INTERVIEW # 10: THE RISK AND TREASURY CONSULTANT

Interesting People

BACKGROUND

Hailing from middle class family in Europe, with a father who worked in electronics at local university and a stay-at-home mother, Andrew is the eldest of 3 siblings. His interest in financial markets was nurtured by his dad who followed the local stock market to nurture the family’s future.

Andrew has a Masters in Economics and Business Administration, has a Financial Risk Manager designation and is on the brink of obtaining his Chartered Financial Analyst credentials.

In this interview, he provides us with his career story to date.

***

IN THE BEGINNING

Andrew: I wanted to be a pilot as I wanted to travel to different places and I like flying too. I actually took the test spread across a couple of days where I faired so-so; it wasn’t enough for them to offer a paid scholarship but I still received a place in the school. So there was a scheme in place where I could still become a pilot but I had to pay for it out of my own pocket – and the money was an exorbitant amount.

This is when I switched as it was simply not affordable. I went on to do Masters in Economics and Business Administration. These were my other interests and I actually came in 2nd in a university-wide stock picking challenge.

I picked Finance as one of my majors after the 2nd year as we had to pick our field of specialty. It was after the 2nd year when we had a visit from one of the big wigs in one of the investment banks who gave us a brief on financial risk management. I was so inspired that I joined this financial risk management study group. The group itself met twice a week and we took turns presenting ideas and findings on numerous topics.

After a year of doing this, I took a month and a bit off to study for the FRM exams – this was way back in the 2002.

FRM VS. CFA PART 1

MMA: So the FRM, how are the exams structured? I’m not too familiar with its structure.

Andrew: This was full day exam; part of it in the morning and part in the afternoon. It covered such topics as credit risk, liquidity risk, operational risk etc. And it’s a little bit technical as well – stats, quant and the like. These days I believe its split into 2 parts[1].

This differs from the CFA where the format is still the ‘1 level exam’ format.

MMA: I know we are going to touch on the CFA later, but can I quickly ask now what your impressions are on the differences between FRM and the CFA?

Andrew: Focus is obviously different; FRM is a bit more technically focussed on risk. It’s more quantitative where you need to apply specific formulas as part of the exam. You also need to understand the shortfalls of models e.g. Value-at-Risk.

The CFA is broader i.e. more subjects[2]. It’s really touching on everything from Corporate Finance, Security Analysis etcetera. So you have to be very good in everything to pass.

MMA: I expected that that answer. So coming out of university you had both your Masters in Economics and your FRM. What happened next?

Andrew: Yes I had both coming out of university and I started applying for roles. One of which is where I am now – and I’ll just say it’s the consultancy arm of one of the big 4 accounting firms. This suited me well as I wanted more exposure in accounting and financial reporting because up to this point, it had only as part of my Masters and the CFA. So I knew how to value Asset Back Securities, Derivatives and the like but this was pure accounting. It was throwing away the books and getting to it in the real world so to speak.

I started in the Audit area within Financial Services to get a sound understanding of the balance sheet and P&L and how to read financials. I was also hoping to learn the shortfalls of financial statements and the whole audit process, so basically how much can I really trust the financial market and the different stakeholders.

This was my main reason for joining audit. To be quite frank, I wasn’t that interested in accounting standards during my studies.

MMA: Hey I forgot to ask – did you guys have an internship system as part of university?

Andrew: No we didn’t really have that. We had to apply ourselves if you wanted experience.

I did apply and worked for a few months with a professor within the Computer Science area in university and later for 2.5 years with the professor in the Derivatives and Financial Engineering area.

MMA: I can see your interest in academics stretches way back here. You’re going to do your thesis one day and become a professor yourself.

Andrew: Yeah…maybe.

HOW TO TRAVEL AS PART OF WORK

MMA: So getting back to your company, this was really your first job. And presumably this is how you got a transfer here in Australia?

Andrew: Yes. I came here originally as part of Audit but then moved to Advisory after a few months.

MMA: An internal job ad?

Andrew: No I put my hand up for it.

Joining a global consultancy, the move overseas and getting into a management role within Advisory was something I actively pursued. I approached management for roles within Asia Pac, from Tokyo to Hong Kong, Singapore and here in Australia. I guess that’s one of the advantages of working in such a large organisation. But let me stress that working in a large company doesn’t guarantee you the move – it’s a lot of proactive management on my part.

MMA: I’ll jump the gun a bit; this is not your final destination is it? Are you considering other regions too?

Andrew: Yes I will but probably in a year’s time.

At the moment, I’m considering US or Hong Kong in my next move for the simple reason that US is something I always wanted to do and Hong Kong still taps into the Asian growth story.

MMA: Fair enough.

Andrew: And something that I should have pointed out earlier is that my plan was to get into Audit then Advisory even before I approached my friend who worked here. I always planned ahead.

When I moved here to Australia, it was by approaching one of the partners who also had his FRM qualifications. So it was in Advisory for Financial Risk.

MMA: You’re a good networker by the sounds of it.

Andrew: I’m ok. I try.

MMA: Come on – from Uni, to Audit to Advisory. You proactively sought these roles until you got what you want.

Andrew: It sounds easy when you sum it up in a sentence but obviously a lot of time and effort was involved.

You know the at worst they can possibly tell me is No. If that was the case then you look back for other avenues to get where you want to be. There are usually several doors just waiting to be opened – not just one. My job is to assess each one and knock on the one that ranks at the top of my list. If that doesn’t open then it’s the next one on my list and so on.

MMA: Well organised and well planned. I’m sure a few people will be interested to hear that.

CAREER HIGHLIGHTS

So at this stage of your career, what are some of the highlights that you would want to share with others?

Andrew: As you know, I went to Pacific island nation for the implementation and change management of a Treasury system. So it included teaching them new techniques in the liquidity function, cash management, forecasting and the like. This was a really rewarding experience as you could see the impact from go-live onwards.

The down side if you want to call it that is that the country is socially more restrictive. I can’t just leave the hotel at night. In fact, even during the day I have to lock the car and keep away from certain areas.

English however is the main language at work and they have a few Australian educated employees at work which made communication easy.

MMA: Ok – food for thought for people that have wondered about the Pac island option.

Any others?

Andrew: It’s hard you know. There are always ups and downs with every client and project wherever you go. Each one is different.

But I guess another one that sticks out is within Audit for a firm during the financial crises mid ‘09[3]. This was a company that was really performing well prior to GFC. There were 80 or so people on the floor I was on pre-GFC. But when I was there, it was down to 6. That was a fairlyintense period with the CEO screaming at staff – remember they were down to 6 so you could imagine how intense that was. He was even having GO at us.

In hindsight, I can understand what breaks a man under those conditions. He watched his empire fall at a rapid pace which would have been very difficult for everyone involved.

I believed he has since sold the company off[4].

FRM VS. CFA PART 2

MMA: Fair enough. So before I ask about future plans which we touched on before, I do want to ask you about the CFA. How did that come about?

Andrew: It was part of my uni-days. There were a few of my peers who were about to take it after the FRM. I actually did the same and cleared level 1 of CFA but took a few years off before I sat CFA 2. And when I say I took a few years off, it was only because I was also pursuing some Tax related qualifications to really cement my place in Audit. As it so happens, I realised that Tax and Audit was not as interesting as the CFA which is why I sat and passed level 2 a few years later.

MMA: Thanks for connecting that for me.

Can I ask how does the CFA stack up against FRM in terms effort spent?

Andrew: Hmmm. I’m afraid you won’t get a straight answer from me only because when I was preparing for the FRM, I was in university and every spare moment I had was spent in the library.

At this stage of my life with the CFA, I am also working – and working with different clients at that. So I don’t actually have a lot of spare time as I work long hours. To prepare these days, I would be taking a month off prior to exam.

MMA. The 2 other CFA guys I interviewed did the same – they took a month off to prepare and both were working professionals.

Andrew: It’s just that stage in life I suppose.

I guess the secret to passing the tests however is to take a lot of practice exams. It’s an absolute skill to take exams and the secret is a lot of practice.

MMA: Agree. You might know your stuff but you might bomb out in the exam if you haven’t practiced under those conditions.

So level 3 next year?

Andrew: Yes – next year is the year.

MMA: And have you thought about what you will do next after you get those 3 letters?

Andrew: To be honest; not yet. I still enjoy what I do so at the moment. So I would use the qualification to pitch for work.

And outside work, being a charter holder means I will have access to a greater network of like professionals. There’s a lot of value in that and its part of my motivation.

MMA: Agree again. I interviewed another guy who basically said the same thing and for his final year of his MBA, he even travelled to Chicago Booth to get access to the MBA’s best network.

Andrew: Why not? Spend that extra money to expand your network will always help.

MMA: Indeed.

ANDREW’S INSIGHTS

So do you have any outlook for the future that you would like to share?

Andrew: Not a lot of surprises with my answers here:

  • Opportunities in Asia will still be strong or at least, stronger than most other regions I can think of. This may or may not trickle down to Australia but certainly you can argue that Australia is in a good position to catch some of that growth.
  • When I say Asian growth, I’m talking about what everyone is talking about: China. I’m sure lot of other countries will be envious of a slow 7% GDP growth.
  • In terms of job opportunities, just keep an eye out for more compliance-based work. Regulation is changing at such a rapid pace that businesses are reacting quickly in order to comply[5]. So within risk and treasury, I have all Basel III activities[6] to look forward to.

MMA: Nice summary. So are you still going to be within consultancy in the immediate 1-2 years.

Andrew: Yes I believe so but potentially in another area.

Each job is different. There are times I manage a team – that is to say that when we have a big piece of work on, we form a team onsite and I usually get a few other consultants with me. But that all depends as smaller pieces of work may only require one person.

LINKEDIN AND THAT MAGIC 500 + MILESTONE

MMA: I understand. Hey – a few more jobs and you will hit the magic 500 + jobs in LinkedIn[7].

Andrew: Well, I might. But I don’t connect with people I don’t know. I receive a few unsolicited connection invites which I don’t accept. That’s just a personal belief I have.

But I am also on other professional sites back in my home country. So if I add that up, I would have surpassed that 500 + mark. That’s not a personal goal mind you. It’s more about the quality of my relationships with those connections.

On top of that, I organise a monthly networking event for expats from my home country as still have a lot of contacts when I was active in a student organisation focussed on international exchange and understanding. So as I was saying, the connections I have are quality; I do spend time strengthening my bond where I can.

Besides the word ‘connections’ sometimes can mean something superficial in the internet age. These are relationships and good ones at that.

MMA: Wise words indeed.

***

big thank you to Andrew for getting this interview down; living life, working long client hours, working advisory hours at a consulting firm, studying for CFA 3 and sitting down, reviewing and rubber-stamping this interview does take a little bit of time.

And yes, we will enjoy a couple of cold ones soon.

Andrew’s identity has been masked upon his request. This blog uses real people who work in the Australian Banking and IT industry.


[1] Refer to this Wiki entry for FRM.

[2] Refer to this Wiki entry for CFA.

[3] Actual timeline was prior to ’09 but the knock-on impacts were not felt by some until much later.

[4] Company name is not provided for privacy reasons.

[5] We share the same views with Andrew as highlighted here.

[6] The 3rd accord Wiki entry is located here.

[7] There are several articles written about the 500 + club. Here’s one of them.

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