The U.S. financial services sector is a massive complex comprised of the banking, asset management, insurance, and venture capital industries. According to the U.S. Department of Commerce, finance and insurance represented 7.2 percent—$1.26 trillion—of the total U.S. gross domestic product for 2014. The nation’s financial markets remain the largest and most liquid in the world.
As of 2012, at least 132 of the Fortune Global 500 companies chose to operate their headquarters in the U.S. in order to have better access to the nation’s creative and competitive financial services sector. Today’s financial services industry is stronger than ever, with investors and businesses enjoying an ever-increasing array of financial instruments and products that allow them to manage risk and create wealth.
Taking a Look at the Components of the Financial Services Industry
Jobs in finance are broad and exciting, and new trends continue to spark a strong demand for those who possess specific skillsets. For example, regulatory roadblocks and more stringent customer protections require professionals skilled in navigating a more complex array of regulations and restrictions. As global business surges, finance professionals skilled in foreign markets continue to be in demand. And, of course, skilled technical analysts continue to be key to any financial firm, even more so as financial instruments become more complex.
Banking - The U.S. banking system supports the world’s largest economy. By the second quarter of 2013, earnings in the banking industry grew to $42.3 billion.
Asset Management - Asset management encompasses the pension management needs of more than 55 percent of the global retirement market. U.S. pension assets totaled $18.9 trillion at the end of 2012; add insurance assets and mutual funds to this, and the total jumps to $39.6 trillion.
Insurance - Premiums for the insurance industry totaled $1.27 billion in 2012; life and health insurance premiums accounted for 45 percent of this total, while property and casualty insurance premiums accounted for 55 percent.
Venture Capital - According to the U.S. Department of Commerce, the U.S. venture capital industry maintains the most dominant position in the world. In 2012 alone, venture capital-backed companies generated more than $3 trillion in revenue and employed more than 12 million people.
Jobs Within the Financial Services Industry
From performing financial analyses and overseeing investments to staying abreast of economic developments and predicting changes in the economic climate, jobs in the financial services sector are numerous and wide-reaching.
Just a few of the areas where professionals in the finance industry work (many of which overlap) include:
- Corporate finance
- Real estate
- Financial planning
- Investment banking
- Money management
The following list, although not comprehensive, is representative of some of the high-profile careers in the financial services industry:
Financial managers monitor a company’s finances through data analysis and advise senior managers on ways to maximize a firm’s profits. It is typical for financial managers of large corporations to work in teams, where they serve as trusted business advisors to some of the company’s top executives. Some of the job duties of financial managers include:
- Preparing financial statements and business activity reports
- Monitoring financial transactions to ensure all legal requirements are met
- Reviewing company financial reports for errors or to find ways to cut costs
- Analyzing market trends
Financial managers, depending on the company or industry, may serve as:
- Controllers: Direct the preparation of financial reports that summarize the organization’s financial position and forecast future earning or expenses; often work for governmental agencies that regulate businesses
- Treasurers: Ensure that an organization’s budget meets its financial goals; often oversee the investment of funds, strategies for raising capital, and plans for mergers and other acquisitions
- Risk Managers: Control financial risk by implementing strategies that limit a company’s financial loss or exposure to financial uncertainty
Most financial specialists work at banks, credit unions, and insurance companies.
Financial specialists help customers or businesses determine short- and long-term financial goals and recommend/sell them financial products or services that meet these goals. Depending on the company or industry in which they work, financial products or services may include insurance, investment services, certificates of deposit, annuities, and other financial instruments.
As part of their job, financial specialists may also be required to contact prospective customers, make financial presentations, and review business trends.
Some of the job duties of financial specialists include:
- Understanding customers’ financial goals and recommending asset strategies
- Assessing customers’ financial situation to determine which type of investment is best for them
- Preparing cost and budget reports for management
- Preparing financial statements and ensuring they comply with regulatory rules
Budget analysts have the task of preparing a corporation’s annual budget, which includes consolidating data to provide an overview of the financial status of the organization. The process of preparing an annual budget encompasses a wide array of activities, such as:
- Examining and analyzing past budgets
- Allocating financial resources
- Providing leadership for budget presentation, formulation, and presentation
- Estimating future financial needs
- Evaluating past performance of a program and readjusting funds, as necessary
- Reviewing proposed budget submissions from department managers
- Serving as an advisor to department managers regarding budget submissions
- Proposing enhancements to the budget model
- Updating the budget model to account for changes in the business environment
Financial analysts manage other people’s money. Many work as investment advisors with brokerage firms, while others work for banks, insurance companies, or mergers and acquisitions firms.
Financial analysts, many of whom have expertise in a specific area, evaluate a specific financial situation and generate appropriate reports that detail professional recommendations for their investors or company.
They base their evaluations on a number of factors, including industry and economic trends. They also provide forecasts and determine a fair market value for the sale of company stocks.
Financial analysts make business, sector, and industry recommendations based on both macroeconomic and microeconomic conditions. Their recommendations usually involve a course of action, such as buying or selling a company’s stock.
Personal Financial Advisors
Personal financial advisors (also called wealth managers) provide financial guidance and investment advice to individuals. Their job involves examining a client’s overall financial portfolio and recommending savings, stocks, and other investment tools to improve upon it.
Financial advisors are very often licensed as investment advisors (when operating an independent firm) or investment advisor representatives (when working for a large firm), which binds them to a fiduciary duty to always act in their clients’ best interest. Earning an investment advisor license requires passing the FINRA Series 65 Uniform Investment Advisor Law Exam.
Clients trust financial advisors to provide them with sound financial advice. As such, these finance professionals must stay abreast of market trends and be able to recommend strategies that are in line with their clients’ financial goals and objectives. This may include providing them with advice on debt management, case management, insurance coverage, and investments.
Job responsibilities of personal financial advisors include:
- Meeting with clients to discuss their financial goals
- Educating clients about their investment options, types of financial services, and the risks involved
- Recommending investments to clients or selecting investments on their behalf
- Overseeing client accounts and determining if changes need to be made to improve account performance
Many personal financial advisors hold licenses to directly buy and sell financial products like stocks, bonds, and annuities. Because of this, some have permission from their clients to buy and sell stocks and bonds on their behalf.
Financial examiners oversee banks and financial institutions to ensure they are complying with the laws and regulations that govern them.
Financial examiners oversee compliance with laws and regulations within the financial and securities sectors. Their work often involves examining, verifying, and authenticating records.
Some of their work duties involve:
- Investigating activities to ensure the legality of transactions
- Preparing reports and other materials that detail a company’s compliance with laws and regulations
- Directing meetings to discuss findings and recommend solutions
- Resolving problems regarding the integrity of banking institutions and recommending solutions for questionable financial activity
Loan officers oversee the loan application process for both businesses and individuals. They authorize approval of loan applications based upon their evaluations (called the underwriting process).
Loan officers meet with clients, discuss their loan options, and collect and verify all related financial documents related to the loan. Upon receiving all of the necessary paperwork and information, loan officers evaluate the information and make a determination regarding the applicant’s ability to pay back the loan. Many times, the initial underwriting process is determined by underwriting software. Loan officers then consider any additional information and make a final determination.
Loan officers often specialize according to their expertise or according to the loan products their company offers:
- Commercial loan officers: Specialize in loans to businesses
- Consumer loan officers: Specialize in loans to individuals consumers (personal loans, car loans, student loans, etc.)
- Mortgage loan officers: Specialize in loans used to purchase real estate
Securities, Commodities, and Financial Services Sales Agents
Securities, commodities, and financial services sales agents—also commonly referred to as stockbrokers—help clients buy and sell in financial marketplaces, such as the New York Stock Exchange. Their job duties also include providing insight on the market to their clients, but they must stop short of providing direct recommendations to buy or sell based on that insight in accordance with the limitations of the Series 7 license (stockbroker license).
Stockbrokers serve as the intermediary between investors and brokerage firms, placing orders to buy and sell stocks. However, stockbrokers do not actually manage their clients’ stock portfolios in the same way an investment advisor or personal financial advisor would.
Stockbrokers serve the financial needs of their clients, but have limited fiduciary responsibility to the interests of their clients since they work strictly as sales agents rather than as investment advisors or personal financial planners.
Selling securities of any kind (with the exception of annuity products) in the US requires sales agents to register as a representative of their employer through the Financial Industry Regulatory Authority. Achieving a license includes passing the FINRA Series 7 General Securities Representative Examination.