Risk-taking is fine, gambling is not
Investing people's money carries huge responsibility, but the rewards are equally great
Thursday 18 May 2006
Ever dream of earning a couple of million a year but have neither the assets of Jordan nor the bankable charisma of Tom Cruise? Is £30,000 your idea of a good starting salary? Are you opinionated and able to convince others that you're right? Do you like taking risks? Are you unafraid to put your money where your mouth is?
If so, you should consider a career in investment management, one of the world's booming financial industries. In the UK, as a result of the pensions crisis, people are being pushed to save for their retirement. The result - more private money is going into the investment market, and more time, effort and people are needed to increase returns.
Which is why, in September, Reading University's ICMA Centre - a hands-on training academy for future stockbrokers and traders - is launching a new MSc in Investment Management, aimed at economic graduates and stockbrokers who want to change direction.
As a finance school, the ICMA centre is state of the art. It was the first in Britain to have a simulated dealing room where students could buy and sell shares without risking real money. For the new MSc, they have developed a computer program that mimics the markets, giving students experience of buying, selling and managing funds. Think LMA Manager (the fantasy football management game) with bonds rather than Barcelona. It's also a chance for students to muster the analytical composure they need to work in this industry - and to practise explaining why their decisions lost them money.
Mark Dampier, head of research at Hargreaves Lansdown, a Bristol-based asset management company, isn't convinced that simulation models will give trainee fund managers an edge. "If anything, a simulation will cause you to gamble. The only way to learn is to lose money - preferably your own. It's a pretty sobering experience. Even worse are those sleepless nights when you've lost someone else's money."
That's not to say he's not in favour of the MSc, though. "We do need courses like that, because most of the fund management industry is quite dreadful. Only 4 or 5 per cent of fund managers are any good. You only need look at the unit trust statistics to see how badly money is handled."
The academic part of the course also has a firm footing in the real world. ICMA asked fund management companies what they were looking for in potential employees. Their response: someone who knows the theory, and can apply it to the current trends leading the markets.
Which is why the lecturing staff include not only former stockbrokers and government advisers, but six guest lecturers who are currently big players in fund management. Their job is to give students a direct line into what is happening in the markets now.
Students will also have to read for the Chartered Financial Analyst (CFA) level 1 qualification, regarded in the industry as one of the most gruelling and important professional qualifications for fund managers. Usually, trainee fund managers would do this in their first year of work, spending 12 hours every weekend with their noses in the book.
"It's going to be an intense year," says the course convenor John Evans, "but the pay-off is extremely high. Employers want people who are prepared to put in the effort and who can manage heavy workloads. Our graduates will have proved they have the capacity to take on this industry."
Richard Barry, human resources manager for Baillie Gifford, an Edinburgh-based investment management company, likes the fact that they will do CFA 1: "It'll save us money, and it means they can get straight into on-the-job training, analysing companies, getting involved in the markets, learning from their peers."
But Barry admits that this wouldn't favour them more than any other potential employee. "We don't stipulate any degree discipline for our investment managers. Some of classical civilisation graduates who have absolutely no knowledge of finance - and they end up as some of the best fund managers."
Dampier agrees. "It's more of an art than a science. Some of the top earners have degrees in English literature and philosophy. To be good, you have to think laterally, you've got to be able to do something different from everybody else, and that's very hard. Most of us are sheep. You can't teach intuition."
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