Those entering the workforce armed with a degree in finance face a tough choice. Do they head to Wall Street and the lucrative, although risky, world of high finance? Or, do they head away from the path of the investment banker and develop the tools to become a future giant of corporate finance? Of course, there are even more choices than that. Here we take a look at the options available to those entering the workforce, and provide some tips on how to find the right career.
TUTORIAL: The Greatest Investors
Coursework for finance majors varies from school to school. Typically, the curriculum exposes students to several key subjects, including business fund management, financial markets, security analysis and valuation, financial institutions, investments and securities, risk management, trading, financial forecasting, capital structure, venture capital, and security issuance.
Overall, finance courses are more quantitative than qualitative, meaning that students really need to develop some real-world experience through internships to build up the interpersonal skills that the workplace requires. This is one of the primary reasons so many schools have students work on projects in teams. (It only takes a little legwork to land a prestigious career while you're still in college, check out Internships: Find The Best One For You.)
The success of financial firms may ebb and flow and the fates of investment bankers may change at any moment, but there is one employee that firms can rarely get enough of: accountants. Accounting work on Wall Street involves reviewing and handling financial system data, maintaining financial schedules and journal entries, and keeping track of where a firm's obligations are. Taking this career path requires an eye for order and a stomach for complexity. Tracking the value of a security position may not seem difficult in a textbook, but keeping track of a dizzying array of derivatives requires a certain finesse that requires more than knowledge of accounting principles.
Essentially, investment banks are consulting firms that provide advice on initial public offerings (IPOs), mergers, stock repurchases and corporate refinancing. These firms rely on smart personnel with inquisitive and detailed minds to help them examine the inner workings of their clients, which makes it easier to bring in sizable billings. Business analysts work with clients to identify their needs, develop strategic plans that will move them toward meeting those needs, and setting requirements and tasks to improve the likelihood of sustained success among clients. This career track requires skill in identifying the big picture and the patience to work with clients who may not know what they want. This position often involves interfacing with many different client employees, as well as working with members of the firm who are specialists in specific fields. Projects may be short and defined or long and vague. (Fancy yourself a problem solver? Management consulting might be right for you; check out Consulting - Everybody's Doing It, Should You?)
The heart of a Wall Street firm is its operations. Work in this area involves project management, gathering requirements and business process planning – tasks generally not considered when college graduates think of an investment bank. Employees may track complex trades to ensure that all parties are settled and that the ownership of securities passes to the correct group. They may examine how deals are executed in order to improve the process, and they focus on accomplishing the firm's goals efficiently and with the fewest resources required. Operations staff, much like accountants, need an eye for the relationships between different parties and factors and should be comfortable with business-process mapping and modeling.
The world of finance changes rapidly - so much so that it barely resembles the days when computers were first used to evaluate transactions. Today, financial engineers create new financial instruments would have been impossible to implement in the past. Complex derivatives, exotic options and multiparty trades require employees who understand financial economics, mathematics and software engineering. They also require imagination and diligence. A financial engineer may be charged with developing software that can reduce the time it takes to execute a trade, allowing firms to profit from more minute fluctuations in a security's price. Tasks might require modeling financial formulas and developing simple interfaces so that other employees can interpret data. (Learn how to put your trading system into code. It'll work so that you don't have to. Read Trading Systems Coding: The Coding Process, and Style Matters In Financial Modeling.)
When Wall Street draws the ire of Main Street, politicians and regulators often step in to fix an industry that may be considered broken. Since before the Great Depression, regulatory bodies such as the Securities and Exchange Commission (SEC) have provided rules and guidelines that firms must follow in order to protect consumers and other businesses; breaking these regulations often comes with a hefty fine. To avoid conflicting with regulations, firms employ compliance officers to make sure that the strategies and processes they employ are legal. Compliance officers review and evaluate business processes and compare them to regulations, audit company activities in order to mitigate risk and develop policies and procedures designed to make breaking the rules evident and preventable. This position is often the "bad cop" of the company, as its function is to limit behavior that increases a firm's risk, even if that behavior is highly profitable. Knowledge of process planning, financial forensics and business law are all desirable assets for achieving success. (Learn more in Get A Job In Compliance and An Inside Look At Internal Auditors.)
The Bottom Line
Working on Wall Street means long hours and backbreaking work, all thrown in with a level of hazing commonly referred to as "paying your dues." Entry-level work can often be thankless, and the rewards of the job may vary greatly from firm to firm and position to position. Tough economic times and political influences also change what Wall Street jobs have to offer. Many factors can focus the public's eye on several facets of Wall Street that might have typically gone unnoticed. Ever-changing bonuses, salary, regulations and technology will adjust the benefits and restrictions of a career in finance. The days of the "fat cat" may not be over, but they certainly have changed.