Episode 7: Vaibhav Jain
The perfect episode to engross you and teach you a variety of valuable lessons during this lockdown time is here.
Interviews in comfy five-star hotel rooms can make the toughest guest open up!
Like this one, which is probably my longest yet. The questions were endless, like –
Is it better to be a specialist or a generalist?
What are the three skills that many youngsters in finance don’t have yet are essential?
Why is it essential that a CFA charter holder or CA should have at least a basic idea of Artificial Intelligence and Machine Learning?
How is AI/ML transforming private banking?
How does one get over the fear of public speaking?
Why is that one skill that can save you in tough times in any company?
All these and more are answered in my sit down with Vaibhav Jain CFA. From analyst to investment banker to private banker, he’s learnt a lot (and is still learning!) and is full of insights.
Listen, learn, and grow.
Vaibhav and I right after our almost never-ending chat!
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EPISODE TRANSCRIPT BELOW:
[Tune]
Binod:
This is Binod Shankar and you're listening to The Real Finance Mentor Podcast, from therealfinancementor.com. The Real Finance Mentor is your go-to resource for insight and inspiration on careers and finance, CFA and more. I would think, "Why this podcast?" Well, my goal is to deliver insight and inspiration for your finance career, but 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 plus years as a corporate warrior, mix in 10 years of entrepreneurship, throw in a decade of full-time CFA training, add speaking, mentoring, cycling, and mountaineering and that's me. Welcome to the Real Finance Mentor. Or as they call it, RFM.
[Tune]
Binod:
Welcome to episode number seven with Vaibhav Jain. Vaibhav did what many bright and ambitious youngsters do in India. He became an engineer and then got an MBA from a top school. He worked at Deutsche Bank in investment banking for four-plus years in India and Australia before making an unusual career change and getting into wealth management at Edelweiss Financial Service in Mumbai, where he's now a partner. Yes, and along the way, he got his CFA charter. Vaibhav loves teaching and tutors part time. He has also learned many lessons along the way, which he'd like to share by mentoring youngsters in finance, so that's how we connected, apart from the shared CFA thing, of course. Welcome to the show, Vaibhav.
Vaibhav Jain:
Thank you so much, Binod, for inviting me to your series of podcast, and really glad to be a part of it and share my experiences with the audience.
Binod:
Thanks so much. I've got a lot of questions to ask you.
Vaibhav Jain:
Sure, sure, go on. I am here to answer all your questions.
Binod:
Right, first one, first one, you're a engineer, right? I mean why a career in investments?
Vaibhav Jain:
That's very interesting. So if I go back to my schooling days, I was always a very good student but only in the field of mathematics. I used to like numbers. I used to like maths a lot. So I come from the city of Lucknow. It's the capital city of Uttar Pradesh, and my family background in academics is not that strong. So what happened was that I used to follow herd mentality. What my friends were doing, I also did the same. A lot of these guys were actually tending towards science subjects, physics, chemistry, maths. So I also opted for the same, and what after physics, chemistry, maths, you just generally try to get into IITs
Binod:
Engineering.
Vaibhav Jain:
Engineering, so I also gave IIT JEE and these other things, and I got into... I did not get into IIT but I got into a college which is called Jaypee Institute of Information Technology, based out of Noida.
Binod:
Right.
Vaibhav Jain:
There I did computer science engineering.
Binod:
Right.
Vaibhav Jain:
But what I observed after first year is that I was not getting much interested in coding and all stuff. And I thought no, this is not a career which I would be going into, into the future. So, what I did was in stock market. I started doing the stock market trading and following the stock market, the share prices as well during those times. And the combination of love for the numbers and to follow the stock price fluctuations, actually intrigued me a lot.
Binod:
Did you make any money?
Vaibhav Jain:
I started trading in 2010. The first stock which I bought, I made money.
Binod:
Oh, wow. Okay, that's a good one.
Vaibhav Jain:
And you know what was interesting is that I was in a college which was promoted by Jaiprakash Associates.
Binod:
Right.
Vaibhav Jain:
My first stock investment was Jaiprakash Associates.
Binod:
Okay. Had to be.
Vaibhav Jain:
And, unlike now, when it is a penny stock, then that point of time it used to trade at much higher levels.
Binod:
Right.
Vaibhav Jain:
But I was lucky to make money in that. So, as things happened, I was not forced to learn, but as an interest, I made investments as my career option.
Binod:
Certainly interesting because people tell me I'm passionate about finance. And my first question is, have you traded? Have you invested? Have you made a lot of money? So I tell people, "You know what, before you talk about your passion, try do something and get your hands dirty, right."
Vaibhav Jain:
Exactly. Practical knowledge is always above theoretical knowledge, I would rather say.
Binod:
Absolutely. Now moving on, you spend the first two years of your career doing financial modeling and valuations and being a data analyst. Now, let's go back to financial modeling and valuations, people talk about a lot... I keep saying it's quite important for CFA charterholders, CFA candidates, know the skill, right? Because it is linked to valuation.
How key is the skill, and more importantly, being an engineer, how did you learn this?
Vaibhav Jain:
Binod, I had started my career as a data analyst where financial modeling and valuation was not needed at all. But because of my interest in finance... And I had started giving CFA Level one, just before I entered my first job with this company as a data analyst. So, I was very much interested in doing financial modeling, valuation and being good with the numbers and Excel also, Microsoft Excel, what I did was, I volunteered myself to help the financial services team based in that company. I wasn't in the data analytics department, but I used to do some after-hours... After office hours or regular hours modeling for those guys.
Binod:
Beyond the call of duty.
Vaibhav Jain:
Yeah, yeah, exactly. So, in the initial two years at that job I was doing the financial modeling and valuation exercise out of my interest. But then I also followed it up with similar kind of a role once I joined Deutsche after my MBA. So, all in all, a total of more than six years of experience with financial modeling. And, you're right, coming from a background of an engineer... But what happened was that because I had already learnt few concepts in CFA Level one, and with the help of my mentors, the help of my seniors, managers over there, I actually learned the techniques, tools and techniques.
It's actually nothing, but you need to be good with your financial modeling. The Excel skills basically and then you gradually learn with your job.
Binod:
Right.
Vaibhav Jain:
But as you asked, how important this field is, I think modeling and valuation knowledge is extremely important for anyone who's trying to enter the field, like investment banking. It could be research or even a private equity. To just be a star stock picker. And I learned this skill from mainly reading books, CFA curriculum as I already spoke about and some online materials. One very good resource, I would say, what I figured out was Aswath Damodaran's blogs.
Binod:
Oh, he's the guru of valuation
Vaibhav Jain:
Exactly, exactly. So, you have the theory from there. You apply it on your Excel and you are a valuer, you're a financial modeler.
Binod:
Correct, correct.
Vaibhav Jain:
Right.
Binod:
Amazing, right. So, one question I didn't ask you, right. Where did you get the idea for CFA?
Vaibhav Jain:
Okay.
Binod:
And from whom?
Vaibhav Jain:
Okay. So, see, I have actually done two MBAs.
Binod:
Right.
Vaibhav Jain:
Just to tell the public. The second MBA is from IIM Indore actually. The first MBA was actually a part of... So, I did my engineering, as I told you from this college, but that was a part of a five-year integrated course. It was a BTech plus MBA. There was some reasons why I enrolled for this course. But when I was doing this MBA from Jaypee Business School, there used to be a professor who used to come and who used to teach at IIM. He was a visiting faculty. That was in year 2009, a year after the crisis.
So I thought... And I got to know that even the students from colleges like IIM Ahmedabad, Bangalore and Calcutta and all these premium B-schools were finding it difficult to get a job in the market. Why would someone hire me from not a tier one college or not even a tier two college? So I thought I need to have something extra. That professor, when I went to him and I asked what can I do extra? Then he introduced me to CFA. I had not heard about CFA until that point of time. That was in 2009. And when he told me that okay, this is something that you can do, to actually, with your colleagues, with your batch mates you can have a little extra edge.
Binod:
Correct.
Vaibhav Jain:
So, I thought okay, let me try this.
Binod:
Okay.
Vaibhav Jain:
So that was the first time I heard about CFA.
Binod:
It's interesting you say that, Vaibhav because what CFA itself has found out is a lot of people start CFA, or first hear of CFA from the university dean or professor or faculty. That's when they get their first knowledge about okay, there is some qualification like this, like CFA. Right. So, right now let's park CFA for the time being. Let's talk about MBA. Right. You did... The first MBA you already touched up on. The second MBA you did was from IIM, Indian Institute of Management Indore.
Vaibhav Jain:
Yeah.
Binod:
Why that second MBA and what was so valuable about the second MBA?
Vaibhav Jain:
So, going to the point why second MBA? Actually this was the question all these MBA colleges when I was giving CAT for the interview they were asking, "boss, you've already done one MBA, why the second MBA? Why the hell second MBA now?".The only college, I remember, who did not ask me why the second MBA was IIM Ahmedabad.
Binod:
Okay.
Vaibhav Jain:
I had qualified for Ahmedabad interview, but did not make it to the final list because later on I realized that there are a lot of people who give, who sit for their second MBAs from Ahmedabad. So, this was regular for them. But coming back to the topic. So, what happened was that when I joined this company called The Smart Cube... I was a data analyst which I spoke about, I had already given CFA Level one. When I was doing that job I had also cleared CFA Level two but I wasn't getting a corefinance job. When I say about a core finance job, it might be in equity research, an investment banking kind of a role-
Binod:
Right.
Vaibhav Jain:
... generally the HR used to say that okay CFA's okay but have you done any MBA? Have you done MBA? So I had done MBA, but that MBA was a part of a five-year degree, not a proper MBA which they considered. And suddenly I realized if I want to make something big in life, in the finance industry, getting an MBA from a premium institute is a must-have kind of a thing.
I won't say it's a must-have but it was a very good to have.
Binod:
Right.
Vaibhav Jain:
And then I thought okay, I'll write CAT.
Binod:
The Common Admissions Test.
Vaibhav Jain:
The Common Admissions Test which actually takes you to IIMs and all those things.
Binod:
Right.
Vaibhav Jain:
And then I decided... To be very honest, I did not study for it. I'll be very, very honest with you. Because for my love of numbers and all, I thought that I can clear the mathematics part. I always struggled with the English part. But, by God's grace, I got good percentile and I finally went to IIM Indore to do the second MBA.
Once you get into a college, then there's no looking back. Okay, second MBA, if you are there, then let's do it. A better brand and lots of things. So, that was my reason for doing the second MBA.
Your second question was-
Binod:
What'd you learn?
Vaibhav Jain:
... What did I learn from MBA?
Binod:
Yeah.
Vaibhav Jain:
I can compare IIM Indore's MBA very well with other colleges because I've done twice.
The first MBA, first purely focusing on the theory. Because it was a new college. There were not like the student group communities and-
Binod:
And the alumni network-
Vaibhav Jain:
... and the alumni network. Exactly. So, it became just like a 9:00 to 5:00 classroom coaching, classroom center. At 5:00 PM they would just shut down their doors and people were just like left for home.
In the second MBA, when I reached, I had already studied all the concepts anyways because I'd done one MBA. And also, by that time, I had cleared two levels of CFA. So, I knew that okay, now let me concentrate on the practical aspects of the thing. MBA teaches you the practical aspects, right? How do you communicate? What's your body language should be and how you generally learn the management techniques of the things.
So, what I focused was more on the practical aspects. And I'll tell you, at IIM Indore, we have a club and community kind of things which our student run. So this Voyage Capital was... It's called Voyage Capital. It was a student-run mutual fund. Because I was already interested into finance, mutual funds, investment industry and all those things, I thought let me get into this community, this committee.
And when I joined that I really enjoyed whatever I was doing. And then in the second year, I became head of that. I was nominated the head of that but I was doing a lot of work. I'll be very honest, I did not do a proper study and I wasn't a brilliant student at IIM Indore. Simply, I would say for the reason that I knew that I just had to study finance courses, right? I had to make a career in finance. I would not give your listeners this view that you can take studies lightly, but I did that. But entire one and a half to two years I just concentrated on running that Voyage Capital.
Vaibhav Jain:
So, that was kind of a start up venture for me.
Binod:
And I'm going to interject here because during our pre-podcast discussion, you mentioned something very interesting which I think a lot of listeners would resonate with. You said that you had this huge fear of public speaking.
Vaibhav Jain:
Yeah.
Binod:
And manning this Voyage fund atIIM Indore, actually where you had to stand up in front of 100, 200, 300 students and explain to them how their fund or how their money was doing, actually helped you a lot.
Vaibhav Jain:
So, Binod, as you said, yeah. I was always this... I had a fear of public speaking. But I am that kind of a person who will identify what my weaknesses are and will try to work on it. So, when I heard about this Voyage Capital thing, obviously this is something which I loved, but it would also give me an exposure to do something which is a public speaking thing.
So, then I became the secretary of it which is the head position. I organized a monthly interaction with all my volunteer investors. Those who invested 1,000 bucks, 2,000 bucks, they used to be present in that evening sessions and I used to tell them how the fund is doing. And what strategies did we apply and some techniques about fundamental analysis and all those things. It helped me to overcome that fear.
I remember initial one or two or three times my legs and hands were trembling-
Binod:
Yeah, it happens.
Vaibhav Jain:
... and it happens to everybody, now I realize. But this is also my suggestion to a lot of listeners as well. I mean, there're a lot of people I've seen, like about 90%, 95% people who would be afraid of public speaking. But until the time you do that and you do that twice or thrice, you'll never overcome that fear.
Binod:
Like how they say, just stand up in front of a crowd and just say it.
Vaibhav Jain:
Exactly. And be it you are 20 years old, or a 35 or a 40 year old-
Binod:
Correct.
Vaibhav Jain:
... everybody gets nervous in front of a crowd.
Binod:
Correct.
Vaibhav Jain:
It's just a practice.
Binod:
Right. So, by this stage in your career, you have an engineering degree, you had the MBA in finance and you've finished the CFA as well, by then, Level three. I think you got to Level three as well.
Vaibhav Jain:
Yeah.
Binod:
Before we go to the next question of mine, how did you find CFA or specifically what are the three challenges maybe that you had in CFA and how did you crack it? Because coming from a engineering background, suddenly you're doing a tough... CFA's a tough course, right? What are the three challenges you can think about? I know sometime ago. And I'm sure listeners will be very keen to know. Three challenges that you faced and how did you resolve them?
Vaibhav Jain:
So, coming from an engineering background, as all, mostly the listeners would know that CFA comprises of 10 different topics. Testing candidates in 10 different areas. What I've observed is that the people who come from a commerce background will find quantitative techniques a bit difficult. Similarly, for me, as an engineer, I found economics very difficult. I found some portions of FRA very difficult.
Binod:
You must have loved derivatives?
Vaibhav Jain:
And I had loved quantitative techniques and derivatives and I was very sad when the QT, the quantitative techniques was not in Level three.
Binod:
This I have to disagree because I hate derivatives.
Vaibhav Jain:
Oh, really?
Binod:
I come from a commerce background, obviously.
Vaibhav Jain:
Okay, okay. All right. But then you would know. Because you loved quantitative techniques, you said. You hated derivatives... An engineer would love a lot of these topics-
Binod:
Exactly, correct.
Vaibhav Jain:
... because it's most of the maths and formulae and all those things. But you're right, as an engineering background, I hated economics and FRA. And to be very honest, I still hate them. Somehow I managed to pass them-
Binod:
Happens.
Vaibhav Jain:
... I got between 50, 70 or whatever... I don't even remember for all the levels. But still I would never go back and volunteer myself to teach or to study subjects like economics.
Binod:
So, first lesson or the first learning words there, basically you were strong. Because you were strong in quants because of engineer and derivatives and topics like that, as an FRA student you didn't have much of an issue, right? You said that because-
Vaibhav Jain:
I did not have much of an issue. Maybe in second level there was few topics where multi-national company that is listed in lot of geographies, how to do the reporting because they're rule-based kind of a thing. I was never a student who loved to mug up things.
Binod:
It's very interesting, certainly, because I've taught quite a few engineers in my CFA class. And they all, without exception, had difficulties mugging up rules. Because in engineering, you always ask about cause and effect-
Vaibhav Jain:
Exactly.
Binod:
... there's a logic-
Vaibhav Jain:
There's a logic to it.
Binod:
... to every single thing. In FRA, you have USGAAP, IFRS,just follow the rules.
Vaibhav Jain:
Of course, yeah. Okay, you need to put in your dividend, in term to cash flow from financing activities and in IFRS and US GAAP. But why? Who made that rule? Why should I do all that?
Binod:
So, my solution was, don't ask why, just learn it and-
Vaibhav Jain:
Just mug up, yeah, yeah.
Binod:
... pass the exam. What other challenges you faced in the CFA journey?
Vaibhav Jain:
So, Level two I would remember. I just told you about the subject wise difficulty which I faced. There was also time, it's a story in itself. In CFA Level one, just before the exam, there was some family emergency happened so I did not get a good time to study for Level one. I cleared it. When I was giving Level two, then there was this office commitment. I was put into a project where I wasn't getting leave and all. This was a challenge. And, to be honest, I studied CFA Level two in just around 17 days.
Binod:
Okay, listeners, just to be... Warning, you cannot normally pass CFA Level two by studying for 17 days-
Vaibhav Jain:
Let me add to this. Let me add to this further. So, after studying CFA Level one, I was very much intrigued what more CFA can offer. I mean, this is what... Okay. I mean, what is there in CFA Level two? So I purchased the book right on the first day when I registered for it, right. And I was studying from the curriculum books rather than Schweser or other kind of notes. I hadn't even heard about Schweser, I'll be very honest.
So, I was reading this curriculum books and I started in September for the June exam. And I took one month for each of the six books. By the time March ended when I... There was like 17 days left and I thought let's go back to the curriculum books. And I had not... You will agree that you need to revise all these-
Binod:
Of course.
Vaibhav Jain:
... lot of times.
Binod:
It takes time to revise.
Vaibhav Jain:
And then there's no time. It was very difficult for me to go through the entire six books in 17 days. This is when someone told me about the coaching materials and all those things and then I studied. So, I won't say that I just passed in 17 days, I had already built up a lot of-
Binod:
So, I think the second point would be study regularly and study early and start early and study consistently.
Vaibhav Jain:
So, every day, whether I came back to home after work at 11:00 PM or 8:00 PM, it was my habit of just sitting for at least two hours every night to just have... Don't lose the focus, have that break in the momentum. So, be it until from 11:00 PM to 1:00 AM, I would, every day, pick up the books, even on the weekends and study. This is what suggestion I would also like to give to the audience. That never break the momentum.
Binod:
Right. So, now, go back to the career track we talked about, but we've diverged into CFA. So, you've done your CFA. You got the gold standard in investment management education. You have an MBA from one of India's premium management colleges, so what are the three advantages of having both a CFA and a MBA? And is it essential that people do CFA and MBA?
Vaibhav Jain:
Yes. CFA and MBA. CA and MBA always, or a CA and CFA. These combinations always work. For me, how MBA and a CFA both has helped, is that, even today in India, MBA from a tier one college holds more value than even being a CFA Level three pass. That may sound a little unfortunate, but that's true.
Binod:
That's probably because CFA Institute isre slowly building up its……
Vaibhav Jain:
Exactly.
Binod:
... reputation in India, right?
Vaibhav Jain:
Yes, yes, yes. It might be something different in US or UK or other countries. But in India... I'm talking about the India perspective, right?
Binod:
Correct.
Vaibhav Jain:
So, however in college you know there're hundred of students fighting to get those coveted roles in their favorite domain, favorite companies. Being a CFA acts as a strong catalyst. And you're amongst the most preferred actually. So, I remember in my batch of 450 students, only three were CFA Level three. And we were the most preferred candidates over there. But this same CFA Level two or Level three did not help me when I was not an MBA. So, this combination has actually helped me a lot from the career perspective. So, that's one point.
From a general perspective, being a CFA makes me strong in theory. Because CFA's all about tools, techniques and this and that. And MBA's helped me to gain holistic view of learning how a business runs and... Not only from a finance perspective, but overall your strategic thinking, your managerial-
Binod:
HR, operations-
Vaibhav Jain:
... HR, operations. And all those kind of things. So, you can easily jell well into a kind of a corporate role with a very focused knowledge about the field of finance.
Binod:
I'm going to jump in here because one of the things I've noticed about most CFA charterholders and CA students, and you probably agree with me, is most finance people, right? They're not very good at dealing with people.
Vaibhav Jain:
I was coming to that topic, actually.
Binod:
Technical skills strong, soft skills weak.
Vaibhav Jain:
Yes.
Binod:
Do you think your MBA education helped you polish yourself as a person?
Vaibhav Jain:
Very much. Very much. And you're right. Mostly the people who are, I would say, kind of nerds, or who like to study a lot, they're not good at the social aspect of the thing, the soft skills which are very much necessary in the industry today, they lack. So, the CFA is actually what makes you strong theoretically, but you also need some courses like MBA, which will make you strong by soft skills and knowing things about the world.
There're a lot of suggestions for the students as well, but I think let's take that towards the end of the session. And I had already covered two points how CFA and MBA both had helped me.
There's a third point as well, which I would say, after 8 of experience, I would say that being both from a tier one college of MBA and CFA charterholder, gives me an opportunity to enter that elite group of alumni who have both of these things, which not many people have.
Binod:
True, true.
Vaibhav Jain:
So, that has helped me networking with very much of like-minded and influential people globally.
Binod:
I mean, one is the CFA network in India. And you're already a volunteer with CFA India and active on LinkedIn and otherwise. And then you have the whole IIM Indore-
Vaibhav Jain:
Exactly.
Binod:
... which I am sure is also quite active.
Vaibhav Jain:
It is quite active. It is quite active.
Binod:
And like I said, there's networks and everything.
Vaibhav Jain:
Yeah, yeah. So, network is everything and that is what I've realized in the last one and a half years in this kind of a role where I've switched from IB to PB. Which we had discussed before the session, that why have you chosen a career from investment banking to a private banking-
Binod:
We will talk about that, yeah.
Vaibhav Jain:
Is this a question?
Binod:
So, next question. You went from data analyst, then you went to CFA, right? To MBA.
Vaibhav Jain:
Yeah.
Binod:
Then you went from investment banking to what you're doing right now, which is private banking-
Vaibhav Jain:
Yup.
Binod:
... which is private management. Which is where you manage money of very rich people, right?
Vaibhav Jain:
Yes.
Binod:
So, you're very close to very rich people. Why the switch? Because I would have thought investment banking is the dream job for many people, right? You worked in Australia for a while-
Vaibhav Jain:
Yes.
Binod:
... you worked in Deutsche Bank in India for a while. So, talk me through that.
Vaibhav Jain:
Again, just like I was touching on this point. This is a very interesting decision which I had made last year and a very rare one. Basically, generally, what people actually do from IB, they try to go into a VC or a PE kind of a firm.
Binod:
A venture capital or private equity-
Vaibhav Jain:
A venture capital or a private equity firm. Right. But what I did was a completely different thing. I have observed people from private banking to move into investment banking. But I have done the other way around. And what led me to this decision, just to focus on this, firstly you know whatever you are studying CFA L1, L2 and L3 the focus is on portfolio management.
Binod:
True.
Vaibhav Jain:
So, whatever I had studied actually, I was not utilizing it in complete, holistic way. That was the first reason I thought that in India. And second point, is in India that there is a lot of scope for portfolio management and wealth advisors, wealth management kind of a thing.
Binod:
Why is that, briefly, before we continue?
Vaibhav Jain:
So, lot of middle-class are actually doing well in their careers in their lives and the studies say that in India, in the next five years we'll have... I think that is a 20% growth in the number of HNIs-
Binod:
Wow, okay.
Vaibhav Jain:
... and we know that in tier one cities like Mumbai, Delhi, Bangalore, these guys are well covered. But then, India's a vast country. We have a lot of tier two, tier three and even tier four cities or towns where there are a lot of industries, there are people, but they have no clue about what equities, and what mutual funds and what all these things are. It's a huge industry to tap in. So, there was a lot of scope.
So, that was a point which I wanted to make, that I looked at the scope of the industry. And I had my interest aligned with it. I was always interested in equities, mutual funds and all those things. Obviously I entered into investment bank because I wanted to. And then obviously I got placed from the campus. So, that happens. That thing, that interest in this industry was always there.
Binod:
Right.
Vaibhav Jain:
Then lately, I would also like to highlight, what I realized probably in the final year of my investment banking, last year, when I was there, that... This is a very interesting story.
My MD over there, he-
Binod:
At Deutsche-
Vaibhav Jain:
... at Deutsche-
Binod:
... at Deutsche Bank-
Vaibhav Jain:
... at Deutsche, he used to be a star analyst in his days. I heard about his stories, that he was one of the youngest-
Binod:
Equity analyst.
Vaibhav Jain:
... Not equity analyst, the analyst of who makes the valuation models and the reports and all those things-
Binod:
Okay, yeah, got it.
Vaibhav Jain:
... but he is one of the youngest people in India to become an MD. But I observe him today. What is he doing? He's just on calls, he's meeting people, he's saying that he's pitching Deutsche Bank. What is he doing? He's doing sales. You are always a cost until the time you're an analyst or an associate. But when you start becoming senior in your career, you have to bring in revenues.
Binod:
True.
Vaibhav Jain:
To bring in revenues, you need to interact more with the clients.
Binod:
Agreed.
Vaibhav Jain:
More with the people. You need to bring in money. You need to do sales basically. Then I observed that if I want to be closer to the clients, in investment banking, I would've taken three or four more years. In this kind of a role, I got an opportunity with Edelweiss where I'm currently working. I got this opportunity to directly deal with the clients right from day one because I had to build my own book. And the sales skills, which is very much... And I have observed with lot of students of finance, nobody wants to learn sales.
Binod:
No.
Vaibhav Jain:
They think that sales is a menial task and why should I do sales.
Binod:
Correct.
Vaibhav Jain:
And I was one of them. But I really want to tell all the audience that no, sales is very important. At least you need to learn how to speak, how to network, and all these things. These will be very important in the later stages of your life. The earlier you pick up these skills, it's better for you in your career.
Binod:
It's very interesting you say that because we were so technically focused... I remember when I was young, I used to look at people who were partner level in the big four and say this guy doesn't have technical skills as much as other people, why is he a partner? But it turns out he's a partner because he can sell and he can lead. And that's true for big fours, true for consultancies, true for private banking. It's true for asset management, right? At some level it ceases to be about PE ratios and cash flows and formulae and models.
Vaibhav Jain:
I'll give you some quick examples over here. People would have been following who see the news channels and all. Everybody knows Rakesh Jhunjhunwala-
Binod:
Right, of course.
Vaibhav Jain:
... everybody would know Nilesh Shah from Kotak.
Binod:
Correct.
Vaibhav Jain:
Even Rashesh from Edelweiss. Those guys are not sitting with the financial ratios and analyzing all these things. What are they doing? They are speaking. They are conversing with the crowd, with the audience. So the speaking whosoever you... Name anybody. Any CEO, anybody in the top management, they are very good at their speaking skills. So, this focus, be it you're a CEO of a bank or a CEO of a NBFC, or a CIO, he has to do this. A CIO... You would say oh, okay, Mr. XYZ is a CIO of this firm, so you would be just running some financial models or this and that. No.
Binod:
Of course not.
Vaibhav Jain:
His team does that for him. And nobody knows who his team is. Everybody knows Kotak's AMC, guy is Nilesh Shah. Motilal guy is Mr Ramdev Agarwal. Because they are good speakers and they are always on the TV speaking to someone. So, this skill is, I would say, is a must-have.
Binod:
Right, okay. So, we talked about successes, learnings, great openings, working in multi-national companies, banks and switching over to a dream career. So now let me talk about something different. What are the three worst things that happened in your career, very briefly and why? Because everyone talks about successes. You go to LinkedIn, you go to social media, it's all about how I've made it-
Vaibhav Jain:
Failure story is what actually because-
Binod:
... No one talks about failures. But I want you to talk about failures. Tell me about it.
Vaibhav Jain:
So see, let me think about it. One thing which comes to my mind instantly is that when I was in my Deutsche Bank career, initial two, two and a half years I spent serving the Australia real estate sector.
Binod:
REITS.
Vaibhav Jain:
That was actually REITS, yeah. In India, it has just recently come, but in developed nations, REITS is a sub sector which has been there for a lot of years.
Binod:
Right.
Vaibhav Jain:
So generally what happened is that I was sitting in India and catering to the Australian team and I was also in a part of... I went to Sydney for about a year. But then, obviously it was a dream to settle in Sydney for a lifetime, let's say. It needed to be a conversion which I would've got from my employer, from Deutsche Bank to move permanently from India to Sydney, rather than doing up and down.
But this was due to some regulatory stuff in Deutsche's whatever scenario was there, I could not actually make it in time to that list. If I could've waited for one more year, I might have. But that is a regret where I would say luck played a part and I could not get into that permanent... Relocated to Sydney.
Another part where I would like to focus is that because I have always been in two different kind of fields, I started with a data analyst and became an Australian investment banker, then India, then private banker, I've always been a generalist. I've never been a specialist. And today what I observed in the market is that if you're a specialist, you actually make a lot more money. So, this is what I have never actually felt really because for me, the learning is more important. But somewhere down the line you will also think okay, if I had followed one path, then probably I would have been earning much more today.
Binod:
But here's a very interesting, very important question, Vaibhav, because a lot of people asking the same thing. Like should we... Is it okay to keep jumping jobs or should I stick to the same area from the beginning? But then the question becomes, which sector do I stick to because I still haven't discovered my passion or my purpose or what I enjoy doing? So, in hindsight, you might think that you jump too much, but, in hindsight, you also learnt a lot and, in hindsight, maybe the jumping was required to take you to where you are now.
So, what are your thoughts on that? I mean, can one become a specialist from day one? I mean...
Vaibhav Jain:
You can, because sometimes what you are doing you start loving it and you just think I learn more and more of these things. But as I explained about my life story that I always want to learn more and more about the different fields as well. I thought that okay, two and a half years was more than enough to learn about the REIT sector and then probably two years to learn about the ECM in Deutsche. And I need to learn something else.
So, it's not a formula that will drive everybody. It depends upon what you want to do. And as I said, some way or the other, sometimes it may happen that if you are a generalist, you might get into managerial roles where you know everything. But if you are a specialist, you generally keep on getting hikes and hikes and you move up the ladder. I'm not generalizing that if you are a specialist you'll always get more salary than a generalist. It just happened with me.
But you're right. A person who is just starting his career, he never knows what all fields that are available.
Binod:
Exactly.
Vaibhav Jain:
For example, when I was a data analyst, I just know that there is a good field which is called finance. But then in finance there's hundreds of other things in there.
Binod:
It's huge.
Vaibhav Jain:
What do you want to do in finance? You want to become investment banker? You want to become a private banker? You want to become a private equity guy? So, you just need to keep exploring it. And exploring in a very much accelerated fashion. Talk to people in the industry. Talk to senior guys in the industry. Telling that what you like. What all career prospects will be good for you. And then obviously get a download and think about it. What do you want to do in life? And one thing which I... I did not do it, but I would rather suggest everyone to do this. Network. Keep talking to people. LinkedIn is a very strong platform which people who are introvert, who cannot speak directly to people can just write your queries and can connect with a lot of industry leaders. And get inputs.
So, do that. So just get idea about all the field and make a quick decision.
Binod:
So basically, network, learn a lot, connect with mentors. And keep switching until you find what you're looking for.
Vaibhav Jain:
Exactly, exactly. Probably now what I feel, after three career job change, probably this private bank I'm liking. Private banking role I'm liking. And this might be the thing which I'll stick to now for the remainder of my working life.
Binod:
You never know.
Vaibhav Jain:
But you never know. You never know.
Binod:
You never know. You never know.
Vaibhav Jain:
There's never that stage where you know everything.
Binod:
Which brings me neatly to the next question. So, I know you do a lot of volunteering work with CFA Institute-
Vaibhav Jain:
Yeah.
Binod:
... and everything else. So, what self development project are you working on now or what projects are you working on now? Tell me about those.
Vaibhav Jain:
I have always been a student. I think learning never stops. So, there was a point in time in my investment banking career and I thought that okay, now that I have already done CFA, what next? I thought I'll do CAIA, let's say. FRM, obviously, people do not do after CFA. They generally do it first, and I was not even inclined to do a financial risk management kind of a role.
Binod:
Why is that? Because a lot of people do do FRM along with CFA, by the way.
Vaibhav Jain:
They do, yeah, yeah. So, I've observed that people either simultaneously start doing CFA and FRM or they start with FRM. Maybe some people I've met they say FRM is easier than CFA. And at least have those three coveted abbreviations in front of their name. So, if not CFA, then FRM is fine. But I have not really met people who first become a CFA charterholder and then probably give FRM. Maybe there are cases. I am not aware about it.
So, I thought I'd zero down to CAIA, Chartered Alternative Investment Advisor. But I did not get much time in my investment. Because investment banking is tough, it's 16, 18 hours a day and this and that. So, I actually just kept on reading some material, some books and that. I did not much do any certification.
But right now, what I observe in the last one year, is that there is a huge demand of artificial intelligence and machine learning in the industry. And this is something which will eventually kind of become a compulsory for everybody, be it whatever industry they are, I'm not saying finance industry. Whatever industry they are in, sometimes you are seeing that. A lot of apps you are seeing on your mobile phones, you download them. Ola, Uber, the cabs, Zomato, the delivery guys, everybody's using the AI and ML techniques.
Binod:
So, we had a long chat about that before the interview, right?
Vaibhav Jain:
Yeah.
Binod:
So, I'm going to dig a little bit deeper into that because-
Vaibhav Jain:
Sure.
Binod:
... this is very important. It's very interesting as well. Now, you're of course, a computer engineer-
Vaibhav Jain:
Yeah.
Binod:
... and you're familiar with the coding.
Vaibhav Jain:
Right.
Binod:
And you've done coding-
Vaibhav Jain:
Yes.
Binod:
... and I think probably getting back into coding in some way, or shape or form. But what about people who are chartered accountants or Bcomgraduates or who have done the CFA, who have no connection with engineering or coding or algorithms, do they need to know artificial intelligence and machine learning and why? And if they need to know, how much do they need to know?
Vaibhav Jain:
My blunt answer would be yes. At one point in time, everybody will need to have, at least a working knowledge, of what an AI and ML is. Not just the full form of it.
Binod:
But why? They will not be doing coding themselves.
Vaibhav Jain:
No, they don't need to do coding. But then, as a manager, as someone... You might hire people under you. If you become a manager and you might hire five people under you, who are coders, but at least you need to understand what they are doing. You need to give them instructions, right? You at least want to understand the algorithm part of it.
Binod:
Can you give me a use-case of this, in the industry, Vaibhav?
Vaibhav Jain:
Okay, okay. So, I'll talk about my industry only, wealth management industry where I'm currently working. So, right until now, if you are investing... If you have an investible surplus of let's say, 25 lakh rupees, 50 lakh rupees, you're kind of called a 'mass affluent' client. You're not a high net worth individual or something. You're just a retail client.
Binod:
You're not really rich.
Vaibhav Jain:
Still you need to get to there. You will eventually.
Binod:
You're not there yet.
Vaibhav Jain:
But you're not there yet.
Binod:
Yeah.
Vaibhav Jain:
So, there was... And I don't know if there was a time ever or not, but a person who is just investing 20, 25 lakh rupees, generally won't even expect anyone to be kind of a dedicated advisor to them. But there used to be. I mean, many of the audience would have got calls from people okay, do you want some kind of assistance and this and that. So, there was a time when you were catering to around 50 clients to pick up which mutual funds you want to get into. Which products you want to get into.
Now, this work can be automated by a simple... An artificial intelligence or machine learning could do. Not a simple, but some kind of a code. So, the entire job of this advisor who was handling 50 clients can be just done by a click of a button.
Binod:
Yeah, but that doesn't answer my question. Why does a CA or CFA charterholder need to know AI or ML?
Vaibhav Jain:
So, again, coming to the point that let's say... How does a CFA charterholder pick which mutual fund to invest in? Let's say that he has a list of... There's a huge universe of mutual funds, there're about 6,000, 7,000 schemes, right? And he needs to pick the best ones. Let's say, not one but five, six, the good schemes. He knows you need to look at the fund manager expertise and the past performance, the Sharpe ratios and all those kind of things. And he'll do that manually.
If there is a software which he will just click a button and can do it in five minutes and can throw five good names, why wouldn't some employer want to hire someone who has this kind of a knowledge? He's saving on a lot of time and efforts and bandwidth... And obviously the resources of the company.
Now having said that, as I told you that someone can hire a lot of coders who start young and all those things, but there has to be a manager who understands what to feed into the code.
Binod:
Correct.
Vaibhav Jain:
There're a lot of algorithms actually. There are 100 plus algorithms doing different kind of things. Let's say there are five algorithms who will do certain kind of a job. Just like there're a lot of valuation techniques in finance. There's DCF, there's comparative-
Binod:
There's dividend discount model. Asset based models.
Vaibhav Jain:
Exactly.
Binod:
Yeah.
Vaibhav Jain:
Even you need to know where do you apply a P/E or P/B or P/CF ratio. But that is you who will decide which ratio or which technique will I use now, right? Similarly, there would be, let's say... Assume there will be five different algorithms and doing certain kind of a work.
Binod:
When you say algorithms, for the layman, you're talking methodologies?
Vaibhav Jain:
Methodologies, yeah, yeah. Framework, methodologies and all those things. But, as a manager, you need to know which methodology to be applied in which kind of a scenario.
Binod:
Got it.
Vaibhav Jain:
And then you need to know the methodology. So, this is actually what is leading to the statistical tools and techniques, the knowledge, and there're a lot of algorithms like random forest. The fancy names, actually. You can go to a Wikipedia and there will be a list of 100, 150 algorithm names. You can't master all of them. But at least for the interest sake, people can read five or 10 of them and get a gist of it, how that is helping.
So, that is what I'm saying, these... All the guys who do not have a coding background, need not learn coding, but they at least should know what constitutes AI and ML. What is running behind the thing?
Binod:
And of course, this is where they should know the statistics as well because statistics is probably one of the least loved subjects in the CFA curriculum.
Vaibhav Jain:
I know, it's most hated. But I would would just please-
Binod:
Especially things like probability concepts and regression analysis, right?
Vaibhav Jain:
Yeah, yeah, regression analysis, what is taught in CFA is nothing if you try to learn more into the AI and everything. In CFA they have not gone very much deep into the statistics. There's just left it on multiple regression. But there's a huge scope after there to learn as well.
Binod:
So, how does... If I completely get your point, so people need to understand finance, people need to understand AI and ML.From a managerial supervision strategy point of view, how do they learn this? What are the best way or easiest way to pick it up?
Vaibhav Jain:
See, there are various modules today available on website, on the websites like Coursera, Udemy and Khan Academy, all these coaching providers. I think it's good to start there. Even YouTube videos, free YouTube videos are there. There are a lot of them. Even... See, I left coding in 2006 or 2007. It's been good 13, 14 years I've never coded or done statistics and all that. But when I went back, I opted for a course on Udemy. It was a good course and you can easily start learning, at least from there. If you are liking it, then do that one course, if you're not liking, just switch.
Or best, just ask any expert who has already done that.
Binod:
Right. Fair enough. So, that is one thing you're focusing on?
Vaibhav Jain:
I'm focusing on it big there, yeah.
Binod:
So, interestingly, although you said before this interview, you said doing computer engineering was not such a smart move, but it seems, interestingly, you're coming back full circle to computer engineering-
Vaibhav Jain:
Exactly.
Binod:
... because now you're getting your hands involved in coding?
Vaibhav Jain:
A few months back I was discussing that I wanted to do investment banking and all those things. Most of my colleagues who have done three-year BCom or BBA from... It's a three-year course. And as I told you, I did a five-year integrated course, which I'm actually not using only. And then I took a drop actually to study about all those things. So, why did I waste so much of my time-
Binod:
Doing your engineering?
Vaibhav Jain:
... Yeah, yeah. If I had clarity in my mind, if my parents or my relatives would have told me, Vaibhav, it's good that you just do three years of a BCom or a BBA kind of a course, then you'll end up something... And I would have been three years younger enjoying the same salary.
But now, things are coming back. And now I'm realizing this coding skill that... Whatever exposure I had, has actually is helping me now.
Binod:
Exactly.
Vaibhav Jain:
As it is said, the dots will connect.
Binod:
Dot to dot. Looking back-
Vaibhav Jain:
Looking back. Always looking back.
Binod:
I think Steve Jobs said that.
Vaibhav Jain:
Steve Jobs, exactly.
Binod:
So, fantastic. And I think you read a lot as well.
Vaibhav Jain:
I read a lot.
Binod:
Despite a very busy schedule. I keep seeing on LinkedIn about how many books you read, about 25-30 books every year, on average?
Vaibhav Jain:
No, no, not. I thought I read 24, two per month. But I ended up with around 16, 17 last year.
Binod:
Still not bad at all.
Vaibhav Jain:
But I started reading just from last year. Because as I told you in investment banking I didn't get much time. Reading always has been one of my favorite things but now I'm getting time. I've not reached the two books per month, but probably in 2020 I will.
Binod:
That's your target for 2020.
Vaibhav Jain:
That's my target for 2020.
Binod:
We'll talk at the end of this year.
Vaibhav Jain:
Sure.
Binod:
Now, again, something that I get a lot of questions about is, in terms of skill gaps, Vaibhav, right? So, people are graduating, they're finishing the CFA or CA. They're out there. You have hired people, you have hired youngsters, you have supervised youngsters. You have mentored youngsters.
Vaibhav Jain:
Yes.
Binod:
What are the three top skill gaps you see in youngsters and how can they close the gaps?
Vaibhav Jain:
One thing which I would say about... At least I can say about Indians, and I don't want to generalize it for the world-
Binod:
Sure.
Vaibhav Jain:
... is that, give anything to Indians, they'll study, they'll read, they'll pass the exam. Be it anything. They started off with engineering, then went onto MBA, conquered MBA and even CFAs. A lot of CFAs are there in India. I mean, everybody who enters is increasing. What is different in you? I mean, as I told in the previous answers, at least you need to be good with your networking skills, you need to be good with your soft skills. Soft skills is one of the thing which I think is very, very important in any industry, not only finance. Any industry, I would say.
Few gaps which I have noticed with people interacting with them is that they don't want to learn IT. As I told AI and ML is very important. There are many MBA students in even tier one, tier two campuses, schools who might have worked in some IT firms for a year or two and then they cleared CAT and then they have come to do MBAs. But what happens is that they don't want to go to the same... They'll think okay, I'm going... Why did I do my MBA, if I have to go back to the coding skills and all those things?
So, they just hate getting back to learning the IT thing, the technical aspects of the thing. So, this I would rather suggest to people that don't leave that, technology's the next big thing. So, always keeps your... Keep hands on with the increasing technology, technological revolution and all those things.
So, this is one of the skill gaps which I have seen in many people. That they don't want to update themself with the thing.
Second, and more important thing is the, as I talked about, is the selling skills.
Binod:
Right.
Vaibhav Jain:
Many finance, and almost 90% of the people will... Finance students will hate the word, sales.
Binod:
Of course.
Vaibhav Jain:
And I was amongst them. So, I used to like, "Why sales? Why would I do sales? Sales is not something which is considered to be a high kind of job." But as I told in one of the previous lines that sales is the revenue earner for the company. The rest of the courses are generally the cost. Only those people will be preferred in life who are getting revenue for the company. And if you start your own business, you need to sell your product, right?
Binod:
Of course.
Vaibhav Jain:
Selling skills is one of the things which-
Binod:
I think you said something, before the interview, you said, "Those who bring revenues are respected and have their jobs safe."
Vaibhav Jain:
Exactly, exactly.
Binod:
You made that point, right?
Vaibhav Jain:
An employer can actually go back and see that who are my costs? If there are five people who are the cost... Let's talk about the research analyst. If some company has hired two research analysts in the same sector, he would easily do away with one and then ask the other to just do overtime and because obviously you need to save your job. If someone is tracking 10 companies, another is tracking six companies, he would fire the six company's one and say the first one to cover 16 companies.
Binod:
Of course.
Vaibhav Jain:
Because you are a cost. But if you are a revenue earner, you will think 10 times before okay, if he's earning okay, let's say 20 lakh salary, and he's bringing in even 25 lakhs, even if it's increment five lakhs, he's getting some revenues to the company.
Binod:
Correct, correct.
Vaibhav Jain:
Only the people who are good at getting the revenues to the company, at the end, will be respected.
Binod:
Agreed. In other words, don't be a cost center, be a profit center.
Vaibhav Jain:
Yes.
Binod:
Or a revenue center.
Vaibhav Jain:
Yes. And along with learning your skills which will probably be the equity research guys and all those things... You need to have the knowledge. But then also have the knowledge like you said, the skill gaps.
Binod:
Correct.
Vaibhav Jain:
You need to have the knowledge about sales. Sales is not actually a knowledge. It's a practice.
Binod:
It's practice.
Vaibhav Jain:
It's more you interact with people, it's psychology and everything is mixed. You cannot learn it in the books but you should be open to learning about experiencing about sales.
Binod:
Right. So, three key skills or three skill gaps you see. One, you said was about networking.
Vaibhav Jain:
One is... No. One, I said, IT.
Binod:
IT, yeah.
Vaibhav Jain:
I said selling and the third I want to focus on, the networking aspect.
Binod:
Network, yeah, yeah.
Vaibhav Jain:
As I said, many finance students I have seen are very introvert. They don't want to go out and talk to people. As I said, LinkedIn has given a good mechanism, but somehow stand out, right? Come, talk to people. If you talk to industry experts you learn a lot of things.
But people would think 'why should I' or 'what will I get talking to...'. If you talk to 100 people, probably some day you'll realize out of those 100, five may be of help to you. But you need to explore and talk to those 100 people, right? Always go out, attend like... For people who are the CFA candidates or Level one, Level two, whatever, keep attending the CFA conferences.
Binod:
Right. Absolutely.
Vaibhav Jain:
They give you the access to those people who you will never get an access to like-
Binod:
And the CFA India Society has organized lots of events.
Vaibhav Jain:
... Lots of events.
Binod:
Throughout the country.
Vaibhav Jain:
Of all the CIOs I mentioned, Mr. Navneet Munot, who is the CIO of SBI Mutual Fund you generally don't get to interact with him in his office, but if you are attending a CFA conference, he himself, comes and introduces. I don't know whether-
Binod:
I've met him. I've met him.
Vaibhav Jain:
... So, he's dead down to earth that he'll come and interact and will talk to youngsters.
Binod:
Correct, correct.
Vaibhav Jain:
So, that gives a good platform.
Binod:
Fantastic. So, like I said, selling, networking and programming, probably.
Vaibhav Jain:
These three I would put in one, two and three.
Binod:
One, two and three.
Vaibhav Jain:
No order, but-
Binod:
No order, right.
Vaibhav Jain:
No order but important skills.
Binod:
Fantastic. I wish we could talk on and on. I think we had a 2 hour chat before this interview. And there's so much that we can talk about.
Vaibhav Jain:
Exactly.
Binod:
You've got so much experience, so much happening out there. Thank you so much, Vaibhav, for coming down here and spending so much time sharing your experience.
Vaibhav Jain:
Well, I'm glad to be a part of it.
Binod:
I think the fact that you have gone through being data analyst, investment banking, now a private banker, CA, engineer. Sorry, CFA, engineer-
Vaibhav Jain:
Not yet
Binod:
You haven't done CA yet.
Vaibhav Jain:
I haven't done CA.
Binod:
CFA, engineering and MBA. And your intimate knowledge of local markets, I think that is hugely helpful. And hopefully the listeners will learn a lot from this podcast episode.
Binod:
It's been quite inspirational and quite insightful, if you don't mind my saying so. And I hope you continue sharing this knowledge-
Vaibhav Jain:
Of course, of course.
Binod:
... on whichever platforms you can. Both virtual as well as face to face.
Vaibhav Jain:
Yup.
Binod:
I know you're active on LinkedIn. I know you meet people at events-
Vaibhav Jain:
Teaching is actually my passion. I want guys to learn and learn and learn. Whatever I can share, I just... I just share with people. Be it through LinkedIn, be it through classroom coachings and all. So, this is just a passion which I-
Binod:
More power to you. I hope that there are more people like you out there. And all the best for your career and-
Vaibhav Jain:
Thank you so much.
Binod:
... thank you so much, once again.
Vaibhav Jain:
Thanks, Binod, thanks.
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 drop us a review and spread the word and be sure 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'll tell you about new episodes plus book reviews, upcoming events, and blogs. Till the next time - onwards and upwards.