By Sam Wong, Peers for Careers/SCDC Correspondent
(As originally published in the Ticker: http://ticker.baruchconnect.com/article/opportunities-in-finance-besides-investment-banking/)
The hours are long, the work may seem menial, and you may lack control over your time as you get staffed on various deals andprojects. However, there are other options if you are majoring in finance.
Asset management is investing other people’s money and obtaining a fee for the service. There are active (fund managers who try to beat the market) and passive investors (fund managers who track indexes or effectively match market returns).
Being a research analyst out of school includes reading 10-Ks to find company information, updating and maintaining financial models, synthesizing and analyzing external company and industry data, proofreading presentations and research reports, conducting primary research and writing minor research reports.
A research analyst may be promoted to a portfolio managers, whose job is to pick a portfolio of stocks, bonds, or combination of the two, to make the highest returns for investors.
Operational roles within banks or any financial institution involves ensuring that all the divisions function efficiently.
The role is important and needed for a financial institution to function. Primary roles of operations are clearing and settling trades.
Clearing trades involves making sure that the records one bank has kept of the sale of a financial security match those of the bank or organization it sold the security to.
Settlements cover everything from preparing the documentation required for a sale to making sure the bank has been paid for all the shares it has sold and bought.
Senior roles within the operation field include Chief Operating Officer, which is responsible for ensuring that the back and front end of a bank are running efficiently.
Compliance and risk management deal with regulators and risk that a bank exposes itself to. This includes credit risk (the risk of default from a client), market risk (risk of traded financial products changing in value due to market fluctuations) and operational risk (risk of bank losses due to internal factors such as human errors and system breakdowns).
Compliance ensures that the bank is working in line with regulations imposed. Internal audit is the division which undertakes review of all of a bank’s processes from financial audit to technical audit.
Technology plays a differentiating factor in finance. Investment banks, retail banks, investment firms and insurance firms all spend heavily on technology.
Development roles in IT create software in-house for bank use. If software is purchased from outside sources, technology analysts will tailor them for the bank.
Business analysts within the IT role act as the liaison between the IT department and the rest of the company.
Commercial banking involves various banking services offered to large institutions ($25 million and above) and governments. Services offered include loans, cash management, and project financing.
Generally, junior employees wishing to pursue a career in commercial banking start off as credit analysts which review financial statements to decide whether or not to issue loans. Senior roles are more client-focused and revenue generating.
The insurance industry is comprised of four areas: insurers (assess risk and develop products for sale to individuals and corporations), re-insurers (insure insurers against risk of significant losses), insurance brokers (intermediaries who sell insurance) and Lloyds global market (about 80 corporations, individuals, underwriters and financial backers or syndicate who come together to spread risk).
Roles within the insurance include underwriters (involves extensive risk analysis, sifting stats on industries, demographics and clients to prepare a quote), actuaries (produce financial models based on statistical risk which are used by underwriters), agents (salespeople of insurance, who try to find the right product for a client) and claims (where most insurance people work.
Investment banking isn’t the only option for students who want to pursue a career in finance. There are plenty of other financial careers that can be just as fulfilling.