The financial industry is very broad with many kinds of careers falling under the financial umbrella. Before you decide which facet of the industry you want to pursue, take the time to explore all of your options. You will quickly discover that some financial careers are more appealing than others, and you may be well-suited for a particular aspect of the field.
Careers in Financial Markets
Why Major in Finance?
Accountants are very important to a business’s health. Without good accounting and accounting practices, an otherwise healthy business could be significantly and negatively impacted. Accountants look at both sides of the accounting balance sheet: income and expenses. They help businesses identify areas in which they can cut costs, and they can also identify revenue sources that are growing, which the company may wish to expand on. Additionally, if companies aren’t using good accounting practices, they could be wasting money and not taking advantage of discounts or tax breaks. Certified public accountants can also assist individuals and businesses with estate planning and tax preparation. Within the accounting field, there are several different types of accountants.
Today, there are many types of financial planners—professionals who help clients prepare financially for retirement, children’s college tuitions, weddings, and other big lifestyle expenses. Some financial planners focus on a specific type of planning, such as college, estate, or retirement. Others offer the broadest range possible to attract more clients. These professionals help their clients save money and put it in investment vehicles so it will grow to a large enough sum to use to live on (or use for college or other needs) in the future.
In addition to financial planners, a growing opportunity in this facet of the industry is the registered paraplanner. The paraplanner works at an investment or financial services firm as a combination of administrative assistant and financial planner. While the full-fledged planner is in charge of the client’s account and makes important decisions, the paraplanner is the one buying and selling the securities according to the plan, keeping the client’s file updated and assisting the planner with the many details involved in maintaining the account. Most paraplanners eventually become financial planners.
Investment bankers can be employed in a large bank, investment firm, or a consulting firm. These financial professionals specialize in helping companies obtain funding through various means. The most common ways they accomplish this is by helping them obtain very large loans, initial public offerings of company stock, or additional offerings of stock. They also help companies that wish to merge, or when one company is going to acquire another company, especially when the companies are publicly owned. Each of these funding processes is complicated and time-consuming and requires expertise and knowledge of government regulations and filings. The investment banker must do a great deal of research and careful planning to orchestrate these processes.
Certified Financial Planner
Some positions in finance offer many options for employment. The certified financial planner (CFP), as one example, may work for financial planning companies such as Merrill Lynch, Raymond James, or Edward Jones. The planner could also work at a bank, helping a bank’s customers plan for future financial needs. Another option for the planner is to remain an independent, self-employed consultant, which has its pros and cons. It may be harder to acquire clients, but you may be viewed as more impartial if you’re independent.
The CFP meets with clients and has in-depth discussions about their current and future financial situations and goals. Most people utilize financial planners because they’re ready to invest money so that it can be saved for retirement or other important future goals. However, most people aren’t knowledgeable enough about the stock market, tax savings accounts, and general financial planning practices to begin a savings and investment plan on their own. That’s where a CFP comes in. Once the CFP has met with the client and has a very good idea of his or her financial picture and goals, the planner then puts together a plan to help the client reach those goals or get as close to them as possible. Then, each year or more often, the CFP reviews the plan and makes recommended changes based on how the investments are performing or in view of any changes in the client’s lifestyle.
Working conditions for the CFP are generally good. However, when considering this position, keep in mind that you may be required to work evenings and weekends in order to meet with clients. Also, making sure clients’ portfolios are successful can be stressful.
Financial planners aren’t required to get certification. However, more people are looking for certified planners. Certification indicates that the planner has the knowledge and skill required to meet clients’ needs, and it also indicates that the planner has agreed to adhere to ethical practices that ensure the planner will put the clients’ needs first.
To become certified, the planner must have a bachelor’s degree, a specific number of hours of financial planning training, and a minimum of three years’ experience as a financial planner. The education component may be satisfied by college coursework or specific training classes offered by accredited financial planning educational organizations. After the education and experience requirements are met, the planner must take and pass the certification exam. Once certified, the planner will need to take continuing education classes.
The salaries CFPs can earn varies a great deal, depending on whether the planner is employed by a bank, financial services firm, or is self-employed. The more clients the planner is able to bring in, however, the more money he or she can earn. Most planners either charge a flat rate planning fee for his or her services or earn commissions on the investments or insurance products he or she sells to the clients. Currently, more planners are transitioning to a flat rate fee for services because clients have called into question the commission system. Basically, there is a concern on the part of clients that the planner is selling them certain products based on the commission earned rather than how well it will meet the clients’ needs. No matter which system a planner chooses, he or she will earn more money if he or she can attract more clients.
The U.S. Bureau of Labor Statistics says that financial planners or advisors earn an average annual salary of approximately $69,000. However, new planners may earn much less, while successful, established planners can earn much more. The bureau says higher earners average about $120,000 per year.
Registered paraplanners are one of many financial careers that are increasing dramatically in demand. A position that has just developed in the last twenty to thirty years, registered paraplanners can bring many benefits to financial planners. The registered paraplanner assists the financial planner with the many details of initiating and maintaining clients’ accounts. While the certified financial planner puts together the plan for the clients, it can be the paraplanner’s job to actually carry out all of the necessary tasks to put that plan into action. Because paraplanners may need to buy and sell stocks and securities, as well as insurance and other financial products, the paraplanner needs to be registered and certified to do these things.
The paraplanner works at an investment or financial services firm in a role that is a combination of administrative assistant and financial planner. As mentioned, the full-fledged planner is in charge of the client’s account and makes the decisions; the paraplanner does all the groundwork, buying and selling securities, updating client files, and assisting the planner with the many details involved in maintaining accounts. Many paraplanners work their way into becoming full-fledged financial planners.
The demand for paraplanners is growing for two primary reasons. First, with the number of baby boomers retiring in the next several years, there will be an increased need for employees who can help transition these clients from wage earners to retirees. Second, having an adequate number of paraplanners allows financial planners to focus on the big-picture details of each client and actually serve a larger number of clients because he or she isn’t bogged down handling all of the details connected with each account. Many financial planning companies are actually hiring enough paraplanners so that, for every two financial planners, there is one paraplanner.
Working conditions for the registered paraplanner are generally good. But, like the financial planner, the paraplanner may need to work nontraditional hours, such as evenings and weekends. This is because there are times when the financial planner has the paraplanner sit in on client meetings. This is good for the paraplanner who is interested in becoming a certified financial planner.
How to Become a Registered Paraplanner
There are several registered paraplanner programs available at community colleges, colleges, and universities. The programs provide students with the basic information they’ll need to perform their jobs. This includes courses on the basics of financial planning. If the paraplanner intends to buy and sell stocks and securities or other financial products, he or she will also need to become licensed to do so. This means he or she will need to take and pass the Series 7 exam administered by the Financial Industry Regulatory Authority (FINRA). However, in order to register for the Series 7, the paraplanner needs to have a financial institution sponsor him or her. This is usually done after the paraplanner has been hired or through an internship as a paraplanner. The Series 7 exam is taken by all employees who are classified as general securities representatives.
In addition to receiving education and training, candidates can also complete a paraplanner internship with a financial services company. Doing so will give the candidate practical experience as a paraplanner that he or she can use to get a job later. It can also lead to employment with the internship company.
Registered paraplanners earn higher-than-average salaries but not as much as other professions in the financial industry. Paraplanners cannot increase their salaries by bringing in clients; they are paid an annual salary rather than commissions or advising fees. The average annual salary range of paraplanners is between $31,000 and $41,000.
Retirement Plans Specialist
The retirement plans specialist has a more specific job function than many other financial careers. The specialist works in the financial planning sector, but while most financial planners help people save for retirement, the retirement plans specialist works with the retiree to maximize his or her income and minimize the person’s potential tax consequences. The retirement plans specialist may be hired by a large company to oversee its retirement plans, hired by a bank to administer its clients’ plans, or he or she may have his or her own business and retired clientele.
The retirement plans specialist that works for a large company will be more or less a plan administrator. This person will make sure that the overall retirement fund is performing well and that all allocations and taxes are paid according to company policies and government regulations. Bank specialists perform similar functions. The specialist on his or her own will work with clients one-on- one doing much the same thing, but this person has more authority to make changes in fund investments.
There are a few primary reasons that people choose to go to a retirement funds specialist after they retire. Most financial advisors are paid based on the total amount of funds they oversee and administer, and it’s been their goal and job to protect their clients’ money while it’s growing for their retirement. They can therefore be less experienced when it comes to setting up planned income for retirees, although this is not always the case. There are many financial advisors who are certified retirement plans specialists as well.
To become a retirement plans specialist or earn certification as a retirement plans specialist, financial professionals can take specific continuing education classes through different educational organizations. Some programs will require the specialist to take and pass an exam. These programs provide professionals with the information, methods, and techniques for developing income and tax plans for retirees and can usually be completed online. Certification is good for a specified period of time, and specialists are usually required to take continuing education and retake an exam to maintain their certification.
- Benefits of Pursuing CertificationMany experts in the financial services industry say there will be big demand in the coming years for retirement funds specialists. This is due to the number of baby boomers who are reaching retirement age over the next decade. These experts also say that more people are looking for specialists to handle their retirement funds rather than remaining with the advisors who have managed it before retirement. This is because more people understand that it takes different skills and expertise to manage an income fund than it does a fund that is primarily designed to build wealth. In fact, many financial experts predict that there will be more specialization taking place in the financial industry in the coming years, and professionals who specialize now will be in a position to reap the most benefits.
- Salary and Other ConsiderationsThere is a wide range in the salaries available to a retirement plans specialist. Specialists who are self-employed and work with individual clients tend to earn higher salaries because they can earn flat rate consulting fees, earn commissions, or charge transaction fees. Specialists who work as funds administrators for large companies make yearly salaries that are above the average for many other jobs but not as high as those who are self-employed. The average salary for these employees is approximately $51,000 per year.
Retirement plans specialists may also have to work evenings and weekends in order to meet with clients when it’s convenient for them, although as most of their clients have retired, this may occur much less frequently than for other financial advisors.
The investment banker’s job is to help companies obtain various forms of financing. Sometimes, it’s simply helping the company get the best deal on a large loan, but often, the company is seeking such a large amount of financing that it needs to sell shares of ownership in the company. The financing is usually needed to build a facility or needed equipment, hire employees, or for research and development. This is when the company decides to develop an initial public offering of stock, and investment bankers specialize in helping companies through this process. There are many details associated with this process and many laws and government regulations that must be followed. The investment banker must be able to help the company navigate through this complicated ordeal. The investment banker also helps companies when they decide to offer more shares, when they want to acquire another company and need funding, or when two companies (with one or both of them public) want to merge. The bank interested in pursuing the deal underwrites the stock offering, and the business receives the funds immediately. The bank then receives the proceeds of the sale of the IPO stock.
Financial careers as investment bankers usual require at least a bachelor’s degree, but employers now often prefer candidates with master’s degrees in business administration for these very important positions. The Financial Industry Regulatory Authority (FINRA) branch of the U.S. government may require that investment bankers be licensed. It’s also a good idea for the investment banker to earn his or her CFA, or Chartered Financial Analyst designation, sponsored by the CFA Institute. To qualify, the banker must have a bachelor’s degree and four years of related work experience. Then, he or she must pass three exams.
Salary and Other Considerations
One of the primary benefits of being an investment banker is the salary associated with it. Investment bankers are the most highly paid employees in the financial industry. The average yearly salary can start at around $100,000 per year. Investment bankers who are very successful can earn more than $300,000, depending on their experience and which financial institution employs them. However, this very high salary comes with a price—namely, the banker’s time. Most investment bankers work very long hours and can spend a great deal of time traveling. If you’re not a person who likes to work evenings and weekends or if you don’t like being away from home for periods of time, then you should probably think carefully before jumping into an investment banking career.
On the other hand, many investment bankers find this a rewarding career, and not just financially. It can be exciting to see businesses grow and succeed and know you have played a key role in making that happen.
It’s also important to know that investment bankers are often promoted to executive positions. Because they must have in-depth knowledge of sound business practices and are experienced working with CEOs and other executives of companies, they are logical choices for high-level positions within a company. At investment banks, very successful investment bankers have the potential to become president, director, or managing director of the firm.