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Home  > Article

Career choices expand within Financial Sector

By Lucas Laursen

Recent graduates have several options for entry-level careers in finance. Check out some of the most popular positions.

Entry-level careers in finance are generally found in commercial banking, investment banking, or insurance. Experienced financiers, or specialists from relevant fields, can get involved in private equity as well. Many firms have stakes in multiple sectors, and many people move laterally between financial sectors not long after entering the field.

Commercial (Retail) Banking

Commercial, or retail, banks invest funds deposited through checking, savings, or time accounts in loans and bonds. The career path is considered less volatile than investment banking, though recent deregulation means that many firms now have both commercial and investment banking under the same roof.

Credit analysts, a common entry-level position, review credit applications. This yields an intimate understanding of businesses and cash flow and can lead to more advanced financial work like managing loans, trusts, or mortgages. Loan officers make use of sales skills, as do trust officers and mortgage bankers, in selling various products. They must have advanced knowledge of banking and need to be comfortable seeking and interacting with outside clients.

Tellers and customer service representatives are the human face of commercial banks. Human services skills are useful in a business that still relies on face time with clients. The same skills can lead to advancement within the bank to positions like branch manager.

Commercial banking is probably the broadest segment of finance with the most entry-level opportunities.

Investment Banking

Investment banks are in the business of fund-raising--but they use equity and debt, not baked goods. Investment banks also offer financial advice on mergers and acquisitions and trade in stocks and commodities and more, but the nuts and bolts remains the sale of securities on behalf of companies that need funds.

"I-banking" is probably one of the highest-profile "finance" fields on college campuses in the United States. If your college has a recruiting program, that will be the easiest way to find out about entry-level positions. Summer internships are often available to get your feet in the water. Entry-level research analyst positions are held by quantitatively-gifted recent college graduates.

An entry-level analyst might help evaluate the value of a company or transaction one day and contribute to a pitch book the next. Duties vary widely, and insiders probably attribute bigger differences between departments than outsiders would believe. For example, the high-speed mergers and acquisitions desk may have bursts of activity that leave workers gasping in the quiet between deals, while other desks have a more predictable, if not less demanding workload.

The hierarchy in investment banking is always clear: analysts are expected to give their all for the company. They may rise vertically, but most go away for business school before returning as associates. After that, they can grapple with each other for access to senior management positions.

Insurance

Insurance is a financial tool used to minimize the risk of financial loss. Physical property and financial transactions can be insured, as long as the risk is quantifiable. Patent infringement insurance is even available for inventors of special kinds of...well, insurance. The principle is always that the insurer must assess as accurately as possible the risk to which the insured will be exposed, and charge a premium accordingly.

This so-called actuarial science is a path for people with strong statistics training. It also helps to be curious about the risks in a particular field, as these "underwriters" tend to stay in one particular area, since they must invest their first years assisting in data collection and analysis, getting to know the field well. As they gain experience, they are assigned more responsibility in setting premiums to reflect the relevant risks.

Insurance companies invest their premiums, so portfolio management is another major component. This side of the industry converges in some ways with other investment-related financial services, and it will also require strong mathematical skills and a willingness to work in the fast-paced environment associated with investment banking.

Like commercial banking, most insurance firms have a personal relations side: they must sell their policies. Sales are often commission-based. As one insurance salesman puts it, his company "basically hires anyone who is willing to work for them." The challenge is not just getting in the door, but actually making the sales. Commission-based sales mean that both the commitment and rewards are up to the salesperson.

Private Equity (including Venture Capital)

Private equity is the term for investments closed to the public. Usually a comparatively small number of investors pool their resources to invest directly in a small portfolio of high-risk companies with the expectation of above-average results in the long term. The companies are typically undergoing some kind of structural change, either because the investment takes place in the initial stages (venture capital) or the private equity firm takes control of management, restructuring the company to increase its value.

Career paths vary widely, since private equity firms are highly specialized. Firms often focus on a narrow industry, since evaluating a potential buy-out target and contributing to its management requires detailed knowledge and experience in a given field. Breaking in can demand proven business or technical sense and the ability to learn quickly on the job. One 2006 graduate recently began work at a Boston biotech venture capital firm: "Most of my day is still spent learning new things, but all of the learning is active insofar as I do things. Thinking back on school work, it actually would have been a whole lot more productive to have learned as actively."

Recent college graduates may find it difficult to break in because much of the work is so focused and requires experience. Many firms look to hire former investment or commercial bankers and accountants. A good strategy is to check with network contacts for internship possibilities during college, since the formalized recruiting structures found at investment banks are rarely in place in private equity.







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