If you’re good with numbers and interested in the ways that money moves around in the new global economy, then a career in banking or finance might be exactly what you’re looking for. There are a myriad of different areas in which to specialize, and many career paths within each of those areas. Banking has the added bonus of being a constant presence in our culture—no matter what else happens, businesses do business, with each other and with people. Careers in banking and finance get you right in the middle of that, helping to make it happen.
The world of banking and finance offers quite a lot to the right person: good salaries, a secure career path that commands respect, and the chance to do what you do best: math. If you’re logical, clear-thinking, and can work with numbers the way writers work with words, then you need look no further for a fulfilling career.
If you’re intrigued by what you’re reading, but have no experience in banking or finance, you might want to try this online course in banking fundamentals. Even if you aren’t looking for a career in banking, getting a better grip on the nuts and bolts of our economic system is probably a good idea.
The Financial Industry
The world of finance and banking can be broken down into several areas, each of which merits its own article. And you need a solid educational background and the right degree or degrees. We’ll take a look at what you need to learn, and at each part of the financial sector, and give you what you need to know so that you can dig deeper once you know what you’re really interested in.
What Education Will You Need?
Obviously, working in finance and / or banking requires that you have a facility with numbers and with mathematics, but majoring in math tends to be more the province of math teachers rather than banking and finance. But if you want to work in a bank, on the retail end of the industry, a math major and some public speaking as an undergraduate should get you by. At the graduate level, you would most likely want to think about an MBA, or an advanced degree in Finance, Accounting, Higher Math of some type, and perhaps pursue a certification in accounting, if you wanted to have some upward mobility.
A career in banking and finance requires that you take business-related courses such as accounting, business finance, money, financial markets, statistics, and micro-and macro-economics, regardless of what you major in. You might choose to major in Accounting, Finance, Economics, Applied Mathematics or Statistical Mathematics, or Business Administration (with a minor in Accounting or Mathematics). Graduate degrees are of course available in all of these fields, and there are certifications that may be required, such as the rigorous exam required to become a Certified Public Accountant.
No matter what you major in, it’s probably a good idea to get some entry-level experience in the world of banking and finance, either through a retail job in a bank or through an internship with a financial company. If you plan to follow this path, it is worth your while to think about how to prepare for the interview ahead of time. Interviewing for a finance or banking job is not as intuitive as you might think. This blog article by Kasia Mikoluk will help you prepare for the tough questions you’ll be asked.
Banks and Banking
There are many job options for those who wish to work specifically in, or for, banks. Teller is the entry-level position in many cases, but you might want to move up to positions like branch manager, mortgage banker, loan officer, trust officer, or credit analyst. Each of these positions is specialized, and each requires a unique skillset and educational background. Branch managers often have studied business or management, while loan officers benefit from a background in sales.
Whichever end of commercial banking you pursue, you will most likely be dealing in some capacity with the public. A grounding in sales and relationship management is essential, and you can learn more about those in this online course.
Working in asset management means doing just that for clients, whether they are individuals or companies: managing the client’s assets. Asset managers and portfolio managers typically create funds (mutual funds, hedge funds, etc.) and then invest for their clients in securities and equities. Usually, skill in research and quantitative analysis is a boon in this field.
The field of corporate finance encompasses mergers, acquisitions, IPOs, and large-scale real estate deals. Working in corporate finance means collaborating closely with corporate clients, advising them on the best strategies for growth and continued success in the ever-evolving market. If a corporation needs capital to buy out another company, purchase a new facility, buy back some of their own stock, or even sell off a division, they turn to their corporate finance advisors to help them figure out the best way to do it.
“Investment banking” is a term that covers a lot of area. Saying you are “an investment banker” is about as specific as saying you are “a teacher” or “an athlete.” Such a term gets you in the ballpark, but doesn’t get nearly specific enough.
So what sort of things do investment bankers do? They sell, trade, and underwrite securities for clients. They also provide many of the same services that corporate finance firms might provide, but they often do so for smaller clients, such as smaller companies and individuals: managing assets and advising on all investment matters.
The thing that differentiates investment bankers from others in the financial sector and is common to all who use that name to define what they do is that they work for banks. Specifically, investment banks devoted to that purpose. It’s a fast-growing field, and just as the name is broad in scope, the job opportunities are, as well. If you’re interested in a career in investment banking, you can get a good overview of the field in this online course. To get more in-depth, you might want to take a look at this online course on financial and valuation modeling, a key area in investment banking.
In fact, there is so much growth in this field right now that many recent college graduates find themselves interviewing for entry-level positions at investment banks. If you are already on this track, and are trying to land an interview (or if you have just scheduled one and want to do some quick preparation), read Kasia Mikoluk’s blog post on formulating answers to some common investment banking interview questions.
The hedge fund has gotten a bad rap in the movies and in the popular conception. They got their name for the practice of “hedging,” the sometimes-ethically-questionable practices that are used to guarantee an investment in unpredictable market, such as agricultural commodities. In other words, hedging is like betting on yourself to both win and lose.
However, not all hedge funds actually engage in hedging techniques. Most hedge funds are simply open-ended, pooled investment vehicles. Clients can be individuals or companies. Someone needs to manage these funds, administrate them, and ensure that only the smartest choices are made, and that’s where hedge fund managers and other employees come in.
Private equity firms invest in both privately-owned and publicly-traded companies. They don’t work for clients; rather, they are the clients themselves, seeking to make profits on smart investments. Very large amounts of money are made and lost by private equity firms, and so a strong business and finance background is recommended for those interested in this world.
Sales and Trading
Those who work in sales and trading generally work for large companies, managing various in-house funds, such as pension plans and mutual funds. Those in sales maintain client relationships and oversee the sales of securities and other assets, while those in trading typically do just that: execute trades in commodities, equities, bonds, derivatives, bonds, and currencies, to make a profit for the parent company.
Pursuing the path of public finance does not necessarily mean working as a public servant. More often, those in public finance work for investment banks that partner with various public and private agencies on public projects. Most of the work involves raising capital by issuing securities that are exempt from federal taxes.
Venture capital firms do exactly what the name suggests: they help raise capital for new business ventures, usually start-ups in industries like energy, biotech, and the Internet. These firms solicit funds from companies and wealthy individuals to accomplish their goals. Experience in the industries that venture capital firms focus on can be the make-or-break portion of your work history.
The Long and Short of Banking Careers
Money, some say, is the root of all evil. It has been more than twenty-five years since the Wall St. dictum “greed is good” became first a call to arms for all young college graduates with endless drive and ambition, and almost ten years since the economic meltdown and the ensuing public backlash against the world of finance. We’ve all grown up since then, and the field of banking and finance is not going away, no matter how it may change with the times. The job opportunities are there; the high salaries are there; the career paths are there. You just need to decide that this world is one you want to live in, and then pursue it with all the drive, resourcefulness, and intelligence you possess. Good luck!