What are the keys to a profitable finance profession?
Eric Sim, CFA, has considered that query lots. As a college lecturer and writer, he needed to give his college students and readers a logical framework to comply with, and 20-odd unconnected suggestions weren’t going to do it. So he regarded again on his skilled life: How had he gone from a teen in Singapore washing bowls at his father’s prawn noodle stand to serving as a managing director at UBS Funding Financial institution and attaining monetary independence? What had been the frequent threads that tied the seemingly random twists and turns, the sudden setbacks and equally unanticipated strokes of fine fortune, right into a understandable narrative?
All of it got here all the way down to capital, Sim concluded: particularly, human capital, monetary capital, and social capital. The place he succeeded, such capital had been important. The place he failed, a scarcity of capital in some kind had been determinative.
So, what are these three types of capital, and the way has Sim’s profession demonstrated their affect?
Human Capital
“So human capital is our data and abilities,” Sim mentioned. “We have to have human capital in order that we’re helpful to individuals. And after we are helpful to individuals, we will then construct different types of capital.” We acquire human capital by means of training and expertise. The primary in his household to go to school, Sim graduated from the Nationwide College of Singapore with a level in engineering. Although his bachelor’s in science was not an apparent match, he parlayed it into a company gross sales place at DBS Financial institution due to a well-told anecdote about what he realized serving drinks at a crowded nightclub.
Sim spent the following two years working in overseas change (FX) earlier than deciding to roll the cube and take an enormous probability. And that’s the place monetary capital got here in.
Monetary Capital: Not Rolex, However Timex
Together with his blue collar background, Sim had little expertise with the bonus tradition in banking and finance. “Once I obtained my bonus once I was a junior banker, a whole lot of my friends went on massive holidays,” he recalled. “Some purchased watches and spent $30,000.”
It didn’t make sense.
“Who appears to be like at your hand?” Sim mentioned. “I don’t have a look at individuals’s watches, and I assume no one will have a look at mine. So why spend the cash?”
So, somewhat than blow his windfall on a flowery Rolex, Sim purchased a Timex and invested the remainder in shares. And when he was able to make a guess on his future, he had $30,000 to spend money on himself and a grasp’s in finance program at Lancaster College in the UK.
Sim had carried out the analysis. The ten-month program was essentially the most economical and the one one he may afford. Related applications in London had been means out of his value vary, however Sim thought if he did nicely at Lancaster, it might open up some doorways and broaden his horizons.
“I’ll spend $30,000,” he thought. “I can then work in London, earn money, and alter my destiny just a little bit.”
Tradition Shock
It didn’t work out fairly in addition to he anticipated. First there was adjusting to a brand new tradition on the opposite aspect of the world. Novelty was all over the place. Rising up in Singapore, Sim had by no means even seen sheep. Now they had been grazing exterior his bed room window. He hadn’t anticipated how dear meals and housing prices can be both. “Every little thing was three or 4 occasions dearer than what I assumed,” he mentioned, “I couldn’t eat something, besides a slice of pizza for every meal. . . . One slice of pizza shouldn’t be a full meal.”
However the tradition shock went past that: As a non-native English speaker, Sim was robotically at an obstacle. He wasn’t rich or well-traveled, and now for the primary time, he was distant from house, from household and associates. He was additionally insecure. The legacy of colonialism in Singapore affected his confidence. Certainly, considered one of his first massive doubletakes in the UK was seeing Caucasians laying bricks and mixing cement at constructing websites. “That blew me away. White individuals doing building work — by no means in my life. So I used to be shocked,” he mentioned.
“I used to be hit by this colonial mindset,” Sim continued. “I come from promoting meals and by no means learn extensively and didn’t assume I may compete.”
No matter doubts he had, he rapidly put them to relaxation in his monetary arithmetic course. Sitting subsequent to Cambridge-educated friends, Sim outperformed everybody, incomes the highest rating within the class. That was a sample he repeated all through his course of examine.
After 10 months in Lancaster, Sim was assured and able to take the following step. He had bonded along with his classmates, constructed friendships, and excelled in his coursework. He had little question he would discover a finance job in London and embark on the following part of his profession.
However first he wanted a swimsuit.
The Rooster Go well with
Whereas Sim’s research might have improved his human capital, the identical couldn’t be mentioned for his monetary capital. All his financial savings had been gone, and he needed to in some way finance a brand new enterprise swimsuit in addition to a number of days’ keep in London to take a seat for interviews. London wasn’t like Singapore the place the warmth made a collared shirt, tie, and costume pants acceptable enterprise apparel. So Sim went garments buying, and Savile Row was not an possibility. Cash was so tight that he needed to go to the Oxfam charity the place the secondhand swimsuit choice was decidedly restricted.
“After all they didn’t have my dimension,” Sim mentioned. “I’m already on the small aspect in Asia. Then within the UK, I’m like further small. So I purchased a swimsuit so massive that I may have hidden a hen inside.”
The ill-fitting double-breasted swimsuit didn’t make an excellent impression on the well-tailored London bankers he interviewed with.
“It was ridiculous. How may I anticipate to move an interview with Goldman or Morgan Stanley?” Sim mentioned. “All of the interviews ended early, and none of them referred to as me again.”
It was a helpful lesson in monetary capital.
Social Capital
Social capital is the third type of capital we’d like for fulfillment, however what’s social capital? In contrast to human and monetary capital, it is a little more refined and fewer tangible.
“Whenever you deal with individuals with respect, whenever you assist them, you deposit some social capital. It’s a bit like placing cash in your checking account,” Sim mentioned. “To have social capital, you want to have one thing to supply to individuals. Why do individuals come to you, proper?”
Sim lacked the monetary capital to purchase a swimsuit, however social capital may have made up for that. If he had had extra UK connections — household close by, knowledgeable monitor document within the nation that demonstrated what he needed to supply — he may have borrowed the cash and gotten referrals from former colleagues about different jobs. However he didn’t have that robust native community.
“I had good social capital with my classmates, however all of us had been searching for jobs,” he mentioned. “They couldn’t assist me.” So the calculation remained the identical in Sim’s thoughts: His lack of monetary and social capital within the UK — his incapacity to search out 300 kilos in money or credit score to purchase a pleasant swimsuit — meant no job in London.
So Sim made up his thoughts to not fall into that entice once more.
“If I fail due to skill, fantastic — I’m not ok,” he mentioned. “But when I fail due to what I’m carrying, that may’t occur.”
Nonetheless, with no job in London and no cash left, he had no selection however to fly house to Singapore and proper into the Asian financial disaster of 1997.
Social Capital at Work
Regardless of his new grasp’s diploma, the monetary disaster meant finance jobs had been briefly provide. So Sim settled for a threat administration place at Normal Constitution Financial institution. Whereas there he studied for and earned the CFA constitution.
Why the CFA constitution? Due to the human capital gained by studying the curriculum. The rigorous course of examine made him higher at his job and expanded his data in different areas of finance. And it let individuals know he knew his stuff. Finance professionals in China might not have any context for Lancaster College. Their counterparts in Frankfurt might not have any for the Nationwide College of Singapore. However all of them perceive these three initials. “Whichever nation I’m going to, they acknowledge the CFA designation,” he mentioned.
After 4 years at Normal Constitution, Sim wished to take his profession in a brand new path. However he discovered he had been typecast. “As a result of I used to be a threat supervisor, individuals wished to rent me solely as a threat supervisor,” he mentioned.
However that’s the place the social capital he had accrued paid off. Terence, a former colleague from DBS referred to as up. “Hey Eric, my boss is searching for somebody together with your talent set. Are you eager to attempt?”
It was for a entrance workplace place on Citi’s Asia threat advisory desk. “It was an enormous improve,” Sim mentioned. After three rounds of interviews, he obtained the job.
For the following eight years at Citi, Sim centered on excelling at his work, however he additionally labored to extend his social capital.
“There have been lots of people on the way in which up that I knew once they had been junior,” he mentioned. “I helped them, and once they grew to become senior, they’d refer jobs to me, they’d level me in the precise path. The capital has grown. If you happen to purchase somebody only one cup of espresso, in 10 yr’s time they could bear in mind your kindness. However in fact, the secret is to not anticipate something in return.”
The Basis of Social Capital: Belief
Sim’s company profession reached its pinnacle in 2011. His good friend and coworker Paul had moved to UBS, and when a managing director place got here up, he really useful Sim for the position. After 9 rounds of interviews, he was employed.
“How did I get the job? MD jobs — lots of people need them — however they’re not marketed,” Sim mentioned. “Once more, based mostly on the social capital that I had with Paul. We had been colleagues from completely different departments again in Citi. However I attempted to be honest, so once I closed the offers, I shared the credit score. When there’s a gap, individuals bear in mind you.”
So what was the important thing to the social capital Sim had generated with Terence and Paul? It wasn’t simply human capital, the talents and experience that he had acquired and demonstrated throughout his profession. It actually all got here all the way down to belief. “In addition to rapport,” he mentioned, “you additionally want belief to construct your social capital.”
At 17, simply earlier than his obligatory nationwide service started, Sim washed dishes at his father’s noodle stand. The stall had just one water faucet, and his father wanted that for cooking. So, they used a three-pail technique to clean the noodle bowls. The primary pail was stuffed with water and cleansing resolution, the following two with clear water. Every bowl can be dunked within the cleansing resolution pail, sponged off, then dipped in succession into the buckets of fresh water, after which dried and put again into service.
However as soon as, when making ready his lunch, Sim took one of many bowls that had gone by means of that three-step cleansing course of and washed it once more beneath the tap. “I used to be cooking for myself,” he recalled, “and I didn’t belief my very own washing.”
Although no clients had been round and no one may see what he was doing, his father spoke to him softly however sternly. “Don’t do this,” he mentioned. “Whether it is clear sufficient for the shopper, it’s clear sufficient for you.”
That admonishment caught with Sim, and he took it to coronary heart and utilized the precept all through his skilled life.
“Whenever you do your job beneath scrutiny, it’s powerful,” he mentioned. “However when no one is watching, it’s even more durable as a result of you want to uphold a good greater normal.”
That’s what he considers the most important differentiator in his profession. His human capital gave him the technical abilities to do his job nicely, the monetary capital he accrued helped him purchase the training that he wanted, however his social capital, and the belief that it was constructed on, had been what really superior his profession.
“That’s the place it got here from,” he mentioned. “That’s why individuals had been prepared to place their head or their neck on the road for me.”
When Sim returned to London for a enterprise e book award dinner earlier this yr, he made certain to not repeat his sartorial blunder from years earlier than. He had a tuxedo tailor-made specifically for the event, one with no room to cover a hen.
For extra from Eric Sim, CFA, don’t miss Small Actions: Main Your Profession to Huge Success.
If you happen to appreciated this put up, don’t overlook to subscribe to the Enterprising Investor.
All posts are the opinion of the writer. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially mirror the views of CFA Institute or the writer’s employer.
Photos courtesy of Eric Sim, CFA
Skilled Studying for CFA Institute Members
CFA Institute members are empowered to self-determine and self-report skilled studying (PL) credit earned, together with content material on Enterprising Investor. Members can document credit simply utilizing their on-line PL tracker.
