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Financial Careers 2016-10-21T11:02:48+00:00

Careers in the Financial Industry

A career in finance can be challenging, fast-paced and potentially very lucrative. But it can also be grueling, unsatisfying and low-pay. It’s hard to know which scenario you’ll encounter but some foresight may be important to your career trajectory and overall job satisfaction. We provide an insider’s perspective on the different jobs and areas in finance and accounting.

Aspiring professionals also encounter confusion regarding the job titles of many financial positions, so we try and explain what they really mean. For example, the terms ‘banker’, ‘broker’ and ‘analyst’ have vastly different responsibilities (and pay) depending on what area you’re in or location. For example, an entry-level analyst at a pension fund in Minnesota could make $50,000 while a hedge fund analyst in New York City could earn half a million dollars (the average pay for a hedge fund professional is over four hundred thousand dollars).1

We decipher various job descriptions to give you an idea of what you are likely to expect. For example, if you hear ‘candidates must be highly motivated’, it could mean ‘sales with commission-only pay’. In addition, we distinguish between the higher end jobs in finance (hedge funds, economist, and financial advisors) and the less selective positions (operations, insurance brokers, relationship bankers).

Financial Career Options

There are plenty of different jobs in finance, but which career path is best for you? Assessing your personality is very important when pursuing the right job in finance and accounting. Some positions, like sales, are perfect fits for gregarious extroverts. They don’t mind the inconsistent pay, heavy travel, cold-calling and networking. These ‘people persons’ are often best utilized in more customer facing roles like sourcing and cultivating new relationships. Typically, financial advisors, bankers and insurance brokers are among these sales-heavy positions.

Others finance jobs may be a better fit for more introverts. These professionals don’t mind putting their nose to the grindstone (or computer screen) and working on analytic models or combing through financial statements. These may be analysts, operations professionals, forensic accountants, compliance personnel and auditors.

Further, some positions in finance and accounting have more job security (public accountant) than others (financial advisor). Accountants enjoy some of the lowest unemployment rates in finance at just 3.6%.2 Conversely, only an estimated half of financial advisors stay at that position over their career. With the increased regulations for publicly traded companies regarding the integrity of their financials, accountants, auditors and compliance personnel should be in high demand going forward. Accountants can be employed in both the public sector (governments are large employers of accounting professionals including tax examiners, investigators and revenue agents) and the private sector (Big 4 accounting or smaller public accounting firms or banks).

Contrarily, financial advisors only work in the private sector and endure high-stress, performance-based compensation. Many work for one of the large wirehouses with a recognizable brand and big marketing budget. But this comes at a price since their percentage of new business generated may be underwhelming. Financial advisors are rebelling against this model and are increasingly leaving to start their own firms known as a Registered Investment Advisors, RIAs.

More Information on Financial Career Options

Financial Areas of Employment

Working in ‘finance’ is a very general statement that can mean anything from collecting debts over the phone to tracking the footprints of a money-launderer. We’ll look at all the different areas within finance such as asset management, banking, accounting, operations and risk management. Some areas try to maximize profitability for the firm’s stakeholders (employees, investors, shareholders) while others focus on risk mitigation and compliance.

There is a growing trend of de-risking throughout the financial industry. Laws and regulations such as Sarbanes-Oxley and Dodd Frank have placed scrutiny on the high amounts of risk taken by financial firms throughout their operations. Given the increasingly punitive damages for regulatory non-compliance, firms have prioritized risk reduction, fraud management and compliance procedures and policies into their missions and are hiring accordingly.

Financial jargon can also get confusing and when pursuing a career in finance, so it’s important to understand the subtle nuances between different jobs and areas of employment. For example, some entities are referred to as buy side and others as sell-side and it’s important that any candidate know the difference between.

When you are selling something it’s referred to as the sell-side. Financial advisors are sell-side, they sell their services (financial planning services, investment advice, clearing and custody services, the firm’s investment products, etc). The client is the ‘buy side’ who may be a high-net worth individual, a pension fund or an insurance company. These buy-side examples all have future liabilities that must be adequately prepared for. For example, an insurance company needs to invest in certain types of financial products to have adequate capital to meet the claims of its customers. In a nutshell, sell-side firms sell the investment products (stocks, bonds, structured products, derivatives, etc.) that help their buy-side customers meet their promised benefit obligations.

Of course, there’s always some overlap in these descriptions. An analyst can work for either the buy side or sell side and asset managers also have business development departments that solicit funds from financial managers or accredited investors. For example, a hedge fund is a buy-side firm but wants the assets of a teacher’s pension plan who allocate part of their portfolio for the alternative asset to hedge funds or private equity. A large financial institution may have an investment banking division (sell-side) but an internal asset management division using partner’s capital (buy-side).

The stereotype is that you can tell which professionals are on the buy-side or sell-side on the morning train just from what they’re wearing. If they’re wearing khakis and polo, they’re on the buy-side. They don’t need to overly impress anyone because they are the client (the sell-side has the sharp suits on). If you’re too well-dressed on the buy-side, it’s a sign you may not be doing well and need to raise capital.

More Information on Financial Areas of Employment

We are here as a resource for professionals seeking information and insight about financial careers. Please feel free to contact us with any questions or suggestions.

1http://www.businessinsider.com/how-much-people-make-at-hedge-funds-2014-4
2http://money.usnews.com/careers/best-jobs/accountant