How much of what you learn in college is useful?

Monkeys,
How much of what you learn in college is actually useful in investment banking and high finance?

I frequently find myself reading about companies spending a lot of time training interns and analysts so that they can properly function in investment banking roles. How much of a finance background do you need to properly undergo training?

I know that much of what you learn outside the classroom (time managements, social soft skills, keeping up with the markets, etc.) is essential throughout the entirety of my career. Compared to those skills attained throughout your years in college, how valuable is the knowledge gained from the courses taken in college?

 
charmingchimp:
How much of what you learn in college is actually useful in investment banking and high finance?

~0.

Caveat: my undergrad major was in biomedical engineering. As with most things, your mileage may vary.

"Son, life is hard. But it's harder if you're stupid." - my dad
 

Oh yes. I took an in-between step though-- I worked for a strategy consulting firm for a few years when I was really fresh out of the lab, and I transitioned from there into finance.

My career path is a wild combination of dumb luck and happenstance. I wouldn't use it as any kind of model.

"Son, life is hard. But it's harder if you're stupid." - my dad
 

Pretty much anything applicable to my job, I would argue that I learned more from my school's investment club and outside study than actual classes. The only class that I find valuable is my sophomore financial accounting class, where my professor had 30 of us build full historical three-statement models on Excel to understand how everything flows together.

 

I'm not an investment banker, I work in quant finance so what impacted me most probably won't be the same for you. The class Real Analysis really impacted me because of how the class proved all of calculus by starting out with simple axioms such as a + b = b + a.

I also really enjoyed the few philosophy classes I took. Really helped me understand how to construct and understand effective arguments. Obviously this has benefits both inside and outside of the workplace.

I think people generally overestimate how useful classes in accounting and finance are once you actually have a job. They're probably useful for indicating interest and doing well on technical interviews but 6 months into the job, I would imagine that the English majors have mostly caught up to the finance majors in terms of technical ability.

 

Yeah to some degree you're right. In my view, it's because there are all of these ultra specific majors now tailored to specific jobs. At some schools you can major in "advertising marketing communications" or any other 2 or 3 corporate buzzwords slapped together. IMO schools need to reduce the number of majors and go back to having kids major in core subjects. Maybe have some vocational minors but keep the majors more academic.

 

Got to call bullshit on this. Being good at regurgitation and memorization doesn't make you smart. Colleges teach you to think like other people, not think for yourself. It's purely theoretical aptitude.

 
geology rocks:

In my opinion basic math is a pretty useful skill.
As for history - "Those who cannot remember the past, are condemned to repeat it."

I love history and read a lot on war, now reading on Latin America. It's awesome to learn about patterns and trends in history, only to watch them unfold right now.

But... I haven't needed to use the knowledge for a career or job interview. It's mostly just there until a friend approaches the topic during casual conversation.

 

Mostly no. Makes you more well rounded and keeps brain functioning and growing, yet things learned in the classroom are either irrelevant to business, or will be obsolete and old by the time you get a job.

 

I use some of what I learned in college, but it's mostly basic stuff: how to properly write, basic accounting, basic finance, etc. What I think college really teaches (or should teach) is critical thinking. Questioning what you're told, researching topics until you come to an evidence-based conclusion, etc. is the largest takeaway from college. You obviously do not need a college education to think critically, but it certainly helps to spend four years in an environment where critical thinking is required.

 

Depending on your career path, you may not even use stuff that you learned in your previous job when moving on to the next one. It's just the natural progression of life. Yeah, I think that a lot of those ultra-niche subjects like 18th century feminism and whatnot are seldom valuable topics for the rest of your life, but I think the overall college experience teaches you more about life skills and how you approach working on projects and with other people.

If you know yourself well enough to be certain of your career path at 18 yrs old, then you are probably a rarity. Since my parents didn't go to college, I had no idea what to expect, and to a point, didn't know how to best go about formulating a plan to major in something that would lead to a viable career. If you don't have people to guide you in that process, it can be pretty daunting. Obtaining financial aid, figuring out housing on my own, and researching different careers was a huge part of my learning experience. Even though I took a little longer to figure out what I wanted to do and how I wanted to get there, the entire process of learning how, figuring out those steps, and actually carrying out that plan taught me some invaluable life lessons and skills that carry over into most other aspects of life.

As for all the useless facts I learned in general ed classes (hello chemistry), you are probably right. But, again, I may have wanted to become some type of physical sciences major or a journalist. At that point, I just didn't have enough life experience to know what I wanted out of life. For me, I appreciated that time to just be a student and figure that stuff out because I certainly didn't know beforehand.

I see your point about all the things I could have learned in finance that would have helped my career progression along much more quickly, but in the end, I think that any advantage I might have gained was offset by all the peripheral skills I learned while bumbling through college in a very zig-zagging sort of manner. For guys that know what they want to do early on and have plenty of direction from mentors and parents, however, I think a lot of college is not as helpful as it could be.

 
j. madden:
If you know yourself well enough to be certain of your career path at 18 yrs old, then you are probably a rarity. Since my parents didn't go to college, I had no idea what to expect, and to a point, didn't know how to best go about formulating a plan to major in something that would lead to a viable career. If you don't have people to guide you in that process, it can be pretty daunting. Obtaining financial aid, figuring out housing on my own, and researching different careers was a huge part of my learning experience.

Even though I took a little longer to figure out what I wanted to do and how I wanted to get there, the entire process of learning how, figuring out those steps, and actually carrying out that plan taught me some invaluable life lessons and skills that carry over into most other aspects of life.

Wow. Thanks for sharing. Tell me more of what helped you in figuring all those things out.

Was it more of a matter of you doing research or finding people that helped you along the way?

 

It's all a matter of your interest in the subject. I think it's a general trend that people likely do a little worse their freshman and sophomore years than the later years, because they are likely enrolled in their specialized classes towards the end (or taking ECs). I admit I wasn't the brightest student, but I got a 4.0 my last year, and I believe that was because I was taking finance classes, German, and maybe one or two ECs. Classes I took early (e.g., biology) are the ones I just couldn't care less about, and it showed in my grades. I also don't remember much from those classes either, but I do think they are necessary for students to get at least a base knowledge in general subjects.

 
RobberBaron123:

It's all a matter of your interest in the subject. I think it's a general trend that people likely do a little worse their freshman and sophomore years than the later years, because they are likely enrolled in their specialized classes towards the end (or taking ECs). I admit I wasn't the brightest student, but I got a 4.0 my last year, and I believe that was because I was taking finance classes, German, and maybe one or two ECs. Classes I took early (e.g., biology) are the ones I just couldn't care less about, and it showed in my grades. I also don't remember much from those classes either, but I do think they are necessary for students to get at least a base knowledge in general subjects.

Yeah, stuff like Linear Algebra I could care less about. I can recall the gist.

What year are you in now?

 

classes that helped me the most: (in no order)

debate economics sales (GREAT professor) consumer psychology (same prof as above) marketing communications (applied advertising theory) psychology business statistics spanish, wish i had taken more considering i'd spend 5 years of my life (at minimum) in latin america

wish I took a little more philosophy & history

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AndyLouis:

classes that helped me the most: (in no order)

debate
economics
sales (GREAT professor)
consumer psychology (same prof as above)
marketing communications (applied advertising theory)
psychology
business statistics
spanish, wish i had taken more considering i'd spend 5 years of my life (at minimum) in latin america

wish I took a little more philosophy & history

I can see how the consumer psych and sales mix. What made this professor great, in your opinion?

 
FinanceBrah:

Any class that required giving speeches and presentations has been invaluable to me.

The thing about soft skills is that you probably developed those well before college but rarely do you have them challenged. I'd have to say debate team and then public speaking.

For sure. My presentation skills sucked before I joined Toastmasters for a summer.

The feedback and criticism from the professionals helped me see my weaknesses and improve on them.

I need to re-join the club!

 

Since I was a poli sci major, I have applied absolutely nothing I've learned. I agree with some comments though about critical thinking and learning to see multiple sides of an argument. My senior year I decided I wanted to be better at math, and not just the "math" in IB which is just addition subtraction mult and division, but stuff that was a bit more complex. These classes helped in opening my mind a bit more and thinking laterally.

But college DEFINITELY helped in my bs'ing skills. Coming from a bs major, I got really used to giving kick ass powerpoints, speeches, and essays with absolutely minimal preparation and getting kickass grades. Translates surprisingly well when applied to a firedrill and you need to write an exec summary, or a few pages in the CIM, and can knock it out with finesse.

 

Humanities fields like do not help you in the short run, but they do in the long run; when you start being able to analyze historical patterns and compare them to today's events.

Also it can legitimately get you laid. Meet a Ukrainian girl? Make a show off of your knowledge about how Ukrainians and Russians became Orthodox and the foundation of their national identities. First she drools over you then she'll suck your dick.

Blonde girl from Sicily? Tell her how she's likely descendants of Medieval Norman conquerors of the region because of her unique look compared to the rest of the ethnicities the inhabitated the island.

At this point of life I can detect nationality, social status, level of education, political convinctions of most people with a 5 minutes conversation. Pretty fun.

Never discuss with idiots, first they drag you at their level, then they beat you with experience.
 
neink:
Meet a Ukrainian girl? Make a show off of your knowledge about how Ukrainians and Russians became Orthodox and the foundation of their national identities. First she drools over you then she'll suck your dick.

Blonde girl from Sicily? Tell her how she's likely descendants of Medieval Norman conquerors of the region because of her unique look compared to the rest of the ethnicities the inhabitated the island.

At this point of life I can detect nationality, social status, level of education, political convinctions of most people with a 5 minutes conversation. Pretty fun.

Haha this is awesome. What made you find the info on migration trends?

The stuff you just mentioned interests me a lot actually.

 

I spent a few years at a very focused university where you spend almost all your time on business courses, and a few years at a very general university where I took a lot of philosophy etc. Generally, both approaches seem to work in the long run. But it's important to remember that college isn't trade school. It's not meant to build a series of skills to directly apply in the workforce.

College, instead, teaches you how to think.

The basic skills you acquire along the way (professional writing, communication, presentation skills, etc) build a baseline expectation that builds the school's brand amongst employers. But the benefit to you is the learn how to tackle a question or problem and explore variety of thought.

 

I was a STEM major, and took 2 semesters of C++ programming. I would say the type of thinking involved in object oriented programming (plus other math classes) has been invaluable both during the analyst years (when trying to find elegant/efficient solutions for tricky excel modelling problems), and in more senior roles (especially in operating companies) where you can demonstrate a value-add by making processes run more efficiently. The exercise of debugging one's programs is also helpful when having to find the errors in a model (that your junior analyst prepared for you for example). With experience, you start to be able to put an eye test to numbers that are way off base, but being able to dig in quickly and find where the logic isn't working is helpful too.

 

I majored in finance and graduated without knowing very basic Excel. I'd say a financial modeling skills are 1,000 times more relevant than memorizing the formulas for correlation and covariance. So even a lot of finance majors come in lacking the basic skills you need.

Unless my school is the only finance program to not incorporate Excel in the curriculum.

 
Pokemon Master:

I majored in finance and graduated without knowing very basic Excel. I'd say a financial modeling skills are 1,000 times more relevant than memorizing the formulas for correlation and covariance. So even a lot of finance majors come in lacking the basic skills you need.

Unless my school is the only finance program to not incorporate Excel in the curriculum.

My school scratches the surface when it comes to excel.

We're given the formulas/ shortcuts but without much practical application.

 

I did my undergrad in finance and economics. The only courses that were relevant in my current role are financial and managerial accounting and corporate finance.

I'd say less than 10% of the CFA program is relevant to my current role as well.

"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
 

The valuation methods you learn in school, most of the accounting, etc is completely useless and never sees the light of day in banking.

Useless items include: -Any math you can't do in excel -Debt / Credit accouting -Stated claim -APV -Bond pricing (unless thats what you do) -Proofs behind financial methodologies

Basically, if you can't do it easily in excel or in a meeting on an HP financial calculator, you don't need it. Most of banking is just being anal, formatting, and not sleeping.

--There are stupid questions, so think first.
 

I was an Econ major but took a lot of undergrad business classes. Accounting and Corporate Finance are incredibly valuable - directly applicable to the job and I would take them as early as possible. Most other business classes, even those not directly related to finance, can be helpful in better understanding business models. They also just generally help to get exposure to concepts, ideas, vocab, etc. in the business world.

 

Accounting and finance classes are most valuable in terms of being immediately applicable to your first job. In that sense, they're quite critical.

Econ classes are very valuable in the way it requires you to think and form arguments while still utilizing underlying quantitative/calculus concepts in the course material. This is helpful for understanding the world and domestic economies from a macro level. You'll also be able to engage in interesting conversations from things you learn in those classes whereas no one is going to want to talk about FIFO/LIFO or why you add back depreciation.

 
Best Response

REAL reasons you got to college:

1) Learn how to learn (how to read, write, form logical arguments, and process information).

2) Learn how to be independent

3) Expand your horizons, step over the boundaries of your comfort zone

4) Have fun, meet people, be social, binge drink, etc....

If adequately accomplish 1-4, you will do fine in whatever job you get after school.

 

I do M&A and we don't use a single one of the things you mentioned. However, understanding financial statements, all the different pieces and how they interact, as well as concepts like capital structure are crucial. Having exposure to these things makes the transition a heck of a lot easier. However, it is certainly true that the majority of the learning occurs on the job and your advantage over the non-finance majors fades pretty quickly once you start working.

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 

Know your finance in and out. They will quiz you on the INTERVIEW to make sure you paid attention in class. If you fail the quiz they'll wonder why they should bother with you. Not because you'll use it on the job. There isn't a college course on pitch books anyway.

 

Thanks for the advice and the responses. I'm obviously trying to learn the most that I can right now. In addition to the training in my internship, I'm also doing a lot of reading on the side regarding a variety of topics (some finance related and some industry related), both in books and on the internet, to hopefully prepare me to be successful and excel in the industry, if I do get in. I find it all interesting too, which is a definite bonus.

 

You'll use your basic accounting - how to pro forma comps, how to tie the balance sheet/cash flow statement/income statement together when building models. You'll have to remember the formulas for DCF and such when doing those calculations, things like that. Nothing you can't learn/pick up quickly know. A general finance knowledge is helpful though, even just for office conversations.

 

Absolutely nothing but that figures cos i read art history - which, however, goes to show that you need not know anything before starting in the first place.

"Living the dream 24/7 on http://theallnighter.blogspot.com"

____________________________________________________________ "LIVING THE DREAM 24/7 ON http://THEALLNIGHTER.BLOGSPOT.COM" ____________________________________________________________
 

As Restructure This rightly noticed, knowing finance does help during interviews. However, once you're in, you never use things like APT, option pricing or other advanced things... (Pity, pity)

 

well, at MS (London) anyways. A buddy of mine told me to use these in interviews in lieu of more pedestrian terms. Some may make you sound like an arrogant prick, others are pretty "in-the-know", to wit:

We're in a "benign credit environment" aka cheap credit

"out of the box" - the moment where the LBO deal is consummated and the new capital structure deployed

Your cost of debt will go up if you fall one "notch" in your credit rating.

Any other terms out there?

 

I studied Biology with the intent of going PreMed.

Sometimes it comes in handy getting into the technical aspects of a healthcare deal (with some familiarity) and impressing the client. However, the more reoccurring scenario is that a vital portion of Realestate in my brain is going unused.

"A man can convince anyone he's somebody else, but never himself."
 

I can't see how a scoring well with a Finance degree wouldn't prepare you for a career in finance. All of the information might not be immediately useful, but even the basics will give you the edge over other majors.

 

Finance has nothing to do with investment banking - what you need is word powerpoint and excel skills. Bulshitting also comes in handy.

____________________________________________________________ "LIVING THE DREAM 24/7 ON http://THEALLNIGHTER.BLOGSPOT.COM" ____________________________________________________________
 

I did find it quite useful during my internship. At least my associates didn't have to explain me things that thoroughly and if they did, I understood it directly. Ofcourse you will learn the practical things on the job (such as which database to access for certain information, which numbers to put in the models), but I can definitely say that having had a finance background enabled me to do my work somewhat more confidently than my non-finance peers.

 

I don't have a finance background and I got did as well, if not better than my counterparts who majored in finance. The finance classes may teach you concepts, but not so much the specific technical things you need on the job (at least that's what my friends told me). Like Headhunter said, finance doesn't really have much to do with the job, especially at the Analyst level, and DEFINITELY at the Summer Analyst level.

 

Finance knowledge has been helpful, particularly in the capital markets arena (bonds, equities, all that CFA level 1 stuff). Finance majors were also frequently provided more opportunities to meet the right recruiters, which is also key.
But...I think good understandings of accounting and business strategy are just as essential if you'll be working in M&A (S&T may be totally different, I have no idea). Understanding what levers move value up and down--the way a company is positioned in its industry in terms of products/services, channels, pricing, growth opportunities, etc...--is waaay more important, and we touched upon all those concepts in strategic management courses. Being able to understand that stuff, plus having the ability to look at financial results and see whether those concepts are manifesting themselves or are just being obscured (forensic accounting, as we refer to it)...that's the most difficult stuff to know. If I could do it all over again I would have taken more intensive accounting prep work and would have done more on the business policy/strategy side, in addition to my finance major.

Once more into the breach, dear friends.
 

School doesn't help.

Here's all you need to know from school:

-streamlined accounting. (Just figure out how the statements relate to each other.)

-a little bit of something called "industrial organization", which basically means a few things. 1) bigger market share is better. 2) diversification in vendors and customers is good. 3) differentiation is good.

-then excel and powerpoint.

 

Sorry if this question sounds stupid but I just have to ask. I'm just a high-schooler and would like a concrete understanding of skills expected of a prospective banker:

What about math? How does being comfortable with mathematical concepts fare in IB? Must you be able to add, subtract, divide and multiply huge numbers in your head such as 2352 times 25 or do you just have to possess the ability of thinking fast on your feet hence the purpose of brain teasers at interviews?

 

an intuitive understanding of finance and numbers helps. e.g. something super simple like accretion/dilution - you can memorize formulas for it but if you understand the concept, it's even easier. in addition, being able to look at the "big picture" will help you check your work.

 

For finance, M&A and corp fi classes will help. Depends on the approach your school takes in delivering that info. The more case-based the better. The more theoretical the less germane it is to IB.

Don't discount the importance of accounting. Forget debits and credit, book-keeping, journal entry crap. But as Indeed said, take courses that help you develop a 6th sense to sniff out earnings management and the quality of earnings. Are they capitalizing things they should be expensing, and how are they showing derivatives on their books (hedge accounting stuff). Basically, how much is window-dressing as opposed to real economic value. A course like 'Financial Statement Analysis' could prove of great utility.

Don't undermine the importance of strategy either. If your MD is the type to toss a few annual reports at you and tell you to come up with a few pitch ideas in your spare time, you need to be able to think of actionable strategic advice. Frameworks taught in strategy classes are alright, but picking up BusinessWeek every so often would probably be more insightful; you get to see what how others are finding ingenious ways to eke out value.

 

I did my undergrad in finance with an emphasis in corporate finance and a minor in accounting. My knowledge base helped me immensely with my M&A IB internship. My school was very accounting heavy - to the point where I could've gone for another semester and gotten an accounting BS ontop of my finance degree, and while I hated it at the time it was pretty helpful later on. One of the penultimate finance classes was a financial modeling class where it was basically all case studies ranging from capital budgeting problems to comp analysis to DCFs to LBOs to really complicated WACC problems. The teacher rips everything you do to shreds, but you learn a ton. In restrospect, the financial markets classes (or anything really pertaining to the public markets) are necessary knowledge but not very helpful for IB (obviously varies by group), but the accounting knowledge set given & corporate finance classes were stuff an analyst would use on a daily basis.

 

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let's see Paul Allen's card
 

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