Who needs financial education and why today.
What universities teach future financiers and what employers expect from them, what should be added to the training programs – this is what our article is about.
What financial education looks like today
Modern financial education is not only focused on the present day – it helps to understand what skills will be required in the near future. A good financial program should open up different professional trajectories. There are two standard paths for many students – consulting and corporate finance. But there is and will be a very high demand for data analysis – both in financial and non-financial companies.
What stereotypes about financial education still live
The first stereotype that is widespread in Russia is that there are too many economists, lawyers and financiers in our country, because they are taught everywhere.
The second stereotype is that finance is accounting. And if you do the wiring correctly, then you are a financier. An accountant is mistakenly compared to a person who is engaged in modeling financial processes: from trading in the markets to scoring and risk management. Applicants and their parents often believe that a good accounting course in two months will give a financial education. This is absolutely not true: finance is modeling, working with different ideas, it is the search for opportunities to beat competitors in the market.
The third erroneous stereotype: sometimes people think that before doing finance, they need to go to study mathematics or technical specialties, because they will not receive a mathematical basis in financial programs.
There is another stereotype: finance is very difficult, you need to study it for a long time and for this you need a serious base. This is not true. I know people with a completely non-core basic education who are very successful in finance.
Can mass financial education be of high quality?
I find it hard to believe in mass financial education, but that doesn’t mean it doesn’t exist. There are enough strong bachelor’s and master’s programs in the world, which are released annually by, perhaps, tens of thousands of decent financiers. But a very difficult question is whether mass financial education can be at the highest level. To get a good specialist, you have to work with them almost individually, there should not be many students per teacher, you need to hire strong professors. This means that such education cannot be cheap and cannot be too massive.
What financiers need to be taught today: what employers expect from them
As always, basic knowledge is required from graduates. It is difficult to imagine a graduate of a financial program who does not know what financial markets, financial instruments, NPV and cash flow, corporate finance are. In addition to basic knowledge, graduates of financial programs must also have specialization: this is what is in demand in the financial sector.
I manage risk and even in this area there are at least two dozen specializations. People can jump from one professional field to another only after gaining a lot of knowledge, this cannot be done “automatically”. The job of a credit risk analyst is very different from that of a data scientist who makes retail lending models or someone who writes business requirements for IT systems. These are people with different skills. You can’t teach this in depth at a university, but you can set some kind of vector so that people have the opportunity to choose.
The second is flexibility. Let’s say the undergraduate curriculum is four years in advance, but then another Davos forum happens, and the topic of ESG (environmental risks, social responsibility, corporate governance) goes to a very high level. But a person who is graduating from a financial program today, most likely, has not heard anything about it. If he does not understand the connection between finance and the climate agenda, then his options will be limited. ESG will be a topic for years to come, but two years from now, something else might come up. Therefore, universities need to be flexible and redesign courses on the fly.
Data science is not yet taught in all schools, but it should definitely be studied in universities. In large companies, knowledge of the basics of data science is becoming an integral part of financial modeling. Literally today, I spent 40 minutes listening to mini-lectures on data science. I want to know how it works, what technologies exist, how much they cost, how to test and validate them. I have about 200 data scientists in my team, but I myself must also understand what they are facing. Yes, I cannot be as deep a specialist as they are, but I need to invest my personal time in order to figure it out. In addition, I read several scientific and financial-economic articles about ESG per week. This is what I have on my agenda right now and for the coming months.
Finally, it is necessary to include soft skills in financial programs as they become critically important. Now the result is achieved by teamwork. You need to be able to work in a team, present your idea, communicate effectively and hear feedback.
Basic financial and economic education is necessary for everyone, and not just a financier or an IT employee. Financial literacy is also needed for personal purposes: if you have never been taught this, then it is important to devote two months or six months to obtaining this basic knowledge. This will help you a lot in everyday life, because no one will distribute your own money for you. A basic understanding of how financial markets work, how to invest and make effective financial decisions is essential for everyone today. I would advise everyone to invest in their education in this area.
Can a humanitarian become a financier
Finances are very different. There are specializations that require a conditional mehmat as the first education. There are areas that are closer to consulting, corporate finance – here you need to rather understand the processes very well. And such a change in career trajectory: conditionally from a lawyer to a financier – this is an absolutely standard story. One of my best employees is a man with a journalistic background.
Primarily not a basic education, but still a desire. I agree: if you are engaged in serious data science, then without a technical background and specific knowledge it will be very difficult. But if these are some more general topics, then such a scenario is quite accessible. Of course, other things being equal, basic technical knowledge helps, but humanitarian knowledge is not at all contraindicated.
How to choose a financial program
Everything depends on the goal. If you are successful, you like what you are doing, you understand where you are going in the next three to five years, but you need to gain specific additional knowledge along the way, then you go to a short monthly program that solves your problem – full-time or absentee.
And if you are planning a long-term investment in yourself, then most likely you are going along a more general path: study data science or take a CFA. I myself took the CFA, but I can’t say that I needed it at that moment. Then I had enough knowledge and skills to manage assets and liabilities. But later CFA helped me many times.
After you have defined the goal, you need to look at who meets this goal. I am a supporter of choosing the best place. In steep places it is often more difficult to study, it takes both time and money. If these resources are enough, then I would go to the most prestigious, most powerful place. Why? Because there will be the best teachers and strong students, so the exchange of knowledge will be more intense.
Are Modern Financial Programs Keeping Up with the Market?
We work with what universities offer. We roughly understand what kind of knowledge people leave certain universities with, and if necessary, we take this into account. We supplement the basic education of our employees. If universities were more flexible, then, it seems to me, the need to finish teaching would, of course, be less.
At the beginning of the discussion, I already spoke about ESG: now we are developing our own program at our university. The need for this program stems from the fact that climate economics will have to take into account many risks. We also opened a chief risk officer (CRO) school. I know universities that teach risk management, but I don’t know of a place where they will give all the knowledge that CRO needs.
If universities could become more flexible and adjust curricula on the fly, then there would be more demand for their graduates.