsters who are doing their CFA or financial co-studies and things like that, go to LinkedIn, that's the best networking platform you can have, to be honest, LinkedIn, right? Go there, have a decent profile, post, share, like, comment. You can showcase, like you said, BD, if you don't have experience, how do employers know that you have a passion or that you have some skills? You showcase it, right?
Biharilal:
Yep.
Binod:
Talk about interest and fixed income or equities or real estate or whatever it is, share these for example.
Biharilal:
I'll give you a small example. When I started using LinkedIn back in 2010, I used to share a lot of news related to US market because I was tracking US market then. One of those days I got a call or a message from one of those advisors on a private bank in US saying that, "Can you join us as a sales guy?" I said, "But I'm based in India." And that's when he realized that I'm based in India and hence obviously he cannot hire me because of visa. But his point was that he was so impressed with the content which I was sharing that he thought he can make me an offer and hire me out.
Binod:
Just because of social media.
Biharilal:
That's because of the social media. So, I mean, I have a real example with that.
Binod:
Right. Now, so we talked about you, we talked about what's out there in terms of what youngsters can do and what are the skills gaps. We, of course, in India, big economy, fast growing economy, lots of opportunities in finance. And you have worked in credit analysis you have worked in wealth management, asset management. So in India right now, because a lot of listeners are probably from the subcontinent, right? In India right now, where the three biggest opportunities. When I mean opportunities, I mean now and over the next five years for CFA pass outs. And why do you think these are big opportunities?
Biharilal:
Let's talk about the first. I'll give you some numbers. So the total assets under management for a mutual fund industry in India is about $350 billion or $400 billion. Whereas we have economy size of about $2.62 trillion, maybe $3 trillion. So roughly you are about 10% to 15% in terms of GDP for the AAUM. Now, if you look at developed countries, that ratio is as high as 50%, 60%. Now, if you believe that India is going from three trillion to six trillion and maybe 10 trillion at a later date, that number is going to double. And if that number is going to double, there'll be more opportunities in the asset management space.
Now when you say asset management space, I mean you can technically argue saying that there is this whole active versus passive debate for what is going to happen. Now, in this whole active versus passive debate, there'll be opportunity for people who can add alpha, people who are not index oriented, but people who can manage a portfolio with certain constraints, for example, ESG or maybe SDG or whatever they call it. But you will have dedicated strategy, you would have liability-driven strategy. So someone just want to manage a portfolio to meet some liability.
So asset management space, especially on alternative investments on portfolio management have a huge opportunity in terms of investment side. The other one is basically on the client side. Now, India has, in terms of bank accounts, we have roughly 30, 40 crore bank accounts. And the number of unique mutual fund folios, now mutual fund is a retail product, very regulated, so less than one crore which is like 10 million folios which you have with a population of a billion. So the amount of financial under penetration you have is huge. Which means that if you look at number of clients versus advisors, it'll be like one advisor for a million people, so that means they're definitely a scope for more advisory, more wealth management.
Biharilal:
Now, within wealth, within advisory you can be at multiple stages. You can be just at a advisory stage, which is basic, meeting the goals like a financial planning. Once the basic goals are met, you can be at a wealth management stage, which is more how do you generate or grow this well, or do you could be at a different stage, which is like a family office, much higher. Again, all of this depends on the number of assets which people have, but if you think that the bankers are going to do well, the advisory is a big piece and there is a deficit of people who want to get into this role.
Biharilal:
Now, we analyst or we charter holders or chartered accountant have this whole phobia thing that, "Look, I'm not a good sales guy."
Binod:
I think you mentioned that earlier during the webinar as well, right?
Biharilal:
I had the same thing, but my point is, even if you're an analyst, you will still have to sell your idea. Even if you're a portfolio manager, you will still have to sell your fund.
Binod:
You're always a salesman.
Biharilal:
So you're always a salesman. You are talking to your wife, your fiancé, you are selling yourself, think how good you are, how bad you are, right? So sales is part of the whole thing. So don't confuse between mis-selling and selling. Selling could be a genuine selling also, helping the client, which what you can do, which fits with your objective, which fits with ethics and mis-selling is completely different. So wealth is more advisory and it's not blanket sales without knowing anything. Sales is when somebody orders online and they get a product. Advisory is something when you guide him through the journey on what wants to happen.
Biharilal:
And because there are opportunities on the management side, on the advisory side, there comes a risk part, right? So risk management becomes hugely important. Now, whether you talk about anti money laundering laws, whether you talk about risk models, whether you talk about AI based technology risks, market risk, liquidity risk, operation risk, you have all these opportunities available in this whole space, because whenever the market grows, obviously there are some fallacies, right? So credit risk is a big thing. India doesn't have a big credit market, and even if the economy will grow, credit markets will grow. So you have those opportunities.
Biharilal:
So I think there are three interlinked opportunities, and you have opportunity to move across the chain. You can be on the wealth side, you can go on the management side, you can be on the risk side. It depends on what you want to do.
Binod:
And what's the difference?
Biharilal:
And are there opportunities there?
Binod:
Correct. Now, of course, apart from bringing a finance professional and being highly qualified, you're also on the board of CFA India Society, and I think at the regional or global level also, you played a part or are playing a part. What are the society doing here locally for careers of CFA pass outs in India?
Biharilal:
What we realized was that there are a huge number of candidates and all of them are young, so we need to do something different from them apart from just giving them a job feeds or something. So we have started something called the Annual Financial Talent Summit which happens in at least three, four cities where we're trying to explain them about career paths and we at least give them a forum to interact with industry leaders. We do a career webinar series, and you've been part of one of those, then we'll try and explain, take one sector and give you career paths, salary levels, interview questions, et cetera. And apart from that, we have a lot of CPD sessions, about 100 of them, about eight 10 market conferences, which are a forum for you to get your knowledge out there. Now, in the national conference where you can hear speakers like Roubini or something, be it value investing, FinTech, corporate governance ... We have a lot of activities available.
Biharilal:
On CFA Institute website also you have a lot of these resources available, but at a society level we are trying more in-person initiatives which are available to you.
Binod:
Well, from a personal standpoint I can testify to that because first of all I spoke at the Financial Talent Summit, which I thought was very well organized in Bangalore in September last year and well attended as well, with quite a few stellar speakers, then I also had the career webinar on closing the skills gap, which was, again, very well organized and very well attended. We had about 1800 attendees, and of course I keep hearing about other events and initiatives that you're launching as well. So I think society is doing quite a lot of work in CFA India, and it's incumbent on the students, candidates rather, to take advantage of these opportunities. It's not just Mumbai, by the way, because the FTS for example, Financial Talent Summit happens in Delhi, Mumbai, Poona, I think and Bangalore as well.
Biharilal:
Yep, yep. And we'll add more cities there.
Binod:
You'll add more cities, Pan-India as well. Something I haven't mentioned here which I'm going to talk to Amit later about is a young woman in investment series, which I think is fantastic, encouraging young women to enter finance and know basically scaling them up through boot camps and basically giving them internship opportunities.
Binod:
So a lot of work. So I would strongly encourage anyone listening to this podcast to connect with CFA India Society and attend events wherever you are, listen to webinars ...
Biharilal:
And most of our events which we do, we record them and we host them on YouTube for free. So you can actually go to YouTube and listen to all of those amazing sessions if you like. Be it from CIOs, be it from international speakers. So, I invite you to go and look for our social media channels on LinkedIn, Facebook, YouTube, wherever you're comfortable.
Binod:
Quite active. Quite active. Absolutely. Right. I think we can go on and on, but it's probably time to bring this episode to a close, but before we go, BD, I need to ask you. If you had a chance to rewind your career, now this is hypothetical situation, obviously. All of us would have wished to have that option, but if you had chance to rewind your career, would you do anything differently? Because this is almost an advice for others as well. What would you do differently?
Biharilal:
One thing for sure, 100%, I would've started networking at a word, very, very early stage, which means as soon as I'm in graduation or something, I mean, I would go out, meet people, maybe talk to them, understand what they do, even though I had nothing to gain at that time, I don't understand much of that, but I would have started networking very early and invest in those relationships by regularly in touch with those mentors or coaches which I have. Reading and obviously a writing. I still do a poor job at it, but I would have done more, for example, you read a lot of books and you at least tell people these are the books. At least I would have read some top 20 books and given summary and shown that as my work samples.
Biharilal:
And then I would have added as many skills as possible. So for example, do you think a Python or a language would help me right now? Maybe no. But at a future date, possibly, yes. So I would add those language. So I mean I added some of them like financial planning, wealth, IFRS, risk ... I would have either more, which is in terms of computer skills like language ones. We have this phobia thing that we are accountants so we can't learn languages, but now I think it's more or less available. You have these MOOC platforms where you can go and learn everything. And believe me, a good analyst or a portfolio manager, I mean he obviously knows his subject well, but he can also think about other things. I mean, some of these great portfolio managers are students of arts or history or psychologists, right? They're not necessarily finance geeks. Finance, obviously they know, but obviously their horizons or perspectives come from different this thing. I mean, so I strongly urge you to go out and get as many skills as possible, read as much, write and network.
Binod:
Yeah. And again, the last part about skills, just before the interview happened, I walked into BD's room and I found him studying for an exam, which I thought he was going to deliver rather than he's going to be studying for the exam. So apparently it was the anti money laundering exam certification from Institute of Chartered Accountants of India, which I wasn't aware of that there was such a course based on the Prevention of Money Laundering Act, bare act, I haven't heard that word for ages, the bare act, but that shows, someone as senior, someone so accomplished, someone so successful, someone so highly qualified is still learning about new things, what value he can add, what else he can pick up. I think it's something that everyone should understand, appreciate, and not just appreciate and clap and like, but also implement in their own lives. I think there's a big gap between knowing and doing. We talked about that as well, BD.
Biharilal:
Yeah. Everybody knows what to do.
Binod:
Everybody knows what to do, exactly.
Biharilal:
And they also get a confirmation bias. We call affirmation bias. They will even ask you, "Ah, I know that I know-
Binod:
But they won't do it.
Biharilal:
No way. So, whenever I talk to people, I mean I delivered a session in Financial Times, but I'll give example. So there were 500 people whom we told what to do. Five of them came up with a follow-up.
Binod:
1%.
Biharilal:
1%. Out of those five, yesterday somebody reached out to me saying that, "I've done this." So you can clearly make out the difference between those who just listen and those who actually do. So I urge you to take action irrespective of whether you are ready or not. There is a magic in action and you will realize and you do it.
Binod:
That's a fantastic way to end it. I like the code, "the magic in action." I'll probably talk about that as well.
Binod:
So, yeah. I think that's fantastic. Thanks so much, BD. It's been a very insightful, interesting session. I think youngsters will benefit a lot by learning from someone who's achieved so much in the finance career and is CA and CFA charter holder as well. So again, it's been a pleasure. Actually, last time you interviewed me when we were on the stage at the Financial Talent Summit. So this is me interviewing you in return. So I hope it was a, can I say hopefully a enjoyable experience.
Biharilal:
We're equal now.
Binod:
Yeah, 1-1 now, equal now, exactly. Everything has been squared off right now. Thank you so much. Once again, BD, yeah?
Biharilal:
Thank you.
Binod:
Yes.
Binod:
This podcast is brought to you by The Real Finance Mentor. Thank you so much for listening, and I hope you found it insightful and inspirational. If you did enjoy this episode, please do drop us a review and spread the word. And be sure to check out more exclusive content on therealfinancementor.com and my LinkedIn profile, which is Binod Shankar, CFA. Let's keep in touch. Just add your name to the mailing list on therealfinancementor.com and we will tell you about new episodes plus book reviews, upcoming events and blogs. Till the next time, onwards and upwards.
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