< The Finance Professionals' Post: May 2013

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7 posts from May 2013


Book Review: What You Were Really Meant to Do


My first boss in Wall Street advised me "All the happiness in the world won't buy you money." I got the message, as did most of my generation. But the recent consolidation in the business has forced many to rethink their career paths. The growth of entrepreneur opportunities is opening new avenues to follow. In every part of the finance and business worlds, everyone is facing many more competitive challenges. Systematic thinking about career paths has become as essential part of staying employed, and moving ahead. 

At the core of What You're Really Meant to Do: A Road Map for Reaching Your Unique Potential is "the difficult task of understanding who you are and what interests you," which is in contrast to following along defined traditional career routes, often becoming influenced by what your peers are doing, and what looks like the fastest road to a big bonus. It goes without saying, the self-discovery theme of the book is much different from the traditional career goal of finance professionals, which is to make money, as much and fast as possible. In an industry now characterized by restructuring and new business models, this has obvious dangers.

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Eight Ways to Maximize Your Relationships with Financial Recruiters


Financial services recruiters can be a great resource, but if you don’t pick the right ones or fail to work with them strategically, you’ll end banging your head against a wall and going home jobless. Here are some hints from recruiters themselves on how to get the most out of the relationship and make the process as pain-free as possible.

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"You're Fired!" Now What? Survival Strategies

Chances, are, you saw it coming.  You no longer have a job.  Technology, globalization, and fierce competition have created a tough job market. Downsizing. Re-aligning. Right sizing. Regardless of the cold corporate rhetoric, to protect yourself you must have an action plan.

Here are survival strategies to help put you back in charge of your career.

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Thoughts on Reputation and Governance in Banking


"In the end, it is probably leadership more than anything else that separates winners from losers over the long term – the notion that appropriate professional behavior reinforced by a sense of belonging to a quality franchise constitutes a decisive competitive advantage."

The epic financial crisis of a few years ago inflicted immense damage on the process of financial intermediation, the fabric of the real economy, and the reputation of banks and bankers. Even today, some five years later, little has happened to restore financial firms to their former glory near the top of the reputational food-chain in most countries. For reasons of their own, many boards and managers in the banking industry have little good to say about the taxpayer bailouts and the inevitable regulatory tightening. In the words for former Barclays CEO Bob Diamond, "There was a period of remorse and apology for banks. I think that period is over. Frankly, the biggest issue is how do we put some of the blame game behind us? There's been apologies and remorse, now we need to build some confidence.”

There have been some notable exceptions, of course. In the middle of the crisis Josef Ackermann, former CEO of Deutsche Bank and Chairman of the International Institute of Finance (the preeminent lobbying organization for the world’s largest banks), noted in 2008 that the industry as a whole was guilty of poor risk management, with serious overreliance on flawed models, inadequate stress-testing of portfolios, recurring conflicts of interest, and lack of common sense, as well as irrational compensation practices not linked to long-term profitability – with a growing perception by the public that banking was the playground of “clever crooks and greedy fools.” Ackermann concluded that the banking industry had a great deal of work to do to regain its reputation, and hoped that this could preempt damaging regulation. It was already too late for that.

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Recent Research: Highlights from May 2013

"The Deeper Causes of the Financial Crisis: Mortgages Alone Cannot Explain It"
The Journal of Portfolio Management (Spring 2013)
Mark Adelson

Losses on US residential mortgage loans are too small to explain the magnitude of the 2008 financial crisis. Total losses, including both losses realized to date and those yet to be realized, should fall in the range of $750 billion to $2 trillion. The global magnitude of the crisis is significantly larger, probably in the range of $5 trillion to $15 trillion, depending on the measuring approach. This implies that losses on residential mortgage loans cannot be the main cause of the crisis. They can only be a trigger that unleashed the true causes. The failure (or near failure) of a significant number of major financial firms suggests that high leverage and strong risk appetites were important immediate causes of the crisis. However, explaining the sources of high leverage and strong risk appetites requires probing for deeper causes that developed over a longer period. This article proposes deeper causes that include securities firms' conversion from partnerships to corporations, the 30-year deregulation trend, the quant movement, the spread of risk-taking culture throughout the financial industry, and globalization.

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Is There Any Point Applying for Jobs through Recruitment Firms Now?

EfinancialCareersThe sands have been shifting with regards to financial services ‘recruitment channels’. Once upon a time, banks did a lot of their hiring through financial services recruitment firms. Now they don’t.

UBS is a case in point. When the Swiss bank presented its first quarter results last month, it said recruiters were used to fill no more than 10% of its jobs in 2012, down from 16% in 2011. Even William Vereker, the big-name M&A banker whom UBS has reportedly hired from Nomura, is said to have been brought on board without the intervention of headhunting firms. UBS declined to comment as to whether this was the case, but it is not the only bank to hire directly – at our recent round tables for banks’ heads of recruitment, recruiters said they do 70-75% of their hiring themselves.

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Book Review: Thinking, Fast and Slow


Cogito, ergo sum.  Whether or not you agree with Descartes’ proposition, “I think, therefore I am,” is immaterial.  In Thinking, Fast and Slow, Nobel Prize winner Daniel Kahneman explores exactly how the human mind works. There are two systems that control the way we think.  System 1 allows us to make split-second decisions and is based on emotion (“fast thinking”), whereas System 2 is more calculating and logical (“slow thinking”).  Be prepared to learn exactly how much of our thought is based on System 1 (it is much more than you believe) and techniques that can be used to force our brains into a System 2 environment.  By the end of the book, Kahneman may have you believing that economic actors are not as rational as economic theory assumes.

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