Evolution of analyst training programs

Published on September 19, 2013 by Chanakya Dissanayake

Ever since the investment analysis industry was founded in the 1930s, experts have debated whether the investment profession is an art or a science. Far less debated, however, is the view that it is essentially a “craft” industry, where skills are accumulated in an apprenticeship environment over a long period of time. Fresh graduates with varying academic backgrounds, who joined investment banks and asset management firms as either interns or associates, were expected to demonstrate intellectual brilliance, strong work ethic, and learn under the watchful eye of experienced investment professionals.

As the industry expanded over the 1980s, global capital markets firms started investing in training programs for new analysts. The subject matter and the training methods differed among firms. Some bulge bracket investment banks viewed new analyst “boot camp” training sessions as a form of cultural indoctrination and provided on-the-job training under the tutelage of senior analysts to develop technical skills.

Others structured their training programs as classroom sessions on accounting, financial statement analysis, and securities valuation, with the more hands-on skills training provided by their senior analysts. Geographical differences also existed; firms’ Wall Street and London offices had structured programs, while their Asian offices relied on less structured training programs conducted by visiting senior analysts.

As the industry evolved in the 1990s to become the top career choice for the brightest graduates in the developed world, the training programs also evolved. Advancements in technology enabled firms to conduct certain classroom sessions remotely and archive recorded sessions to create self-paced training solutions. There was also an increase in third-party training providers, founded by former investment banking professionals and well-known academicians.

Today’s capital markets environment is markedly different from the 1980s and 1990s. Increased regulatory compliance and capital requirements have caused firms to undertake strict cost-control measures. Headcount reductions following the 2008 crisis also reduced the senior bandwidth available to conduct on-the-job training. Slower recruitment rates and small batch hires also posed challenges in conducting classroom sessions using expensive resource personnel. Many of these challenges are more prevalent in emerging markets, where the dearth of experienced talent affects firms’ ability to expose new hires to global best practices in investment analysis.

We have continuously evolved our training programs focused on preparing our analysts to support global capital markets firms. Our boot camp training sessions have proved valuable to our clients, as our analysts can support critical elements of a client’s analysis process with minimum supervision.

We aim to take our investment analysis training program to an integrated online platform in response to the industry’s new realities – the need for cost-efficient and high-quality training programs that provide a self paced environment for new analysts to build critical skills in investment analysis. Our online training platform will feature four modules – industry analysis, building earnings models, equity valuation, and writing investment notes.

Our online training platform will significantly enhance the effectiveness of training both young analysts and experienced capital markets professionals.

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