Introduction: Careers in Finance
‘Finance’ is an umbrella term that includes a wide variety of positions and job functions, from independent proprietors to globe-spanning firms with thousands of employees. Specific roles and responsibilities include: wealth management, financial advisory, financial risk analysis, investment analysis, financial trading, stock trading, financial account management, and investment banking, among others.
While some roles emphasize communication, business development, or client services, and others emphasize modeling, market research, or analytics, all roles in finance require a foundation of mathematics, economics, and business knowledge as well as the ability to communicate complex quantitative findings and qualitative arguments in ways that are both concise and persuasive.
Breaking Into the Finance Industry: Career Paths & Qualifications
Regardless of speciality, anyone pursuing a career in finance should have a strong background in mathematics and economics. At very least, a bachelor’s degree in economics, finance, accounting, management, business, or a related field is required.
A non-finance degree in mathematics or statistics is acceptable provided you can demonstrate considerable professional experience or an academic concentration in business or finance. To be competitive in the finance job market you should have either an MBA or a master’s degree in a relevant field. These days, for candidates in global financial centers like New York City, a bachelor’s degree alone may not be enough to stand out from the crowd. However, intelligent networking and outstanding communication skills can make up for shortcomings in other areas.
Here are three popular career paths in finance — financial manager, financial risk analyst, and stockbroker:
Financial Manager — Position Overview
Financial managers may also be referred to as financial analysts or business analysts. They are responsible for providing financial advise to key decisions makers and stakeholders at client firms (if they work for a financial management consultancy) or at their own firms (if they are an in-house financial manager).
Financial management is particularly important for institutions with significant financial assets that are not tied directly to day-to-day operations, including charities, financial institutions, NHS trusts, universities, businesses and corporations with significant cash reserves, family funds, or independently wealth individuals.
Specific responsibilities vary widely, from strategic analysis with market research and modeling at larger firms and dedicated investment funds, to something much closer to everyday accounting at smaller firms.
Financial managers generally work full time with regular 9am-5pm hours on weekdays.
Financial mangers can earn around $30,000 per year to start, with starting salaries rising to $40,000 to $50,000 per year in the banking and financial consulting sectors. Experienced managers with more than 10 years of experience can make over $100,000 each year.
Financial Manager — Qualifications
Aspiring financial managers should be able to demonstrate a variety of skills, including: exceptional math and accounting, communication and negotiation, basic business acumen, and strong IT skills.
Most financial managers will eventually become certified accountants. While you may not need to pass the CPA exams at the start of your career, you should look toward them as a means to future professional advancement. And the sooner you can add certifications to your resume, you more you will stand out from other candidates.
If self-employment is your goal, understand that you will need to build a reputation through years (if not decades) of experience before being able to land and hold enough clients to sustain your own business.
Certifications for Financial Managers:
- Chartered Financial Analyst (CFA) https://www.cfainstitute.org/pages/index.aspx
- Certified Public Accountant (CPA) http://www.aicpa.org/BecomeACPA/Pages/default.aspx
Financial Risk Analyst — Position Overview
Financial risk analysts investigate, identify, and analyze sources of risk that may threaten an organization or individual’s financial assets, and go on to recommend specific actions that decision makers and stakeholders can take to mitigate or eliminate these risks. Risk analysis is a field full of complexity and nuance. Risk analysts not only study risks that can destroy wealth outright, but also risks that may threaten potential assets, including a firm’s earning potential, a stock portfolio’s valuation, or the ability for borrowers to pay back loans years into the future, among many other possibilities.
Within the field there is considerable specialization, with analysts committing to careers in stock markets, financial services, private banking, regulatory action, loan origination, insurance, marketing, and business operations, to name a few.
Financial risk analysts generally work full time with regular 9am-5pm hours on weekdays. Given the inherent uncertainty of the subject matter, working extra hours from time to time should be expected.
Entry level financial risk analysts — sometimes known as risk technicians — can earn around $25,000 per year. Risk analysts with three to six years of experience can earn as much as $50,000 each year. And risk managers with a decade or more of experience can earn a yearly salary of as much as $80,000.
Financial Risk Analyst — Qualifications
As with other financial professions, the best risk analysts will possess strong mathematics and analytical skills. They should have strong communication skills, and should be able to precisely and persuasively convey complex quantitative findings to non-experts.
Risk analysis relies uniquely heavily on forecasting and models. So would-be risk analysts must have experience building and working with predictive financial models using a variety of digital platforms. (If you have a specific firm in mind, be sure to find out what applications they use and, if possible, get to know those programs before or during the application process.)
A number of certifications are available to risk management professionals, which you should consider as you identify what area of risk analysis most interests you. Lastly, it’s worth noting that risk analysis is a dynamic field; this can be exciting, but it also requires a commitment to continuing professional development in order to stay up to date.
Certifications for Risk Analysts:
Stockbroker — Position Overview
Stockbrokers have a glamorous reputation. And their work environment is indeed among the most fast-paced, dynamic, and challenging in finance. But for the most part stockbrokers adhere to the same set of principles that wealth managers and risk analysts do. In fact, risk mitigation is a primary concern for many of the most successful brokers.
Stockbrokers help their clients make informed decisions on what stocks and markets to invest in and when to do it. Each broker’s responsibilities vary depending on their clients and the type of firm they work for.
Institutional clients (e.g. investment funds) almost always contract with stockbrokers in an advisory role. They usually have in-house experts who make major decisions and execute trades on their own. These in-house decision makers usually only approach their brokers for specialist knowledge on specific markets; and they may sign with multiple brokers at once, each with expert knowledge in a different market sector.
Image Credit: Top Five Paying States for Stockbroker
A broker’s experience with retail clients (e.g. wealthy individuals and small family funds) can vary significantly. Some individuals — whether they have expertise or not — enjoy working closely with their broker, while others are satisfied to employ their brokers in a discretionary role, letting the broker buy and sell shares within broad limits.
The responsibilities of advisory brokers depend largely on the whether they are are a full service broker, a discount broker, or an online broker.
- Full service brokers will provide their clients with personalized advisory reports listing what stocks to purchase and including research and analysis to back up those findings.
- Discount brokers usually only provide their clients with a list of recommended stocks.
- Online brokers serve clients who are — or should be — knowledge about the markets in their own right. These brokers provide their clients with raw data and curated news items without including specific recommendations.
Stockbrokers who take positions are larger firms can expect a starting salary of around $30,000 a year — relatively low amount for how demanding the job can be. However, this is offset by 15% to 20% commissions. And as a broker’s experience increases, so can their base pay and their bonuses, with experienced brokers making six figure salaries before commission.
Stockbroker — Qualifications
Successful stock brokers must have a firm grasp of business fundamentals, be excellent at mathematics, and they must have truly outstanding market research skills. Many stockbrokers will also develop expertise in specific industries.
Being a broker at a brokerage firm is a client-facing role. So, in addition to being financial whizzes, stockbrokers must be personable communicators and persuasive salespeople. (Your commission often depends on your ability to convince your clients that purchasing a particular stock is the right move.)
A bachelor’s degree may be enough to secure a low level position at a brokerage firm, while an MBA or other advanced business degree will help you stand out from other applicants. Professional certifications will also put you at an advantage, with the CFA qualification being particularly valuable if you can obtain it before applying to your first job.
Stock brokers must be mentally tough. Along with investment banking, working as a stockbroker is one of the most demanding jobs in finance, especially for new hires. Brokers can expect to work 12+ hour days, as the world’s financial markets open and close at all hours. Likewise, brokers are often expected to take meetings at odd hours to accommodate international clients and may frequently travel abroad. The financial markets are closed on weekends, but during crunch times research and analysis may require brokers to work more than five days a week.
Finally, stock brokers who wish to practice in the United States must pass the Series 7 exam to be granted a license by the Financial Industry Regulatory Authority (FINRA).
Certifications for Stockbrokers:
- Chartered Financial Analyst (CFA) https://www.cfainstitute.org/pages/index.aspx
Finance: Industry Outlook
The finance industry is diverse. And some sub-sectors such as stockbrokerage and investment banking can react with volatility to market turns and current events. More stable sectors including corporate finance and financial management within large firms.
In the face of increasing global uncertainty, financial risk analysis is seeing strong growth, as more organizations are looking for ways to mitigate risk without removing themselves from the financial markets altogether.
Aspiring finance professionals who want even more job security should consider specializing in finance related to high-growth and/or evergreen industries such as social media, digital gaming, or healthcare. Are you looking to secure an finance internship in a particular sector? Shoo-In Career can help.
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