What are the keys to a profitable finance profession?
Eric Sim, CFA, has thought of that query rather a lot. As a college lecturer and creator, he needed to give his college students and readers a logical framework to comply with, and 20-odd unconnected ideas weren’t going to do it. So he appeared again on his skilled life: How had he gone from an adolescent 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 have been the widespread threads that tied the seemingly random twists and turns, the sudden setbacks and equally unanticipated strokes of excellent fortune, right into a understandable narrative?
All of it got here right 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, an absence of capital in some type 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 information and abilities,” Sim mentioned. “We have to have human capital in order that we’re helpful to folks. And once we are helpful to folks, we will then construct different types of capital.” We acquire human capital by training and expertise. The primary in his household to go to varsity, 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 discovered serving drinks at a crowded nightclub.
Sim spent the following two years working in international alternate (FX) earlier than deciding to roll the cube and take a giant probability. And that’s the place monetary capital got here in.
Monetary Capital: Not Rolex, However Timex
Along with his blue collar background, Sim had little expertise with the bonus tradition in banking and finance. “After I acquired my bonus once I was a junior banker, quite a lot of my friends went on huge holidays,” he recalled. “Some purchased watches and spent $30,000.”
It didn’t make sense.
“Who appears at your hand?” Sim mentioned. “I don’t have a look at folks’s watches, and I assume no one will have a look at mine. So why spend the cash?”
So, relatively than blow his windfall on a elaborate Rolex, Sim purchased a Timex and invested the remaining in shares. And when he was able to make a wager 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 completed the analysis. The ten-month program was essentially the most economical and the one one he might afford. Related packages in London have been method out of his worth vary, however Sim thought if he did nicely at Lancaster, it might open up some doorways and increase his horizons.
“I’ll spend $30,000,” he thought. “I can then work in London, generate profits, and alter my destiny a bit of 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 facet of the world. Novelty was in every single place. Rising up in Singapore, Sim had by no means even seen sheep. Now they have been grazing exterior his bed room window. He hadn’t anticipated how expensive meals and housing prices can be both. “All the things was three or 4 occasions costlier than what I assumed,” he mentioned, “I couldn’t eat something, besides a slice of pizza for every meal. . . . One slice of pizza just isn’t a full meal.”
However the tradition shock went past that: As a non-native English speaker, Sim was routinely at a drawback. He wasn’t rich or well-traveled, and now for the primary time, he was far-off from residence, from household and mates. He was additionally insecure. The legacy of colonialism in Singapore affected his confidence. Certainly, one in all his first huge doubletakes in the UK was seeing Caucasians laying bricks and mixing cement at constructing websites. “That blew me away. White folks 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 broadly and didn’t assume I might 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 research.
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 section of his profession.
However first he wanted a swimsuit.
The Hen Swimsuit
Whereas Sim’s research could have improved his human capital, the identical couldn’t be mentioned for his monetary capital. All his financial savings have been gone, and he needed to one way or the other finance a brand new enterprise swimsuit in addition to a number of days’ keep in London to sit down for interviews. London wasn’t like Singapore the place the warmth made a collared shirt, tie, and gown pants acceptable enterprise apparel. So Sim went garments procuring, 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.
“In fact they didn’t have my measurement,” Sim mentioned. “I’m already on the small facet in Asia. Then within the UK, I’m like additional small. So I purchased a swimsuit so huge that I might have hidden a hen inside.”
The ill-fitting double-breasted swimsuit didn’t make a superb impression on the well-tailored London bankers he interviewed with.
“It was ridiculous. How might I count on to cross an interview with Goldman or Morgan Stanley?” Sim mentioned. “All of the interviews ended early, and none of them known as me again.”
It was a precious 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.
“If you deal with folks with respect, once 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 might want to have one thing to supply to folks. Why do folks come to you, proper?”
Sim lacked the monetary capital to purchase a swimsuit, however social capital might have made up for that. If he had had extra UK connections — household close by, an expert monitor document within the nation that demonstrated what he needed to provide — he might have borrowed the cash and gotten referrals from former colleagues about different jobs. However he didn’t have that sturdy native community.
“I had good social capital with my classmates, however all of us have been searching for jobs,” he mentioned. “They couldn’t assist me.” So the calculation remained the identical in Sim’s thoughts: His lack of economic and social capital within the UK — his lack of ability to seek 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 potential, positive — I’m not adequate,” he mentioned. “But when I fail due to what I’m sporting, that may’t occur.”
Nonetheless, with no job in London and no cash left, he had no selection however to fly residence 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 have been in brief provide. So Sim settled for a threat administration place at Commonplace 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 research made him higher at his job and expanded his information in different areas of finance. And it let folks know he knew his stuff. Finance professionals in China could not have any context for Lancaster College. Their counterparts in Frankfurt could not have any for the Nationwide College of Singapore. However all of them perceive these three initials. “Whichever nation I am going to, they acknowledge the CFA designation,” he mentioned.
After 4 years at Commonplace Constitution, Sim needed to take his profession in a brand new route. However he discovered he had been typecast. “As a result of I used to be a threat supervisor, folks needed 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 known 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 a giant improve,” Sim mentioned. After three rounds of interviews, he acquired the job.
For the following eight years at Citi, Sim targeted on excelling at his work, however he additionally labored to extend his social capital.
“There have been lots of people on the best way up that I knew once they have been junior,” he mentioned. “I helped them, and once they turned senior, they’d refer jobs to me, they’d level me in the precise route. The capital has grown. When you purchase somebody only one cup of espresso, in 10 yr’s time they could bear in mind your kindness. However after all, the bottom line is to not count on something in return.”
The Basis of Social Capital: Belief
Sim’s company profession reached its pinnacle in 2011. His buddy and coworker Paul had moved to UBS, and when a managing director place got here up, he really useful Sim for the function. 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, primarily based on the social capital that I had with Paul. We have been colleagues from completely different departments again in Citi. However I attempted to be truthful, so once I closed the offers, I shared the credit score. When there’s a gap, folks 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 right down to belief. “Apart from 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 scrub the noodle bowls. The primary pail was full of water and cleansing answer, the following two with clear water. Every bowl can be dunked within the cleansing answer 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 that three-step cleansing course of and washed it once more below the tap. “I used to be cooking for myself,” he recalled, “and I didn’t belief my very own washing.”
Although no clients have been round and no one might see what he was doing, his father spoke to him softly however sternly. “Don’t try 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.
“If you do your job below scrutiny, it’s robust,” he mentioned. “However when no one is watching, it’s even harder as a result of you might want to uphold a fair larger commonplace.”
That’s what he considers the main 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, have been what actually superior his profession.
“That’s the place it got here from,” he mentioned. “That’s why folks have been keen 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 positive 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 Massive Success.
When you favored this submit, don’t neglect to subscribe to the Enterprising Investor.
All posts are the opinion of the creator. As such, they shouldn’t be construed as funding recommendation, nor do the opinions expressed essentially mirror the views of CFA Institute or the creator’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.
Paul McCaffrey
