For a successful career in finance, you need insight into the economic and strategic consequences of financial decisions, sophisticated excel modeling skills, and an in-depth understanding of financial statements. The study of finance combines with specialties such as strategic management, economics, accounting and quantitative analysis for additional career options. Welcome to the world of finance!
Professionals in corporate finance determine how to make good financing and investment decisions for their employer. In the Finance Department of a firm, you could be an analyst working on product pricing, budget analysis, financial forecasting, simulation models or equipment acquisition. Major companies have training programs so new talent can get a broad understanding of how all the products and departments in the organization work together.
The highest rank in corporate finance is the position of Chief Financial Officer (CFO). The CFO's duties include financial planning and monitoring cash flow. He or she analyzes the company's financial strengths and weaknesses and suggests plans for improvement. The CFO works with the Chief Executive Officer and the Board of Directors. Similar to a treasurer or controller, the CFO is responsible for overseeing the accounting and finance departments, and for ensuring that the company's financial reports are accurate and completed on time. The CFO is also heavily involved in raising capital for the firm’s various investment projects.
Investment banking professionals do many different things in their work for investment banks. They work with CFOs. They work as research analysts whose reports are widely read. They work as traders. They work in private wealth management. They develop new exotic financial products (financial engineering).
Investment banks may be categorized into three groups: Universal, Main Line, and Boutique. Universal investment banks are very large banks supported by large balance sheets. The major source of funds on their balance sheets is retail deposits from individuals and companies. The bank tries to put those balances to work by lending money. An example of this type of bank is JP Morgan Chase or Bank of America.
Main line investment banks serve a global market and sell on the basis of relationships and deal-making expertise. They provide advice on large financial transactions such as a merger or an initial public offering. Such a company might invest itself in some of the transactions for which it is providing advice or sell the entire transaction to another investor or syndicate of investors. An example of this type of investment bank is Goldman Sachs or Jefferies and Co.
A Boutique firm focuses on specific industries or services related to business transactions such as mergers and acquisitions. These firms do not invest their own money but are paid to provide advice and manage specific transactions. An example of a boutique firm is Lazard or William Blair and Company.
Typical career paths within an investment bank are private wealth management, investment banking relationship management, sales and trading, back office, and research or security analyst. These positions require a depth of knowledge in finance, economics, and spreadsheet modeling. Students with expertise in accounting, operations management, data analysis, and management information systems also have many opportunities in investment banking firms.
Retail Investment Brokerage
Retail investment brokerage firms invest money from individuals, identifying appropriate portfolio allocations and specific securities. Students can pursue careers as brokers, financial analysts or security analysts. Your career could be selling securities to the mass market. Or, you could be managing the investment decisions of individuals who have a relationship with your firm. You may be performing security analysis to identify investment opportunities with excess return possibilities. Brokers’ pay is typically based on a commission system.
In today’s retail investment environment, individual investors are not only interested in stocks and bonds but all sort of commodity investments, mutual funds, ETFs, bond funds, or derivative securities like call options. The financial market is characterized by a high level of financial innovation, which produces investment vehicles that offer superior return for greater risk incurred. A retail investment advisor might seek to become a Certified Financial Planner (CFP).
Financial consultants may work in public accounting firms, consulting firms specializing in large financial transactions, or even small boutique investment banking firms. Financial transactions typically involve building a financial model of what future balance sheets and income statements are expected to look like so that the parties involved understand the value implications of the transaction. Financial consultants work with accountants, legal experts, government entities and senior management teams. The work of a financial consultant requires good communication skills, sound judgment, industry expertise, and strong analytical skills. Additional certification as a Chartered Financial Analyst (CFA), Certified Public Accountant (CPA), or Certified Financial Planner (CFP) will help with career advancement.
Investment Portfolio Manager
An investment portfolio manager might work for a mutual fund, a private equity company, an investment bank, a retail bank or a credit union. The job of the portfolio manager is to assemble the investment portfolio to match the risk tolerance of the investors, while satisfying legal requirements of the investment portfolio. The position might involve analyzing securities, making buy and sell recommendations, conversing with clients, keeping records on portfolio performance, monitoring legal requirements, or assembling and filing SEC reports.
Retail Bank Manager
Retail banks collect funds from depositors and disperse funds to borrowers. In most cases, the borrowers and depositors are individuals or small to medium sized companies. Some of the largest financial institutions in the world are retail banks. Managers in retail banks could be involved in deposit taking or loan making or both. They are responsible for the relationship that the borrowers and depositors have with the financial institution. Finally, they are responsible for ensuring that all government regulations are being met and that financial risk is being managed. Retail bankers might actually work for credit unions, manufacturers with captive finance operations, or internet banks that provide services like traditional retail banks.
Commercial Loan Officer
Commercial banks provide most borrowed funds used by businesses. These loans may be a revolving line of credit or a secured loan with a maturity of 30 years, like a mortgage. The Commercial Loan Officer understands the needs of the borrower and risks of the loans available to meet those needs. Building a relationship and close communication with the borrower is an important part of the job. Lending practices may change due to regulation, the economic environment, and competition in the relevant market. The job requires good knowledge of financial analysis tools, accounting reports, regulation, and general business management principles.
Job Outlook for Finance
In 2013, the economy is recovering strength in the US and opportunities for financial managers are expected to grow. Regulatory reform and the globalization of the business economy are both forces that increase the need for financial expertise.
Web Sites for Researching Careers in Finance
Financial Management Association International
Certified Financial Analyst Institute
American Insurance Association
Association of Financial Professionals
Security Industry Association
American Bankers Association