Careers in Finance

Most students who pursue a finance degree will follow one of three career paths upon graduation, as shown in the illustration below. Each of these areas. Details on each (job descriptions, income levels, skills required, etc.) may be found on other pages of our site. In addition to the areas shown below, there are some peripheral areas of finance that may also appeal to certain people: real estate, insurance, risk management. Each of these areas also offer attractive opportunities at the moment. Most of our site, however, is devoted to the three core areas shown below.

Descriptions

• Financial Institutions / Banking - This area includes commercial banks, thrift institutions, insurance companies, and a host of other financial insitutions. For much of this century, this area was a sleepy industry that, at times, seemingly moved at a snail's pace. Then, in the early 1980s, the industry exploded into a frenzy of activity and frantic expansion. Banks with operations centered in one state expanded rapidly and often became multinational in scope. Much of this growth came through acquisition - large banks bought smaller institutions and expanded their geographic territory and financial clout. Savings and loan associations were transformed into more aggressive institutions. Insurance companies acquired financial service firms, like brokerage houses. Rather than concentrating on one product, these institutions today have become giant supermarkets of financial products, offering whatever services the client desires.
  
• Corporate finance - In all corporations, someone must provide the finance function. From the smallest Mom-and-Pop grocery store to the largest multinational corporation, someone must answer and resolve certain questions. What are the greatest financial needs of the company in the future - money for additional inventory, money for new buildings or equipment, money for repaying the company's debt? How much money will be needed? Where is the best place to get this money - a bank, the financial markets, or other providers? Finding answers to these questions are the job of the corporate financial manager. Sometimes called a Treasurer, sometimes the Vice-President of Finance, sometimes the Chief Financial Officer (CFO) ... this person heads a team of financial specialists who are responsible for making sure that the company is financed adequately to meet its goals.
  
• Investments - Stocks, bonds, options, futures contracts ... the list of potential investments that we can make numbers in the thousands. Someone has to sell these products; someone (financial institutions, individuals) wants to buy them. For that reason, job positions in this area are often referred to as "sell side" and "buy side" positions. A stock broker would be an example of someone who has a "sell side" position; a portfolio manager would be a "buy side" position. Few areas offer the potential high levels of compensation that the investments industry offers. However, it is a very performance-based field ... the effective performers earn six-figure incomes (or more), those who are ineffective fall by the wayside and pursue other jobs outside the industry. Typically, your income will be based in some way upon your job performance, either through commissions (sell-side) or bonus (buy-side). But the average income for the industry is among the highest of any of the financial fields.

Numbers vs. People

You might ask, "If I pursue a career in finance, will I be sitting at a desk working with numbers all the time?" The answer is a definite "No!" Although quantitative skills are important in finance, most finance professionals spend most of their day working with other people. Strong communication skills are a must. In many positions, you would find yourself working in teams, coordinating the work of others, and spending much of your day talking with peers and clients. Computers have vastly reduced the amount of time required to "crunch numbers;" behavioral skills are much more important today than previously. You want to develop a strong quantitative ability, but the ability to communicate and work with others effectively is equally important.

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