A good understanding of risk is essential for anyone working in the banking world, especially those tasked with estimating and managing financial uncertainties. Anyone who decides to change career paths completely after many years of training also knows a lot about risk, or is likely to learn. So Alex Marini, who left theoretical physics after earning a Ph.D. to pursue a career in risk management at one of the country's leading banking institutions, is bound to know something about risk.
Today Marini, the senior manager of the Risk Management and Technology department at the National Bank of Canada in Montreal, admits it was a big gamble to leave his comfort zone in science. But--ironically, perhaps, considering the analytical expertise he has acquired since leaving science--the move was not the result of a careful risk assessment. Marini went with his gut, and it paid off.
“I learned a very important lesson: the idea of risk and reward,” he says. “I took a risk; there was no guarantee that I was going to find a job. I knew that there was a chance I might fail. But I ended up getting the best reward I could ever hope for, a career that I love.”
Marini began questioning his professional plans during the second-to-last year in his Ph.D. studies at McGill University in 1995. Throughout his academic life, Marini hoped to become a researcher in either the academic or government setting, where he would continue his research in theoretical quantum mechanics. As he approached completion of his Ph.D., however, he noticed that his interest was waning. “I don’t think that I really enjoyed what I was doing on a daily basis at one point. I liked it, but I had lost my passion for it,” he says.
Like many scientists-in-training, Marini was also worried about the long path to a career as a scientific researcher. Once he was through with his Ph.D., he realized, he would still require several more years of postdoctoral training. Postdocs in his department told him about their experiences of jumping from postdoc to postdoc, with no obvious end to the "training phase" in sight. “The lifestyle of a postdoc just didn’t appeal to me," he says, "and I knew then that perhaps this wasn’t the direction that I wanted to go.”
Marini's work may focus on risk, but in his personal and professional life he prefers stability--and this, he realized, was an important factor in choosing a career. He knew that as a scientist it was likely that he would work 2 or 3 years in one place, then find a new temporary gig when his fellowship ran out. If he was lucky and good he would eventually earn a 7-year audition for a position potentially permanent position. He found the prospect depressing.
Marini says there was no "eureka" moment when he suddenly realized his future was in banking, not physics. But a chance meeting at a local pub with a friend’s relative, who was doing a Masters degree in finance, was, if not a eureka moment, something very close to one. Chatting over a beer, Marini learned about the field of financial risk management. Quantitative research, which he enjoyed so much in his own work, was an integral part of this field, the acquaintance told him. “When he told me about this, bells went off in my head. Here was something that really sounded interesting to me,” Marini says.
He began frequenting the university’s management library, signing out one book after another. His supervisor discovered that something was up when Marini decided to give a talk to his physics department about “options strategies” during their regular weekly seminar series. The talk was a hit with the audience. “The turnout was amazing; it was packed, and everyone, including myself, thought it was fun,” he says.
Not long after--before his Ph.D. defense--Marini had a chat with his advisor and found to his surprise that he supported Marini's desire to go into finance. It was not uncommon, his advisor said, for physicists to switch fields and move into careers that were more applied. By the time he finished his degree in 1997, he knew where his future lay. He headed for Toronto, Canada's banking capital.
With the help of a headhunter and training courses designed for financial planners and brokers, Marini landed a job as a financial analyst at the Bank of Montreal. He spent his days calculating financial risk exposures in commodity swap transactions. Marini gives an example: a company buys a lot of oil and wants to lock in the price in order to structure their cash flow. Depending on the fluctuation of the price of oil, the bank calculates the credit risk and their exposure to other risks. “By analyzing historical market data, we would calculate inputs that could handle all the different possibilities.” Meanwhile, in the evenings he minimized his professional risk by attending banking-related classes at University of Toronto.
In 2000, Marini took a new position in Montreal. Five years later, he has moved up the ranks at the National Bank of Canada and now manages a team of 13 analysts. He and his team calculate and report the market risks the bank takes every day. “Our goal is to quantify these risks and detail them to upper management in the form of user-friendly, usable reports,” he says.
Many of his colleagues over his years in banking have had academic backgrounds similar to his, with physics, math, or engineering degrees. He himself has hired many folks with physics degrees; estimating financial risk, he believes, requires strong mathematical and problem solving skills. Indeed, he sees modeling the money markets as fundamentally a science problem--why not attack it with people with scientific training? “I think this field really lends itself to be studied like science: looking for patterns, managing problems, and doing approximations; all skills you should have in your math and science training toolbox.”
Marini is quick to point out, however, that folks entering finance from science backgrounds are at a disadvantage: it's harder for them to communicate with people from more traditional backgrounds like trading or accounting. “Its important to adapt your communication style and learn the lingo; otherwise the message doesn’t get through, and it can lead to a lot of confusion.” This is where his extra training--those night courses--comes in handy, helping him to function and communicate in this very different world.
Although a physics Ph.D. may not seem like the most efficient way to prepare for a banking career, Marini doesn't consider the extra time wasted. Every step he took, he says, helped him understand himself better and narrow the range of professional possibilities. It also helped him to mature, which in turn taught him to be true to himself. “If you really like what you’re doing and you have that passion for it, then that should really help you achieve you goals,” he says, “But if you’re studying something or doing something that doesn’t give you that--yes, this is my passion--then [you] might have to re-look at what is it that gives you that, and consider it.”
The key to finding the right career, Marini says, is to follow that passion and take a risk; risk-taking is what will separate you from your professional competitors. “It’s really interesting that in the financial world, the idea of risk and reward happens every day,” he says, “Sometimes you make a calculated gamble and it fails but you still look back and say--it was still a gamble you felt you had to take.” Other times you take a risk and you succeed.
Andrew Fazekas is the Canadian Correspondent for Next Wave and may be reached at firstname.lastname@example.org.