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A Lesson in Finance is A Lesson in Life

Professor Ramesh Rao guides students to find simplicity in the complex world of finance by focusing on real life.

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Professor Ramesh Rao. Photo by Marsha Miller. Graphic by Ryan Goeller.

It’s a quiet evening in the Rao household. Ramesh Rao, a professor of finance at The University of Texas at Austin, prepares to sit down to dinner with his wife Anita when he receives an unexpected phone call. He recognizes the name of the caller as one of his past students and immediately answers. After spending a few moments catching up, he hangs up and looks at his wife with a delighted grin.

“What did they ask you?” she asks.

“They didn’t ask me anything. They just called to thank me for what I’ve taught them, for changing the way they view the world and changing their life.”

Rao has received many similar calls during the past 41 years of teaching at UT, and he references these moments as his everyday motivators. His unwavering work ethic has not gone unnoticed. He is one of five professors inducted into the prestigious Academy of Distinguished Teachers this year, a distinction recognizing excellence in teaching at the undergraduate level. Rao teaches an introductory course to undergraduate students in the fall, and he teaches MBA students in the spring.

Rao says many students enter his courses with a misconception of the complex discipline he teaches. Because of that, he likes to begin at the most basic level.

“On the first day I’ll ask them, ‘How do you pronounce finance?’ ” he says with a laugh. “Is it ‘FINE-ance’ or ‘fin-ANCE’? One is a noun, and one is a verb, so we start there, and then I’ll slowly start to pull them in step by step.”

This tactic has proved successful, but he stresses that the actual turning point for most students is when he is able to connect the material he teaches to their lives on a personal level.

“I’ll stop mid-lecture and ask them questions. Why are you listening to me? Why should you care? If they can’t tell me the benefit they are getting, then what’s the point? I won’t continue the lecture until we have a discussion. Once they see the relevance, it makes a world of difference.”

He further cultivates this connection by linking the material to relevant topics based on sociology and psychology, piquing his students’ curiosity.

Sharing his own stories also helps connect the material to reality. One story that Rao shares every first day of class involves his son (when he was 4 years old) not being able to decide between four lollipop flavors. As he explains, every choice involves sacrifice. If he chooses a red lollipop and the blue as his second choice, then the cost of choosing the red is what he gives up by rejecting the blue. “Choices can create stress. The more choices people have, the more they have to weigh the benefits and costs and the more stress associated with analyzing this tradeoff. This is why finance — which emphasizes opportunity cost — is important. It’s about life.”

Caring about his students’ success in and out of the classroom is one of the characteristics students rave about most. During his office hours, you’ll find Rao chatting with students about their families, interests and ambitions.

“You’d be surprised how much students will open up. They’ll tell me why they chose their major and career track. They’ll tell me what their parents and grandparents have said. As I listen to them, I learn about myself too. At times, it changes my way of thinking, which I like to think makes me a better person,” he says.

Rao’s ability to empathize with his students is due largely to his past struggles as a college student. Having dreams as a young boy of taking over his father’s business making graphite crucibles (containers for melting metal), Rao pursued a degree in metallurgical engineering at the Indian Institute of Technology. To his dismay, the classes left him feeling uninspired and unmotivated, prompting him to pursue an MBA and doctorate in finance from Indiana University.

“When I went to engineering school, I had to study so much. I got A’s, but I didn’t really know the material. If you had asked me at the end of the semester what exactly I had learned, I would have had a tough time answering.” Rao vowed that his students would never exit his courses with a similar sentiment.

It didn’t take much persuading for Rao to accept a job at UT in 1978. “I flew into Austin to check out the opportunity. I tried interior Mexican food at Fonda San Miguel, my favorite restaurant to this day. I discovered I liked a good margarita. The weather was warm and nice, and after having experienced Indiana’s blizzards, this was wonderful. I immediately called my wife and told her, ‘I found the place for us to live.’ ”

At UT, his desire to invest in his students’ well-being has made him an exceptional mentor to many over the years, a part of his career he says he cherishes. “There’s an enormous sense of satisfaction knowing that teaching is not simply teaching your academic discipline and content; you’re teaching them about life and living. Every one of my students is going to get a job, but you have to prepare them for a career. That’s why I’m a firm believer in mentoring.”

Through his mentoring of undergraduate students all the way up to C-suite executives, Rao notes commonalities among his diverse audiences. “It doesn’t really matter how young or old a person may be. At our core, we are all very similar. We all have similar goals, interests, insecurities and wants, creating a common ground.” Rao establishes a common ground for students in the complex world of finance — one life lesson at a time.

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Phone: (512) 471-3151

The University of Texas at Austin

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