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Commercial awareness – useful learning tools to boost your theoretical knowledge

Commercial awareness – useful learning tools to boost your theoretical knowledge

Matthew Dow

02/07/2019

How can I improve my commercial awareness?

This question is regularly asked by applicants at open days that I have attended. This is because most applicants realise that graduate recruiters use commercial awareness as a key metric to assess potential candidates.

Yet, the term ‘commercial awareness’ remains quite ambiguous. There is no real yardstick to aim for – no real exam to pass.

Therefore, typical responses regarding improving your commercial awareness will recommend financial exposure. Like a child learning a language, the expectation is that the candidate will slowly accumulate a greater knowledge over time.

Consequently, lawyers’ common suggestions are that you should read the Financial Times, browse the business pages and subscribe to their firm’s blogs. Additionally, you are advised to listen to radio shows such as Wake Up to Money and scrutinise Newsnight, rather than Love Island.

Undoubtedly, the above sources (excluding Love Island) offer great financial content and analysis. However, following the news passively can often mean absorbing knowledge by osmosis.

This osmosis approach is a useful approach to learning, but I would question whether it necessarily provides you with the understanding of how business, finance and politics all interconnects. Would you be able to discuss the implications of a rather peripheral news topic that might be more relevant for your firm?

For instance, the news about Neil Woodford limiting withdrawals from his fund is fascinating. But, what is an ‘equity income fund’? How does it differ from an exchange traded fund, unit trust or similar sounding financial jargon you may have heard mentioned elsewhere?

For this reason, I would like to offer some suggested sources that teach how financial institutions, governments, businesses and investors operate and interrelate. The content is more academic and conceptual, rather than merely focusing on the latest story; yet I feel this approach enriches your commercial awareness – helping to put the news in a greater context and clarifying the more obscure financial topics.

Know the City by Christopher Stoakes

For good reason, this is one of the most recommended books out there for students looking to apply for any corporate law firm. The relatively quick read provides an excellent insight into areas of finance that are often difficult for a beginner to understand. Furthermore, concepts rarely explained in the news are summarised and simplified.

For example, the author offers clear insight regarding how the insurance and reinsurance market work. In addition, he is able to explain to the novice the role of investment banks, the process behind M&A deals, bond issues and many aspects of equity’s use in finance. Significantly, Christopher Stoakes has a great ability to pre-emptively tackle misconceptions or assumptions that we hold about financial products. For example, about how insurers will make money out of payments. This makes the topics far easier to digest and discuss at an interview.

As a caveat, the book is definitely tailored towards finance, rather than law. Consequently, it is more relevant to city/international firms that specialise in corporate work. Additionally, it is not particularly focused towards the role that law firms will play in these processes – other than brief references to legal due diligence, tax law or regulation during a transaction.

Nonetheless, in the past, I often experienced difficulty fully appreciating what law firms worked on. A firm would state they were specialists in asset finance, project finance or high yield bonds. My response would be sudden adhoc googling. Therefore, have one book that covers broad swathes of the financial sector and that can help to effectively explain the majority of a city law firm’s practice areas is welcome.

Great Courses Plus, financial lectures by Professor Fullenkamp

Great Courses Plus is an E-learning platform that specialises in providing academic lecture series for home study. They produce erudite content ranging from cooking, history to sport psychology. In particular, the financial lectures available on the platform are proficient at providing a theoretical understanding of the financial markets. These lectures are targeted towards beginner investors who wish to increase their understanding of the markets.

The two series that I recommend by Professor Fullenkamp are ‘Financial Literacy’ and ‘Understanding Investments’. Both lecture series may take you a while to complete - over 24 hours in total. Despite this, this series should be doable within the one-month free trial. You can also download them to your phone and watch in faster speeds than normal.

By the end of the course, you will rarely be confused by financial jargon. Furthermore, as significant time is spent on niche financial topics, such as clearing houses, exchange traded funds, mutual funds and the money markets, you may find your commercial awareness becomes far more sophisticated than you expected.

The reason that I particularly recommend this lecture series is because financial theory lectures on YouTube are often quite maths heavy. That approach is fine if you want to work as a quantitative analyst or accountant, but it is perhaps unnecessary for deepening your overall commercial awareness. In contrast, this series often uses examples, stories and visual images to enhance your understanding.

Tim Bennett, MoneyWeek and Killik.Com

In my opinion, Tim Bennett is one of the best financial educators on YouTube. Previously, working in the role as an editor of MoneyWeek, he understood that educating your audience could increase their engagement with a brand, enabling MoneyWeek to become their trusted advisor.

Therefore, I can highly recommend his video series on MoneyWeek’s YouTube page which offer insight on topics from the basics of bonds and index funds to analysing the products behind the financial news, such as the repo market. Tim makes the complex matters simple and after only one or two videos on a topic, you can develop a much more advance theoretical knowledge level. The caveat I would make is that these videos may contain examples that are slightly dated as many were made six or seven years ago.

Tim Bennett is now at Killik. On their YouTube page, he provides weekly tutorials covering a range of financial products in the news. Furthermore, he presents insight videos relevant to the general principles of investing. These personal finance videos will be very useful for those interested in private client work.

Tim’s videos are usually 10 to 15 minutes long and are easy to understand. Therefore, they are worthwhile subscribing to in order to complement the detail-heavy analysis provided to you by other, more regularly recommended sources.