A Beginner’s Guide to the World of High Finance
High finance can be simply defined as complex or large financial transactions. Dealing with high finance requires a refined skill set and the ability to analyze situations accurately. For instance, when entrusted with a client’s portfolio, an investment banker must ensure that proper financial advice is given and the portfolio is maintained.
Being involved with asset management for extremely wealthy organizations and clients can also be classified as high finance. It is also considered high finance if there are massive transactions to go through or act as a medium Now, these transactions do not need to be in currency and can be a large merger or a high-profile acquisition.
The world of high finance is fun and extremely lucrative. This is a highly valued domain that is desirable to finance professionals in India and all across the globe. High finance professionals enable important business deals or assist in massive transactions as well.
If you are wondering how to become a financial analyst and work in high finance, then you will definitely need the necessary skills and additional exposure to the domain to get started. To start off, you can opt for finance courses in India or specialized financial analyst courses to give you the necessary foundational skills that you will need.
What happens in the world of high finance?
The world of high finance involves meeting important people and being involved with extremely crucial transactions. These kinds of heavy-duty transactions fund the entire seeding phase of companies or see crores of rupees worth of stock being traded. You can even find many veteran traders who only trade in high finance.
High-finance job roles are generally client-facing roles that require you to get into meetings and lunch plans with industry leaders and top-level management. Apart from the private sector, there are also many high finance roles in the public sector and government agencies. Building budget models for massive government projects are an example of high finance in the government sector.
Many high finance professionals are commissioned to increase the employer’s profit through small changes in the process of making large payments and investing in businesses. Algorithms, statistical analysis and financial techniques are used to maximize the companies’ revenue. For example, a large commercial property can be turned into asset-backed security for earning profits.
Expert high finance professionals have helped many financial institutions and investment banks earn profits even during inflation and times of crisis. With proper quantitative methods, high finance professionals can even help corporations avoid bankruptcy. Similarly, M&A modeling (Mergers & Acquisitions) is an essential high finance job role that is involved with ensuring that M&A deals are beneficial or profitable for the concerned party.
In asset management, pitching schemes worth lakhs of rupees is considered to be high finance, while, in investment banking, it is raising crores of rupees for start-ups. In corporate banking, it is involved with helping large transactions occur or with assisting high-profile customers and companies get massive loans. Unlike going for the masses, high finance professionals only go after a select group of potential clients.
What are the different roles and types of jobs in high finance?
Here are the different jobs in high finance and their respective job roles:
- Investment Banker: This job role in high finance demands working with start-ups, investors and banking clients to raise crores of capital. Handling large investments and deals such as mergers & acquisitions is also a part of investment banking.
- Risk Manager: High finance professionals are sometimes commissioned to be risk owners or risk managers. Risks worth crores of rupees can be incurred in various projects and processes, thus requiring the vigilant monitoring of a risk management professional.
- Personal Banker/Portfolio Manager: There are specialized personal bankers and portfolio managers assigned to clients who require large transactions, trades and deposits. Portfolio managers are also responsible for ensuring the maintenance and growth of a client’s portfolio. The valuation of certain portfolios goes up to crores and crores, thus requiring individuals trained to handle this kind of money.
- Financial Analyst/Credit Analyst: Financial Analysts analyze financial transactions, markets and businesses to provide data-driven insights to employers or clients. For instance,for an investment bank to know if a start-up is worth raising capital for, financial analysts can use forecasting methods and analysis to find if there are good prospects. The average financial analyst career path in India eventually takes you to positions where you can save crores for companies through the application of your skills and knowledge of the domain.
What are skills needed?
Here are the skills that you will definitely need if you wish to enter the world of high finance:
- Valuation of securities and stocks
- Microsoft Excel
- Risk analysis
- Efficient Market Hypothesis
- Market modeling and strategy
- Arbitrage Pricing Theory (APT)
- Corporate finance
- Capital budgeting
- Portfolio theory and portfolio management
- Capital Asset Pricing Model (CAPM)
- Corporate financial decisions
- Capital structure
- Payout policy
- Corporate bonds
- Forwards and Futures
- Financing and Capital Structure
- Risk Management
- Behavioral Finance
- Prospect Theory
- Loss Aversion
- Hyperbolic Discounting
- Market crashes and bubbles
- Charting and Technical Analysis
- Market Psychology
- Derivatives Market Modeling
- Currencies and Commodities
- Time value of money
- Valuation models and ratios
- Industry research
Over and above these, you must have a good foundation in general accounting and bookkeeping. Without understanding how to record and read transactions, it is hard to understand the world of high finance and generate financial models or evaluate assets. Also, you must be capable of deriving as much insight as you can from the financial statements of start-ups, clients or your employer.
Here are some accounting skills required for financial analysts and other high finance job roles:
- Accounting ratios and principles
- Balance sheet
- Accrual accounting
- Income statement
- Profit and Loss
- Allowance accounting
- Cash flows
- Financial statement analysis
- Debt and lease
- Financial ethics and regulations for non-banking and banking organizations
- Income Tax and GST
- Property, plant, securities and intangible assets
Other than national financial regulation, you should be aware of global regulations, such as CCAR, GARP, IFRS and DFAST. You should also know how to use statistical models and determine the probability of default models. High finance professionals are also masters of risk management and deal with collaterals, debt and assets of all nature.
Finding the creditworthiness of a bank can also be considered to be a part of high finance; thus, one must also know credit analysis, foundational economics and banking.
What kind of educational qualifications are required?
If you are wondering how to become a financial analyst in India, here are the educational qualifications you will need:
- A bachelor’s degree in Mathematics, Science, Economics or Technology
- You can also get in with a background in business or finance
- A certification in finance, financial technologies or financial analytics
What kind of work experience is required?
Freshers can also join this field with a good educational background or after undergoing training programs. However, professionals who wish to join high finance must know the answer to ‘What is financial analysis?’ It is okay if an individual is not a financial analyst, but every high finance professional must know foundational analysis and modeling.
For example, even if you are an investment banker or risk manager, you must be able to conduct basic analytics operations to determine if assets or businesses are worth investing in. You must also have a good sense of markets and financial transactions.
It is sometimes preferred that the professionals required for high finance come from finance backgrounds and have some amount of work experience. This is due to the sensitive nature of the job roles as well as the crores of rupees (or millions of dollars) at stake.
5 ways to enter high finance
- Placements after university: Placements, walk-in interviews and off-campus drives are great ways of getting into top finance roles after finishing your degree in finance, economics or statistics. Many MNCs and large investment banks conduct placements in colleges that teach finance.
- Internships after certifications or online programs: Some online programs come with assured internships and even placements. Otherwise, after gaining a certification or finishing a finance program, you can always apply for internships. Eventually, these internships in banks or investment firms transform into a full-flown high finance role.
- General or National Banking Examinations: You can also take the general banking route in the public or private sector to secure high-finance roles in the future. After joining a bank as a personal banker or a teller and gaining some experience, you will eventually be promoted to handle general or corporate banking for bigger clients and business entities.
- Trading and Consulting: If you do not wish to work for a company, you can set up your own investment consultancy services or act as a medium/agent for making high finance trades. In this kind of trading, your commission will also be extremely lucrative since the sums of money being traded are massive . You can also work as a consultant in an external investment firm or a bank.
- Investment Banking: Finally, you can study investment banking specifically and specialize in it. With investment banking, you can help start-ups get investors or help existing companies raise capital. Investment banking involves working with large clients and thus, it is preferred that one has the relevant educational background.
High finance is an extremely lucrative domain, and high finance deals have the capacity to have a major impact on the market or even across the whole country. This domain also deals with working on the financial systems, infrastructure and transactions to improve operating speeds and decrease operating costs.
What new things lie ahead in the world of high finance is still a mystery as transactions are becoming more efficient, and paperless transactions are being adopted. It is expected that AI will be taking over most of the processing part, and both bankers and clients might not need to be physically present for large deals in the future.
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