Five Highest Paying Jobs in the Financial Industry
One of the most rewarding and exciting career options for anyone
Introduction to the Financial Industry
The financial industry is one of the most demanded ones, as people all over the world want to be in this sector as it is often closely associated with high salaries and great respect in general.
The desirability of this sector can be linked with a vast number of factors that play a crucial role in attracting employees to it.
The financial industry is a segment of the economy made up of businesses and institutions that offer financial services to retail and business consumers. This industry generates money from mortgages and loans in significant amounts, and when interest rates fall, the value of this sector rises.
The financial industry has a lot of subfields and areas in which one can choose to work. They have different skill requirements and salary propositions. In this article, we are going to discuss the ‘Top 5 Careers in Finance’ with respect to the salaries they offer.
However, let us first clearly understand what the financial sector is and what it entails for us.
Key Takeaways
- The financial industry is in high demand due to its lucrative salaries and reputation.
- The sector includes businesses providing financial services and is vital for the economy's health.
- Top 5 highest-paying finance careers: Investment Banker, Actuary, Portfolio Manager, CFO, and Quantitative Analyst.
- The financial industry offers diverse career options with varying skill requirements and salaries.
- Financial jobs offer great earning potential but may come with high pressure and regulations.
What is the financial industry?
The financial sector includes a wide range of business models that offer financial services to people, organizations, and the government. In the past 50 years, the financial services sector has grown in importance and is a crucial part of industrialized economies.
In 1950, financial services companies made up just 10% of all business profits, but by 2010, they were responsible for close to 50% of all profits produced by businesses. That is a significant factor in why it provides many of the highest paying employment.
Financial companies that are publicly traded lead the world in both overall earnings and market capitalization.
The most prominent players in the market are conglomerates that provide a virtual marketplace of financial services in one area. However, there are still many significant, prosperous companies that focus on offering only one kind of financial service, such as personal investment advice.
One of the highest-paying sectors of the global economy is finance. There is a finance career for every skill set and personality with plenty of pay and good perks, from risk management to investment banking.
A wide range of financial businesses make up this sector of the economy, such as:
- Banks
- Investment houses
- Lenders
- Financing companies
- Real estate brokers
- Insurance companies
This industry is dominated by huge conglomerates, although it also has a broad spectrum of smaller businesses.
Mortgages and loans, which appreciate as interest rates decline, provide for a sizable amount of this industry's earnings. The financial sector's strength has a significant impact on the economy's overall health. The more robust an economy is, the healthier it's considered to be. The economy often weakens when the financial sector does.
The best financial firm in the world is Berkshire Hathaway, which is a conglomerate headquartered in the United States. It is followed by, but not limited to:
It is every financial enthusiast's dream to work for these companies and learn from the best.
What Does The Financial Industry Do?
The practical implementation of the financial sector is primarily responsible for much of the health of the economy. A nation’s safety is directly linked to its economic growth. An economy that has been contracting more often than not has a poor financial sector.
Many people and the clearing houses that run on Dalal Street tend to equate the financial sector with them. Nonetheless, these are some of the vital parts of many industrialized economies in the banking sector.
It consists of brokers, financial institutions, and money markets, all of which contribute to the daily operation of Main Street by offering essential services.
There are a plethora of activities that go on within the financial sector and are very much diverse from each other. To properly understand the working of the financial industry, one must first dig deep into the individual smaller sectors within the financial sector.
The financial sector is broadly classified into the following:
- Banking Sector
- Investment Services
- Government Institutions
- Insurance Providers
- Payment Processors
Banking Sector
The financial services sector is built on the banking industry. While the financial services sector includes:
- Investments
- Insurance
- Risk redistribution
- Other financial activities
It is primarily focused on direct saving and lending.
Large commercial banks, neighborhood banks, credit unions, and other organizations all offer banking services.
The primary source of income for banks is the spread between the interest rates offered to depositors and those charged for credit accounts. These kinds of financial services mostly make money via fees, commissions, and other means, like the difference in interest rates between loans and deposits.
The banking sector is further divided into 3:
- Retail Banks
- Commercial Banks
- Investment Banks
a) Retail Banks
The traditional deposit-taking institutions are retail banks, which also offer income on cash deposits from depositors. They make money by charging borrowers a greater interest rate on loans secured by deposits than is offered on savings.
The difference between the interest earned from loans and the interest paid on deposits goes to the bank. A few well-known examples of retail banks in the world are:
They go by the commercial name banks as well.
b) Commercial Banks
A commercial bank refers to any financial institution which accepts deposits from the general public, provides loan facilities, offers checking account services, and also offers other basic financial instruments like a certificate of deposit. It is the most commonly used bank in any country.
They hold much importance in the economy of a country due to their ability to create credit, capital, and liquidity.
They generally offer services to consumers and small-scale businesses and earn most of their profit through lending activities and fees changed for various services.
Bank of America and State Bank of India are common examples of commercial banks.
c) Investment Banks
Investment banks are institutions that do not accept deposits. They are mainly concerned with corporate financial practice. They offer business advising services to help clients raise capital from the financial markets, such as assisting a firm in issuing equity through an IPO.
Additionally, they provide substantial institutional clients with other services like prime brokerage, which are brokerage services like securities lending.
Investment banks generally make money by charging clients for advice and underwriting services. They make money on the financial markets by trading as well.
The majority of commercial banks have an investment banking division, though more recently, they have been forced by the Dodd-Frank Act and other rules to keep the two business divisions apart. A few renowned investment banks are:
Investment services
Professional companies which are generally classified as investment managers offer investment management services to both individual and institutional clients. Hedge funds, managers of mutual funds and exchange-traded funds (ETFs), and other players are among them.
In order to best serve regular clients, mutual fund and ETF managers offer pre-packaged investment vehicles. As a result, they make money by adding a modest fee to the cost of handling the overall amount.
Contrarily, the majority of hedge funds' clients are institutions, together with a select group of high-net-worth individuals. The phrase "hedge fund" in this context refers to a variety of alternative asset managers, including:
- Private equity
- Venture capital
- Commodities trading advisers (CTAs)
- Investors with a very narrow focus on public markets
Famous examples of investment managers include Carlyle Group, BlackRock, D.E. Shaw, Fidelity (mutual funds), and ETFs (private equity).
These big firms play a crucial role in the investment services market and are a familiar name to anyone trying to make it to the investment services segment of the financial industry.
Government Institutions
A significant participant in the financial markets is the government. It controls how the markets operate through a number of its institutions. The central bank is the largest and most powerful government organization in every financial industry.
The sole issuer of legal tender or money in an economy is the central bank. It also manages domestic interest rates and, frequently, a currency's exchange rate on the foreign exchange (FX) markets.
Some securities regulators establish regulations that control how financial markets operate outside of the control of central banks. Nevertheless, the fairness and transparency of the financial markets are upheld by securities regulators.
In order to do this, they impose strict penalties on individuals who engage in unlawful actions like insider trading and demand thorough disclosures from all participants in the financial markets to maintain openness.
Among well-known government organizations we have:
- The Federal Reserve (central bank)
- The Securities and Exchange Commission (SEC)
- The Federal Deposit Insurance Commission (FDIC)
Insurance Providers
Another critical component of the financial industry is the insurance providers. As the name suggests, this segment of the financial industry is more inclined towards providing insurance to the various components of the market.
Insurance companies contribute a good chunk to the overall financial industry and form a sizable part of them.
For a little premium paid every month, they offer protection against unforeseen financial losses caused by occurrences like accidents and disasters. They assist both people and organizations which form a part of the economy.
The most commonly offered goods of these insurance companies are the likes of:
- Life insurance
- Health insurance
- Auto insurance
- Home insurance to individuals
They offer products for enterprises like worker's compensation insurance, data breach insurance, and marine insurance for cargo on ships.
Additionally, there are reinsurance firms that offer insurance to insurance firms. In the event of a major catastrophe, they aid in covering an insurance company's responsibilities. Manulife and MunichRe are a couple of insurance businesses as examples.
Payment Processors
Payment processors are middlemen who make it easier for different parties to trade money. They connect multiple organizations and guarantee safe money transfers.
They are in charge of handling the majority of daily electronic transactions. For example, every time a debit or credit card is used, the payment processor sends the transaction details securely to the user's bank and transfers the money from the user's account to the vendor's account.
Using payment processors, the vendors and their customers don’t have to use cash, which promotes ease of transaction and general traceability.
As economies move towards building cash-free systems (usually to prevent illegal exchange or laundering of money), payment processors have been able to grow their business rapidly.
Global payment revenue amounts to about $1.9 trillion. Payment processors make money by levying a modest fee on each transaction that passes through their network. A few examples of payment processors are:
Top Five Highest Paying Jobs in the Financial Industry
Being a part of the financial industry is undoubtedly one of the most rewarding and exciting career options for anyone. Depending on your background and skill set, there are a variety of positions you can hold in the finance sector.
You are in a position to be able to select a profession that best suits you if you are familiar with a range of finance positions.
Having a job in finance has several advantages. The first is that the sector is generally secure. As long as businesses and people are profitable, they will require a:
- Budget analyst
- Account manager
- Savings protector
Second, careers in finance frequently have great salaries.
Because specialized educational backgrounds and skill sets are frequently required of finance professionals, they are typically well-paid. Finally, there should be room for progression in an entry-level position in the financial industry.
Within your first few years of employment, you may be qualified for promotions or raises if you can establish yourself as a reliable, capable, and skilled worker.
Here is a list of the 5 most desirable jobs within the financial sector:
Investment Banker
Investment banking is a branch of banking that focuses on raising cash for other businesses, governments, and other organizations.
Underwriting new debt and equity securities for all kinds of firms, assisting in selling securities, and supporting mergers and acquisitions, reorganizations, and broker transactions for both institutions and private investors are all part of investment banking activity.
Investment bankers provide planning and financial management assistance to businesses, governments, and other organizations.
The average salary of an investment banker lies somewhere between $1,80,000 - $2,50,000 in the US for professionals holding 5-10 years of experience.
Here is a list of different types of jobs available in investment banking:
1. Mergers and Acquisitions (M&A)
Bankers that specialize in M&A offer strategic counsel to businesses seeking to merge with rivals or acquire smaller businesses.
Financial modeling is used by M&A bankers to assess these prospective big mergers. M&A specialists persuade high-profile CEOs to agree with their ideas in order to successfully perform their tasks.
2. Underwriting
Underwriting experts frequently have an industry-based specialization in addition to concentrating on debt or equity.
These bankers have client-facing responsibilities and collaborate with outside contacts to identify capital requirements while also working internally with traders and securities salespeople to determine the best solutions.
3. Private Equity
A lot of investment banks have private equity (PE) divisions, but positions are mainly found in smaller, specialized businesses. Bankers in this region raise capital for private businesses and organizations while keeping a cut of any profits they make from transactions.
4. Venture Capital
Venture capital (VC) organizations usually focus on lending money to start-up businesses, frequently in quickly evolving sectors including:
- Technology
- Biotechnology
- Green technology
VCs succeed by getting their financial stake in and out at the early stages of development, making significant returns on investments, although many target companies ultimately fail.
Employees at venture capital businesses are frequently skilled at deal-making and number crunching, as well as knowledgeable about emerging technology. They get excited about the possibility of finding "the next new thing".
Actuary
Actuaries to examine the financial effects of risk use: Arithmetic, Statistics and Financial theory. These experts collect, compile, and evaluate data to calculate the likelihood and potential costs of various occurrences, including:
- Injury
- Illness
- Disability
- Death
- Property loss
Actuaries are experts at determining the possibility of future events - using numbers.
They work with organizations that must manage risk, such as insurance companies, pension plans, banks, investment firms, accounting firms, consulting firms, governments, and hospitals, among others.
Their suggestions and knowledge are crucial in assisting these organizations manage their assets in a way that minimizes risk and maximizes returns.
One needs a strong math foundation and a four-year degree in actuarial sciences, math, statistics, finance, or economics to become an actuary.
To reach full professional status, you must join the Casualty Actuarial Society (CAS) or the Society of Actuaries as an associate or fellow (SOA).
The average salary of an actuary with 6-9 years of experience is estimated to be around $195.895 in the US
Portfolio Manager
One of the most esteemed positions in the entire finance sector is portfolio management. Institutional and retail client investments are managed by portfolio managers, sometimes known as money managers.
The portfolio managers advise customers on tailored investment plans and particular investment choices, and they typically exercise discretion in carrying out those recommendations to achieve the objectives of the clients.
Portfolio managers focus on particular asset classes, such as equities or fixed income. Alternatively, a manager might have expertise in specific stock categories, blockchain-related businesses, or high-yield bonds.
Focused funds that hire these expert managers could look for someone with an analytical research background.
Others have broader mandates, like a multi-asset class approach, and these companies frequently seek managers with a comparable breadth of investment experience and understanding.
There are numerous employers in the field, each concentrating on a certain market segment:
- Retail investors can access funds from investment businesses and financial service providers. They need to study each client closely. The portfolio managers working in this arena need to look at the investments from the point of view of retail investors and should advise them on the alternative which suits them best.
- Investment banks offer strategic guidance to businesses, influential organizations, and even governments. The clients in this category are not individual investors but big companies that have a huge amount of funds to invest. Diversification is the key here.
- Customers of commercial banks have access to a variety of investing options. They can choose from a pool of options available to them and must weigh each alternative properly before investing in them to get the best results.
- High-net-worth individuals are catered to by money management services, portfolio management companies, and hedge funds. The average salary is expected to be around $183,184 in the USA.
Chief Financial Officer
An executive at the highest level is a chief financial officer. They are the financial controller in charge of all matters pertaining to cash flow, budgeting, and taxation.
A CFO plays a critical role in the company's strategic efforts and frequently holds the highest financial position and third-highest position within an organization. Financial standards must be followed when producing financial reports under a CFO.
The chief financial officer's responsibilities include:
- Monitoring cash flow
- Budgeting the company's finances
- Identifying its financial strengths and shortcomings
- Making recommendations for improvement
Because they are in charge of overseeing the accounting and finance departments and making sure that the company's financial reports are accurate and finished on time, a CFO's job is comparable to that of a controller or treasurer.
An academic and professional experience in accounting, economics, and/or analysis is required for those who want to become chief financial officers.
The average salary of a chief financial officer has been recorded to be around $156,696 globally in the year 2022.
Quantitative Analyst
A quantitative analyst is an authority on the subject of using statistical and mathematical techniques to address financial and risk management issues.
In order for the organization to make financial and business decisions on things such as investments, pricing, and other bits and bobs, they create and implement sophisticated classification methods.
While some economic analysis jobs include writing or speaking in front of an audience, quantitative analysts, or "quants," usually operate in the background.
Mathematical models are developed by experts in this field of study to assist businesses in making financial and business decisions.
To assist with risk management and opportunity identification quants are employed by:
- Asset managers
- Banks
- Hedge funds
- Insurance companies
- Private equity firms
In the trading industry, where they develop algorithms to identify the most lucrative trading opportunities, quants are in particularly high demand. The majority of quant workers have degrees in statistics or mathematics, frequently with a doctorate.
The average salary is $120,000 in the USA.
Pros of Working in the Financial Industry
Although the financial sector is one of the most desirable sectors amongst job seekers, it comes with its own set of pros and cons. A few of them have been discussed below:
The pros are:
1. Great Career Prospects
According to research, between 2012 and 2022, the number of positions in the financial services industry is predicted to rise faster than the overall employment rate. This suggests that financial services recruitment will likely remain robust.
Additionally, most jobs in the sector have a variety of opportunities for advancement and high promotion prospects.
2. Amazing Earning Potential
The precise level of compensation for positions like financial advisers will be determined on a salary plus commission basis.
This, along with the ability to continually find new clients, practically implies that there is no ceiling on the amount of money that can be made and that employees can earn as much as their productivity warrants.
3. Good Working Environment
The quality of working circumstances available is a benefit that is frequently neglected of maintaining a job in financial services.
Employees should anticipate some level of flexibility with regard to the possibility to work remotely, which will allow for a better work-life balance, even if the majority of employees will be based in offices and involve a somewhat sedentary lifestyle.
Working from home is a relatively new practice that firms are increasingly accepting of in order to keep good staff.
Many industries, including financial services, are being affected by it. Additionally, employees should anticipate receiving a respectable amount of paid yearly leave.
Cons of Working in the Financial Industry
Some of the Cons are:
1. Hectic Schedule
Due to the ongoing pressure to fulfill objectives or quotas and satisfy client requests, financial services occupations typically have a competitive, fast-paced, and stressful work environment.
While financial analysts may have their jobs jeopardized if they make poor decisions, sales agents' compensation may depend on their ability to perform well.
Financial services occupations frequently require workers to work extremely long hours in addition to the stress factor. In fact, more than one-third of all employees in the sector put in more than 40 hours a week, and some put in even more. For this reason, it might not be the best industry for people who want a laid-back way of life.
2. High Level of Regulations
Particularly in the wake of the most recent global financial crisis, the financial services sector as a whole is subject to an extraordinarily high number of compliance requirements.
This means that those who operate in the industry must constantly stay up to date on the regulations that apply to their specific field.
For instance, a large number of workers in the financial services industry are required to purchase and maintain professional liability insurance, such as errors and omissions coverage, throughout their careers.
Certain licenses can be difficult to get, and additional education courses could be required.
3. Cyclic in Nature
Financial services remain a cyclical business, following the boom and bust cycles of the economy, despite the good job opportunities available.
As a result, banks and other companies frequently hire a lot of people when the market is strong and then fire a lot of people when things go south. Therefore, there is a slight lack of job security for positions in the financial services industry.
Few occupations in the business can actually be deemed 100% safe in the case of a big economic downturn, and this is outside the control of the common worker. Senior positions will typically be immune to their cyclical nature.
Conclusion
Consider the demand for the position when pursuing employment with the best prospects of success. Discover your possibilities by doing some study beforehand. Working in a position that just doesn't fit can save time that could be spent exploring the most intriguing possibilities.
It is advisable to choose a financial career that fits your long-term interests and talents because financial careers demand a variety of skills and offer very various work settings.
An actuary might be a good fit for someone who appreciates math while a financial planner might be a good fit for someone with strong interpersonal skills.
Thus, it is quite important to first analyze your skill set and match them with various job roles to come to a conclusion about whether you would be a good fit or not.
High entrance restrictions, fierce rivalry among applicants, and a great deal of stress are common characteristics of financial occupations.
Nevertheless, these positions have many benefits, such as:
- A demanding workplace
- Connection with competent and highly driven coworkers
- Chances for growth
- High income
Corporate finance can be your calling if you're curious about how businesses should allocate their financial resources.
Investment management may be the right path for you if you're more captivated by financial markets, how people build investment portfolios, and wealth development and preservation.
Moreover, risk management might be the best course to take if you want to learn about probability and statistics and how they apply to business decisions.
Suppose you still feel unsure whether a career in finance would be good for you or not and whether you would excel in it in the long run.
In that case, we recommend you to go through this article on “Is Finance As A Career Right For Me?” as it would help you to introspect yourself and analyze whether you possess the necessary skills.
Although many people enter the financial industry for monetary potential, those who succeed tend to have a clear passion for what they do.
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