The Demystification of the Finance Industry, a JP Morgan Event

With Matheus Covre de Menzes

Matheus Covre de Menzes, a Lancaster alumnus joined us last week to share his journey at JP Morgan, explaining how the finance industry has changed since 1973, and continued by giving advice to current students. 

His journey

He completed his Bachelor of Science in Engineering at Lancaster University between 2012-2016. Following a summer internship at JP Morgan during 2016, he was offered a graduate role in the front office analytics team. Fortunately, Matheus was then head hunted to join the Hedge Fund analytics team!  

Working for JP Morgan

One of the benefits of working at JP Morgan is the opportunity to rotate on a regular basis and gain experience in different departments. Matheus worked in the Market Risk department, where he was a part of the corporate team. 

There are challenges to working in any firm, which is why it is beneficial to gain an insight into a firm from a current employee. As highlighted by Matheus, it was difficult to navigate through JP Morgan, given its immense size. Also, one of the challenges he faced was the high levels of bureaucracy within the company, controlled by many regulatory constraints. In contrast to this, working at a smaller firm often means a face-to-face connection with the client, rather than working remotely in different countries. 

Matheus’ Top Tips

His biggest piece of advice for all current students is “you have to push for it!”. It’s clear that Lancaster Students are present in the City, so it is worthwhile going the extra mile to secure placements and internships, particularly in such a competitive field. At university it is essential that you work hard and consistently show your ability and passion to learn. It is useful to show perspective employers that you enjoy learning. For example, it may be advantageous to learn a new skill such as coding or another technical aspect. During your studies, you learn the theoretical approach to everything. However, this all changes when you enter the real world – learning doesn’t stop when you leave university! 

USE LINKEDIN! Matheus explained how he researched different Master Programmes via LinkedIn, through looking at the profiles of people who have completed/are participating in the same programme. He reached out directly to current and past students to ask for advice and gain an insight into the programme, in exchange for an offer of his help from the experience he had. From this, Matheus completed his Masters in Finance at the London School of Economics and Political Science. Connecting and networking is an essential part of entering the world of work, you must always remember to make invites personal, so people remember you. 

There is no ‘magic formula’ to succeeding in the finance industry. Ensure that you have conceptual knowledge in finance and always remember that there is not one common path that you must follow in order to become successful. There are people working in huge banks who have not been to university, as real-world exposure proves just as powerful as further education. 

Rejections are inevitable. According to Matheus, he has seen a lack of resilience amongst graduates. You have to be willing to fight consistently for the role you want. Don’t worry about the location of the role, you will still work for the company and gain experience regardless of where. It may be useful to apply strategically. For example, if Bournemouth has more roles available – apply there and apply early! 

So finally, take any opportunity you are given. You never know what it might lead to! 

Summary of Top Tips

  1. Never stop learning 
  2. Use LinkedIn to your advantage
  3. Never give up
  4. Take all the opportunities you are given

How has the finance industry changed?

The Oil Crisis of 1973 was one of the turning points of the financial market. In the past, fixed securities consisted of government bonds, in particular the US. It is possible that Digital Currencies (such as Bitcoin) may fill the gaps of safe commodities given that gold has always had a ‘safe haven’ effect. However, new products have been released into the market with higher levels of liquidity and complexity. The market has a ‘natural selection’ process resulting in a battle of survival of the fittest. This can be shown through the success of Renaissance Technologies, one of the biggest trading houses. 

The digitalisation of the market has become the norm, where processes have become much more quantitative (hence why coding and hardware skills are important!). There are many drivers of this change:

  1. There is more liquidity in the market as well as a higher level of market efficiency, meaning that mispricing is removed extremely quickly. 
  2. During the 70s and 80s private equity became a new thing, creating alternative investment fields. For example, American Universities such as Yale produced high returns and had much less volatility. 
  3. The Financial Crisis of 2008 has placed a regulatory burden on banks. Prior to this, banks had the ability to prop trade and become market makers. This has changed the scope of institutions in financial markets, becoming more Asia and Europe focused rather than US Centric. 
  4. Hedge funds with larger capital are becoming more active investors, given that the private equity sector produces considerably less yield. 

Although the financial sector is continuously evolving with quicker responses thanks to technology, the fiscal commodity market is still extremely volatile (we are still experiencing oil crises). Societies continue to be built around a necessity for oil, particularly within emerging markets. 

ESG & Green Recovery 

Following from the coronavirus pandemic, the hot topic amongst all leaders is making ESG a priority. 

ESG (Environmental, Social and Governance) criteria are used by socially conscious investors and shareholders to screen investments and assess a company’s impact on the world. They affect how your company will gather and retain funding from investment funds who have a ‘socially responsible’ investment strategy.

According to Matheus, ESG must be proactive and follow a profitable strategy. Although it has such a huge amount of potential, it requires more than just investment. There needs to be a regulatory change globally, as well as a change in mindset of investors and citizens on a large scale. There are many factors which also contribute to the success of ESG. For example, the geo-political scenarios across the globe (Brexit, US-Iran, American Re-elections) make it difficult to predict whether global economies will reduce their exposure to China in the near future. 

Suggested Further Reading: 

Digital Currencies: https://cointelegraph.com/news/singapore-to-explore-central-bank-digital-currency-with-china

ESG Recovery: https://www.hl.co.uk/news/articles/video-how-esg-investments-have-weathered-coronavirus