Right after the merits of the CFA, GPA rounding, and the ranking of schools and banks, the question that spawns the most debate is which language you should learn to break into investment banking.
And there are many candidates, each supported by a combination of logic and zeal:
- Spanish: Latin America!
- Portuguese: Brazil!!!
- Mandarin: China!!!!
- Arabic: The Middle East!!!!
So which one should you learn to maximize your chances?
Or is the real answer not even on this list?
None of the above.
Learn English or improve your English skills – even if you’re a native speaker.
Probably not the answer you were expecting – so let’s first look why this is the answer, and then why other languages are less useful in business than you would expect.
If you’re learning English as a second language, you’re doing it because… um, it’s the standard business language and almost a requirement to travel or do international business.
Even if you’re a native speaker, you could always improve your communication skills by writing, giving speeches, and so on – and MDs in banking care far more about your communication skills than your knowledge of advanced LBO models.
Now for part 2, where I get to convince you that even the CFA might be a better use of your time than learning another language.
You Are Racist / Politically Incorrect / Ethnocentric!
I’m not saying that you shouldn’t learn another language - I’m saying that you should not learn another language solely to break into investment banking.
You might see a job listing on a career site that looks something like this:
“Seeking investment banking analyst with 2 years of experience in M&A; must be fluent in Arabic.”
You might see that job posting and think, “I can learn Arabic for 4 years in school, study abroad in Jordan or Lebanon, and then go work at an investment bank in the Middle East!”
But you’d be wrong. Here’s a more accurate translation of this job posting:
“Seeking investment banking analyst with 2 years of experience in M&A; must be an Arabic native speaker and have attended school in the Middle East, and then studied abroad in the US, Europe, or Australia.”
There is no room for miscommunication in investment banking – you might get an A on your exam with 90% correct, but in finance 90% correct just means that 10% is wrong – which is equivalent to a natural disaster.
Understanding 90% of an article or a news broadcast in a second language is pretty good – but you’re still missing 10% of it.
That’s OK for everyday life, casual discussions, and language classes.
But if you’re responsible for recording all details of a conference call – as analysts often are – that is a serious problem.
And no matter how much you study, you’ll never be perfect in a second language that you started studying as an adult.
(More on how important languages are in investment banking in Latin America.)
Don’t Be Misled by Exams, Either
That’s an impressive accomplishment – but it’s still far from sufficient to advise clients on M&A strategy or to analyze non-recurring charges in the footnotes of financial statements.
Reading, Writing, and Arithmetic
Even if you dismiss the argument above and believe that you can become 100% perfect in both conversation and reading/writing, there’s another problem: speed.
Working in banking or PE requires a lot of speed reading – if you get a 10-page teaser and it takes you an hour to read it, your day is hosed.
No matter how much you study, you’re unlikely to ever be quick at reading other languages – especially ones like Arabic, Japanese, Korean, and Mandarin that have different character sets from European languages.
This question of which language is “most useful” in finance is also an incomplete one, because you need to consider cultural elements as well.
I won’t mix words: in some countries, no matter how good you are at the language you will never be accepted in the business community if you’re a foreigner.
I want to keep this as boring and uncontroversial as possible so I’m not going to name specific places, but they exist across multiple continents.
That’s not always the case, and there are plenty of countries with more diversity – but you need to keep the above points in mind before you end up disappointed after years and years of study.
And then there’s the competition: you’re up against people from elsewhere in the world who are not only native speakers of their respective languages, but who have also studied English since elementary school.
This one comes up a lot in China, where silly foreigners somehow get the idea that they can just march in, “learn Mandarin” and then work there like a native.
Please, don’t bother: even if you assume that only a fraction of the local population is fluent in English, that’s still tens of millions of people.
And banks in Hong Kong or on the mainland would much prefer to hire them over you.
The CFA is Better Than Something?
I’ve been critical of the CFA before – but for once I have something good to say.
Even though the exam requires a ridiculous amount of time, at least it gives you a conclusive result at the end: you pass, or you don’t pass.
If you pass, you can write it on your resume and everyone recognizes your accomplishment.
Language study, on the other hand, is more random, subjective, and possibly even more time-consuming than the CFA.
People list all sorts of different proficiencies on their CVs/resumes: What exactly is the difference between “Fluent” and “Conversationally fluent” and “Proficient”?
All of these labels are ambiguous unless you write “Native speaker.”
The CFA might require 900 hours of study, but becoming nearly perfect at the most difficult languages for a native English speaker – Arabic and the East Asian languages – will require even more time.
OK, So What’s Your Solution Then?
To reiterate: I’m not arguing that you shouldn’t learn other languages. I’m saying that you should not base your study decisions on what will be most “useful” for investment banking.
These days it’s almost expected that you will have some proficiency in other languages, even if you’re not perfect – so you pretty much have to learn something.
The Better Way to Use Languages
Rather than using a second language to work in the country of your choosing, use it as your “interesting” fact in interviews instead.
Combine it with a study abroad or volunteer abroad experience and use it to stand out.
See this article on how to prepare for your full-time banking job – there are several examples of how you could spin even a few months into sounding like a life-changing experience there.
After you get back, set expectations low and say that you can have a basic conversation but that you’re not good enough to use it for business.
Talk about all the cool stuff you did while studying abroad, and use that to hypnotize your interviewer into giving you an offer.
This approach gives you most of the benefits of language study without all the pain and uncertainty:
- Casual Study and Study Abroad Experience: Can get results in 3-6 months and hype up the experience while downplaying your actual proficiency.
- Super Hardcore, Fanatical Study: You might spend 4-5 years studying and write detailed reports and papers in the language, but you still won’t be good enough to use it for business.
Gaming the System
We still haven’t answered the question of which language you should learn, regardless of whether you take the casual or hardcore approach.
I’ve never ranked the banks or schools or anything else and I’m not going to start here – but I do have a simple suggestion: pick the most exotic option.
So if you’re non-Asian, studying European languages doesn’t stand out as much as Asian languages, and vice versa if you are Asian.
That may sound racist but it’s also true: interviewers will be much more impressed by a random white person who studied abroad and learned the language in Asia vs. an Asian person who did the same.
If you don’t already have a burning desire to visit a particular country or learn the language there, pick whatever’s the most exotic for you and go with it.
You could also make an argument that your time is better spent learning a computer language if your goal is simply to impress in interviews: most bankers won’t even be able to test you, and they assume that anything related to engineering is more difficult than finance.
It’s not easy, but it still takes far less time than learning an actual spoken language to a high-level.
And If You Really Want…
If you really want to go into hardcore super-study mode, go right ahead – but only do this if you have a burning desire to learn the language and are so obsessed you will stop at nothing until you’ve done it.
Otherwise, you will waste time and lose motivation at an “in-between” level, resulting in a high sunk cost and limited usefulness in interviews.
Exceptions, Footnotes & Disclaimers
For trading, you don’t need to be perfect because you don’t talk to people or read documents all day – lots of foreign traders at large investment banks in Japan, for example, are nowhere near good enough to use the language for serious business.
In sales, you have to be perfect because you are speaking with clients all day.
There’s considerably more leniency with English as a second language simply because it is the most widely learned second language worldwide.
So if you’re not a native speaker, don’t start panicking about an accent or using the wrong word occasionally.
As long as you can read and write business documents without errors, you’re fine.