How to choose a career – that seems to be a question quite in vogue of late. Everyone is on the lookout for a successful and fulfilling career. This, in turn, helps them in becoming independent and charting their path in life. And we, at Totempool, decided to throw some light on the varied choices available. So, we started our 'Good career path' series. This piece is our latest effort – Is finance a good career path? Let us find out.
What Are The Streams of Finance Available?
The first step towards understanding the answer to – Is finance a good career path? – is to understand the different streams available and what would be the right career for you. There are four significant streams of Finance. We shall explore them in some detail below:
Committing money or capital to buy financial instruments is known as an investment. Additionally, one can use capital to purchase assets such as real estate as well.
One invests to earn returns in the form of earning, interest, or appreciation of value. Investment is a method to delay spending.
These are institutions that collect funds from the public. The financial institution, in turn, puts this money in deposits, loans, or bonds rather than tangible property.
This branch of financial economics is focused on the macroeconomic and monetary relations between countries. It examines the dynamics of balance of payments, floating exchange rates, foreign direct investment, and their effects on international trade.
Corporate finance deals with the capital structure of a corporation. These include decisions such as funding sources, accounting, and investments. The end goal here is to enhance the value of the firm. Allocation and prioritization of resources also fall under corFinancefinance.
Five Questions to Ask Yourself Before Pursue a Career in Finance
Often enough, the fancy salary figures thrown around in the media sway the minds of young people looking to pursue a career in Finance.
However, one must always perform due diligence before making such important decisions. Here are five questions one must ask before choosing a career in Finance, and these will help answer the question – Is Finance a good career path?
What does a career in Finance entail?
Number crunching on excel sheets is integral to finance. But, pursuing a career in this field involves plenty of other aspects such as:
- Excellent written and verbal communication skills
- The ability to persuade others
- People management
- Legal knowledge
An individual can't alienate himself from these. Hence, one must bear in minFinancefinance is an all-encompassing sector. So, it is essential to have a holistic approach.
What draws you to finance?
There is a lot of information that is readily available these days. So this leads to several assumptions about the kind of career one might hFinancefinance. Yes, this is an ideal career if one loves numbers, money or enjoys the volatility of the markets.
But given the width of careers that finance offers, one must remember that working in investment banking is entirely different from working in commodities trading.
What are your strengths?
Before deciding on a career in finance, one must have a clear understanding of their strengths. Are your strengths suited to a career in Finance, and will they be put to good use?
For instance, if one is a creative person, Finance might not be the area for them. Also, let us say a person is more inclined towards looking at the larger picture rather than, the finer details, then he is better suited to a career in strategy. To summarize, a person must make sure that a career in Finance is aligned to their strengths.
What do you wish for?
The decision to pursue a career in Finance must be yours and yours alone, and it must not be a result of societal pressure or herd mentality. Therefore one must make sure that this decision is in sync with the end goals.
Is a person looking for great opportunities for career growth and is willing to sacrifice work-life balance in the short term? The answer to this question depends purely on what you expect from the job.
What are the sunk costs?
This is a question that will make sense if you are switching to finance from another career stream. You will have to analyze whether the efforts and energies put in while switching to finance is worth it or not.
Once you have satisfactorily answered these questions, you can enroll in some courses online to get a flavor of the subjects to understand if Finance is the right career path for you.
Certifications and Licenses
A bachelor's degree in Finance is considered the bare minimum for any finance job. However, additional certifications and licenses are a way of proving to your potential employer that you are willing to go the extra mile. In this section, we shall take a look at some reputed certifications in Finance.
Chartered Financial Analyst (CFA)
This is one of the most recognized qualifications that financial professionals have, and however, it is restricted to banking and Finance. This is an ideal degree for those interested in a career in asset management, investment banking, private equity, or hedge funds.
To complete the CFA qualification, one has to pass three examinations that are generally considered complicated and tricky.
Additionally, one needs 48 months of investment or banking-related experience in a full-time role. People who complete the CFA have a firm grounding in equity investments, corporate finance, derivatives, financial reporting, and portfolio management, amongst others.
Financial Risk Manager (FRM)
The FRM designation is an international risk certification offered by the Global Association of Risk Professionals (GARP). Career options for FRM professionals include Chief Risk Officer, Senior Risk Analyst, Head of Operational Risk. The topics covered in this exam are tools used to assess financial risks, such as financial markets, risk modeling, quantitative analysis, and valuation. To complete this certification, one must:
- Clear both levels of the exam
- Have two years of relevant work experience
- Be a member of GARP
- Complete 40 hours of CPD training every two years
Certified Financial Planner (CFP)
This is a certification that requires one to have a bachelor's degree with finance-specific coursework. Additionally, one needs to possess 6000 hours of financial planning experience or 4000 hours of apprenticeship experience. And, one must pass a grueling 6-hour exam to be certified.
Chartered Market Technician (CMT)
The CMT is a globally recognized specialized certification focused on the technical analysis of investments. So, it helps one create a unique profile that has expertise in technical, financial analysis. This is a three-level exam. Moreover, a person must hold a CMT membership and agree to its code of ethics.
Certified Public Accountant (CPA)
This exam prepares you for careers in public accounting, managerial accounting along with tax planning and preparation. Also, it enhances avenues for higher-paying careers in accounting and management. This exam requires a degree or 150 credit hours in accounting or Finance.
One also needs to have a Social Security Number or US citizenship in some states. It has four parts – auditing and attention, business environment and concepts, financial accounting, and auditing. The last part of the exam is regulation.
Certified Management Accounting (CMA)
Management accountants are essential to arrive at financial metrics that help in their daily operations. Pursuing CMA requires a person to have a bachelor's degree.
Additionally, one needs to have a minimum of two years of work experience and be a member of the Institute of Management Accountants (IMA). The exam consists of two parts. Part-1 consists of financial planning and analysis, and part-2 deals with strategic financial management.
Chartered Alternative Investment Analyst (CAIA)
This designation is meant for individuals working in the alternative investment space, such as hedge funds and private equity. It is also helpful for people in less traditional roles such as derivatives or trading desk. One has to clear a two-level multiple-choice examination to earn this certification.
Chartered Investment Management Analyst (CIMA)
The CIMA certification covers topics such as asset allocation, risk measurement, due diligence, risk measurement, investment policy.
Since this is a specialized certification, only persons with a minimum of three years of professional consulting experience can take this up. CIMA requires continuous re-certification and training of at least 40 hours every two years.
Roles in Finance: What Finance Career Is Right For Me?
We have now arrived at the most important parameter to answer the question, Is finance a good career path? The breadth of the career roles offered. Let us look at some of the roles that the finance sector has to offer.
These professionals utilize their knowledge to measure the livelihood and severity of the risk. They also can predict and minimize the impact of upcoming risks, and this is an ability that is extremely useful for businesses. Actuaries are best suited for a career in corporate finance, and the national average salary of an actuary is around $125,000.
Financial analysts use their research skills and knowledge of securities to advise firms on their investment decisions. They measure the risks and accordingly approve or reject investments in stocks, bonds, and other securities. Also, they forecast the company's ability to repay its debts with the inclusion of bonds. Financial analysts typically make $74,000 a year.
They primarily deal with a company's financial statements. These include the profit and loss statement, balance sheet, income statements and, cash flow statements. Financial accountants keep track of the company's reports.
Additionally, they record every transaction and maintain the accounts of a firm. They are also responsible for keeping track of overall investments into various projects. A financial accountant earns more than $63,000 a year.
The role of an investment banker is highly versatile. They help public and private sectors issue debt and securities. Furthermore, investment bankers often advise on transactions about mergers and acquisitions.
They work in a manner that helps businesses raise capital to achieve their growth goals. An investment banker makes more than $80,000 a year on average. Furthermore, when it comes to investment banking analysts, this number goes up to $90,000.
Security traders are a medium between the buyer and the seller. They help sell securities like shares or bonds to various potential buyers in the financial market. They do this either on their account or their employer's account based on their level of expertise.
Security traders also assess the performance of the securities traded based on their stability or speculative tendencies. Their average salary per year is over $88,000.
Hedge Fund Analyst
The job of a hedge fund analyst is similar to that of an investment banker. The primary difference lies in hedge fund analysts managing high risk and rewarding portfolios for investors who pool their capital to make investments in hedge funds.
They have to monitor the markets to protect investors constantly. This makes the role of a hedge fund analyst extremely demanding. Top hedge fund analysts earn around $200,000 a year.
Private Equity Associate
Private equity associates are professionals that help investment firms create deals. They assist in finding potential investors, assist with acquired investments, and perform due diligence for existing customers of an investment bank.
Additionally they duties include restructuring existing deals. Private equity firms come in all sizes, which leads to slight variations in the type of work these associates are involved in. They make $100,000 a year on average.
Is Finance a Good Career Path For Students?
There are innumerous internships and externships in the finance area. A single search LinkedIn shows that there are more than 3.6K internships available in the USA that includes the following jobs: goes from Accounting InternFilter by Accounting Intern
- Accounting Intern
- Tax Intern
- Audit Intern
- Summer Intern
- Finance Intern
- Claims Representative
- Actuarial Intern
- Tax Specialist
- Property Specialist
Among the tops companies offering internships, there are:
- Grant Thornton LLP (US)
- Carr, Riggs & Ingram
- CBIZ MHM, LLC
- Baker Tilly US
- Wipfli LLP
- CohnReznick LLP
The salary distribution on LinkedIn shows that around 19% earn between $40,000 and $60,000. Glassdoor shows that the average finance intern job pays 56,633 /yr, starting from $30,000 and going up to $107,000!
After showing the number of jobs available, the high salaries, and the whole career in from of a future finance professional, we consider Finance a great career path.
In Conclusion: Is Finance A Good Career Path?
The answer to the query – Is Finance a good career path is yes if one is looking for tremendous growth opportunities. Also, one should not forget this is a highly lucrative path that comes with many perks and that Finance professionals are always in demand.
However, this is a highly stressful field with extremely long working hours, and this is because one is constantly exposed to demanding clients and tight deadlines. This is also an area heavily influenced by external macroeconomic factors and the state of the economy.
Additionally, to maintain an edge in this field, employees have to keep learning, which is highly taxing and expensive continuously.
If you want to know more about other career paths, check this list on Totempool. You will be able to make your choices with solid information before moving to a particular industry: