“I want a finance job” is the typical answer you will get on asking the career aspiration of a non-conventional CAs. But, many don’t even know the intricate details of various job profiles and how different and challenging various financial profiles can be:
1) Dream Job (IB, Consulting & Private Equity):
a) Investment Banking: Popular for million dollar salary (50L+ for IIM graduates) and extremely long working hours (100+ hours in a week) and small team size (<10 members). Given the low hiring rate (less than 50 front end IB roles each year), high pay and strict hiring criteria’s (from top B-school campus only), it becomes next to impossible for CAs to move into Front-end IBs. The typical work of investment banks includes Buy-Side advisory, Sell-side advisory, IPO issue, Debt Issue, M&A activity etc. However good the work may sound, initial work of an Analyst is just limited to making PPT and client meetings templates.
b) Consulting: BCG, Bain & McKinsey are the top Consulting recruiters. But sadly, none of them actively hire CAs. BCG & McKinsey hire 2-3 CAs every year but only rank holders who clear there tough recruitment process. The work in these companies is project specific thus providing diverse sector exposure and they have an excellent leaning environment & work culture. Projects can range from advisory, turnaround, marketing, recruitment, private equity, etc. For example Flipkart would hire BCG for advising on the steps they should take to counter Amazon’s prime delivery offer or HUL might hire McKinsey to advice on how to improve their distribution channels. Entry into this three firms is very difficult, thus it is better to try for consulting division of Big Fours (I am not speaking about Audit/Tax consultancy).
c) Private Equity/ Debt Fund/ Venture Capital: One of the most exciting profiles among all this profile; the typical work ranges from doing due diligence, management meetings, sector specific research, etc. So basically it includes all the steps one should take before investing in a company. In terms of future prospects, I have seen associates being elected to the BODs of the PE backed company. Thus, this profile is excellent in terms of leaning and networking opportunities.
As, Indian debt capital market is not yet matured the number of debts funds are limited (some of them are Blacksoil Group, Piramal Real Estate Fund, IIFL Real estate fund). These funds deals in relatively risky companies and startups without any security, so bank won’t cater to their funding need. The typical work here ranged from analyzing business model of the client, preparing security & other documentation, pitching the proposal to investor committee, monthly monitoring of the loan repayment, etc.
d) Corporate Finance & M&A Team: The employers in this profile include Corporate Finance division of corporates and Big Fours. For example Flipkart/Tata Steel has its own M&A department to handle any internal acquisition, fund raising or corporate restructuring. Thus, work is pretty stable & exciting. They do hire CAs for entry level role, like in Flipkart bulk of the Analyst are CAs.
Entry for Fresher CAs: I have rarely seen them entering this profile early in their carrier. So, you will need either a prior relevant working experience or a very strong reference (CEO/MD level). One of my friend directly got into an Investment banking firm called Unitus Capital, only because he had an industrial training at a Chennai based IB firm. BCG hires few CA fresher, but for that you need to be a rank holder and clear there rigorous interview process. Getting into an offshore unit of back-end IB like Moody’s is relatively easier. If you don’t satisfy any of this condition then you still have two alternatives: get an internship experience of an IB/PE firm after qualifying CA or go for an MBA degree. I know of a CA fresher who worked at Tano Capital as on Intern and then later on got a Full time job at Bain-Piramal PE.
Getting into an IB/Consulting/PE profile is like a dream coming true for CAs. Many believe that here MBAs clearly have an edge over CAs, but this profile is difficult to get into even for MBAs (majority of fresher recruitment of IB & PE firms are done from top 5-6 MBA colleges namely IIM A, IIMB, IIMC, ISB, FMS, IIML). In some of these firms getting an Analyst role is relatively easier and if you are smart enough to get an interview through your reference and then crack it you can convert it into a job (some companies also hire B.Com graduates from SRCC/St. Xavier’s as analyst). For example, Kotak IB’s analyst team consists of CAs and B.com graduates. But, even after getting an Analyst role in this profile, future growth is relatively slow as they prefer MBAs for Associate role (one level above Analyst). Thus, it is always advisable to later-on go for MBA (CA+MBA will make a killer combination).
Entry for Experienced CAs: Over a long-term, CAs always have an option of gaining relevant experience (at FDD division of Big4s, SEBI or other core finance jobs) and then trying to move into this profiles at a later state of their career. I have seen many guys working at FDD, getting a job at boutique mid-size IB firms after 2-3 years of FDD experience. One of my friend worked few years at Ambit Capital’s equity research division before switching to an mid-size Indian PE fund and then later on to Bain-Piramal PE Fund. Also, one of my colleagues moved into Jupiter PE fund after working at HSBC Credit Analyst division for 2 years. Instead of growing organically over the years you also have the option to go for MBA from these top colleges which directly opens the door toward this profile.
2) Equity Research:
This is one core finance role where CAs has an edge over others, due to their broad knowledge. But this role demands prior working experience, which gives rise to the chicken-egg problem. Typical work of equity research analyst ranges from doing sector analysis, identifying sector trends, fundamental analysis of stocks, attending investor concall, meeting the management, primary research, drafting equity research reports and handing investors queries. Broadly there are two parts in equity research, buy-side and sell-side:
Sell Side Analyst: As the name suggest it involves work done by brokerages to sell a particular security. This are sector specific and you will be given a particular sector to research on and draft equity research report on them to be circulated to your HNI clients or to be published. For example, the typical work of a Banking Sector analyst would involve tracking banking related news, making quarterly calls on numbers, drafting reports and doing roadshows for HNI clients
Buy Side Analyst: As the name suggest it involves work done by MF’s AMC, Portfolio’s Fund Managers and investors to manage their MF/PMS and buy/sell stocks. Thus are generally sector agnostic with a small team size (3-6 members) and involves much long term investing principles compared to sell-side research. I am working as a buy-side analyst at Ambit Capital’s Good & Clean Fund, and my work broadly revolves around, managing the day-do-day working of the fund, adding or selling stocks in the portfolio, handling client’s query, doing bottom-up fundamental research, meeting management of prospective company to be invested and primary research.
Off-shore Equity Research: This profiles also deals in buy-side/ sell-side research, thus work is the same as discussed earlier. But the main difference lays in the fact that these are off-shore units (KPOs) setup to assist foreign clients/entity and thus they deal in foreign markets instead of Indian market. For example, CRISL GR&A hires a lot of CA Fresher, for there equity research division. Here you will be doing equity research for a foreign client (ex. JP Morgan) which involves, filling their proprietary model, making valuation, checking accounting of various companies, etc. Thus, the work might be more model-intensive and not directly related to fundamental research, but this serves as an excellent entry point for a CA Fresher or someone without prior equity research experience.
Trading Desk: Future First hires CA both from off-campus/on-campus recruitment for their trading desk. Their interview process is very rigorous and less than 1% can even make it to the final round. Trading roles have disproportionately higher pay but with high chances of lay-off and high working hours kills the deal. Thus, it must be avoided unless you are passionate about trading.
In the above table I have mentioned names of many other firms (Crescora, WNS, Netscribe, Astha PMS, Activitas, NSE exchange, Pittch, SG Analytics, EXL services) that provide work related to equity research but, they are quite unstructured and random in nature thus it needs to be avoided if possible. Nonetheless they can serve as entry point into the world of equity research. For example, at Zacks Research’s work is only limited to drafting financial blogs.
Entry for CA Fresher & Experienced: The criteria of prior relevant experience make it a bit difficult to get equity research job for CA Fresher. But if you are smart enough to crack the interviews then it won’t be problem. But this would involve having knowledge of Valuation, Financial Modeling, Sector specific knowledge (track atleast 2 sectors), knowledge about fundamentals of investing and tracking stock market news on a daily basis. Having, appeared for equity research interviews at dozens of companies, I must admit that these interviews are not easy but if you have a passion for stock market investing, you won’t face much problem. Thus, working on you excels & valuation skills and tracking the border equity market on an regular basis will be key. Or, if it seems difficult, you can start with mid-size/ off shore research firms like Puratan Capital, Angel Broking, CRISIL GR&A, Multi-Act, Moody’s, etc. and then work your way to the top. I have also seen many guys with 2-3 years of statutory audit experience moving into equity research.
3) Big4s and CA Firms:
Core Finance jobs are offered but this top CA firms under the head Transaction Advisory Services (TAS), which involves Valuations, Financial Due Diligence, Corporate Due Diligence and M&A Taxation. All the Big4s and their off-shore arm have separate division for each of the above mentioned roles under TAS. Bulk of the hiring here is done internally across departments or from other big fours. They generally take first-attempt CAs, but I have also seen second-attempt CAs working here. If someone is not first-attempt qualifier or has done his articleship from small-sized CA firms, they can try getting to TAS department of mid-sized firms or Off-shore unit of Big4s where they don’t have all this criteria and then he/she can more to Big4s TAS subsequently.
Financial Due Diligence: This is one of the most sought after role by CA Fresher, because of the challenging work and varied growth opportunities. They are generally hired by investor before fund infusion or M&A deal, to assure that the company is recording the book of accounts in proper manner. The FDD teams then, does valuation checks, check rational of fluctuation of margin, normalizes the earning over the years to make them comparable and audits other accounting based reporting. Thus, you will be exposed to quality work ranging across various companies in multiple-sectors. The demand for this profile makes it very competitive to get into FDD. Thus, Big4s primarily have criteria of hiring First-Attempt CAs with Big4/large size article-ship with ‘statutory audit experience’.
Valuation: This department is quite tough to crack for CA Fresher due to small team size and no prior relevant experience. CFAs are preferred for these roles.
M&A Taxation: It is not directly a core finance profile, but as it is indirectly linked to finance and as the working is both challenging and exciting, I have included it here.
4) Credit Research:
This involves work done by Credit Rating Agencies, Corporate Ratings and Retails Sector Ratings. Typical work day at rating agencies involves drafting Credit Rating Report, analyzing fundamental of the company, capital & debt ratio analysis, current loans taken and how is it structured, meeting the managements and site visit.
Banks and NBFC have their own internal team for internal credit team for analyzing loans given to Corporate and Retail customers. Banks like HSBC, JP Morgan, RBS etc. have opened their off-shore unit where work of credit analysis is outsourced. Thus, the overall work remains the same but as it is a back-end work the work gets monotonous after a time. In Credit Research, the primary thing one should understand is what it the product that the CA will be handling. If he is doing Credit Research of a Retail loans given for purchase of two-wheeler/home, he won’t be analyzing the book of accounts thus, the learning is very much limited. But instead if the product is a corporate/SME loans, things can be little interesting.
5) Operations:
This is the jobs that most CAs are misled into thinking them to be a Core Finance Job. An employee over here will be working as a support staff to the core finance division. Thus, you won’t be directly working on financial analysis but the learning is decent here. Lot of foreign banks like Barclays, Standard Chartered, and GoldmanSac etc. hire a lot of first attempt CAs in their fund account and product control division. The pay handsomely and treat the employees well with great work culture. But, the work gets monotonous over time.
In fund accounting the work will be restricted to NAV calculation of the off-shore clients of the banks, thus it does not involves much analysis, but you will definitely get idea on how the funds works. Similarly in product control the work is limited to preparing and reviewing the daily P&L of the products (ex. Swaps, Options, Traders, etc.). An Relationship manager’s work will be relatively more exciting. For example, the Relationship Manager at Ambit Capital get to deal with clients, solve their queries regarding the PMS funds, handing meetings with clients and work with the fund manager for the same.
On an overall perspective, operation job must be avoided. But if you are very much passionate about core finance job, then this can be used as an entry platform to switch to a core finance job.
In this article I have explained the intricate details of each profile in core-finance. Click here to read the Part-2 of this article to know how you can get into one.
(This article is prepared by Ajit Agrawal (CA, CFA L2, Buy-Side Equity Research Analyst at Ambit Capital) and Amit Agrawal (CA, pursuing MBA from IIM Calcutta and Intern at Bain Piramal PE). It is based on our interaction with 100+ CAs and IIM graduates working in financial services space, our own experience at work and from 30+ finance interviews).