There is a world of difference between finance in academia and finance in the financial services industry, even if you are working with the exact same model. When you work in the financial industry, you are inevitably seeking profit. Whereas in academia, you are seeking truth. The different goals of the two realms inevitably means that you will be doing something different, even with the same tools.
To seek profit, you have to sacrifice rigor. The markets move fast and slow responses erode profits. Thus, people in the financial industry tend to prioritize speed and hastiness. This speed and hastiness is often driven by a lot of grunt work under heavy time pressure.
To seek truth, you have to heavily weight academic rigor. There are tools for validating the truth of certain claims. These tools have to be used a precise way, so results cranked out with grunt labor and speed are often not presentable in academia.
“Refined academic prose or rushed pursuits of profit?”
This seems at first glance the unavoidable trade-off. If you admire academic rigor and can’t stand the corner-cutting of investment banking, you head towards graduate school. If you enjoy the exhilarating search for profit making, you head towards finance. Whatever your preferences are, what’s at stake is rather clear.
Yet, this type of sorting promotes an inevitable “dumbing down” of the financial industry. Because of the efficiency required in the industry, you inevitably have to abandon the search for truth to maximize your search for profit. This makes it relatively difficult for the seekers of truth to join the industry. We now have a large pool of profit-seekers, though nothing wrong with them individually, as a whole corrupts the infrastructure of the company. In the current financial services industry, the beauty of finance is desecrated: you enter a case through one end, and retrieve a deliverable out the other.
What I personally believe we need in a financial services firm is an equal balance of the truth seekers and the profit seekers. This composition, though less aimed at the “deadly efficiency of excel”, creates more financial value through academic rigor. Quoting a friend who’s a junior analyst at Credit Suisse, “the amount of financially wrong things we publish is astonishing.” Some force needs to be there to balance out the imprecision of the current financial services industry culture. The perfect report shouldn’t just have a well-thought out discounted cash flow model. It should make the reader feel the beauty of finance. And doing this is only possible with those seekers of truth.
This creates a firm that not only creates greater value for their customer, but adds value to the study of finance. I think that is the type of financial services firm we need.