Finance Career Path & List

Finance Career Path

Welcome to the guide to financial careers from Wall Street Oasis. This guide aims to provide you with an introduction to a career in finance, and hopefully help you determine the right finance career option. We’ll begin with some opportunities in the industry, finance career salaries and job market, the knowledge base required, and finally the different niches.

Although this tutorial isn't fully comprehensive, you’ll hopefully find enough information to make an informed career choice. With that foundational knowledge, you’ll then be able to dig deeper on your own to learn more about those finance jobs which are especially intriguing to you.

What makes a career in finance interesting?
The first question to ask yourself - why a finance career? The most common reasons are that a finance career A) is high paying and B) offers solid career placement opportunities.

Although the public median salary for starting finance jobs is around $57k, there is extreme variation in this figure. Depending on the exact role, that starting salary number can go as high as six figures. For example, for investment banking - our 2017 Investment Banking Report analysis demonstrates an all-in average of $121k. In addition, the ceiling for finance salaries is much higher than other industries such as medicine and engineering.

According to the public-available U.S. Bureau of Labor Statistics, the demand for finance careers will vary by the area of finance in which you choose to specialize. While general unemployment remains high, university-degree holders with specialized skills in areas such as financial analysis will fall well below the national unemployment average. Currently, financial analysts and business systems analysts are in high-demand. Analysis firms estimate that entry-level hiring is also thriving as employers strive to hire people who will grow with the company.

Finally, those with a solid background and/or professional credentials, job opportunities are especially good. Finance related positions are viewed as crucial organizational functions and are a profit center within corporations, not just for Wall Street investment houses.

Finance Careers Salary & Growth

Finance Job Market

According to Bureau of Labor Statistics,

Employment of business and financial operations occupations is projected to grow 9 percent from 2016 to 2026, about as fast as the average for all occupations, adding about 750,400 new jobs. Globalization, a growing economy, and a complex tax and regulatory environment are expected to continue to lead to strong demand for accountants and auditors. In addition, increasing usage of data and market research in order to understand customers and product demand, and to evaluate marketing strategies, will lead to growing demand for market research analysts.
This median annual wage for business and financial occupations was $66,530 in May 2016, which was higher than the median annual wage for all occupations of $37,040.

However, many jobs in corporate finance are high-paying compared to the median. One example is investment banking. In this area, first-year analyst total (base & bonus) compensation averages $121,000 with associate level rising to $218,000. Further investment banking salary statistics can be found in the WSO 2017 Investment Banking Report.

Other general finance job types and their salaries can be found below:

It is also important to note that most finance jobs follow a cyclical job market. When the stock market is booming, finance jobs increase. But when returns dwindle, layoffs increase.

Quants & Engineering in Finance
Similar to many other industries, technology continues to make its mark on the financial industry. This has a similar effect on finance jobs. As technology infiltrates finance, the need for engineering and quantitative skills grows.

A 2013 paper by two Oxford academics claims that 47% percent of jobs are at “high risk” of being engineered within the next 20 years – and 54% of lost jobs will be in finance.
Thus, it is important for upcoming grads to prepare for this change. Universities are now revising their curriculum to adapt to this tech disruption in the finance job market. Both Stanford University and Georgetown University business schools are planning to offer so-called “fintech” in their MBA syllabi to get ahead of the curve, for example.

Finance Courses and Certifications

To be prepared for a career path in finance, it is important to demonstrate knowledge - whether from university courses or through certifications. However, the qualification for advancement in the financial field us typically a graduate degree or Masters in Business Administration (MBA).

It is important to pursue a bachelor’s degree or an MBA degree in finance that teach you economic theory, advanced financial concepts, and applications. Many undergraduate business or MBA programs also have curriculum focused on projects or case studies to provide the real-world application experience.

Basic Finance Courses & Topics:

• Micro- and Macro-economics
  
• Basic Financial Accounting
  
• Corporate Finance
  
• Business Statistics
  
• Marketing Analysis
  
• Budgeting & Forecasting Variance Analysis (Cost Accounting)
  

Advanced Finance Courses & Topics (Masters or MBA):

• International Financial Markets
  
• Advanced Portfolio Theory
  
• Financial Derivatives & Options Theory
  
• Corporate Valuation
  
• Behavioral Finance
  
• Financial Buyouts & Acquisitions
  
• Private Equity & Venture Capital
  

Advanced Skills (developed through specialized study or projects):

• Financial Engineering
  
• Macros and VBA Programming
  
• Financial Statements Analysis
  
• Econometrics & Mathematical Finance (Actuarial Science)
  
• Business Law
  

Typically, the progression of learning is as follows: 4 years in undergrad learning the basics, followed by a few years working and then returning for a Master’s/MBA or directly to Master’s in some cases. Specialization in a financial niche, such as actuarial science or business law can occur at any stage.

7 Courses Finance Students Should Take

In addition to university courses, many financial organizations prefer candidates with professional certifications. To add value to your resume, one can pursue a CFA (Chartered Financial Analyst), CPA (Certified Public Accountant), CFP (Certified Financial Planner). All three are slightly different and confer different certifications, but will certainly demonstrate aptitude to an employer. To see the differences between a CFA and CPA, see this thread.

Many financial services like selling stocks require obtaining a special license from authorized agencies (such as the Financial Industry Regulatory Authority). These include financial licenses such as the Series 7 and Series 63, and require exams to pass. These licenses are legally required to provide certain client services, so it is important to plan ahead if you intend to pursue that area of finance. Wall Street Oasis offers some great material for preparing for the Series 7, for example.

List of Careers in Finance

Once you understand the basics of finance and feel that the industry is right for you, then it is important to understand the many options within finance. This will help narrow down your focus when networking, selecting courses, etc. Here are the types of careers in finance:

Corporate Finance Careers

Investment banking (IBD): Investment bankers act as advisors for companies who want to raise capital through debt or IPO; or buy, sell, or merge their company (M&A). You will typically be preparing to present a deal, presenting a deal, or finding people to present a deal to. There is a lot of modeling, (although much of it is updating current models), and attention to detail is critical. You'll learn how to value companies using a variety of valuation methods. You'll also learn how to work on 4 hours of sleep. To understand more about the industry based on Wall Street Oasis data, check out these key trends from the 2017 Investment Banking Industry Report.

Sales & Trading (S&T): These are the traders that you see shouting on a trading floor, making trades for either the company or the company’s clients. These can involve various securities or options. They're constantly on the phones talking to clients and making quick decisions. You'll need an aptitude for the markets and a natural sales ability but the lifestyle is hard to beat in the finance world.

Private Equity: Similar to IBD but instead of acting as an advisor you're investing using raised funds and buying entire companies. They buy companies they think can be better, fix them up and make them profitable and then sell them to public markets or other buyers. This also encompasses venture capital and angel investors, though typical "private equity" firms buy more developed companies. To understand more about the PE industry, take a look at these trends from the 2017 Private Equity Industry Report.

Hedge Fund: Similar to S&T but they make trades on the market using a lot of leverage to reap in profits. They invest money for institutions and individuals and take a management fee as well as a percentage of the profits. If losses occur, they forfeit the management fee. To see a deeper analysis of Wall Street Oasis Hedge Fund data, check out these key takeaways from the 2017 Hedge Fund Industry Report.

Financial Accounting-Oriented Roles

Internal Audit: This function handles the internal controls that are in place at a company, including designing, implementing, and testing them. It is responsible for ensuring the financial reporting system is free of fraud or errors.

Treasury: This function handles the capital and manages liquidity of a business. Duties could include cash forecasting, working capital management, and maintaining credit lines/debt. It could possibly include more strategic areas like capital risk management or fund raising through IPO, bond issuance, or M&A.

Corporate Finance: This function manages the capital structure (source of funding) and allocation of cash. Investment analysis, capital budgeting, valuation, and project management are some of the responsibilities. If the company is involved in M&A, this function will lead the analysis and management of the deal. While ex-public accountants often fill some of these roles, it is more likely someone with valuation/due diligence or investment banking experience will rise through the ranks.

Financial Planning & Analysis: FP&A can mean a lot of things and can be very interesting career path, but many times positions disguised as FP&A are just glorified cost accounting. At best, the role involves developing metrics for forecasting cost/revenue drivers and strategic project management planning. At worst it does budget vs. actual calculations and helps close out the monthly financial statements. This role often puts together financial reports for the C-suite and can be a great stepping stone to VP of Finance and CFO.

Buy Side vs. Sell Side

Investment banking and sales and trading are on the "sell side" because they are acting only as an advisor and are not typically putting their own capital at risk. You can remember that sell side sells services while the buy side buys assets.

Private equity firms and hedge funds are known as on the "buy side" because they actually buy companies, whether they buy the whole company or just some of its stock. In finance, the buy side is usually preferred over the sell side because the hours are lower and compensation is usually higher, other things being equal.

Conclusion: Choosing a Finance Career

As you can see, one has many options when choosing a finance career. Although this isn’t everything that you need in order to make a considered career choice in this tutorial, you’ll hopefully find it useful to get you started. The possibilities of a career in finance are nuanced and you should research more in the WSO forums to get a better understanding of the day to day.

A few points to also keep in mind:

• This field continues to evolve depending on major economic events!
  
• Not only is a career in finance interesting for the above reasons, but it also helps develop personal finance skills.
  

Anything that we missed or would like to know? Mention it in the comments below!

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