Speaker 1: I’m not particularly familiar with the finance business as a whole. I did some research but I feel like it would be best if you in your own words could explain to me like what is it you do in terms of your role and your responsibilities.

Speaker 2: Sure, obviously the financial space is pretty vast right so it can mean a lot of things to different people. In my case I’m mainly working in what we call capital markets investment management right and the area I’ve been working in for probably 25 years has been around servicing the investment management space. So just to maybe try to explain it in a simple way there are people who have the money right we call them asset owners right so those are for instance pension funds receiving contribution that people make to these funds in preparation for their retirement could be in the development for universities it could be hedge funds people give money to hedge funds to grow so the institution that are collecting money to invest it to make it grow for other people right for different purposes.

Now in the markets whenever you have these large investments done there are a lot of services happening around them the services or could be accounting services could be what we call custody services someone has to kind of custody and keep safe keep the assets right and then there are people who need to deliver a book of records so that’s part of the accounting but as well analytics how the funds are performing performance risk right so there is a whole world of services that are offered to these investors.

Speaker 1: The work I’ve been doing for 25 years initially with State Street which is a bank out of Boston and now back of New York which is a bank out of New York State and New York City

Speaker 2: is around servicing these asset owners and I’m going to narrate a bit more my role in particular is to focus on investment analytics so my background is quantitative right so my background is the math and what we call financial engineering nowadays right so a quantitative approach to risk management portfolio management to asset management in general and what I’ve been doing over the past quarter century now can be summarizing like three different tasks one is to build the technology right so that help us kind of manage the compute the analytics for these assets right now you have to imagine this is pretty large portfolios if you think about back of New York it’s managing two-thirds of the assets in the world this is in trillions of dollars like you know same thing for back of State Street as well so we have this massive amount of data we have complex investments structures so people buy stocks that’s easy right you can buy an equity but people buy what we call derivatives which is a bit more complex such an option on an equity so we’re not going to get into the details but these instruments can be very complex sometimes sometimes they’re over complicated and sometimes they get us in trouble like the large crisis 2008 with the mortgage backed securities so so the idea for me in my career is to deal with this portfolio and build technology and data right that allows me to assess the risk and performance of these assets okay so give you a quick background so I started as a quant at French bank in Paris called BNP I was building models for it those were statistical models for risk assessment right that was for the bank assets right very specific to the bank then I moved to the US and then there I worked for a software company that built technology to be used for pricing and assessing the risks of assets of these asset owners at that time it was large insurance same thing that’s another type of asset owner and so my role was to develop the models right the qualitative models for these portfolios and work with technologists to do so later on I joined a bank state street and that my job was to work with developers to develop the bank’s own technology to develop the service and then that was never wrong so I had a qualitative role purely math math and finance then more geared toward technology and data and then once we built a platform I started selling it so I had a sales oriented role right what we call business development so it’s interesting because it’s highly technical role with project management product management and then more kind of business development so this is how my evolution happened from purely modeling to product development to business development right so from a technical side to more of a business side and obviously then I got into managing teams etc so that’s the path right more or less sticking to risk management and performance management for the these portfolios and more recently I’ve been trying to do something slightly different which is actually helping develop a business for what we call front office services so the difference here is not huge but the idea is to support actually people outside of my banks or those sorts of clients right and help them actually manage their portfolios as in creating portfolios and trading so it’s portfolio management and trading those are aspects of finance that are called investment management right so if you think about these asset owners they all have a people who are actually good at creating portfolios and people are good at trading right to actually turning these orders into an actual trade and owning or selling the assets so this is what I’ve been doing so I’m going to stop here and see if this is clear or you have questions or are you really confused with me?

Speaker 1: No I mean it’s pretty clear what I’m wondering is there’s a lot of math in your job but why did you choose finance in comparison to maybe like academia or other things like that?

Speaker 2: Good question well finance was my first choice honestly initially I thought about doing something closer to like the sciences biology and medicine right then I figured like I didn’t want to study for that long wasn’t necessarily for me back then I said like I’d like to get a master’s but not necessarily like 10 years or studies or getting a PhD so without a PhD probably you don’t want to think about academics so I was more geared towards something more practical so I ended up going into economics statistics right found that interesting and then I discovered capital markets and finance back then it wasn’t even a degree that’s called financial engineering it was just applied mathematics to finance right and so enjoy that I found it interesting because you’re building models that are supposed to select an economics in a way supposed to represent a real transaction so there’s a lot of theory behind it that has evolved but their models that are coming from the world of physics to try to to project basically the path of the market in order to price something so I’ll explain what it is no one has a crystal ball to to know what’s happening in the future but using statistics probabilistic methods you can put a probability on invent that’s happening in the future and a lot of the finance is built on that right especially what we call path dependent derivatives I mentioned to you derivatives earlier so like an option so the option is fairly simple instrument but basically you’re buying the right to buy or sell something in the future right so you don’t buy the thing you buy the right to buy it or sell it and then depending on where the price is at in the future you may decide to buy it or not right if the price went down then you buy it because because you agree that the price for the future and have an option to buy that price okay say I’m buying the right from you to buy IBM for $100 in a month I might not do it if IBM is $90 in a month I’m not gonna buy it I’m gonna just lose my option if IBM actually is 150 of course I’m gonna buy it at 100 and sell it 450 and make a lot of money right so these models where I always find them intriguing based on theories that are as I said coming from physics it’s called stochastic calculus so when I discovered that at school I find it really exciting and there’s a lot of research behind it and I started working on a project as a student for BNP in France and I really enjoyed it because the project was extremely challenging back then so I was a student but I worked on a project that is supposed to at the time build the first banks like really global model for the bank to define what we call capital requirements this is the money the bank has to keep aside just in case of major losses right so the question is how much can we lose right how much are we comfortable to lose so this is pretty interesting so working with a lot of the trading desks fixing comps or the bond side equities and that was a couple of years of amazing research work for them and and developing these first models like this model didn’t exist it was a new concept we had to be very innovative and that is what I think that I liked about this job which is there is a research component so that that makes it exciting and for instance back then just to take this example when I worked at BNP there was no model to compute extreme risk so we went and found models in a library actually it was from Columbia University that someone went to Columbia University for me I was in Paris and digged out a an old research paper that explained risks what are the extreme risk that could result in a bridge breaking under like extreme winds right so these events happens one at one time in 100 years and said well that’s what we’re looking for we’re looking for that one event that would break the bank right so we took this extreme value theory applied for engineering and then we applied it to finance so we had to translate all of that and turn it into like a distribution of risk basically that is more extreme and there is a model called the value at risk model so we created the extreme value at risk model and we defined a lot of the banks capital requirements that was a great exciting innovative way to do things the other aspect I like very much working at the bank was we were still student right students in Paris but we were presenting to the senior committees because that was a big deal right I had a great mentor this gentleman there was an amazing mentor he took a team of young people like us at that time I’m not that young anymore he was probably was my age now and he he took his under his wing and he gave us a lot of responsibility and it gave us a lot of freedom to do things and that ended up being like a hell of a project very successful it got implemented I started the implementation but then I left and went to the ones so so that was what got me into it really it was like exploring economics economics took me to the finance these jobs got me really excited about finance and then that’s it I’ve been doing that since

Speaker 1: wow I mean I definitely really personally like like having freedom and like creativity to solve like problems and you know going like out of thinking out of the outside of the box um and I feel like that’s that’s what really resonated with me with what you said you know um the whole story about going to Colombia is really I find that very interesting um but um I mean obviously um like as it is right now you’re you’re pretty senior um where you work so how how would like because I would be if I was working um at your company I would be coming in at an entry level job how how do the two like compare like in their day-to-day job and maybe in their like responsibilities

Speaker 2: so you’re asking specifically about entry level that referral right yeah yeah so uh interesting so obviously we hire on a regular basis with my team like entry level people including interns I have actually an intern that I had last year in New York and from from the University of New York and she’s joining I think in a couple of weeks so she was interning last year and she accepted an offer to come back after she graduated so uh so people would come in in my main group at an entry level with no experience or some little experience typically they come as business analysts and what we’re asking them to do is really to support clients so they’re different roles the entry level usually is what we call it support role right for the investment management world so they need to come in after the smart people they need to be great at problem solving because in the role that I’m hiring for typically what is required is solving a problem for a client client is gonna come and they’re going to say this number is wrong or I need to create a report with that solves this or answer this question right and there is no clear solution sometimes and very important is that someone who has the basics right someone who has an analytical mind someone who is not afraid of numbers and communicate well that’s the basics of skills and some technical skills but more sometimes importantly someone who can just like he said think outside of the box right and not be afraid and that’s important because you’re solving a problem the client has 15 years experience using the platform for like five years and couldn’t solve it we’re asking someone junior to come in with fresh eyes try to help them so they’re gonna listen learn understand the problem and then start going through the documentation through asking other people and they’re trying things they don’t want but they will eventually solve the problem right so that is actually probably like very important skill set so people who are you know not afraid to ask questions, not afraid to explore, to try things, right? And to try an error, they will get to something. And that’s usually the profile that works best for us, right? And people who want to solve their own problems, right, they’re not necessarily they’re sitting waiting for some letters will feed them a solution. There are a lot of tools nowadays to help people, right? Outside the company, but inside the company as well, we know, be it gen AI tools, we have something called ELISA, they are training tools, they are so it’s like, here’s everything in front of you.

Everything is sitting there. It’s solving the problem. So I can give you a simple example, right? The history of this. Someone joins, they know what a bond is, the definition of a bond, I know what has coupons. And it’s an instrument that you need to give $100 and then every every six months you get $5 and after six months you get back your 100.

Okay. So they understand that they studied that in school, they can send the math on how you compute these cash flows. But someone comes in and say like, well, I’m looking at the risk for the bond.

And the system says, you know, the risk in the bond is called duration in this case, duration is like two. I don’t agree. I think it’s slightly different than that.

It’s longer and shorter. Okay. So the analyst is going to say, okay, fine.

I’ll start with the basic stuff. So is the bond set up properly in the system? Yes. So what else can go wrong? Well, there is data needed. What data? What is actually the industry curve? Well, let’s go check that out. Well, I have an industry curve. Okay. So if the rate data is good, the setup is good, assuming the software doesn’t have a bug, let’s say that for X, then there only could be one thing, right?

The curve is not right. Okay. Now you get into the next step. It’s more complex. How a curve is built, we have the right input to the curve, right? So it’s really like having that being able to actually analyze the problem, break it down into small pieces, fix it, right?

And come back. And maybe after doing all of that, even checking that the model is right with the engineers, you may not have the right answer. So like, well, everything is good, but I am challenged. So it’s either I’m going to go back to the guy tell him like, tough luck, it’s good. I verify that here’s the proof and work them to the proof, or you’re going to think about something else. It could be something else.

It could be that this specific bond is not the US bond, it’s a Brazilian bond, and it has a special feature that you’re going to have to find out. So for it’s fairly simple and kind of first like a standard problem. But for someone new, right? It’s not easy to do all of that. So they really have to work themselves through this, right? And then try to go step by step, knock down what’s possible, what’s impossible, right? And go beyond that and think, maybe I’ve got something special about the body to get the ticket now and read through it, research it to go to the internet.

I mean, so, but not sit down and just like, hey, someone should show me how to solve it, right? It’s less and less true, right? And I think the new generation, people like you, they’re less actually usually keen on waiting for this because of the change in the amount of information, the internet and the availability of knowledge. People tend to go and look for things, right? And dig through it and find which is great.

Right? But that aspect of like, go gather kind of type of skill set is very important. We call it ownership. Even like if it’s always an analyst, owning the problem is important, right? So it’s kind of the, you know, I’ll take it and I’ll run with it and show that I can do the maximum. So ownership is a great way of thinking about work. And this is something that I look into when I hire people. I want people who are actually owners, right?

Not just waiting there and waiting for people to just tell them, do they be seen, right? Ownership as well being very client focused people who in our business client, doing more for client is important. So really trying to do more for the client, right? So owning the problem, doing more for the client, which you go together. Those are values that we look at, we look for in a client oriented business.

Speaker 1: Okay. That’s very interesting. So, I mean, you already kind of hinted at this, but you work in a team, right? Yeah, always working in a team. And I assume that obviously you’re not the only team in the company. So how much like work of between different teams is there at your job?

Speaker 2: Look, there is nothing we do as a single team. We’re interconnected constantly, right? So my drag team, you know, is a servicing team, an operation servicing team, but we need to work with the compliance team and we need to work with the legal team because when we’re going to sell something, all these guys are going to come in and play compliance regulation. We work with the, so there is a team called derivative, where it’s collateral.

So the problem we’re solving for the client are very complex and multi dimensional. So we need teams that can go across. Actually, the organization is built that way.

Right? So one more, you’ll see that organization just not us working in what we call an agile way. So the way it works is it’s not like silos, but what we call transfer, transversal kind of activities that build parts.

So a part is a group of people, a team, built out of different teams with different skill sets. Right? So I’m solving this problem.

I’m an engineer and I need a product person and I need a quant and actually for this one, I might add the marketing guy, right? Because it might give different perspective. And we’re going to say, okay, objective is to solve that problem. This needs to be solved in six months. Okay, we’re going to work in increment of, you know, two weeks, right? And as and we’re going to be together on a bi-weekly basis with short term goals, we’re going to actually not have these goals one by one until we get to the North Star.

Right? So that and then the project is done, then I can take these people and actually redistribute them to make a new kind of functionality that solves the problem. So it’s very interesting, the organizations are less silent, less and less silent, right? So there isn’t a, in understanding that efficiency comes with different perspectives, right? So engaging with other teams is important. And obviously, there is the usual, you know, need that teams work together because what this team does is consumed by the next team, right?

The performance calculation team proputes performance and send it to the performance, the reporting team, the reporting team will actually build these reports. So that is more kind of like chain works, like I need to build something that is consumed by the next guy, right? Which is different from I need people from different teams, different skill sets, right? I need an engineer from the engineering team become joined this specific group, right? We call them POT, which is, I think it’s project oriented. What’s actually the POT standing for?

I forgot, I’ll come back. So this is important, right? So any any project you take on requires different skill set and is, and is usually not just to service one client. So if you look at one of my clients, I’ve got different stakeholders, right? I have people in the investment office, people in the risk office, people in the operational office, right? But they all work together, right?

Because the investment office needs to make sure that they’re following the risk office requirement in terms of the investments, and they need to have operational resiliency, right? And how they do things, right? So those are my stakeholders. They come to us and they say, they’re sourcing their service to us and say, okay, you’re going to do some operation for us, and then we’re going to help us with investment management on the investment office, and then you’re going to help us with the risk office. I need people who actually can cover all of the same things, right? So I need people with investment management, working with people with operation, right? skill set, and then people with analytics and risk, kind of from skill set. So at no time, you know, you’re working that I’m doing my risk job. Your risk job is in conjunction with the other teams, right? And so we are interdependent. So, and obviously, I mentioned the obvious, and you heard probably this few times, along my career, we always needed technology, people, right? Process analytics.

So it’s very difficult to dissociate these. So at the end of the day, the skill set, we ask for a junior analyst. At some point, someone has to start building all these types of knowledge in one person, right? There’s a minimal understanding, even if you’re your quant, you need to understand data.

How else would you do that? Only in school, you can do model and works. In real life, data might exist, might not exist. You have to invent data, proxy data, right? Data might be right, might be wrong, might be sparse. So I have a different problem. I have a math, I have a calculator, but if you don’t fit proper data, go ahead and change it out.

So the model doesn’t matter. So in real life, you have to bring all the skills together, right? You’re not expert at everything, but you need to have, so you bring expert, I’ll bring data expert, be I’ll bring a cloud expert, I’ll bring a, and you’ll see this is the problem, let’s solve it together. So effectively, it has to be a teamwork.

Speaker 1: Yeah. I mean, again, like, I really, I personally really like that, that teamwork environment and what you said about all the teams being interconnected. I mean, the more you explain it, the more it made sense, you know, and how like the company is definitely probably dependent on that interconnection to achieve its goals.

And I mean, I don’t want to take up too much, too much more of your time, because I did say 30 minutes. So would you have any like, for me as like in my in my situation in high school or any like last pieces of advice, if I want to get like a position like yours, or in general, yeah.

Speaker 2: Yeah, look, I mean, in high school, you may or may not know exactly what you want to do still, so it’s good to explore, right? So high school internships, and then in college, try to explore different, I mean, there are, so you may go into like, you really like finance, right? So there are programs that all rotation programs and many firms are pretty good, right? So you can explore, I showed you just a glimpse, various thin slices of what Backoffner does, right?

There’s a lot more, a lot more. And so you might get a rotation program, right? So you can explore different aspects, six months here, six months there, six months in technology, six months in audit, six, and then you understand how the bank works as well, etc. So, but even before, if you choose, you know, a direction, it’s good to, if you can get access or work in the real world, you know, before going to college, right? And you obviously have time to change once you’re in college, but to explore different interests of yours. Obviously, at the minimum, you should have a few interests, you know, you might like never, never work in the bank.

This thing’s not interesting to me. I want to work in environmental things, or I want to work in, you know, my interest is more science or architects, right? So, yeah, so there are interests, but I think it’s good to try to explore that through a real life experience. So internships are typically one of the best ways to do it. Internship programs are more and more complex. Companies are now looking to hire more of the interns. It’s like I’m looking back up in New York, I think our cohort of interns this year is the biggest we’ve ever had.

So last year was 700 in the Tristit area, so we’re married in New York, New Jersey, but I think it’s probably a thousand this year, right? And it’s taken very seriously. So I would definitely encourage you to make sure that you get to summer, get busy during your summer, so I’m to explore that. And even if some companies, you can find those where you can go for like a couple of weeks at a time, right? They take even high school students, I think they do that.

They work them through the floors, they explain to them at a high level, they get to meet the executives, tell them about business, you know, that could highlight interest or disinterest anyway. So that would be an advice for you, but keep your options open, right? Jump into something and say like this is it, that’s the rest of my life. They draw anyway after you graduate high school and then college, still can work and come back to school and then do a master’s in something different. But be curious, open-minded, you know, and challenge yourself, but you find your way. I mean, that’s I think probably what you can expect at the stage where you’re at. The other thing is, I don’t know if you’re well repersonated, but I mean, some like not to go into these large companies or smaller companies. Yeah, actually, that’s really something different, right?

Going to a large company like New York is a different experience from a startup or like a smaller company. So think about what is that you like. If you like to be very creative and nimble, right? You know, Wall Street behemoth is not always the best place. So, but if you want to gain an auto exposure as well, that could be bad when you start there, but then you do something else, right? So you learn some of the business, then you can do your own thing, right? So a friend of mine’s daughter, she loves arts, right? And that’s what she wants to do. But for some reason, despite studying arts, she ended up going to BlackRock.

Yeah, biggest investment manager in the world. When she called me, she said, what do you think? She actually already had past the two levels. She had to pass the last one.

I was very surprised, but she said, well, I have an angle. I mean, there’s an art business. So yeah, art dealing is huge.

It’s like true. So she ended up going to BlackRock. I was very impressed. It was a very selective program and she’s a very smart girl on the Upper West Side.

And two years later, I saw her dad. She said she’s miserable. She hates it.

But you know, she tried it and she worked through it. But while working at BlackRock, she did her art business and then she’s now left BlackRock and she’s living from her art. She’s a photographer.

She had an exhibition in New York. So you don’t know how you bat and go, right? Yeah. So keep that open mind on this. But whatever you do, do it seriously, do it fully, right? And probably that’s the best advice I can give you.

Speaker 1: Yeah, I mean, that’s great advice. I hear that. I hear a lot of the things you say resonate with things that other people tell me that I know. And it’s really, really impressive about like that story about the young woman who managed to sell her art. That’s definitely pretty inspirational.

Speaker 2: I’m very inspired to talk to her because her story is more interesting than mine.

Speaker 1: No, this was definitely interesting. And I don’t want to take too much of your time, but I really thank you for this. It was really, really insightful.