Wednesday, November 9, 2011

Career Path / Basic info on CFA and FRM for strategic advantages and growth (CFA vs MBA, CFA vs IIM)

Career Path / Basic info on CFA and FRM for strategic advantages and growth

CFA-FRM Exam prep / Basic info on how to deal with Finance.
What I like about CFA: The exam gives you 360 degree idea about finance and all inter related fields like accounting, quant, economics and hence is one of the best exams in entire world. I think a CFA is the best to do things like hedge fund management, portfolio management, investment banking, etc.

About FRM: Focuses more on risk and VAR, but this is more important in times of recession and less important in times of boom... Things like risk in Fixed Income, and risk of portfolio is something I enjoy reading in the course.

CA+CFA Vs. CFA+FRM+Modeling(SAS)+Mathematical(Mathematical Finance or Financial Engg)

How to excel and buildup
Estimated growth rate by taking CFA & FRM vs IIM based profile, figures in lac INR

Job Scenario in India: Parameters to get in

MS MIS(management information system: courses to strengthen your profile and movement toward finance)

MIS: Data Mining, Java, Oracle, SAS, Php, etc might help to cover some part of the area.

As a finance student you should talk about supply demand. If they need you or you are that damn good then they take you. Now, either if you are not good, or they have no place, or they cannot effort you then they talk about all the negativity in you rather than talking about these three reasons. Its all about getting the best knowledge at the cheapest marginal cost.

Things also depend on your directions you take and areas that you like:
Portfolio Manager
Equity Research
Quant (Complex Maths)
Risk Manager
I Banker
Wealth Manager (Personal Finance)
Hedge Fund manager
Algorithmic Analyst
Manager of all of the above
Working Capital managment
Data handler

My favorite area is Quant.
Learning on areas like High Frequency Trading a kind of Algorithmic Trading. I think when computer decides to trade these algos might be linked down to technical analysis, thought I will read some books to confirm and will add the details here.

Understanding that the education is a very tricky and high fee is involved, hence consider these options:
Case 1: PGDF (India 1 year)+ CFA all levels + FRM all level+ SAS Base&Advanced&Predictive modeling+Advanced Excel VBA Macros (integrated with CFA done in PGDF) + GMAT 700(hedging against recessions)+ 1 foreign language
Case2: MS financial engg in USA
Case 3: MBA IIM Finance?

Lets look at case 1 PGDF(Excel+VBA+Macro)+CFA+FRM+SAS(Base/Adv/Predictive)+GMAT 700+: You should do modeling on Excel+VBA and depending on your very specific spez area. My research on Spez in Fin Engg and stat skills are given in this blog. Example SAS stat software used for risk engineering  has 3 exams: and clearing, predictive SAS certificate gives you a shot at Fin risk jobs and with this strategy you can break into the "supply-demand game". Today the supply is very strange with convention MBA finance needs experience to move in real risk/quant jobs hence these real-life credentials can help. And you can never be on the firing side.

Opportunity Cost (CFA+PGDF vs MBA): 

PGDF Opportunity cost: 
3.5 lack (forgone job)
2.7 lack (fee+ 1 year interest)
= 6.2 lacks
Suppose he would have done the same job he would have saved 6.2 lacks,
Now, if he gets job to get back he need to recover it in 3 years which goes to 2.4 lack per year for 3 years. Hence 3.5+2.4=5.9 will make him in different for  years with 0 sum.

What are the results in all 3 cases, depends on a lot of things like money invested, social networking, but yes things are really interesting once you look for in terms of ROE.

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