New trends in finance education
Banking and finance students are becoming very pragmatic about their approach to learning and this is being strongly reflected in the type of courses they are enrolling in. They seem well aware of developments in the financial services sector and markets, and are choosing their courses and training programmes accordingly. In addition they tend to have a well-developed sense of the skills required in the workforce of the 21st century.At the Macquarie University’s Applied Finance Centre in Sydney, we have experienced growing enrollments in courses that improve students’ technical and quantitative skills and in programmes that develop qualitative aptitudes, such as negotiation skills. Increasingly students are acknowledging that learning how to ‘crunch the numbers’ is only one aspect of the job. They realise that they will be expected to develop the ability to utilise the results of number crunching, and communicate effectively and persuasively — often to non-technical audiences.
Other areas in which there’s been significant demand growth in recent years are private equity and venture capital. Unlike the United States, these are relatively new fields in other countries and corporates have experienced skills shortages as a result. A number of large institutional investors, such as pension funds, are looking to allocate a significant proportion of funds under their management to these sectors, while investment management firms are also keen to build expertise in these areas. The result has been a sharp increase in demand for training in the intricacies of private equity investing from the perspective of a venture capitalist looking to raise funding, and a fund manager looking to invest in venture capital firms.
For highly technical jobs, financial institutions tend to prefer specialists equipped with a thorough understanding of the specific area in which they will be working, rather than generalists with only an overview of a particular area. For these reasons specialist courses, targeted towards specific vocational needs such as swap book management, debt capital markets, credit risk management, private equity, venture capital, managing shareholder value and exotic options, which are not often taught in more generalised business programmes such as MBA, or M.Com are in great demand.
Likewise risk management has become more important over time in the finance sector and Australian universities have responded by offering an entire stream in the area of financial risk management. This covers topics such as credit risk management, managing energy risk, modelling financial risk, managing operational risk and derivatives valuation. These courses cover the full range of risks to which a financial services firm could be exposed, and develop, for students, the tools needed to assess and manage these risks.
Another area of current interest is credit. A significant proportion of debt markets in many countries now comprises non-government or credit securities. This trend is likely to persist as large, high-quality corporates continue to access local markets and governments retire their own debt. As a result we are witnessing a high level of interest in courses such as debt capital markets.
Finally, growth in the investment management business has led to strong demand for funds management specialisation. Courses such as investments, applied portfolio management, economics of financial markets, and risk and portfolio construction have premium value for those wishing to improve their career prospects either as investment managers, or as consultants to trustees charged with overseeing the operations of large investment funds.
Investing in one’s own human capital by enrolling for higher education is generally the most valuable investment employees can make. Many firms realise this and encourage it either through full or partial contributions to tuition fees, reduced workloads etc. We expect the growing trend towards postgraduate study in areas such as applied finance to continue.The rapid pace of change in the finance sector has made it incumbent upon finance managers to update the skills they have acquired in their undergraduate studies. In addition, we see many applications from those whose first degrees were in fields such as engineering, information technology, law, accounting and science wishing to move into the finance industry.
The best advice for students is to pursue a particular area of finance, taking into account their own aptitudes and interests. They should then sample the market to find the study programmes that can deliver the specialist skills and applied learning they need to achieve their objectives. Moreover they should ensure the study programme of their choice has flexibility to accommodate their particular work and other constraints. And finally, the experience and qualifications of instructors should be a key factor in deciding on a programme.
(Prof. Phil Dolan is the director of Macquarie University Applied Finance Centre, Sydney)