Also referred to as money management, investment management, or portfolio management, the focus of this industry is to increase the value of assets for mutual funds, hedge funds, institutional investors, and high net worth clients. Money management professionals are considered to be on the “buy-side” of Wall Street, meaning that their primary role is to buy and hold securities and equities on behalf of their clients. The structure of buy-side firms is usually less rigid and formal than that of sell-side firms such as investment banks, which means there is no one standard way of entering the industry.
Commercial Banking/Financial Institution
Historically, the primary focus of a commercial bank is deposit-taking and loan-making. Commercial banks generally accept the deposits of individuals (such as in a savings or checking account) and lend the money to others, in the form of mortgages, business loans, etc. While the commercial bank makes a profit by charging a higher interest rate to its lenders than it gives to depositors, it is also accepting the risk if a lender defaults. According to www.careers-in-finance.com, more people are employed in commercial banking than in any other finance industry.
The consulting business provides an array of career options for those interested in applying problem solving-skills to a variety of managerial issues and related applications, including information technology, auditing and accounting, litigation, risk management, mergers, restructuring, compensation strategy, pricing strategy, etc. The consulting industry provides opportunities in many industries and geographic areas and is increasingly important in developing economies. Large consulting firms hire top students from leading undergraduate programs as analysts. These analyst programs generally last three years.
Corporate Finance and Financial Management
Professionals working in the area of corporate financial management usually work for individual companies, determining strategies for acquiring capital, planning mergers, acquisitions and managing other major financial decisions for the company. Generally, jobs in this area dark-h2 on administering the company’s financial resources in accordance with the organization’s long-term goals, rather than having a strong focus on short-term returns. While many jobs in this area require accounting experience, strong analytical skills are also vital for success.
The field of financial engineering is a relatively new one, having emerged with the rapid technological advances and increased global nature of the economy in recent years. As the name suggests, this area involves the application of engineering, computer science, and mathematical principles to finance issues. Many universities offer advanced degrees in financial engineering, and those proficient in this discipline are finding their skills increasingly in demand. Financial engineering is especially useful for careers in risk management, investment strategy, strategic planning, insurance, and investment banking. There are a number of excellent graduate programs in financial engineering (generally MS programs).
FinTech is a portmanteau of the terms “finance” and “technology” and refers to businesses that use technology to enhance or automate financial services and processes. The FinTech industry is rapidly growing and aims to help both businesses and consumers better manage their financial operations and processes by utilizing specialized software and algorithms that are used on computers and smartphones. FinTech also includes the development and use of crypto-currencies. The industry currently primarily includes start-up firms and with the industry projected to grow exponentially in the coming years, talented FinTech professionals will be quickly snapped up for their unique skills and capabilities. Desirable candidate knowledge includes blockchain, software and mobile application development, data science, machine learning, artificial intelligence, and cybersecurity.
The field of investment banking has several segments, including the underwriting of stock and bond offerings, merger and acquisition advisory and other trading and asset management activities. They are considered to be on the “sell-side,” because most of their focus is on finding buyers for their clients’ stocks and bonds. Additionally, investment bankers often provide advisory services for companies considering mergers and acquisitions. In most activities, investment banks charge a percentage fee for their services. The entry-level position for those with undergraduate degrees is most often as analysts, and those coming from MBA programs are associates. Both positions are known for long hours and a high workload.
Private Equity/Venture Capital
Private Equity involves the provision of equity finance (venture capital) primarily to high-growth, start-up businesses. Private Equity specialists structure tailor-made financing packages that meet the needs of investee companies. Private Equity firms work with a wide variety of businesses and may also provide managerial and consulting services to clients. Jobs in these areas generally require broad-based experience.