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June 20, 2011 2:17 am

Emerging markets plug gaps in demand

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Although western economies are struggling and the eurozone faces a continuing crisis, one business is flourishing: financial training.

And as in many other areas, demand from emerging markets is driving this growth.

This year, the CFA Institute, which administers the Chartered Financial Analyst exam, has seen an increase of 17 per cent in applicants from Asia who are eager to sit the first stage of the three-year exam, one of the most widely recognised financial qualifications in the world.

In New York, the New York Institute of Finance (NYIF), a financial education provider and part of Pearson, which owns the Financial Times, reports that while China and Brazil are the two big sources of demand, there is also increased interest from Africa and even such unlikely places as Mongolia.

Tom Robinson, managing director of the education division of the CFA Institute, says that one reason for the surge in demand is that the CFA is a relatively new qualification there, and so the growth rate is higher.

But that is not all. “There is just a real thirst for credentials,” he says.

As the examination is conducted only in English, it performs as a proficiency test of business English as well, he points out.

Patricia Sparacio, managing director of the NYIF, says that business from banks in developing countries has grown by 20 per cent in two years.

“They want to know what the best practices are and they want to see good global practitioners,” she says.

Business schools as well as training companies are seeing increasing demand from Asia, in particular China.

There are several reasons for this thirst for financial training in China says Simon Taylor, director of the masters in finance programme at the Judge Business School at the University of Cambridge in the UK, and they go beyond the desire for qualifications.

“Their banking system is very big and partly because of the rate of growth and partly because they are liberalising, there is a huge demand.”

Like Ms Sparacio, he says that the first task of Chinese banks is to catch up with Europe and the US, particularly in new areas of business.

“They need people in product areas that they don’t have yet.” But, he says, Chinese banks will want to put their own mark on the western models they are taught.

There are already more CFA candidates in Asia than in the Americas, says Mr Robinson — 42 per cent as opposed to 36. “There will come a point when we will have more members in Asia than in the Americas,” he points out.

Such a shift in power could well be inevitable, as the growth in the market in for financial training in Asia is in stark contrast with western Europe.

Mr Taylor says the overall demand is “not growing”. In New York, Ms Sparacio says that, while some of the training and development departments in banks are experiencing static budgets, others are reporting a decrease or that they have been cut altogether.

But there are some bright notes. Alastair Matchett, co-founder and chief executive of Adkins Matchett & Toy, a training group with offices in New York, London and Hong Kong, says there are indicators that investment banks in the US and Europe are hiring again. With that will come contracts for companies such as his, which specialises in training recruits to graduate programmes of investment banks.

Investment bank recruiting at analyst level is back at 2007 rates, he reports. “This summer is probably our busiest ever.”

What is certain is that the market is changing in the Americas and Europe.

Banks and regulators realise that a lack of appropriate knowledge exacerbated the recent financial crisis and both are insisting on more training for those working in financial firms.

There is a huge variety of programmes on offer, from accountancy to private wealth management and from one-day courses to degrees.

The market has traditionally broken down into those qualifications that are required by the regulatory authorities and those that are optional and targeted towards personal development.

But increasingly financial companies are asking for more than is required by law, says Richard Fernand, head of business school at 7city Learning in London.

That means moving beyond pure technical training, says Will Goodhart, chief executive of the CFA Society of the UK. “I think what’s changing is that there is more of an emphasis on what it means to be a professional, rather than just acquiring qualifications.”

But banks also want to save money. One way of doing that is to set up their own training centres. “It is to manage the learning paths of their employees, but it is also about managing costs,” says Mr Fernand.

Another trend is the move away from paper-based teaching materials. The CFA Institute launched an electronic curriculum two years ago, for example, and both it and 7city are looking at delivering teaching materials on tablet devices.

There is also an increased demand for research-led teaching — the Financial Times publishes its first ranking of these types of masters in finance programmes this year .

These degrees can differ markedly from each other.

While many are aimed at new graduates, others — for example at London Business School — are for those who already work in the finance industry. Other degrees are different again.

At Kelley Direct in Indiana, for example, the online MSc in finance is proving particularly popular with senior — often board level — managers, most of whom already have an MBA, says Sreenivas Kamma, head of the finance department at the Indiana University Kelley School of Business and of the Kelley Direct online programme.

“They want to get up to speed and up to date with the latest thinking on finance,” he says.

In a rapidly changing financial world, they are not alone.

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