Institutions insist on more qualifications
Regulatory exams are the first and most mystifying hurdle. A sea of acronyms awaits anyone who wants to work as a trader, equities analyst or operational assistant in an investment bank.
Whether it be the Securities Institute Certificates, the Chartered Financial Analyst (CFA) exams, the Investment Administration Qualification (IAQ), passing something will undoubtedly be necessary.
The array of alphabet-soup acronyms in the UK was thankfully reduced when the Financial Services Authority (FSA) was empowered in 2001. The FSA replaced three former regulatory authorities, IMRO, PIA and SFA.
In the process, exams such as the IIMR, formerly a prerequisite for UK-based investment managers, disappeared. Instead, investment managers and financial analysts working in the UK sit the CFA exams, which are administered by the US-based Association for Investment Management and Research (AIMR).
Uptake of the CFA reflects the globalisation of financial services examinations: in 1993, 17,807 people took the CFA exams; by 2002 that number had risen to 101,787. By January 2003, there were already more than 97,000 enrollments. The closing date is March.
The CFA's appeal is multifaceted. It is difficult to attain: over the past 50 years, the aggregate pass rate has been 59%, compared with an average of 70% for the various Securities Institute Certificates. The CFA is also globally recognised; in 2002 more than half of all CFA candidates were from outside the US.
Robert Johnson, senior vice-president for curriculum and examinations at the AIMR, says: "The CFA holds people to rigorous standards that are the same all around the world.
"It is globally transportable: CFA charter holders can move between national markets."
However, exponential growth in the CFA has not been universally embraced.
There are complaints that the industry has been monopolised by a US qualification. In 2001 this gave rise to the birth of the CIIA, a rival exam that combines nationally specific papers with "common knowledge exams" that are the same the world over.
Supporters of the CIIA argue this system is preferable. Grégoire Coppey of the Swiss Financial Analysts Association, which administers the CIIA course in Switzerland, says: "It is better to have some subject matter concerning your own country than to know only how the US system works."
However, the CIIA suffers from relatively low take-up: in 2002 a mere 1,143 candidates passed the course.
Equally problematic is that many industry insiders remain unaware of its existence.
The CFA may be viewed as the invidious creep of US standards, but this has not prevented moves to promote the globalisation of regulatory qualifications in other areas.
David Jackman, head of industry training at the FSA, says: "We would like to see a single global qualification for securities professionals. It would be taken anywhere and valid in any major jurisdiction."
Jackman says the global qualification would ideally be a combination of the US securities exams, the NASD's Series 7, the UK Certificate of Securities and the Japanese Securities Dealers Association exams. Talks are already underway with the NASD.
Regulatory exams have traditionally been seen as a passport-style qualification, necessary for working in certain areas of the industry. However, as job cuts take effect, people are also using regulatory qualifications to improve their employability.
Renata Wallace of Wallace CitiTraining says demand for the US Series 7 exam has increased. "A lot of redundant bankers want to use Series 7 as a step back into a career," she says.
But unlike the CFA charter, which has also benefited from individuals looking to improve their career prospects, Series 7 is only open to people employed by firms registered with the New York Stock Exchange.
Nevertheless, it seems that some regulatory exams are encroaching on the career boosting territory traditionally occupied by non-mandatory qualifications such as the Masters in Business Administration (MBA) and MSc in finance.
The MBA has traditionally been an aid to progression beyond the initial stages of an investment banking career.
This is particularly the case in the US, where analysts are hired on two-year contracts before being sent away to attain a 30,000-plus MBA qualification at their own expense.
Nevertheless, with hiring down, there are indications that the magic of an MBA pass from a top business school is fading. The signing-on bonuses that investment banks once paid to MBA entrants have been cut. So, too, have hiring numbers.
Michael Molinaro, global head of learning and development for Deutsche Bank's technology and operations group, says the MBA remains worthwhile, but advises people to choose a business school carefully.
"The MBA is still the benchmark qualification. We are most interested in candidates from top schools. Individuals who have studied at second- or third-tier schools may need to have an interesting or specialist background to get a foot in the door."
A less-costly alternative to a top MBA is a finance-based MSc course. Keith Cuthbertson, head of the MSc programme at the City of London's Imperial College, says there were 800 applications for 80 places last year, compared to about 650 in 2000. Imperial's courses appeal predominantly to university leavers. Cuthbertson says: "The job market is very bad. Therefore more students come on MScs."
At the Cass Business School (formerly City University), whose courses are targeted at individuals with prior work experience, 2002 applications were also up more than 35%.
In future, greater cross-over may be expected between regulatory exams and qualifications taken voluntarily to boost employability.
Ruth Martin, director of qualifications at the Securities Institute, which administers the Securities Institute Certificates in the UK, says she is in discussion with business schools to integrate regulatory passes into MBA courses.
The Isma Centre in Reading already offers students of its MSc and BSc courses the option to take the Securities Institute Certificates. Others may follow suit.
