FSA Exams

The following article describes the story of one of the members of Nicube.com, an online community of students and junior professionals interested in Investment Banking, Consulting, Accounting, Law and other professions. Note: FSA exams are the exams you need to take in the UK to deal with securities and investments; the equivalent in the USA are Series 7 and Series 63K.

Life was f*cking good in August. I'd just got a Distinction in my Masters to complement by 1st Class Bachelors degree, and due to shortly start at a top investment bank with an estimated £60,000 salary and bonus in my first year. Thinking I’d never have to sit another exam for the rest of my life, finally ready to enter the real world at 22, things honestly couldn’t have been any better.

By October I wanted to die. In fact on numerous occasions the only thing stopping me leaping from the top of the five-story flat where I live was the chance that I wouldn’t manage to kill myself. You see, whilst others on my grad scheme had happily completed training, and were up-and-running working full-time for a desk, I’d just been fired two months into my first job, without even getting a chance to enter the trading floor, for failing my FSA exams twice.

Don’t be fooled into thinking that you don’t have any exams if you go into investment banking - whether that’s M&A, trading, sales or research. After a couple of months of internal training, often backed up with exams every week or two, you have to take the FSA exams. Most banks operate a “two strikes and you’re out” policy for these exams. Unfortunately for me, I failed one of them twice and was gone in a flash. Banks tend to have this harsh policy as an excuse to unceremoniously can graduates if they realise they’ve taken too many on, and as our FSA exams trainer told us every day, “Why should they keep someone on who fails exams when there’s 100 people out there who could instantly fill your shoes?”. The worst thing is that these really aren’t difficult exams, and it’s perfectly possible to get them all over with in just a week, but the wrong strategy results in on average 15% of 1st year analysts (and around 35% of all candidates) failing something at least once.

Getting fired was maybe a blessing in disguise - as of March, I had my own trading book at a Mayfair hedge fund, making twice as much as I would have on the grad scheme. But most ain’t so lucky. “Fired after 2 months for failing FSAs twice” doesn’t exactly look great at the top of a CV, at a time when many grad schemes for the year after are swiftly filling up. But enough about me, here’s my step-by-step strategy to ensure you pass your exams, the first time.

The Format

When people refer to “FSA exams” and whether or not you “passed your FSAs”, they are actually referring to exams set by the Securities & Investments Institute (www.sii.org.uk) which you must pass in order for the Financial Services Authority (FSA, www.fsa.gov.uk), a universal British finance regulator, to approve you to be an investment banker, essentially.

You need to pass the Regulations exam to speak to clients, and the Securities and Derivatives exams to deal in securities and derivatives respectively (you can take these two exams either together or separately - typically at your bank’s choice rather than your own), and there’s also certificates in Investment Management and Corporate Finance if you’re going down that route.

Most London investment banks will use either 7city (www.7city.com) or BPP (www.bppfinancialservices.com) to give you the reading material and classroom courses to pass the exams. Whilst the exams are like a DVLA driving theory test in that they’re computer-based multiple choice from a massive question bank, the difference is that the Securities & Investments Institute for some stupid reason refuse to issue any sample questions or proper teaching content. Instead, 7city and BPP trainers go into exams, memorise as many questions as they can, come out and spew them out.

If you think that’s stupid then wait till you see some of the typical questions you get in FSA exams. A main reason that intelligent people with Oxbridge / Ivy League PhDs et al fail these is because they struggle with the sheer (b)anality of the content. Typical questions, I kid you not (these are q34 and q35 of 7city's Financial Derivatives Mock 3):

34. Products available on the CBOE include equity index options on the S&P 100 and the S&P 500. Which of the following is true with respect to the exercise style of these options?
a) S&P 100 index options - American and European style, S&P 500 options - European style only
b) S&P 100 index options - American and European style, S&P 500 options - American style only
c) S&P 100 index options - American style only, S&P 500 options - European style only
d) S&P 100 index options - European style only, S&P 500 options - European style only

35. Which of the following is true with respect to exercise deadlines for Euronext.Liffe's traded options?
a) The last date and time for exercise is the third Friday in the delivery month up to 6:00pm. However, these options may be exercised up to 4.30pm on any other business day during the life of an option
b) The last date and time for exercise is the third Friday in the delivery month up to 6:00pm. However, these options may be exercised up to 5.30pm on any other business day during the life of an option
c) The last date and time for exercise is the third Friday in the delivery month up to 6:00pm. However, these options may be exercised up to 5.20pm on any other business day during the life of an option
d) The last date and time for exercise is the third Friday in the delivery month up to 5:20pm. However, these options may be exercised up to 4.30pm on any other business day during the life of an option

I can’t believe I just typed all that out instead of doing a copy & paste jobby. Anyway, now you have some idea what you’re letting yourselves in for. An extensive study confirms that the average investment banker will need to know approximately 0.63% of content from these exams in their day-to-day work. Nonetheless, there’s no point having such a cynical mindset - the bottom line is you have to pass these exams to actually be able to do your job, there’s no way around it if you want to do front-office IB work.

My advice

Step 1 - Skim the Big Books
You’ll be given big A4 textbooks for Regulations (Regs), Securities and Derivatives before your 7city or BPP five-day training course. In the fortnight prior to starting the course, read them. Every word. Just the once through though, and don’t attempt to actively start memorising stuff. The aim is to make yourself fully familiar with all the content so it’s not all completely alien when you begin your course. Don’t waste too much time reading through it all though - make sure your mind doesn’t drift off and you’ll comfortably do it in some evenings and the weekend/s prior to training. Don’t bother with anything else like trying mock questions, leave that until your course begins...

Step 2 - Training: immense discipline required
Your five-day course with 7city or BPP will have 9-5 hours in the classroom, but with the work you need to do outside the classroom 5(am)-9(pm) is more realistic. The first time I failed it was because I fell asleep a couple of evenings after training, which completely messed up the whole revision schedule, putting me way behind. To guarantee a first time pass, you’ll need probably more discipline, efficient time management and consistent concentration than you had when taking your final degree exams.

You’ll all have started daydreaming at some point in the lecture hall before - here you can’t afford to. Jot down and highlight important points made and actively start trying to absorb stuff during the training. If you’re with 7city, leave the big books behind now and just cram everything you need to know into the slide packs. In the evenings and/or mornings, go through the slidepacks now in detail, actively memorising content, whether this requires you to stare at the pages repeatedly, say stuff out loud or whatever. At the end of each chapter, go through the end-of-chapter questions (Review Exercises with BPP) during the evenings. If there’s anything you’re stuck on, re-read the content from the big textbook, or look over the videos or hot topic tutorials on 7city/BPP Online Learning.

The typical structure is to spend a day doing Regulations, two days on Securities and two days on Derivatives. Regulations is the most boring, the one people seem to worry about, but the easiest to pass, with not that much to learn and a lot more common sense required, based around legislations. Securities is maybe the toughest one (it has the highest failure rate), with the greatest volume of anal, pointless content to learn, whilst Derivatives is the one people with financial backgrounds find the most straightforward.

Step 3 - DO THE F*CKING MOCKS!!
Typically you’ll have your Regs, Securities and Derivatives exams to do over Monday to Thursday of the week after your training course. This potentially leaves plenty of time if you’ve managed to be uber-efficient and go through all the reading material and chapter questions over the weekday evenings.

It’s most likely you’ll be a tad behind however so may need to cut into your weekend clearing stuff up. But thereafter, by a long way the most important part of your revision is to do the Practice Examinations. With 7city, the End-of-Chapter questions are a bit rubbish and not that representative of what you get in the real thing, BPP’s Question Bank is a lot better, but the closest thing you’ll get to the paper is the Practice papers.

Go through them all at least twice, remember the questions you got wrong (and the ones you were hazy on but got right), and you should be sailing - a good third and up to half of the questions in the real exam you should already be completely familiar with. With a 70% pass rate, getting others right by knowing the content but not seeing a question before, along with educated guesses, should be fine.

It sounds simple but has to be re-iterated - DO THE F*CKING MOCKS! Don’t waste all your time doing the textbook and chapter questions, just to find that you then don’t have the time to go through the mocks before the exam. And particularly good on the Online Learning site is additional/recent questions - these are the sort of things that have been out in the last few weeks, and a considerable chunk of them will be in your exam.

Step 4 - Go for it
It’s a computer based exam in the same style of a UK driving theory test - therefore it’s better to do practice questions online rather than using your book to get a feel for it. Avoid doing an all-nighter cramfest, you need a few hours sleep, otherwise your brain honestly does turn to mush. You’ll have time to go over all the questions again but don’t change loads of answers you’re unsure on at a second look - for whatever reason, your first guess is always more likely to be correct than your second.

Step 5 - If worst comes to worst
A fail. Not the end of the world, you join a pretty big club. Fail again though and at many places you’re going to be in a spot of bother. However, there’s a loophole around this - take the exam yourself, in your own time, without your employer knowing.

It may sound sneaky but it’s actually very commonplace. You can go to www.sii.org.ukandbook an exam yourself, fill in the QRF form stating that you don’t want your employer to know your result - it costs around £100-150 per paper. This may sound like a lot but its truly f*ck all compared to potentially losing your job. And that six-figure salary three years down the line. The small catch is that if you fail 3 times, SII ban you from resitting for 6 weeks, which may be tough to hide from your bank.

If you took Unit 4 (Securities & Financial Derivatives) and struggled then it’s definitely worth splitting them up - you can take Unit 2 (Securities) alone and take the Financial Derivatives module later on to get you the same qualification.

So there we go. I would strongly, strongly recommend people who have a few weeks off before starting a job in banking, or have a free holiday near the end of university, to take the FSA exams early - a few hundred quid will avoid the potential to have a very miserable first few months in the City.

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Nicube.com helps young people across the world make their career ambitions happen, as well as helping them to make the right choices in the first place. We provide them with a network of advisors and an extensive community-driven knowledge base.

Broken Links in Resources

Apologies - the guides that I have put up lead to broken links or encrypted files. I am making every effort to fix this.

[PLEASE NOTE: FROM NOW ON - EMAIL ME AND I WILL MAIL BACK THE IB/CONSULTING GUIDES]

Reason is that many sites will not let me host thes files with them for obvious reasons! ogaden@hotmail.co.uk

Work Fitness into your Busy Routine

There are only 24 hours in a day, and we spend at least five or six of those sleeping. For the high-powered workaholic types, most of their waking hours are spent at the office hunched over a desk or a computer screen. An increase in work is almost always accompanied by an increase in stress, especially in the environment that surrounds an investment banker or anyone else who works at other fast-paced jobs. These professionals hardly take the time to eat properly, let alone exercise. Fueled by unhealthy caffeine and soggy takeout food once in a while, they find themselves fighting a losing battle with stress and tension and their associated ills. It’s not long before other ailments like diabetes, cardiac diseases and strokes catch up with them as punishment for the unhealthy lifestyle they lead.

It’s never too late for those who seriously want to bring about a positive change in their lives though. Your position at the office can be filled if you are not around, but you are irreplaceable. Remember that and turn your life around today, by making just a few changes.

· No matter how early you go in to work, eat a healthy breakfast before you start your day.

· Walk to work if you live just a few blocks away. Use the stairs instead of the elevator.

· Use your lunch hour to hit the office gym if there is one. If not, take a walk outside or in the corridors of your office.

· Take a brown bag from home to the office with a healthy lunch, and make it a point to eat it.

· Bring your own health drink or fruit juice to replace the numerous cups of coffee you drink at the office.

· Don’t sit at your desk all day; get up and walk around every half hour, either to talk to a colleague or use the restroom.

· When you feel stress coming on, use a minute or two to close your eyes and take deep breaths. Practice meditation for a few minutes or so.

· Massage your forehead and neck with your fingertips when you feel stiff.

· Maintain the right posture; don’t hunch over your computer or slouch in your chair.

· Keep both feet on the ground instead of crossing one over the other.

· Make sure your desk is positioned so that you don’t have to keep turning when someone enters your office.

· When you’re standing for long periods of time, balance your weight equally on both feet and keep your hands at your sides.

· Give up cigarettes if you’re a regular smoker.

Remember, fit or fat, the choice is yours.

This article is contributed by Sarah Scrafford, who regularly writes on the subject of Geriatric Care degree online. She invites your questions and comments at her email address: sarah.scrafford25@gmail.com.

My First Ever Rant!

My first ever post where I will be ranting/grumbling/declaiming/raving (put it any way you like) all the way through this post.

Its been a month or so since I have been working for an invesment bank and I haven't made any posts since the day I started working, too tired and hardly any time to catch up with sleep! The commute is also killer. For me, its three hours a day. One and half to and from!

One thing that always suprised was the amount of money (salary) those that work for investment banks get. Not anymore. I beleive the amount of hours that those that work at investment banks put in is what gets them those high salaries.

We all know the ridiculous hours that are worked. I think this and the stress is where all the money comes from and not the type of work. Some of you may have heard of the jokes about the "micky mouse" jobs that exist, like "doodling" with excel and powerpoint.

The above is just me ranting, but the conclusion I want you to take from this is that I love working for an investment bank! Slightly different from what I was saying above but I love the fact that you get to spend time with people that share similar interests.

A friend of mine is on an Industrial Placement at an investment bank I will get him/her to write something about their experience. Feel free to also share your experience by posting a comment.

I would actually love to hear what those at consultancies have to say since I would like dedicate a summer internship to a consultancy just to broaden my experience.

Can I move from a Back Office role to a Front Office role?

There have been so many rumours that seem to suggest that it’s next to impossible moving from a back office (BO) role to a front office (FO) role. If you don’t know the difference between these two check this out wiki (scroll down to the middle).

To demystify this so called difficulty that it is almost impossible to move from a BO role to a FO role, I thought I would ask the banks themselves. I sent an email to several banks and surprisingly a few replied!

This was the email I sent: Email By me. The following are the replies.

This is JP Morgan’s email reply.

This is Morgan Stanley’s email reply.

This is Barclay's Capital email reply.

This UBS’s first email, they didn’t seem to get the question! I asked the same question in a different way here and then still couldn’t give me a straight reply! Oh well, they must be suffering from the thousands of job cuts!

Please Note: All contact details and names have been removed; only the main body of the email has been used.

As you can see it is not impossible, in fact it is “do-able” and it’s nothing unheard of. All the investment banks will accept applicants that have different backgrounds and because you have worked in a BO role or any other job it isn’t a disadvantage.

Any job experience is worth having, you will only learn something from it. I guess the real test will be the way you put this across during interviews.

You may also be wondering could I move from one division to another within the same back? Again, I think it's possible but this is dependent on the bank. Your comments are always welome as usual.

WikiJob

I thought I would make a post about a site I've known about for a while that some of you may find useful. From now on, I will try to write reviews on good quality online resources that are relevant to those that wish to pursue a career in investment banking and consulting.

WikiJob is an online community where users can create, edit and publish articles. It is basically the wikipedia of investment banking, accounting, consulting and law. I think most of you here will be interested in the investment banking section! What I like about it is the simple and clean look of the site and the relevant content that is on there. I mean each sentence is worth reading, in other words no small talk, it gets to the point unlike many other sites.

A quick summary below to help you find things. I will go through the sections that you are likely to need.

Interview questions - detailed accounts of the application process. From online applications to offers with all aspects of interviews and assessment days covered. You can find Goldman Sachs Interview questions and JP Morgan Interview questions! I am sure most of you wonder what you will be asked on your interview day!

Industry pages - This is my favourite section because there are clear and simple explanations about different things even the most basic things such the different tiers that investment banks have. A very simple concept that many seem to ask! This is very useful for those that would like a starting point to learn about investment banks.

Application Technique - A selection of useful articles on application technique, including competency based interviews and competency based questions. Gold mine!

To top it off they have a forum, a community of job seekers and graduate trainees at firms who give advice and answer to each others questions on all aspects of job search/interview process.

If there are other sites that you are aware of please comment and post them so that others may benefit from it.

I found this amusing - where i found this, it said it was a training video!!

Summer Internship: Make an Impression

You have secured your summer internship and you are about to start. No time to relax, although you have done the majority of the work. There is a little matter of impressing the HR team. Well how do you do this? And how do you make the most of your summer internship?

Before I continue, I would like to make something clear. Although your objective is to do well in this summer internship so that you are offered a graduate job or that you are fast tracked on to a graduate scheme, you have to remember this summer internship is also your chance to learn as much as you can about this investment bank and the role you are currently in. It is important to do this since you later may find out this is not the investment bank or role you want.

Ok, so how you get the most out of your summer internship and how do you impress? Brown nosing isn’t an option here!

To make this easy for you to use later on, each paragraph is a nugget of information!

First impressions are extremely important – this goes without saying, but be smart in appearance, make sure you dress for success.

Prepare for the internship – learn about the company and industry that you will spend the summer in. You should be eager for a challenge and set goals for yourself to complete by the end of your internship.

Be punctual, open-minded, observant, proactive, show enthusiasm and carry a notebook at all times (mouthful) - Tasks can easily get lost in daily responsibilities. A notebook helps in staying organized and keeping important contact information that may be gained while on the job.

An important Note: You must understand that everyone makes mistakes. Do not let a bad day get you down. Instead, learn from your mistakes. Show your employer that you want to learn.

Be professional - When sending e-mails or other forms of written communication, draft and review the text before sending.

Crucial aspect of the internship experience is networking - The key to networking is finding ways to add value to a conversation. Use these social events to learn more about the firm. These events will give you a chance to meet new and influential people, especially key players like recruiters, alumni and mentors. Find common ground with these key players and give them a reason to remember you.

An important Note: When networking don’t just concentrate on “sucking up” to the recruitment team. Network with the other interns too. A friend of mine managed to set up and internet business with a fellow intern, left he IB industry. Yes, fruitful.

DO NOT pretend to know something when you really don't - asking everyone the same question and talking negatively about your co-workers. While it is good to be inquisitive, you want to ask insightful and thoughtful questions, not generic ones. Also, avoid bringing your personal life into the office and focus all your attention on senior management. While you will be exposed to senior management, the employees you work closely with will help you learn the most. They will provide you with resources and advice.

This has been one of my longest post, I hope you find it useful and remember you only have about 10 weeks to make a good impression!