Rajul Raman

If you’re entering the world of investment banking starry-eyed and with lofty dreams, JPMorgan most likely sits atop your list of places to work at. After all, its parent company

JPMorgan Chase & Co. is the world’s largest bank by assets valued at $3.76 trillion. It is also the largest investment bank in the world with 2020 revenues of over $142 million. Its investment banking revenues make up close to 10% of the market share.

The financial services giant operates across four major segments: Consumer & Community Banking; Corporate & Investment Banking; Commercial Banking; and Asset & Wealth Management. If you’re curious to learn how JPMorgan came to be the banking powerhouse that it is today, you can read a simplified summary of its founder here.

With a thriving and ever-expanding business, JPMorgan is constantly actively hiring around the world. They are always on the lookout for talented, driven, and passionate individuals to join their organisation and bring a slice of their personality to it. If that’s something you aspire to do, here are some ways you can land a job at JPMorgan:

1. Sharpen your financial knowledge

This is a truly non-negotiable aspect for getting hired at JPMorgan. The company is a titan in the financial services industry hence, an understanding of finance is key. It is, however, not mandatory to have a finance major or degree to be eligible for jobs at JPMorgan but the company expects that you have an interest and basic knowledge in the field.

This includes the ability to read and analyse financial reporting instruments, banking and finance terms, comb through a company’s financial health and needs, among other things. Further, acquire any technical skills that can aid your application. For example, R programming and Tableau are two data analysis tools that are widely used at JPMorgan.

Even if you have a degree in a field distinct from finance, you should be able to explain how your current degree sets you apart and prepares you for a career in finance. It could be that you are fantastic at negotiations or delivering presentations or communicating with your team. Use your skills to your advantage while brushing up thoroughly on financial concepts. You can use short-term cost-effective course options to do so such as this Investment Banking pathway by FMI. Do remember, you will be asked finance-related technical questions as well during the interview so it’s best to prepare for those in advance.

2. Craft an epic resume

You’re going to be in a pool of hundreds of thousands applying to JPMorgan every day. Why should anyone care? The first opportunity to make an impression is through a resume so don’t skimp on that. Your resume must stand out, hence, make sure it is well-written, proofread, contains metrics and the impact of your work, and don’t shy away from shedding light on your diverse interests and activities.

Also, many young applicants make the common mistake of using the same resume for all job applications. Show the company that you understand their requirements, and a great way to do so is to tailor your resume for the role you’re applying to. Assess what’s important to the role and amplify activities that show you have those skills. Also, highlight all leadership projects, no matter how big or small.

If you’re looking for guidance on crafting the best resume there is, you can refer to this Harvard University cheat sheet.

3. Ask questions

A common way to end interviews is the recruiter asking if you have any questions. As a young professional, you might be intimidated and choose to not ask any. Yet, that approach can backfire. Interviewers want to know how you think, how you behave in high-pressure situations, how curious you are and so on.

Use this opportunity at the end of the interview to seal it off with a final outstanding impression. Ask well-thought out questions. These can range from the company culture to networking events to the brand values. Even on the JPMorgan careers page, they urge all candidates to prepare and ask questions during interviews. They also share advice on this page for applying to jobs at JPMorgan. A remarkable way to figure out what questions you want to ask is to scroll through the company’s website, About Us, Team, Values pages etc. and take note of what stands out to you.

Conclusion

At the get-go, applying to a brand as renowned and top-notch as JPMorgan can seem daunting. But remember, it is an organisation open to evolving, hence, they want to meet and talk to candidates who are genuinely interested. Let your keenness and drive be visible when applying to and interviewing for these coveted roles. Once you have the adequate financial knowledge, a stellar resume, and an inquisitive and curious attitude, all you need to remember to land a role at JPMorgan is to breathe and remember to be yourself!

If you are keen to land a job in investment banking, you are most likely aware of one of its major divisions — mergers & acquisitions. This is such a common subset that a majority of the 3,000 investment banks specialise in M&As and capital raising. While it sure does sound like a dazzling career choice, it’s also a highly competitive one.

Those working in M&As are usually riding on very high stakes. Mergers and acquisitions are concerned with either the amalgamation of two firms or one firm purchasing the other. This includes extensive research, strategic thinking, consolidations, tender offers, and purchase of assets, among other things. A high-profile acquisition case currently rocking the news globally, for example, is Elon Musk’s takeover of Twitter for $44 billion. Yes, you read that right!

So, if you’ve made up your mind to kickstart a career in M&As, we share 3 ways that can help fast-track your journey and boost your chances:

1. Kill the Skills

There’s no circumventing this — you need a solid understanding of at least one of the following: accounting, business, finance, or strategy. It’s not necessary to hold an advanced degree but many M&A professionals have MBAs and some even law degrees. If you further have certifications such as Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA), these can improve your odds of landing a top-notch role.

It’s also not sufficient to have only theoretical knowledge of the above subjects. You should be able to analyse financial health instruments such as income statements, balance sheets, and cash flow statements. It’s also beneficial to have an understanding of business valuations.

Among other skills, you should work to hone your strategic thinking, negotiations, analytical, problem-solving, and data mining acumen. One must also be piqued to understand global markets. Lastly, how good are you at managing your time and stress? In a high-pressure job such as that of an M&A advisor, you need to be able to stay sane in pressing situations.

2. Initiate, Intern, Impress

An internship can be the springboard to landing your desired role in M&As. They not only open doors for jobs but also prepare you for the role through practical training. If you have the opportunity to work at an investment bank under the M&A division, go for it. This will sculpt you for what’s to come and will also help you figure out whether the role is a right fit for you.

Chances are that during an internship like this you will get the golden opportunity to witness an M&A deal in action. It will be a key time to exhibit your skills and allow people to recognise you. Take initiative, ask questions, help however you can, and most importantly, network. This real-time professional environment is an unmatched opportunity to get on the good side of key executives in the IB and M&A fields. So, don’t hesitate to make an impression.

To bag such coveted internships, start your search early. Apply through LinkedIn, your university’s career placement unit, cold e-mailing, and make optimum use of essential resources that can strengthen your profile such as FMI’s Career Buddy programme.

3. Sharpen with Simulations

Ultimately, you need to bank on practical experience when beginning to work in M&As. While internships are the foremost source to gain this, you can also practice with simulations, which come impeccably close to the real experience. With simulations such as this hour-long one by FMI, you can sharpen your asset selection and portfolio constructions. Using the information provided, you will learn how to assess stocks and their performance, weigh the investments in your fund, watch the impact of external events on your portfolio, and ultimately, make an informed decision.

Conclusion

If your mind is set on a career in Investment Banking, then M&As is one of the most lucrative options for specialisation not just for its financial rewards but also for how professionally and intellectually stimulating it is. You are part of the team in charge of selling, buying or merging a company, and executing that efficiently and smartly can set you apart from the crowd. However, that’s only possible when you have an unwavering foundation — one that rests on a solid education and technical skills, practical work experience through internships and simulations, and a reliable network.

What is the average number of Nike shoes sold in Delhi?

A seemingly impossible-to-answer question like this has lately become an important part of interviews for a certain set of roles. Known as guesstimate (guess + estimate) questions, these are asked in consultant and analyst interviews as well as for most interviews during MBA placements. Guesstimates are estimates based on a mix of guesswork and calculation.

The question, as seen in the above example, can be random, weird, confusing, and at times, you may not know where to start at all. But, it’s doable. That’s because no one cares whether you get the answer right or not. The focus rather is on the method you use to get to the answer. Interviewers are simply interested in learning how you solve a complicated challenge problem as many of these roles require that you have a problem-solving mindset.

So, if challenges excite you, let’s help you learn 3 quintessential tricks to ace guesstimate questions during an interview:

1. Think Logically:

The interviewer or panellist will have plenty of time to get to know you personally during the behavioural interviews. But guesstimate questions are their way to assess your ability to construct a logical flow.

That means every step should naturally lead to the next step and make sense, somewhat like solving a Mathematics equation. In most cases, the logical sequence will comprise 3-5 steps, where you begin from a broad pool and narrow it down to get to your answer (as explained below). But remember that the journey matters more than the destination because chances are the interviewer also doesn’t know the correct answer. Hence, the priority is clearly getting the process right.

2. Write and Speak:

You will get a pen and paper for solving guesstimate questions. Use this to illustrate, think, write down your calculations etc. What you write is a reflection of how you think, so make sure you have a few tools in your arsenal and try to keep things tidy. We find flowcharts to be quite useful and can be deployed to visualise almost anything.

Further, when we are nervous during interviews or exams, we tend to write as we please and scribble on rough paper. Yet, you want to show the interviewer that you are meticulous in your thinking. So, avoid untidy and haphazard writing.

Finally, performing calculations like these requires a person to think out loud. So don’t worry about speaking as you try to solve guesstimate questions. The interviewer, after all, is trying to gauge your thought process, and your commentary can help them immensely. This also brings to the fore your communication skills. You should also ask questions, preferably in the beginning, to rule out any confusion. For example in the above question, are we talking about any particular type of Nike shoe such as running shoes or sneakers? Do we account for shoes sold in Delhi but worn outside the city and vice-a-versa?

3. Stay Calm:

Once again, the magic lies in the process and not the answer. Hence, if you’re flustered while solving the question, that is worse than getting the answer wrong. Remember this before and during the interview. Roles like management consultants, financial analysts and the like require that you stay calm in high-pressure situations.

You always want to be able to demonstrate that you are in control of the situation no matter how outlandish the question may seem to you at first. So, ensure that keeping your composure is part of the practice. Many aspirants will often practice hundreds of guesstimate questions but forget to master any tips to prevent panic. Ensure that during mock interviews, you practice ways to keep a positive and stress-free mindset because the better your mind functions, the faster you’d be able to get cracking on the answers.

A Solution in Action:

Let’s consider our original question: What is the average number of Nike shoes sold in Delhi?
At FMI, we have devised the CSAC framework to solve guesstimate questions:

Clarify:
Clear all your doubts with the interviewer such as what type of month are we looking at. For example, more people will buy shoes in Delhi in the winter than in summer.

Structure:
Quickly decide which approach you want to use. The top-down approach works the best in questions that require you to find out a smaller number from a large pool. The trick is to use the method that calls for the least number of assumptions.

Analyse:
This is the most important step. Here’s what that might look like for this question:

Step 1: From the branded and non-branded shoe stores in Delhi, consider only branded stores
Step 2: Divide branded stores into Nikes only and those selling Nike shoes along with other brands
Step 3: Calculate the average monthly sales for each of the above stores and add them
Step 4: Calculate the average monthly sales in Delhi for Nike shoes online
Step 5: Add 3 and 4

Conclude:
Once you are confident in your approach and answer, be ready to present your findings to the interviewer.

Conclusion:

Treat guesstimate questions as a chance to untangle a fun problem – something like a Rubic’s Cube or a crossword puzzle. This will take the pressure off the situation. Also remember, you are being assessed for your logical reasoning, organizational, communication, and analytical skills. To bode well on these parameters, you must have a 3-5 step process, ask reasonable questions, keep calm, and answer coherently and confidently. Further, here’s another detailed guide to cracking the next steps to landing a financial analyst job.

Investment banking may not be as pervasive an industry as the tech sector. Yet, when you delve deeper into it, you will realise that the IB industry is home to some of the most influential people in the world. Since Steve Jobs can be considered a fair touchstone for measuring success and fame, we figured we will introduce one of investment banking’s magnates through him.

We believe that the Steve Jobs of the Investment Banking Industry is none other than J.P. Morgan.

Who was J.P. Morgan?

Today, JPMorgan Chase is the world’s largest investment bank, with $3.76 trillion (in assets) and 2020 revenues of over $142 million. Its investment banking revenues make up close to 10% of the market share. While even the layperson is familiar with JPMorgan Chase, not as much is known about the man behind this investment behemoth.

John Pierpont Morgan, who was born in April 1837 in Connecticut, U.S., is considered one of the world’s most key financial figures and industrialists. Much like Steve Jobs, JP Morgan was quintessential in revolutionizing entire industries as compared to just a company. He played a monumental role in financing the industrial consolidations that came to be known as United States Steel, and the General Electric Corporation, among others.

From Accountant to America’s Financier Hero

JP Morgan began his career as an accountant at the age of 20. By his early 30s, he was a partner in the firm Drexel, Morgan and Company in New York, which was one of the U.S. government’s major sources of finance. This firm then took shape as J.P. Morgan and Company in the late 1890s. Owing to Morgan, it soon emerged as one of the world’s mega banking houses and continues to enjoy that esteemed reputation today.

One of Morgan’s most legendary achievements as a financier was to avert the financial collapse in America after the stock market panic of 1907. He led and amassed a group of bankers, who then took in large sums of government money and proceeded to strategise how to utilise it for preventing the collapse. The U.S. Treasury also backed Morgan’s efforts with $25 million to increase liquidity and keep the market functional. This also prevented many large banks from going insolvent. Hence, not only is Morgan credited with building one of the world’s most powerful banks but was an integral pillar of the American financial system.

The Banking Powerhouse Continues …

J.P. Morgan passed away in 1913. But his prestige continues to echo and is further elevated by what is now called JPMorgan Chase. The New York Stock Exchange closed until noon on the day of Morgan’s funeral – an honour usually reserved for heads of state. J.P. Morgan & Co. went public in 1940, and in 2000, it merged with the Chase Manhattan Corporation with its new identity as J.P. Morgan Chase & Co.

Since 2005, the banking powerhouse is led by its notable CEO Jamie Dimon. In Fortune 500’s 2021 issue, the company secured a rank at #19 and recorded profits of more than $36,000 million in the 2020 fiscal year. Further, on the World’s Most Admired Companies list, the company ranked at #10. Resting on one of the company’s best years, Dimon has predicted a “boom” for JPMorgan Chase that could “easily run into 2023.”

So, as it turns out, besides their exemplary leadership skills as well as their capability to turn the unimaginable into reality, both Steve Jobs and J.P. Morgan also erected empires whose eminence continues to shine on even after their departures.

Many consider investment banking to be one of the most exclusive industries in the world. Yet, while some common facts such as its financial perks and long hours are well known, the industry’s innerworkings aren’t common knowledge. In this article, we delve into some of the lesser known and striking facts about investment banking:

1. The global investment banking fees are a whopping $80.5 trillion

The investment banking fees worldwide – the fees charged for various services such as advisory, M&As, raising capital and so on in the IB industry – stood at a massive US $80.5 trillion in the first half of 2021. This was $18 trillion higher than its value in the first half of 2020. Although this was its highest ever, due to its timeline, the value doesn’t yet account for Russia’s invasion of Ukraine, which has severely shaken the global economy.

2. JPMorgan is the leading investment bank globally

JPMorgan bagged the largest investment banking revenue in the world, as of March 2022. It had clocked in a revenue of roughly $1.73 billion till that period. This made up 9.6% of the world’s investment banking revenue followed by Goldman Sachs at 9%. Further, all five of the top investment banks globally were American multinational investment banking firms.

3. Goldman Sachs is the largest M&A advisor worldwide

Since 2019, Goldman Sachs has been the largest merger and acquisition (M&A) advisor in the world. Last year, they led M&A transactions valuing nearly $1.9 billion. In addition, the global M&A volumes stood at $5.9 trillion in 2021, up from nearly $3.5 trillion in 2020.

4. Less than 25% of investment bankers had a finance degree

Investment bankers are painted with the broad brush of being math and finance geeks yet that’s not always the case. This article points to the other crucial skills needed to become an investment banker. In fact, many IBankers come from a range of backgrounds. The more common attribute, though, is usually professionals who are willing and accepting of working in a demanding and high-pressure environment.

5. Less than 8% of U.S. university graduates working in banking went to an Ivy League school

Although it is believed that the top-ranked investment banks hire exclusively from Ivy League schools, an analysis of the LinkedIn profiles of the 13 top investment banks showed that 7.4% of U.S. university graduates who worked in banking went to an Ivy League college. In fact, while some banks’ had more than 20% of their employees from this premier university bracket, for JPMorgan Chase this number was 7.8%.

6. More than 20% of Barclays’s workforce attended an Ivy League college

Barclays hired the highest percentage of Ivy League graduates of all 13 banks analysed above. Further, nearly 66% of Barclay’s workforce came from private colleges. This number was nearly 64% for Goldman Sachs and 41% for JPMorgan Chase.

7. 100+ hour work weeks are a thing at some firms

Investment banking analysts may work up to 100 hours per week at some firms. While this might be less than ideal for many professionals, in this article we share some tips on time and stress management to ensure a smoother career as an investment banker.

8. Investment banking salaries range from $125,000 to $10 million

Investment bankers are widely known to take home the big bucks. Salaries (including bonuses) can range from $125,000 to $10 million. The lower end is for a first-year analyst while managing directors bag the highest of the lot.

9. The average investment banker likes to stay at their job for 1-2 years

HR firm Zippia assessed over 618 investment bankers resumes and concluded that the highest proportion of investment bankers (41%) preferred to stay at their job in IB for 1-2 years.

10. Investment banking is primarily a sales job

Although not technically a stat as much as an intriguing observation, former banker Henry Wong told Forbes that “People don’t realize investment banking is primarily a ‘sales’ job. Like your neighborhood car salesman, a banker will say almost anything to get a deal done.”

11. Representation of women in financial services falls the higher you go

At the entry-level, women’s representation in the North American financial services sector is slightly higher than men at 52%. However, the higher up you go on the corporate ladder, the more their representation falls. In the C-suite in the financial services workforce, white women made up only 23% of executives and women of colour – a mere 4%. The number from entry level to C-Suite for women representation fell by a major 80%

12. Banking is the most skewed in terms of racial representation at the C-Suite level

Within the financial services industry, banking was the poorest in terms of equality of racial representation. White individuals dominated this level of hierarchy both among men and women in banking. Here’s the breakdown:

Source: McKinsey

13. Women received more support at their workplace in the last year

The financial services industry is reported to have supported employees at a higher rate than corporate America during and after the Covid-19 pandemic. In the 2021 edition of the Women in the Workplace study, 47% of women interviewed reported receiving increased support in the past year. The number, however, stood at close to 60% for women in the financial services sector. This included additional holidays, paid time off, emotional support etc..

14. More women managers make the financial services workplace healthier

Employees with female managers in the financial services domain were 50% more likely to say they received emotional support and 25% more likely to report that their manager helped them navigate work–life challenges.

15. Investment banking is booming in India

India is home to hundreds of investment banks while multiple foreign investment banks are also set up here. Among the top ones are JPMorgan Chase, Goldman Sachs, Barclays, Morgan Stanley, Citi, Deutsche, HSBC etc. In 2021, India’s investment banking industry witnessed one of its best times, with investment bankers making Rs 2,200 Crore.

Conclusion:

So, while this might be a volume of information to process about the industry, we hope this article introduced you to some more crucial facts about investment banking. If this is a professional pathway that interests you, FMI brings you cost-effective and time-saving courses here to help you pursue a career in investment banking.

As an aspiring investment banker, you’re probably keen to find answers to multiple questions – how to prepare yourself for a high-stakes, high-stress job, how to approach investment banking, how to balance work and the rest of your life, what does the future of the industry look like etc. Uncovering these answers can be overwhelming with the volume of content available online. Hence, we have compiled the following list of TED Talks, which anyone looking to join or already working in investment banking, can significantly benefit from.

Let’s get watching:

1. Are you ready to become bankers? by Marcos Eguiguren

Marcos Eguiguren, co-founder of SingularNet and former Executive Director at Global Alliance of Banking on Values, talks about banks’ responsibility as the heart of the economy.
He stresses that banks connect people and hence, should also pay attention to their values. Banks that focus on investing in projects and companies that help with social, environmental, economic, and cultural development are called values-based banks.

For example, house financing is a common service across most banks but value-based banks will lend to people who want homes in eco-efficient buildings or affordable housing projects. Eguiguren emphasises that people plus planet is a greater purpose than profit, and only bankers in the industry can be the flag bearers of these values such as by ensuring transparency.

2. A Step-by-Step Guide for the Average Person to Start Investing with an Investment Bank by Matteus Pouchain

Investor relations specialist Matteus Pouchain explains how investment banks can be beneficial for the average person. He says that a savings account is as useless as stuffing money under the mattress, owing to the loss in buying power. This is because often, the inflation rate is higher than the average rate of return on a savings account.

He encourages everyone to meet an investment manager at an investment bank. She or he can help clients meet their long-term financial goals. A portfolio manager, for example, directly invests the client’s funds into a diverse set of investments. They can also help you determine your risk aversion levels as well as the horizon of your investments.

3. From Tech Start-up to Investment Banker by Jan Metzger

Jan Metzger, now Head of Asia Pacific Banking, Capital Markets and Advisory, in this TED talk takes you through his exhilarating journey from being a software engineer to a management consultant to an investment banker. Metzger talks about his struggles and successes and how he used his failure at a young age as an impetus to drive him forward. Today, Metzger has led landmark deals, including Alibaba’s US IPO of $25 billion – the largest in the world.

4. How to make a profit while making a difference by Audrey Choi

As an investment banker, it can be easy and lucrative to be motivated by money, and there’s nothing wrong with that. But most people will need something additional driving them because everyone longs for purpose in life. Sustainable investment expert Audrey Choi explains how to marry profit and positive impact in this industry.

She is convinced that the institution of the global capital markets – the nearly $290 trillion of stocks and bonds in the world – is one of the most powerful forces for positive social change at our disposal. Choi also explains how this approach with careful and sufficient consideration for good governance and the environment is beneficial for big firms as well. An Oxford study found that companies that cared about these sustainable factors had better operational efficiency, lower cost of capital and better performance in their stock price.

5. How To Multiply Your Time by Rory Vaden

Time management is a skill you will need to master as an investment banker. Thankfully, you have self-discipline strategist and New York Times bestselling author Rory Vaden to your rescue. In this intriguing TED talk, Vaden talks about original ways for effective time management, not influenced by what might have historically worked. He also presents an extremely unique take on procrastinating, suggesting that it is the key to multiplying your time.

6. How to make work-life balance work by Nigel Marsh

Marketer and author of “Fat, Forty and Fired,” Nigel Marsh talks about setting and enforcing the boundaries that we want between work and life. This can be extremely useful to investment bankers, who are widely known to work long hours, often suffering an imbalance between their work and other aspects of life.

Marsh explains that achieving work-life balance doesn’t need to be dramatic. He says that with the smallest investment in the right places, you can radically transform the quality of your relationships and of your life. You don’t need to delay your dreams to “after I retire,” if you design your work life in a particular way, in line with how you define and achieve success, not how society expects you to.

7. How to make stress your friend by Kelly McGonigal

Psychologist Kelly McGongial presents an important outlook on stress. She says that changing how you think about stress can change your body’s response to it. She points to a study conducted in the U.S., where people who were stressed and viewed it as harmful had an increased risk of dying as compared to those who were stressed but didn’t view it as a health hazard.

McGongial explains that stress induces oxytocin in our bodies, which is a sign to seek support and comfort as opposed to bottling it up. When you act on these stimuli and reach out to someone, your stress response becomes healthier, and you recover faster from it.

As an investment banker, since you will inevitably need to learn how to manage stress, you can keep McGongial’s technique in your back pocket. Remember, as we explained in this article as well, your organisation might also be able to offer you resources to help you with managing your mental health.

8. How to turn off work thoughts during your free time by Guy Winch

Psychologist Guy Winch sheds light on a seemingly small but the rather disturbing issue of thinking about work even after work. He says that ruminating on work worries outside the office leads us to activate our stress response and is highly unproductive. Although involuntary, these afterthoughts can seriously damage our emotional well-being.

Winch offers solutions in his talk such as clearing guardrails and setting strict boundaries between home and work. For example, you only designate work at home to a specific corner or space, and you only work while in work clothes. He also recommends switching off work-related notifications when you’re in the non-work time zone.

As an investment banker, you will be compelled to take your work home. Or now with a flexible work from home model, these boundaries might seem hazy. However, Winch offers easily implementable tips to tackle this issue.

9. The future of investing by Edmund Lee

Research analyst Edumund Lee talks about how the trends in investing have shifted from a concentrated focus on making money, generating cash flow, and sufficient capital to being rather asset light. Further, he explains why investing in businesses that may not be highly profitable isn’t an absurd idea.

Companies, today, go through the cyclic process of startup, expansion, high growth, maturity, and decline. Instead of investing solely in profitable companies, people are willing to pay a premium for those companies who have innovative ideas and are in the beginning of their growth cycle. Lee’s talk is a reminder to focus on the product and scalability of the company while investing rather than only their financial statements.

Conclusion:

A successful career in investment banking requires an amalgamation of the best business practices along with the softer but highly crucial skills of organising your time, managing stress, and finding an identity beyond work. These TED Talks will help you understand and learn both these aspects by introducing you to expert methods and ideas that are tried and tested.

A typical financial analyst job description will require you to have a bachelor’s degree in Finance, Accounting, Math or Economics with a preferred MBA, an in-depth knowledge of financial modelling, stellar communication skills, proficiency in using Excel and so on. You won’t be surprised to know that most people applying for the role of a financial analyst will already have the above skills. Reportedly, in 2019 in the U.S. alone, there were close to 300,000 financial analysts.

So, how do you stand out? How do you ensure that you bag that coveted financial analyst role you have dreamt of for years? In this article, we help you understand how to get hired as a financial analyst using the 3 major tools of Education, Skills, and Interview practice:

1. Education:

It is no secret that you need to be equipped in Mathematics or a related field such as Finance, Economics, Statistics, Business etc. to work as a financial analyst. If you know your goals by the time you decide to pursue your undergraduate education, you can choose one of these fields as your major. When you are in university, also take the initiative to join extracurricular activities in this domain that interest you such as finance, entrepreneurship, management clubs etc.

If you take the plunge of getting into financial analysis later, after your university, you will most likely need a master’s education in the field to have the required know-how. One of the most common choices is to pursue an MBA with a finance specialisation. In fact, it is widely known that you must get an MBA from an eminent institution such as an Ivy League university to land the top finance roles. This article by Investopedia, however, offers a detailed analysis on the ROI for an Ivy League education. While it sounds impressive and will offer you a transformative experience, it is not a requirement to work successfully in the financial analysis industry, as other options exist. What will truly differentiate you are your Qualitative and Quantitative Skills.

2. Skills:

A financial analyst has to pore over complex and lengthy sets of financial data, understand it, and draw conclusions on what it means for a company’s business, profitability, and future. Hence, it is a task of enormous responsibility and requires specific skills:

a. Expert analytical skills such as extreme proficiency in Excel are unskippable. Yet, you can learn these either in business school or at an internship or through specialised courses such as this 5-hour course by FMI, which includes quick resources on mastering Excel.

b. Financial modelling skills, which help represent a company’s financial data mathematically, is another indispensable skill set you need as a financial analyst. This information allows you to gauge a company’s income and expenses, based on which you can interpret how it is currently performing and forecast its future performance. This involves financial reporting tools such as income statement, balance sheet, cash flow statement, among others, each of which we have explained in detail. Your education will come in handy in teaching you these concepts. You can also further take courses such as this one on Financial Analysis by FMI to brush up your skills.

c. Interpersonal skills: As a financial analyst, you will be working closely with your clients – companies whose financials you are assessing. You will also be reporting and presenting these to your superiors in a concise and coherent manner, to further draw conclusions from it. Since your job involves finances, people involved are trusting you immensely and expect that you will be able to paint an accurate and comprehensible picture for them. This requires solid interpersonal communication skills.

While you can find courses online to sharpen your networking and conversational acumen, nothing can teach you this as well as actually doing it. You can begin to engage in these activities during school or college by participating in debates, elocution contests, etc. or in a professional environment by setting up informational interviews at an internship or even simply reaching out to professionals you would like to learn from. When someone identifies true keenness and passion, more often than not, they would be willing to set aside some time to guide you.

Other skills we strongly recommend you start building upon are the ability to multitask, think strategically, work in a high-pressure environment and yet, to compartmentalise your job and the rest of your life. Financial analysis is a demanding profession, hence, you must also ace organisational and time management skills to avoid feeling burnt out. When you master these often overlooked skills, you will be able to set yourself apart from the crowd as well.

3. Interview:

If your education and skills matched a potential recruiter’s requirements, and you have made it to the interview, kudos! Before you proceed to read countless articles on how to ace the interview, breathe. Yes, the interview is a spectacular chance to make an impression and to help the hiring organisation see why you are awesome but often, people botch their chances because they’re too nervous. So, find ways to remain calm.

Next, the interviewer will ask you both technical and behavioural questions so you must prepare adequately for both. This guide by LinkedIn offers interesting insights into answering these questions as it throws light on what the recruiter’s thought process is. To practice the technical segment of the interview, you can talk to previous hires, research extensively, and ensure that you have reviewed all key terms and concepts. To practice the behavioural questions, make sure you work with a partner who can conduct mock interviews. Once again, here’s a list by Muse of questions and sample answers to behavioural questions.

Once you have practised sufficiently, remember what matters most is your confidence. Interviewers do not expect you to be perfect but everyone is drawn to curiosity, capability, and confidence. Hence, make sure you do things before the interview that help you believe in yourself. Further, definitely avoid some of these common interview mistakes.

Conclusion:

With the right combination of education, skills (both quantitative and qualitative), and interview knowledge, you can climb up the ladder to being a financial analyst. No one segment alone will get you there, hence, don’t get disheartened if your MBA isn’t from a premier college or if you are struggling with Excel. Even the top companies are looking for those who are authentic, eager to learn and grow, and have the ability to connect with all stakeholders involved. So, focus on these skills, and with enough grit and dedication, you can achieve your goal to become not just any but rather, a distinguished financial analyst.

If you’re an aspiring investment banker, you will find plenty of content online about the shiny bits of this industry – the big paychecks, the ritzy lifestyle, the glamour of Wall Street etc. And when you desperately want something such as a high-paying job, it’s easy to focus on the pros more than the cons. It’s only when you are in the situation and have achieved what you wanted, do you start to notice the pitfalls. As a result, people might feel resentment towards the work and begin to experience the infamous burnout.

However, there’s an alternate path. Once you understand, beforehand, the demands and challenges of a high-pressure, high-rewards job such as investment banking, you can prepare better. So, in this article, we take you through what not to do in investment banking to enjoy a smoother professional experience. This applies whether you are on the verge of entering the industry or are already in it:

1. Don’t forget the journey:

Once you have bagged that interview and received the offer letter for the job you most, you’ll be ecstatic. Nothing else matters. But a couple months into the work, it starts settling in and feeling ordinary. A few more months pass, and being an investment banker doesn’t feel any more special to you than say, having toast for breakfast.

Pause.

At such a juncture, remember how you got here. Remember how badly you wanted to get here. Don’t discount your journey of challenges, hard work, and the rigorous interview prep. Sometimes, you’re living the dream you wanted but you barely even know it.

2. Don’t forget who you are:

Investment banking is notorious for a fratty culture. You might like this or you might not. Yet, when you are surrounded by a homogenous group of people, all of who are graduates from stellar universities, highly smart and competent, you may feel tempted to fit in. But, remember that you’re also here for a reason. You don’t need to alter your identity to blend in with others. Your personality is defined by who you are and the fresh mindsets you can bring to the table. So, don’t feel compelled to leave behind that part of yourself.

3. Don’t let work overpower your entire life:

It is commonly known that investment bankers clock in anywhere between 60-100 working hours a week. If you’re someone who aims for a healthy work-life balance, this might deter you. Yet, if you organise in advance – both your mindset and your time – this challenge could be more manageable than you think.

Fortunately, with a shift in work environment expectations post the pandemic, many major banks are also endorsing flexibility. According to this New York Times article, “[major banks] are shifting to more days at home, hours that adjust to suit family needs and reworked office spaces, in a break with industry tradition that has long emphasized face-to-face relationships built over grueling hours and punishing workloads.” For example, America’as largest bank J.P.Morgan Chase, expects that only about half its employees will ultimately be in the office five days a week.

These tectonic changes should assure you that work does not need to be your entire life.

4. Don’t skimp on physical fitness:

The long hours at the desk, especially if working from home, which offers fewer options to move around, can be detrimental to health. Even amidst your busy life as an investment banker, find ways to take care of your fitness. This includes both diet and physical activity. The most natural and somewhat reasonable excuse you’ll find is that you don’t have the time. But think about whether that is really true? Are there are distractions in your day that can be combined or replaced by physical activity?

For example, maybe you watch Netflix for 45 minutes a day. How about combining that with the same time at the gym? As an investment banker, you are probably lucky to be equipped with facilities like an in-house gym at your workplace. Or maybe you can walk to grab lunch. This article offers an elaborate diet and exercise regime for investment bankers.

Finally, even if you think making money is far more important than your health, remember that only of these is highly dependent on the other.

5. Don’t overlook your mental health:

This might seem like hollow advice because a job like investment banking is known to be stressful and high-stakes. But if you were someone who couldn’t handle stress, you’d probably not dip your toes in the investment banking pond. So, trust yourself. Remember that you don’t need anyone to validate your mental health and how you feel internally, whether good or bad.

Further, find out whether your organisation provides any resources for mental health support. For example, in 2019, J.P.Morgan Chase instated on-site counselors at its London branches. Similarly, Goldman Sachs has trained dozens of its UK staff members to become mental health first aiders. This allows them to spot any signs of stress or anxiety in the workforce through changes in appearance, working habits or social patterns, and then provide access to places that can offer help.

Use the resources at your disposal, and even if you feel a stigma at your workplace to address mental health issues, ensure that you confide in someone outside of work.

6. Don’t make money your only motivation:

Investment bankers start off their professional journeys with salaries of $100,000 on average. This only inflates with fatter bonuses as you progress in your career. This is a massive motivation for many working in the industry. And there’s nothing wrong with it. But, don’t let money be your sole motivation to pursue becoming an investment banker.

You will be surprised at how quickly money loses its charm when all your basic and most of your luxury needs are met. You need a factor beyond money to motivate you. Maybe you love working with numbers. Or maybe you have a passion for driving mergers and acquisitions for large corporate clients. Or maybe you are simply fantastic at negotiations and being a people person. Find your strength and play on it.

7. Don’t stop learning:

In any industry, as time and trends progress, you will have opportunities to learn new concepts. Use these chances to equip yourself. If you feel saturated in one aspect of investment banking, is there anything new that you can learn not only to move ahead in your career but also because you’re curious? Investment banking is known to offer steep learning curves with the opportunity to work with high-profile and eminent clients.

Learning as you go will keep you interested in solving challenges and aid you in climbing the professional ladder, if that’s what you hope to do. If you’re an aspirant and don’t have access to real-time professional opportunities yet, you can still advance your knowledge with various tools online. At FMI, we offer comprehensive and cost-effective courses specific to pursuing investment banking as a career as well as resources to ace IB interviews and learn about concepts like mergers and acquisitions.

Conclusion:

Investment banking is a profession that will throw many challenges your way. Yet, if this is something you passionately want to do, you can find innovative ways to overcome these obstacles with enough preparation and a solutions-driven mindset. The above guidelines will help you succeed professionally, yet in a holistic manner. Plus, as we said earlier, don’t forget the journey once you have crossed the destination!

A balance sheet is one of the three key financial statements, the other two being income statement and cash flow statement. It is a representation of the company’s assets (what it owns), liabilities, (what it owes) and shareholders’ equity (what is owned by shareholders). A balance sheet can be instrumental to you if you run a business, if you are an accounting student, or if you work in the financial sector. Hence, in this article, we help you understand some of the lesser known facts about balance sheets:

1. Balance sheet is prepared at a given date:

A balance sheet shows a company’s financial position as at a given date. Oftentimes, this date is the end of the fiscal year. Unlike an income statement, which is prepared for a period of time such as a quarter or six months or a year, a balance sheet is furnished for a single point in time.

2. A balance sheet is also called statement of financial position:

Since this financial tool states a company’s position at a particular time, it is also, although less commonly, called the Statement of Financial Position.

3. A balance sheet must be well, balanced:

As the name suggests, a balance sheet must demonstrate an equilibrium. This is between the assets, liabilities and shareholder’s equity. A company’s assets must equal their liabilities plus shareholders’ equity

4. There are typically 5 broad parts to a balance sheet:

Within its 3 major components, a balance sheet encompasses 5 key broad categories:

a. Current assets: items a company owns that are liquid (can be turned into cash) within one year such as accounts receivable, inventory, cash etc.
b. Non-current assets: items a company owns for a more permanent time period such as property, equipment etc.
c. Current liabilities: debt due within one year such as accounts payable, sales tax payable, wages payable etc.
d. Non-current liabilities: debt due beyond one year like long-term debt
e. Shareholders’ equity: shareholders’ investment and retained earnings

5. Any transaction in one part of the balance sheet must always offset another:

In order for a balanced sheet to remain balanced, any transaction reflected in one part of the balance sheet will also affect another. For example, if you pay off one of your creditors, you will reduce that amount from the liabilities but since it must have been paid using existing cash hence, that would also go down, once again balancing the statement.

6. A balance sheet can show a business’ net worth:

A balance sheet is the single most important instrument to determine a company’s net worth. Net worth is the value of the assets owned minus the liabilities owed. Positive net worth is when assets exceed liabilities and negative net worth is when liabilities eclipse assets.

7. Balance sheets are crucial for financial analysis:

Analysts use balance sheets to understand a company’s financial position. They are especially integral when evaluating a company for mergers, asset liquidations, expanding or paying debt. For example, during a merger or acquisition, the balance sheet can help determine what the company is worth, which can help decide the appropriate resultant amount to be paid for the merger or acquisition.

8. Balance sheets are useful to investors:

Potential and current investors can use the balance sheet to calculate various financial ratios to base their investment decisions on. For example, current ratio is current assets/current liabilities. Investors can use this to gauge short-term financial risk. Similarly, debt-to-equity ratio is calculated by dividing the total liabilities by the total stockholders’ equity. It shows how much equity relative to debt is used to finance the company’s assets.

9. Publicly-traded companies are required to file balance sheets:

All companies listed on the stock exchanges must file their balance sheets with a regulatory authority such as the Securities and Exchange Commission (SEC) in the United States, with provisions for doing so at the end of every quarter and year. Each country has its own equivalent of such an authority.

10. You can create a balance sheet using a template:

You do not need to start from scratch if you’re trying to create a balance sheet. You can use templates such as this one by Microsoft to make an instant balance sheet.

11. This is what a balance sheet looks like:

To gain a better understanding of what balance sheets comprise and look like, here are snapshots of year-on-year balance sheets from different sectors. As you will see in each of them, Total Assets = Total Liabilities + Total Equity.

Apple Inc.’s Balance Sheet:

Nike Inc. Balance Sheet:

Alibaba Group Holding Limited Balance Sheet:

12. A balance sheet is not an end-all be-all of a company’s financial health:

While a balance sheet is undoubtedly one of the most vital tools for financial accounting and analysis, it may not always reveal a complete picture of a company’s financial dexterity. That’s the reason financial statements come in sets of three including the Income Statement and the Cash Flow Statement. To accurately dissect a business’ financial health, an authentic analyst must always look at the three statements in tandem. A balance sheet, for example, records assets at their historical cost or the cost they were purchased at and not the current value. To find out the current value, you’d have to look at the depreciation expense under the income statement. Thus, a balance sheet does have its limitations. Further, as Henry Ford famously said, “The two most important things in any company do not appear in its balance sheet: its reputation and its people.”

13. You can learn how to analyse a balance sheet with the right training:

You may have studied making and reading a balance sheet while in school or university but real-time balance sheet evaluation may require a deeper understanding. You can gain this knowledge with the help of professional training such as this 5-hour course on financial analysis by the FMI. These can be beneficial if you’re looking to start a career in financial reporting and analysis, or if you’re a business, or even solely for investment purposes.

Conclusion:

Balance sheets are an essential tool in any analyst’s toolkit. The equation driving a balance sheet might seem simple enough with Assets = Liabilities + Equity yet each of these sections contains its own nuances, and together they provide a snapshot of a company’s finances. For this reason, only an elaborate understanding of this statement and its intricacies, combined with that of the income and cash flow statements can help you become adept at conducting a business’ financial analysis.

The cash flow statement may not be as popular as its other two counterparts – income statement and balance sheet. Yet, this single instrument can give a peek into one of a business’ most important aspects – whether it has money to pay its expenses and run the business.

So, we’d like to take you through some of the key facts of a cash flow statement.

1. Cash flow statement records the movement of cash in a business:

This statement is created to track how cash and cash equivalents (highly liquid investments with maturity of 90 days or less) move or flow in and out of a company. The result of this movement helps decipher how well can the business pay its debts and expenses.

2. Cash flow statement contains 3 key parts:

This statement is divided into 3 key segments:

Cash from Operating Activities: cash inflows and outflows related directly to a business’ primary operations i.e.selling a good or service such as customer receipts, salaries, interest payments, income tax payments etc.

Cash from Investing Activities: incoming or outgoing cash from a company’s investments such as assets (property, equipment, etc.)

Cash from Financing Activities: inflow and outflow of cash from capital used to finance a company’s operations such as payment of bank loan, dividends, etc.

3. Cash flow statement is prepared for a specific period of time:

Similar to the income statement, the cash flow statement is also created for a particular period such as a month, quarter or year. This is known as the accounting period. Of the three financial statements, only the balance sheet is prepared for a single point in time.

4. Cash flow statement can be constructed in two ways:

Direct Method:
This is a straightforward method that simply adds all cash inflows from operations such as cash receipts from customers and subtracts all outflows such as cash paid to suppliers, salaries etc. Smaller businesses commonly use this method to calculate their cash flow.

Indirect Method:
This method starts off with the net income or loss, which is extracted from the income statement and adds to or subtracts from that the implicit cash flows from the balance sheet – which have not yet necessarily been paid or received in cash. Hence, this method is based on the accrual accounting system.

5. The bottom line shows the change in cash balance:

After a cash flow statement has been prepared, the last line shows the cash balance – the surplus cash left with the company or the negative cash balance (outflow more than inflow).

6. Positive cash flow doesn’t always equate to profit:

Positive cash flow shows that cash inflow is higher than outflow during a specific period of time. It means the company has excess cash to re-invest, pay off any debt, pay shareholders etc. However, a positive cash flow doesn’t always mean profit. Other accounting expenses such as depreciation, one-time charges, can lead to a negative net income even if the business clocked in positive cash flows in that same period.

7. Negative cash flow doesn’t necessarily mean loss:

A negative cash flow implies that more cash moved out of the business than came in. Yet, this isn’t a definitive measure of a company incurring a loss. It could be a result of more money being injected into the business itself for growth.

8. Net cash flow balance can be derived from and must equal balance sheet difference in that period:

The cash column under the assets section of a balance sheet for two consecutive periods should have the same difference as the cash flow statement balance in that period. This can be used to verify the accuracy of both statements as well. For example, in the below example for Amazon, the balance sheet difference between “Cash Only” from 2021 to 2020 is 36.48 billion – 42.38 billion, which equals negative 5.9 billion. This is the same as the Net Change in Cash for 2021 in the cash flow statement highlighted in the second figure.

9. Cash flow statements are useful to investors:

By reading and interpreting a cash flow statement, investors can understand if the company has enough cash to meet its expenses. A deeper evaluation of each of the heads under a cash flow statement can help them gauge whether the company is simply low on cash because it has invested in itself or because it is actually not profitable.

10. Cash flow statement must be used in tandem with the income statement and balance sheet:

As we already saw in the case of an indirect cash flow statement, its items are derived from the balance sheet and the income statement. Further, you can match elements of the cash flow statement with those in the other two statements and vice-a-versa. We also saw that the net cash flow does not always reflect profit or loss. Hence, to capture a full picture of a company’s financial health, any analyst, investor, or business owner must use all three statements.

11. Cash flow statement is mandatory to prepare:

Cash flow statement is a financial reporting statement that must be prepared by businesses, as per the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IAS) requirements.

12. You can use a template to create a cash flow statement:

If you’re a business owner or want to create a company’s cash flow statement for the purpose of analysing it, you can use a readily available template such as this one by Microsoft.

13. You can learn how to analyse cash flow statements:

A cash flow statement might seem very straightforward and easy but as companies grow and their operations become more nuanced, so might its financial statements. In such a case, it can always be beneficial to gain knowledge on how to read and interpret these key financial instruments. At FMI, we offer a comprehensive, 5-hour course on financial analysis. Whether you’re an entrepreneur, an aspiring accounting professional or a student, such professional training can give you an edge for working in this sector.

Conclusion:

If you want to know whether a business is generating or using up more cash, the cash flow statement is your tool. With a simple calculation of cash-related inflow and outflow, it will help you get to a company’s cash balance. Yet, it records cash-only transactions, and a business can be more complex than that. Hence, the three financial reporting statements complement each other. You can also read our article on income statement and balance sheet to get a primer on each of these.