Careers in Finance

Careers for people with a finance degree can be divided broadly into the three main categories the Bureau of Labor Statistics uses for the financial activities sector: banking; insurance; and securities, commodities, and other investments. Almost all specific jobs that involve financial activities can be found in one of these three areas.

Banking involves the safeguarding of deposits and the providing of loans, credit and payment services.

Many banks also offer investment and insurance products. This category includes commercial banks; savings banks or savings and loan institutions; credit unions; and Federal Reserve banks.

Insurance is the business of providing protection from financial losses through the purchasing of policies that reimburse individuals or businesses for those losses. Insurance also involves the anticipation and management of financial risk, and the astute investment of premiums into income-producing assets that can be used to pay claims. This category consists of insurance carriers; insurance agencies and brokerages; claims adjustment organizations; and third-party insurance and pension funds administrators.

The securities, commodities and other investments category is made up of a wide variety of companies and organizations that issue, sell, and purchase financial instruments; manage investments; and provide financial advice. Typical financial instruments that these organizations handle are stocks and bonds, derivatives, mutual funds, and exchange traded funds. Another term for these instruments is “securities”. Investment banks, securities and commodities exchanges, brokerage firms, investment advisory firms, and portfolio management firms belong in this category.

A degree can also provide an entry into other industries that may not seem so obvious, such as education, real estate, and law. Many people with advanced degrees and highly specialized knowledge of particular areas of finance choose to teach this knowledge to others as university professors. A sound grasp of financial principles is also a great help to the smooth functioning of real estate and law transactions.

Financial Analysts

Financial analysts study the potentials and drawbacks of a particular investment, then advise their clients on whether to invest in it or not. This involves taking a broad and sometimes original view of all of the pertinent information, assembling all of the data into a comprehensive report, and making “Buy,” “Sell,” or “Hold” recommendations on the investment to their clients.

The range of available positions for financial analysts can run the gamut from entry- to senior-level; in large and small organizations such as banks, insurance companies, mutual funds, and securities firms; on both the buying and the selling side. Jobs within this field for people with a degree include research analysts, tax analysts, budget analysts, treasury analysts, credit analysts, risk analysts, investment analysts, merger and acquisition analysts, and money market analysts.

An example of a financial analyst position on the buy side of the markets is that of research analysts who work in large financial organizations and discover lucrative investment prospects for the investment staff within the organization. On the sell side would be analysts who work in brokerage firms or the brokerage department of a large investment bank and who provide investment advice to outside clients. Some financial analysts specialize in particular areas, such as IPOs (initial public offerings of stock), mergers and acquisitions, or debt analysis.

Financial Consultants

Many people with degrees choose to become financial consultants or advisors who offer advice about all aspects of money management to both individuals and businesses. This usually involves such tasks as gathering information about the client's financial situation through income statements, tax returns, and credit reports; analyzing the data to determine the best course of action based on the client's needs; and recommending particular strategies designed to meet the client's goals. Some financial consultants will also help in implementing the financial plan, monitoring its progress, and making any necessary adjustments.

Many financial consultants work with couples or families who need advice on such things as debt management, savings plans, mortgage rates, college funds, or retirement savings. Financial consultants are also hired by corporations, where they usually provide such services as investment advice, assistance with budgeting issues, recommendations on how to manage company debt, or guidance on money plan management, benefits, or retirement plans for the company's employees. Many financial consultants, after they have gained experience, eventually go out on their own by setting up their own private consulting practices and specializing in particular areas of interest, such as retirement planning or family finances.

Financial consultants usually offer their services according to four compensation methods: fee-only, commission-only, fee-and-commission, or fee-offset. The first method charges only for the development of the financial plan in the form of a flat fee or retainer that is paid entirely by the client. The other methods all rely entirely or partly on commissions earned from selling financial products, which cover the cost of implementing the plan for the client. These last three methods also require that the consultant form partnerships with insurance companies and broker/dealers who can help put their strategies into practice.

Finance Managers

Many people who have earned a degree become finance managers who can hold many different job titles depending on the particular corporation by which they are employed, such as controller, treasurer, credit manager, finance officer, risk and insurance manager, cash manager, or international banking manager. Their job duties can vary according to their specific title.

Some financial managers oversee the processing of all the financial paperwork of a company, such as financial reports, income statements, and balance sheets. Some can also be responsible for supervising cash management, mergers and acquisitions, and investment portfolios, and for implementing strategies to reach a company's long-term goals. Other finance managers deal with a company's cash flow, credit, insurance, or risk factors. Many finance managers also work in banks and other financial institutions as branch managers or overseeing various programs, such as sales or operations.

In addition to their general job duties, finance managers also need to be knowledgeable about any issues specific to the industry in which they work. For example, finance managers in healthcare need to have expertise in healthcare financing, while those in government must know the proper appropriations process to obtain funds. Finance managers also need to be experienced in any special tax laws or other regulations that have an effect on their industry.

Commercial Bankers

Commercial bankers provide banking services, such as checking and savings accounts, debit cards, and loans to individuals, small companies, and large corporations. Even though the banking industry is continuing to consolidate, this field still provides more jobs than any other for those who have earned a degree. Part of the reason for the great number of employees in commercial banking is the diverse range of jobs it offers, from bank tellers at small branch offices to officers who trade foreign currencies at global banks.

Credit analysts are entry-level employees who evaluate the bank's overall financial condition, project future cash flows, deal with lenders, and appraise loan applications.

Loan officers act as intermediaries between the bank and loan applicants, evaluating the financial condition of the applicants and making sure the loan offered is in the best interests of both the applicant and the bank. This is often an entry-level job from which employees eventually advance to positions of greater responsibility.

Trust officers set up trust services, such as living trusts and trust funds, usually for customers in more up-scale banks. Working in this position gives an employee valuable knowledge of investments, estate planning, and probate law.

Mortgage officers make property mortgage loans to both homebuyers and businesses. This job involves meeting with homebuyers and real estate professionals, making credit checks, and working to find a loan that best suits the borrower's needs, and making sure all the paperwork is in order, including mortgage insurance.

Branch managers oversee all of the on-going activities at their bank location, including new accounts, safe deposit boxes, foreign exchange, loan origination, and establishing customer relations. Employees with strong interpersonal skills and drive can work their way up to this position from entry-level jobs, such as customer service representatives or loan officers, and can often graduate from there to a market manager who supervises all of the bank branches in a particular market.

Other opportunities in banking involve debit card operations, wire operations, securities transfer, cash management services, loan servicing, accounting, personnel, marketing and advertising, operations, and communications.

Corporate Finance

The main responsibility of a finance professional in a corporation, whether it is a global organization or a small start-up company, is to maximize the corporation's value while minimizing its risk.

Corporate financiers decide where to find the money to run the company, how to manage the money on hand, and how to spend it wisely in ways that will give the company the greatest return on its investment. This involves examining financial documents on income, expenses, and cash flow; evaluating any proposed expenditures; finding ways to cut costs, increase revenue, and make funds available from within; and plotting a growth course for the company that best meets its needs and its resources.

Corporate finance combines the two functions of finance and accounting. Accountants keep track of expenditures and profits, take care of payrolls and bills, balance the books, and organize all of the financial data needed for the release of the company's financial statements. Finance professionals analyze all of the financial data, evaluate costs, and make acquisitions or capital investments to help the company grow. Since these two areas complement each other, they are often considered a single entity in corporate finance, with different departments performing specific tasks.

Job options in corporate finance for those with a degree include those of controller, treasurer, cash manager, credit manager, financial analyst, real estate officer, investor relations officer, or benefits officer.

Investment Bankers

Investment bankers are financial salespeople who bring investors together with corporations that need money. In a form of high-profile underwriting, investment bankers sell their services to companies that wish to secure funding for operations or expansion by issuing securities, such as stocks or bonds; connect the companies with investors who are willing to provide funding in exchange for equity or debt (stocks and bonds, respectively); then sell those securities on the stock exchange.

Investment bankers also offer other services, such as assisting new companies to comply with the strict financial requirements they must meet before they can become public and issue stock for the first time (known as an IPO or initial public offering), and advising with mergers and acquisitions, in which companies hope to buy other companies or be acquired by one.

Other areas in investment banking for people with degree include:

Industry-Focused Coverage – maintaining relationships with and providing financial services for client industries
Project Finance – funding infrastructure projects
Capital Markets – discovering new sources of debt or equity for clients
Corporate Finance – raising capital for client companies' projects or operations
Trading – sales and trading of equities, bonds, currencies options, or futures with institutional investors, commercial banks or other investment banks
Structured Finance – creating financial vehicles to re-direct flow to investors, also known as asset-backed securities
Derivatives – transactions with securities that derive their value from another security, such as options, swaps and futures
Advisory Services – providing advice on such things as valuation, capital structure, or risk management
Equity and Fixed Income Research – making buy or sell recommendations to industry clients
International Sales or Emerging Markets – issuing and selling securities in international or developing markets
Retail Brokerage – selling stocks, bonds, insurance, and other investments to individuals
Institutional Sales -- buying or selling securities for institutional investors
Ratings Analysis – rating the credit quality of companies

Money Managers

Money managers are the opposite of investment bankers; instead of being on the selling side of the markets, money managers are on the buying side by purchasing and holding stocks and bonds for individuals or institutional clients.

Money managers do not receive any commissions on the transactions they perform. Instead, they provide individual service, a personalized portfolio, and continual supervision in return for a fee paid by the client that is based on a percentage of the assets under management. It is, therefore, in the best interests of both the money manager and the client to choose and manage investments in such as way as to make the portfolio grow.

Many money managers buy and hold fixed-income securities, such as corporate bonds, mortgaged-backed securities, municipal bonds, asset-backed securities, and agency securities. Others may deal in equities, such as small stocks and emerging markets. Some money managers take a very rational approach to their transactions by relying heavily on computer models and sophisticated quantitative techniques, while others use a very simple, intuition-based method.

Positions in the money management field for those with degrees include selecting and managing investments for a group of investors as a portfolio manager; providing investment advice to the money management sector; investigating the pros and cons of an investment as a mutual funds analyst; investing stocks, bonds, currencies, and derivatives in a private fund as a hedge fund trader; and working with portfolio managers to sell particular investments to the client as a portfolio marketing manager.

Financial Planners

Like financial consultants, financial planners also give advice on how to meet monetary goals. Financial planners, however, offer their services exclusively to individuals. They also take a very broad, life-long approach to a client's financial future, instead of focusing on one area.

Financial planners examine a client's past and present financial situation through personal meetings and questionnaires, detailing such things as the client's current income, expenses, tax returns, investments, insurance coverage, retirement and estate plans, risk tolerance, and personal objectives for the future. The financial planner will then compile a comprehensive plan that suggests the best way to meet the client's goals, taking all of their resources into account. Financial planners most often advise on investment planning, retirement planning, tax planning, estate planning, and risk management. They will also often give advice on an immediate, specific goal the client has in mind, such as buying a home, putting children through college, or investing an inheritance.

Good financial planners will have a solid understanding of taxes, estate planning issues, and investments. They will also consult with a client's other financial advisors, such as accountants, lawyers, investment managers, and trust officers, to ensure that their plan does not conflict with any other investments the client has made. Most of those who earn a finance degree and become financial planners start out by working within small financial planning firms, then starting their own consultancy once they have gained experience and built up a clientele. Financial planners can be compensated in a variety of ways, through a flat per-hour fee, commissions, or both.

Real Estate Industry Career

The real estate industry involves the sale, management, and analysis of properties and land. It covers much more than just the housing market, however. It also involves such areas as construction, mortgage banking, title insurance, appraisals, property management, real estate development, and brokerage and leasing.

Degrees offers a wide variety of career choices in the real estate industry. You can be a licensed sales agent meeting with and showing properties to clients every day; an entrepreneur who owns and renovates buildings; or an office worker who analyzes spreadsheets.

Job possibilities within the real estate industry can include:

Residential Real Estate – This involves helping individuals buy and sell houses. Sales agents contract their services to licensed brokers, who pay the agent a portion of the commission earned from the agent's sale of a property.
Commercial Real Estate – This deals with the buying and selling of commercial properties, such as office buildings, hotels, apartments, retail establishments, shopping centers, and industrial plants.
Real Estate Appraisal – Appraisers provide impartial estimates of a property's quality and value for appraiser firms or banks, usually based on comparable sales in an area or estimation of the reduced cash flows expected from the property.
Real Estate Advisory – Real estate advisors help institutional investors select properties by investigating and suggesting areas and properties that are expected to experience future appreciation.
Property Management – Commercial real estate owners use professional property managers to investigate the market condition for rents, negotiate leases, handle tenant problems, and ensure that rents are paid.
Investment Banking – Many investment banks have whole departments devoted to real estate that deal with such things as mortgage-backed securities, REIT (Real Estate Investment Trust) stocks, and synthetic lease origination (transactions that appear as a lease from an accounting standpoint, but as a loan from a tax point of view.)
Development and Construction – This area deals with the buying of land for development and the hiring and management of construction crews and equipment operators.
Real Estate Entrepreneur – A real estate entrepreneur buys properties for renovation and resale, or in the hope that market conditions will improve and cause appreciation.

Insurance Industry Career

Major areas of insurance include property and casualty (insuring owners of homes and businesses against loss or injury), auto insurance, renters insurance, life insurance, and health insurance. The opportunity for advancement in the insurance industry for those with a degree is tremendous, owing to the wide range of jobs available:

Insurance Agents and Brokers – Agents and brokers help their customers come to a decision on what type of and how much insurance they need, explain all the available insurance options to them, and help them purchase appropriate policies. Agents and brokers also help clients file claims and release reimbursement in the case of an accident, illness, or injury.
Service Representatives – These employees are the intermediaries between the agents who sell policies and the insurance companies who write them.
Actuaries – Actuaries analyze statistical data about mortality, disease, accidents, disability, and retirement, and then predict the risk of providing coverage on people's lives, health, cars, and property. They determine the required premium rates and how much cash reserves the agency must have in order to pay future claims. They must be knowledgeable about general trends in society and any legislation that might affect risk. Actuaries can work for insurance companies or for pension planning organizations, third-party advisors, or the government.
Claims Adjusters – Adjusters negotiate insurance claims for people who have experienced financial loss and help reach a fair settlement that is beneficial to all parties.
Risk Managers – These employees help identify the risks an organization faces and make recommendations for dealing with those risks, such as adopting precautionary measures or purchasing insurance.
Loss Control Specialists – Loss control specialists try to minimize the occurrence of accidents and injuries by visiting businesses, factories, and other work areas to identify any possible hazards and give recommendations on eliminating them. If they work in health insurance, they may do such things as promote preventive healthcare practices in the workplace.
Underwriters – Underwriters assess potential applicants' exposure to risk in order to determine whether they meet the insurer's standards, then decide whether to extend coverage to them.