Reena Aggarwal

Professor of Finance, Georgetown University

Friday, September 15, 2006; 11:00 AM

Skill, effort and luck can take you to the top of any field — but it never hurts to get a little help. In our

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Reena Aggarwal is a professor of finance at Georgetown University’s McDonough School of Business in Washington, D.C. She specializes in international stock markets, microstructure of stock exchanges, initial public offerings, and teaches finance management and investment banking.

Aggarwal has made appearances on local and international radio and TV stations, and has been featured in several print publications such as the Wall Street Journal, Los Angeles Times, and Chicago Tribune.

She was online to discuss what it takes to break into the finance industry.

Find more career-related news and advice in our

Jobs

section.

The transcript follows below.

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Reena Aggarwal: Good Morning and welcome to the chat on financial-services and careers.

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Boise, Id.: Dr. Aggarwal — Thanks for doing this chat! I will be finishing up my undergrad studies in about 9 months, so its time to start thinking of the next thing. Two questions — Which MBA schools would you recommend to a student who is strongly considering a career in finance, hopefully with a large firm in NYC? Also, what are some of the core finance concepts that I should expect to have deep exposure to if/when I get into an MBA program?

Reena Aggarwal: There are several MBA programs that have a strong finance focus. These include Wharton at University of Pennsylvania, Chicago, Sloan at MIT, Stanford, Stern at NYU.

In order to get into a top MBA program you are typically going to need work-experience. Recently a few schools have started accepting students right after undergraduate. Check out the article in Financial Times, Sep. 14 — Schools Recruiting Younger for MBAs. However, this is still an exception.

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Potomac, Md.: Thanks for doing these chats. I am a working in a corporate finance capacity as a budget analyst and would like to make the switch to a Biz Dev (M&A) analyst. I feel that this is a better career move for me, but am uncertain about how long the future company would need me in this capacity. Would you recommend this move? I have 4 years of experience. Also, what would be more important to be more desirable to companies: education or experience?

Reena Aggarwal: M&A work can be really interesting and good experience. It is also exciting to work on deals and see they get executed. However, you should keep in mind that deal flow is very volatile and this type of work can have ups and downs. If this is a company that grows through M&A and has traditionally been very active in this area then you might want to go for it. If you have been working for 4 years then employers are going to be more interested in experience over education.

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Time Series Analysis: Dear Prof. Aggarwal,

I have a Ph.D. in seismology, and we do a lot of time series analysis, which is something I believe is very useful in finance. I’ve known of a few colleagues that have made the transition, and I ponder it from time to time, although I have no contacts in finance. Do you have any advice how I would get noticed by a finance firm? Also, we’re fairly bohemian in our outlook where I am, and (forgive the Enron-based stereotype) I’m worried that the financial industry might be filled with unpleasant people. Can you describe the general personality of a financial firm? Thanks.

Reena Aggarwal: The financial industry is made up of several types of firms. Certainly people in investment banking will on average be more aggressive than people working in commercial banking. But even within an investment bank different personalities are involved in different departments. For example, Sales and Trading folks tend to be quite different from the bankers. Don’t let the unpleasant people issue stop you.

In one of my answers I mention how Quants are in big demand. Check that out.

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Washington, D.C.: Prof. Aggarwal:

I am US Citizen with Indian Origin. I hold a bachelor’s degree in Mechanical Engineering in India and a Master’s Degree in Manufacturing in USA. I worked for a while with an Auto Major as Manufacturing Engineer. Then changed my career to IT as Database Administrator. Currently serving financial companies offering Credit Card and Mortgage Services. I also held a small business with annual revenue of 400K with eight employees on side. After a thorough self analysis, I decided to focus my energies in one area and pursue career. Then the idea of doing an MBA strikes me.

I am currently applying for my MBA with finance as major. I would like to know the kind of careers open for me after doing my MBA. Please be detailed on your advice. I am worried that it will be difficult for me to get a break in finance jobs since I don’t have relevant experience.

Chandu

Reena Aggarwal: The MBA degree is often used to switch careers but don’t try to run away from your past. Based on what you have said you should really emphasize: 1) your existing knowledge of a part of the financial services industry; 2) entrepreneurial skills; 3) analytical skills.

Finance does not simply mean investment banking so keep your mind open e.g. careers related to mortgage banking/securitization.

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South Riding, Va.: Professor Aggarwal, this is not a job question, but I take this opportunity to seek your expert opinion. As IPOs are one of your areas of expertise, I request your insight: my company (a fortune 500 defense/government IT services provider) is going for an IPO this FALL (after much delay). My question is, given the present day market conditions, do you think it is a good time for new IPOs/investing in them? Thank you so much for your time.

Reena Aggarwal: The IPO market has changed from the days on the Internet bubble. Now only companies that have a track record can go public. IPO success depends on the market and recently the market is showing some life. The defense/government sector is doing well and so the timing might finally be right.

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Washington, DC: Hello Prof. Aggarwal:

I am a former student, from the early 90’s, and then went to Wall Street and started a few entrepreneurial ventures. I recently returned to Washington DC, deciding to stay here based on my wife’s job and my interest in international affairs.

Currently, I am working as a consultant at the IFC/World Bank, but as an US citizen, I am having extreme difficulty cutting through the HR red tape, despite my background and skills.

Do you have any recommendations for someone with experience in corporate/project finance and wishing to apply it to overseas projects, but to do so from here in Washington, DC? Thanks.

Reena Aggarwal: Always nice to hear from a former student! There are a number of DC based firms that were started by former executives of the World Bank/IFC that basically invest in emerging markets. There are also a number of private equity firms in the DC area that have large non-US portfolios. Try out some of these options.

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Washington, D.C.: I recently graduated and am working full time. I am also taking classes part time to finish the requirements for a certificate in accounting (30 credits). My major was unrelated to accounting.

Do you think a CPA is necessary to stand out and get hired into an accounting/finance/budget related position? I do some work related to accounting and budget right now, but those aren’t my main duties.

Thank you for the advice!

Reena Aggarwal: Sarbanes-Oxley and new exchange regulations have created a huge demand for people with accounting background. I think you will have a number of opportunities after the accounting certificate even without a CPA. In the long-run you still might consider getting a CPA.

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Washington, D.C.: I am 25 and preparing the apply to graduate business and finance programs for next fall. I am weighing an MBA versus an MS in finance. I like the more technical nature of the finance degree, but I know a lot of top firms look specifically for an MBA. Do you have any advice on choosing between the two degree programs?

Reena Aggarwal: The two programs are quite different in nature — MS in Finance is narrowly focused and the MBA is more general. If you want to just focus on financial issues for the next several years then the MS is fine. But if you want to branch out to management positions in the future then the MBA is better.

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Washington, D.C.: Not a student, an employer here. Sarbanes-Oxley has created a boom market for financial professionals. I’m now seeing under qualified people in their twenties elevated to positions they can’t handle. positions where errors or bad judgment have real career consequences, such as Controller or Director of Finance. In your opinion, are universities doing enough to warn graduating students that there are times when the should pass on a job that’s above their experience level?

Reena Aggarwal: Sarbanes-Oxley has created a new set of career opportunities and a shortage of qualified people in certain areas. Because of this shortage, some people might be moving up the ladder too fast. I am surprised to hear of Controllers and Directors of Finance in their 20s. These positions require a lot of experience and as you mention judgment. At universities we probably need to do more to warn students in getting help when needed and not taking up more than what they can handle.

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Odenton, Md.: Good morning Dr. Aggarwal, I currently have my MBA and am looking for a new job. I have read a lot of articles implying that if you did not receive your MBA for a top school, it is not worth as much. Is this true? What could I do to make up for not attending a top school? I worked and went to school at night. I know a lot of people do not have the luxury of quitting their job and attending grad school full time. Thanks!

Reena Aggarwal: I would have to argue that there are lots and lots of MBAs from other schools who also end up doing pretty well. You might want to focus on good firms in the local area who do a lot of MBA hiring. Even the local branch of a national/multinational likes to develop relationships with local schools and hire from there.

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Reston, Va.: Are there statistics showing the likelihood of landing a quality position with an investment firm straight out of college with a B.S. in Finance? I talked with a campus recruiter who said that her company only hires between 2 to 5 people in each graduating class — and they look purely at GPA. There were close to 800 people majoring in Finance in my class year. My GPA of 3.72 wasn’t good enough to receive an offer. So I’ve had to find work by looking in the help wanted section of the papers and such. The degree, so far, hasn’t produced a positive cash flow. I could have done better by skipping the cost of college and moving directly from high school into retail. My impression is that the best jobs are offered to those who graduate from Ivy League schools and/or have connections.

Reena Aggarwal: Don’t get discouraged so quickly. Your degree will definitely much more than payoff; sometimes it just takes a little longer to get started. Keep an open mind and don’t be too restrictive about the types of industries or jobs that are acceptable. This is a strong job market and you will be successful.

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Anonymous: Hello Dr. Aggarwal, Thank you for hosting this chat! I am currently in banking and thinking about switching over to another area of finance, perhaps a financial analyst. Since I don’t have experience in financial modeling, it is tough to be qualified. How could I learn this important skill on my own? Thank you for your time!

Reena Aggarwal: This switch should not be too difficult. You might start by looking at reports published by research analysts and see what they are doing. Some are pretty detailed. University libraries sometime subscribe to these services, maybe your local library also has something.

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Arlington, Va.: Hello Reena! I’m in Georgetown’s Evening MBA program, though I haven’t taken one of your classes yet. Career-wise, I’m interested in new product identification / development and strategic marketing. Do you think it would be appropriate to look into venture capital opportunities, or do most of those jobs focus more on the mechanics of financing businesses, and less on direction-setting?

Reena Aggarwal: I hope you are enjoying our relatively new MBA — Evening Program. VCs decisions rely a lot on non-finance issues. VCs have to look at future trends, product/technology identification, management, and a whole host of issues so don’t be misled that it is just finance.

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Paris, France: What are your thoughts on the invasion of Finance PhDs who have invaded Wall Street in the past 10 years? I am of the opinion that despite the ubiquitous presence of these quantitative wizards, many people with traditional skills and very little maths are still earning promotions and doing quite well in the finance and banking industry.

Reena Aggarwal: Actually it is not just Finance PhD but people with PhDs in physics, engineering, math. are in a lot of demand on Wall Street and in hedge funds. However, these people are still a small minority. At the end of the day it is about bringing business to the firm and lots of other soft skills will continue to be important.

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Erie, Pa.: Is it hard for people to break the ceiling when in technical fields — for a chemist, for example, to find a job in finance even when they would like to use an MBA degree to its highest potential? Any suggestions?

Reena Aggarwal: From your question I am assuming that you have a MBA. Many people get a MBA to transition from one career path to another. You want to emphasize your skill set and technical skills can be taken over to the finance area very easily. You might want to think in terms of finance-areas that will combine your chemist background with your management degree. For example, finance positions such as equity analyst that cover the chemical industry could be a start.

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Washington, D.C.: Greetings Ms. Aggarwal,

Thanks for sharing your experience with us here today. Here’s the question: armed with an executive MBA but without finance experience, how does an older professional with 15 years of experience in their own field break into finance (not the big picture of the stock market, but small and medium enterprise or project financing types of lending/rating work)? Does one need to take a salary cut to get a job where you will be learning the ropes in finance? And can one even compete with the young folks with MBAs just starting out and willing to take entry level salaries and have their whole careers ahead of them? Are there any intensive short evening courses in DC with lots of number crunching given anywhere to get at least a better feel for it before jumping into the job search?

Thanks again.

Reena Aggarwal: Let the younger folks do the detailed number crunching. With your experience, I don’t think you want to sell your self in that category. You want to relate your work-experience with how you can help a firm to grow and bring in new business; work on deals e.g. M&A. You would have the industry experience that the new MBAs will not have. You will understand the industry and can put more sense into the numbers. It might be better to think a little differently here.

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Career change to finance: Hi, Reena. I originally trained as a physicist (B.S. and ABD) and then taught high school physics and math. I’m bored with that career, would love to move into finance, but don’t know how to break in. I can’t afford to get an MBA at present, so am targeting pre-MBA jobs. I have taken two graduate economics courses. What areas of finance should I target? Can I get into areas such as I-banking and investment management/research? I would like to remain in D.C. but will consider NYC/Boston/Chicago if need be.

Reena Aggarwal: Quants are in big demand these days in the finance industry. I suggest come up to speed by reading some books, for example, My Life as a Quant: Reflections on Physics and Finance by Emanuel Derman. This will give you an idea of what quants do. See if this line of work interests you.

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Washington, D.C.: I just passed the last of the CFA exams, and have a MBA in finance, but am feeling a bit type cast as a defense contractor (Budget Analyst/Financial Analyst) due to a military background. What are the most critical skills to develop or actions to take to land a job on the commercial side of finance? Looking for a transition to work that qualifies for the work requirements for the CFA.

Reena Aggarwal: There are some finance firms that really like military-types because you bring a very different disciplined background. Try to do some networking with people employed in finance with that background, they are generally very supportive.

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Washington, D.C.: I have a B.A. in political science and a J.D. I did a research project on the banking industry (focusing on the community reinvestment act and compliance issues for banks)and now want a career in finance. How do I get into the finance industry? Will it mean having to go back to school?

Reena Aggarwal: Within the finance industry you should start by focusing on banks and within banks try to get in touch with the group that specifically handles issues related to the Community Reinvestment Act. The B.A./J.D. combination is a very good one and you should emphasize other relevant aspects from these degrees.

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At work. I just graduated from college this past spring and graduated with a degree in Finance and Econ. I got a job with a large bank in an analyst program (year long, real estate focused). How do you feel about these programs? If I choose to leave after the training is up, will other employers account for my intense, year long program? (which I personally believe will put me ahead of some of my classmates who didn’t have this opportunity)

Reena Aggarwal: I think the Analyst programs are absolutely wonderful. In a short amount of time you learn a lot about many different areas. This will a huge plus as you move forward.

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Minneapolis, Minn.: Is it practical for a professional in his late 30s to make a career switch to finance with little background in the field? I’ve spent my career as a newspaper and magazine journalist and I am contemplating a change. How would you suggest I determine if this is a good match? And how should I prepare myself?

Reena Aggarwal: I can think of 2-3 students in my Executive MBA classes at Georgetown who have done exactly this. You should talk to people who work in finance to see what they do and whether you would like to do that. A MBA would be one way to make the transition. Several schools in the area including us at Georgetown offer Executive MBA and part-time MBA programs.

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Washington, D.C.: I’m a 30-year old who has spent all of my career in commercial real estate finance and see myself staying in this field for at least the next 3-5 years. I have an undergraduate degree in finance, but am undecided about getting further certifications (with a broader finance orientation, like a CFA) or enrolling in a part-time MBA program. Is it worth getting an MBA in the DC area—particularly if I’m already out-earning the starting salaries of many of the schools here? Or would the certification route be a better way to go in terms of future flexibility? I’ve ruled out a full-time MBA because frankly, I don’t want to forgo the income in light of the high likelihood of me starting a family in the next few years.

Reena Aggarwal: A certification like a CFA or a degree like a MBA are very different choices. If you want to broaden out of commercial real estate, a part-time MBA might be a good option and there are some good programs in DC. There is a lot of networking that goes on in a MBA program outside the classroom (alums, speakers, student clubs. ) that tends to be helpful in making a transition.

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Arlington, Va.: I’m a politics and economics major who graduated recently. I am interested in finance careers, especially at top firms such as Goldman Sachs, etc. Lacking a finance background, what skills can I develop, either through classes or temporary jobs, and what points can I stress in a cover letter, to be noticed by these firms?

Reena Aggarwal: The large IBanks typically have a two-year Analyst program for which they recruit on campuses. Realistically, in order to get into these programs one should have done a summer internship with them. The students selected for the Analyst program are not just business students but are from a number of different backgrounds.

I suggest that try to get some work-experience in finance jobs and target smaller firms that are more flexible in the hiring process.

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Reena Aggarwal: I hope the chat was helpful. My apologies but I obviously could not get to all the questions. Good luck.

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