A job in finance may be incredibly satisfying at times. If you are good with numbers and are enthusiastic about personal finance management, working in the financial industry can be the ideal choice for you. However, before you make the decision to seek a career in finance, there are a few facts about the industry that you should be aware of first. In this post, we will cover the advantages and disadvantages of pursuing a career in finance, as well as the positions that are now the most in demand and profitable, and much more.
People who think analytically and pay close attention to detail are excellent candidates for jobs that are in high demand in the financial sector. In this industry, there are various occupations available outside trading on the floor of a stock market; yet, a significant portion of these roles generally contain financial predictions and investments for customers and corporations.
Because the fields of finance and technology are converging more and more, specialists in both industries are increasingly able to optimize returns on expenditures for both people and businesses. This article investigates whether a career in finance is a suitable choice by providing information on average salaries for occupations in the field, as well as the expected employment rate of growth with solutions to issues that are commonly posed.
What Does the Word “Finance” Mean?
I’m going to use the term “finance” to refer to a variety of different jobs throughout this piece, including wealth management, investment management, financial firms, and angel investors.
Although equities research, investment management, selling and trading, private equity, and corporate growth are all considered “financial occupations,” these facets of the industry are farther away from the topic at hand for the following reasons:
Occupations in the “stock market,” like secondary market research, investment management, selling and trading, and quantitative fund management, tend to attract a different kind of applicant than other jobs.
In addition, as jobs in corporate strategy and business finance are more often found in “normal organizations,” they are more resilient when confronted with significant macroeconomic shocks. They are paid less, but this is the price they have to pay in exchange for more stability and fewer worry.
The following is an expanded and more specific form of this question:
“Are jobs in the financial sector, such as corporate finance, investment management, hedge fund managers, and angel investors, still lucrative in the short term as well as the long term? If not, what alternative professions are there that are more desirable to pursue?”
Benefits of Working in Finance as a Profession
To begin, a career in finance may result in highly lucrative financial rewards. The Bureau of Labor Statistics of the United States reports that the average annual pay for finance managers is $131 710 dollars. This is just the average compensation; the vast majority of managers make far more than that.
It is essential to keep in mind that the basic wage may provide the wrong impression. Bonuses offered to employees in the finance industry may run anywhere from tens of thousands to billions of dollars. Careers in these areas are desirable.
Jobs in the financial sector are also known for their high levels of job security. It is essential to keep in mind that major organizations regularly purge the employees who perform in the lowest third or so (give or take) of their respective departments. There is a high degree of unpredictability and volatility associated with many of these holdings.
Because finance is such an important business, there will never be a shortage of opportunities for competent financial experts. Even when the economy is in a slump, businesses still need competent financial managers to guide them through the treacherous seas ahead.
Last but not least, working in finance may provide a great lot of room for advancement. If you begin your career with your firm as a financial analyst and are good at your job, there is no reason why you can’t ultimately work your way up to the position of vice president or even chief fiscal officer (CFO) of your organization.
When it comes to the amount of money you may make, the sky is the limit if you work for yourself and run your own company at the same time.
Is a Career in Finance a Rewarding Choice in 2023? (Short-Term)
The forecast for employment in finance has been more favorable in the short term during the last five years, but it has become less favorable in the long run.
When I say “short-term,” I’m referring to a period of around 3-5 years. In other words, sufficient time to begin one’s career in an entry-level position such as an IB Analyst, then advance one’s career to a buy-side position or both.
When I say “long-term,” I’m referring to a period of time closer to ten to fifteen years — an amount of time sufficient to climb the corporate ladder in a banker or other commercial institution.
The immediate future seems brighter as a result of the following:
- The competitors, namely the large technology businesses, seem to have a future that is less certain now than it did four to five years ago. It seems that politicians and the general people all over the globe dislike technology, and as a result, we could start to witness bans and failed relationships on a national basis.
- The global epidemic and subsequent lockdowns have had less impact on the finance industry than on other sectors. It is true that bonuses will be lower for the month, and lenders have halted recruiting or, in some circumstances, slashed workers, but the banking industry is in no way comparable to the hospitality and food service sectors.
- And even if recruitment starts sooner than it occurred in 2015 or 2010, the new timeframe is a little bit saner than the one that was proposed for 2018. (for example).
- Last but not least, even entry-level positions in investment banking and private equity continue to pay very well. The salary may be a little lower than that of an engineer at a FAANG business, but it is still higher than that of practically any other entry-level position.
There are a few drawbacks, the most notable of which are the uncomfortable nature of “networking” in the modern world and the impossibility of in-person meetings.
In addition, the hiring process is growing more impersonal as a result of the rise of services like HireVue and online examinations, as well as the practice of several boutique banks in outsourcing recruitment to headhunters.
On the other hand, I believe that the prospects in the near term have become more favorable. Take a look at the recruitment statistics that HBS and Wharton have to provide for some supporting evidence.
At HBS, for instance, 39% of students graduated and entered into the “Financial Services” industry in 2011, but by 2015, that number had dropped to 31%. However, by the year 2020, it had increased to 34%.
At Wharton, the following are the percentages of students who entered “Financial Services”:
- 2008: 48% (!)
- 2011: 39%
- 2015: 37%
- 2020: 36%
As a result, there was a significant drop in interest in the years after the economic meltdown of 2008; but, since then, the proportion of students choosing to pursue a career in finance has stayed in the 35–40% range.
Are There Any Downsides to a Career in Finance?
Of all, there is no such thing as a flawless profession, and working in finance does come with its fair share of challenges. To begin, working in the financial sector may be a very demanding occupation. If you are employed by your firm as a business advisor or supervisor, you are tasked with making important choices that have the potential to have a significant effect on the bottom line of your organization. This type of strain might be difficult to manage on a day-to-day basis for certain people.
Another disadvantage is that dealing with finances might take up a lot of one’s time. When you are putting in long hours analyzing data and writing reports, you may find that you have very little leisure left over for your personal life. If you pick that sort of job route, it is essential to strike a good balance between your work and personal life.
It is important to keep in mind that the financial industry is always evolving. You have an obligation to be current on all of the most recent changes to tax laws and regulations in order to properly counsel your customers. You also need to maintain a state of readiness for unexpected downturns in the economy, since they do occur from moment to moment and may have major repercussions for companies as well as for people.
Essential Abilities Necessary for a Profession in Finance
1. Capability in Mathematical Operations
A solid understanding of mathematics is required to have a productive career in finance. You will need to be able to comprehend and deal with complicated monetary data, such as budgets, financial portals, and statistics. This entails having a solid grasp of the fundamentals of mathematics, including mathematics, geometry, and probabilities, among others. Before beginning a career in finance, you should think about taking some math review classes if you are unsure of your level of proficiency in the subject.
2. Thinking that is Analytical
The ability to think analytically is another crucial talent for those who work in finance. If you want to be able to make good judgments, you need to be able to examine data and see patterns. Additionally, you should constantly be prepared to consider critically and find solutions to issues. Those who are not analytical by nature may enhance their abilities by working with advisors, attending classes, and practicing on their own time.
3. Paying Attention to the Specifics
In the world of finance, paying close attention to the smallest of details is very necessary since even the smallest error may have enormous repercussions. If you were to input the erroneous number into a worksheet by accident, for instance, this may result in an inaccurate financial statement.
This might lead to personal institutional specialists or creditors being misled about the company’s financial position, which has the potential to cause them to lose money. Additionally, this could lead to the bank’s business health being misrepresented. Working with numbers requires a level of precision and exactness that just cannot be compromised in this line of employment.
4. Business Experience
Good business acumen requires one to be familiar with the intricacies of a firm as well as the ways in which financial choices may influence the overall profitability or failure of a company. Those who have great business acumen are able to make sound financial judgments that support the expansion and continued success of a firm throughout time.
You may enhance your company acumen in a number of ways, including the following:
- Attending classes pertaining to business
- Collaborating in the field of finance with a teacher or guide
- Obtaining work experience in the field of finance via internships or full-time positions
5. Sensitivity to Financial Matters
A career in finance may be very profitable, but in order to succeed in this field, you need to have a solid understanding of the financial marketplace and how it operates. In order to avoid falling behind in the world of finance, it is essential to maintain a high level of awareness of recent happenings and prevalent trends in the industry.
The world of finance is a complicated one, and those who engage in it have a lot riding on their shoulders. When you don’t have a solid grasp of the fundamentals, it’s all too simple to make errors that can set you behind financially and hurt your career.
6. Financial Modeling
The process of developing a mathematical representation of a financial issue is referred to as financial modeling. This might refer to a variety of things, including the anticipated results of a capital project or the future performance of a corporation over a certain period of time. The employment of financial models by capitalists, lawyers, and other investment bankers is intended to assist these individuals in making educated choices on the distribution of their capital.
If you want to have a career in finance, it is very necessary for you to understand how to construct these models. It is possible to simplify the procedure by using software applications, but you will need to have a solid grasp of fundamental accounting and financial principles. In this approach, you will be able to construct reliable models that will assist you and other peers in making important judgments.
7. An examination of profits and losses
In the field of finance, it is difficult to place an adequate amount of emphasis on the significance of being able to do a profit-and-loss analysis. You can determine if a firm is generating a capital gain, as well as how much money it is earning or losing, by looking at its profitability and loss statement, often known as a P&L statement.
This knowledge is essential for making well-informed choices, such as determining whether or not to participate in a certain firm. If a firm is in a financial bind and has to make cutbacks, studying its profit and loss accounts might point you in the direction of potential cost-cutting opportunities.
Wrapping It Up
Is a job in the financial sector something you could like to do? That is a question that can only be answered by you. However, if you are wanting to pursue a career in this lucrative industry, keep in mind that you should carefully consider the advantages and disadvantages of doing so before coming to any conclusions, that you should immediately begin honing your skills, and that you should conduct research when it comes time to discover your first finance career.