The financial services sector accounts for about $16 trillion of economic output worldwide and provides employment to hundreds of millions of people. If you are interested in finance, it’s highly likely you will find more than one role that matches your personality, skills and goals.
The roles listed below are just a small fraction of the hundreds of career opportunities in the world of finance. These are what I would consider to be the most important ones. I will try to link to more detailed guides for each of them wherever I can.
Investment and Corporate Banking
1. Corporate and Institutional Banking
Corporate and Institutional Banking is usually the biggest money maker for all the large international banks. They provide banking services to large corporate clients like GE, Apple, Walmart, Microsoft and everyone else that you can think of. There are dozens of specific roles within corporate banking like coverage managers, credit analysts, trade finance specialists, or supply chain professionals and so on. Everything you need to make a modern corporation tick.
Corporate Banking jobs provide a healthy mix of good compensation, decent hours and some flexibility in terms of career path and prospects. They are not as sensitive to economic shocks as mainstream investment banking, so that is also a definite plus.
- Salary Potential: Medium to High depending on what size clients you are handling
- Stress Level: Medium
- Academic Requirements: High
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2. Capital Markets
These guys help companies raise capital by issuing equity or debt products. IPOs, FPOs, investment grade and high-yield bonds etc all get covered here. Some banks categorize these teams under “corporate finance” but it’s just clearer to use specific terms like Debt Capital Market or Equity Capital Market.
Capital markets are unmatched when it comes to how much money you make versus the hours you put in. You make a bit less than the M&A guys, but your hours are so much better that it is totally worth it. This combination makes DCM/ ECM my top pick within investment banking.
- Salary Potential: High
- Stress Level: Medium to High
- Academic Requirements: Very High
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3. Mergers & Acquisitions
M&A gets a lot of media hype and Hollywood attention and for good reason. They not only make top dollar, but they also do big headline deals like mega-mergers and action-packed-acquisitions. Pick this option if you don’t mind working 80+ hours a week, are really good at math and are willing to slog it out for the first 3-6 years for the opportunities that open up later in your life.
M&A has the highest compensation but it also has the most brutal hours. There is no such thing as a free lunch. The upside is that M&A has a lot of great exit ops after the first 3-4 years, but the downside is that the burnout rate is extreme and most don’t make it that far. This is not for the faint of heart.
- Salary Potential: Medium initially but Very High later on in your career
- Stress Level: Off the charts initially but eventually it gets better
- Academic Requirements: Very High
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4. Project Finance
Project Finance teams are involved in the analysis and funding of large infra projects like roads, ports, airports, and other developments. These projects usually have a very long duration and time to break-even so Project Finance bankers have to deal with a lot more uncertainty and long term risks. However, they deal with real projects rather than abstract instruments like derivatives which is something I have always found personally appealing about this role.
These roles are not as high paying as other IB roles, but still at the top of the pile.
5. Leveraged Finance
Leverage is the use of debt for financing strategic corporate activities like takeovers, expansions, share repurchases, recapitalizations, etc. LevFin is more specialized than plain vanilla lending and requires a deeper knowledge of properly dealing with very large amounts of debt. high leverage usually comes with high risk so extra skill is required.
6. Restructuring
Companies sometimes get into trouble and are unable to pay their creditors. that is where restructuring comes in. These teams usually come up with a solution that is agreeable to both the debtor and creditor in order to salvage a deal that has gone sour. This usually means restructuring the firm’s assets and liabilities by downsizing, asset sales, refinancing etc. in order to meet their obligations.
Investment Management
1. Portfolio/ Asset Management
These are the people who manage your retirement money! Someone has to manage all the pension funds, mutual funds, index funds, university endowments and so on. Asset Managers work within strict government guidelines to ensure they minimize any unnecessary risks while trying to grow your savings.
Asset/ portfolio management is a rewarding career for those who really like dealing with securities like debt, equity and derivatives. You don’t get to use leverage or invest in crazy ideas like hedge fund managers, but that will probably also help you sleep better at night.
- Salary Potential: High
- Stress Level: Medium to High
- Academic Requirements: High
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2. Fund Management
We have already discussed Hedge Funds and Private Equity, but that’s jus the tip of the iceberg. Those are not even the largest funds in the world. The largest funds in the world are Sovereign Wealth Funds, retirement funds, mutual funds, mortgage associations, university endowments etc. These funds manage trillions and trillions of dollars in assets and quite literally shape the world with their combined investment power. Hedge Funds get more media attention because of their high-risk, high-reward swagger, as these other funds generally tend to be a lot more cautious.
An army of analysts, fund managers, accountants, sales reps, and support staff work at these funds to ensure smooth operations and optimal performance. There is some risk from automation and the rise in popularity of passive investing, but you still need people to manage even passive funds.
- Salary Potential: Medium to High depending on the size and type of the fund.
- Stress Level: Medium
- Academic Requirements: Very High. Only the best get to be fund managers because there is so much at stake.
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3. Venture Capitalist/ Angel Investor
Venture Capital is all about investing in early stage start-ups. This makes this role profile quite different from all other types of investment funds. It’s not just a a financial or investment decision, this role becomes a lot about supporting your portfolio companies. Angel investors and venture capitalists provide growth advice, legal and tax expertise, marketing services, product launch assistance, access to contacts and opening doors for their portfolio companies.
Career prospects are good as the start-up business model is really gaining ground. Just look at the list of the largest companies in the world today – most of them are startups that were funded with VC capital.
- Salary Potential: High, based on how successful you are at picking the right company.
- Stress Level: Medium to High.
- Academic Requirements: High.
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4. Private Equity
Private Equity, simply put, represents investments in companies that are private and not publicly listed on stock exchanges. This is a massive industry and accounts for a staggering $500 billion in investments each year in the US alone.
Private Equity is often one of the end goals of many investment bankers. Moving to the buy side means better compensation and better hours. But its rather hard to break in because the numbers are stacked against you. For the cream of the crop though, this is a great opportunity to squeeze the most out of your finance career.
- Salary Potential: Very high (depends on performance)
- Stress Level: High
- Academic Requirements: Very High (usually requires an advanced degree or experience with a good investment bank beforehand or something similar)
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5. Hedge Funds
A hedge fund is essentially a mutual/ index fund for rich people. Unlike other normal funds, hedge funds can employ high risk and high return strategies. For example, a pension fund is not legally allowed to invest in high risk areas because pensioners are relying on that money. But since hedge funds only accept money from accredited and qualified investors, they have a lot more flexibility in terms of what they can do.
Hedge funds have become a sort of mythical creatures because of the popularity of some famous hedge fund managers. But bear in mind that for each such celebrity fund manager, they are a hundred who never get to that level. Still, this is the end game for the investment career path.
- Salary Potential: Very high (The top performers earn hundreds of millions)
- Stress Level: High
- Academic Requirements: Very High (There have been Nobel laureates in Economics building models for Hedge Funds. Unfortunately, even they eventually went bust. Such is life.)
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6. Research
These teams analyze the market or a company and make predictions about how they will perform in the future. This research can then be used by the bank to make trading or lending decisions or sold to/ shared with clients. There are macroeconomics research teams, equity research teams and many others.
Another career that is perfect for intelligent people who are not too keen on front end client facing roles. Successful researchers can be exceptionally valuable and command every high pay packages. Of course, you need a proven track record and exception skills to reach that level, but research roles offer the best opportunity to make a lot of money while still being at the back end.
- Salary Potential: Medium to Very High (If you are really good, you can make a lot of money)
- Stress Level: Low to High
- Academic Requirements: High to Very High
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7. Real Estate Investing
Real estate investing is big business. The main issue with real estate has always been a lack of liquidity, long development times and so on which makes it harder to trade unlike stocks or cotton futures, for example. That is why most big funds don’t invest in real estate but there are thousands of smaller funds that do. Also, with the rise of REIT’s big firms can now indeed trade real estate in real time. Another attractive option is commercial real estate, where property developments are much bigger and more liquid so as to attract the biggest players.
Financial Markets/ Trading
1. Financial Markets (Sales & Trading)
The S&T/ Global Markets/ Financial Markets team provides corporate clients market access by executing equity, fixed income, derivatives, commodity and other such trades for them. They are also involved in market making. Sales involves pitching securities to clients including bonds of equities that the bank is underwriting. Trading can be proprietary or on behalf of clients.
Trading is a high-stress, high reward job with excellent hours. You don’t have to slog for long hours as the bankers do, but the hours you do work can be a bit more stressful and high-stake. You are also expected to rake in the moola quite early in your career which, in my opinion, is a definite plus.
- Salary Potential: High
- Stress Level: High
- Academic Requirements: High
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2. Retail Trading
Trading is a truly massive field in itself. You could be someone sitting at home and doing day trading or someone with a PhD in Quantum Physics building super complex trading models that move billions of dollars each day. Its one of those filed where what you get depends on what you put in.
Its rather tough to consistently outperform the market though. The quest for alpha remains an elusive ones and even Nobel laureates have failed at the altar of the mighty alpha. So know that before going and also know that trading is more about discipline than anything else. You have been warned!
Note: This is not to be confused with the Sales & Trading teams at banks which has been listed elsewhere in this list.
- Salary Potential: Make or lose millions each day
- Stress Level: Nonexistent to Unbearable
- Academic Requirements: Basic literacy to PhDs
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3. Commodity Trading
Commodity trading is a big business. From precious metals to agri products and from industrial by-products to even scrap metal – its all traded and someone has to do the trading. Most of the trading still happens using derivatives of course – options and futures.
4. Oil & Gas trading
Oil and Gas trading is usually big enough to be counted as its own separate division. Secondly, the biggest oil traders are actually not banks but oil firms themselves, along with other major users like refineries, airlines etc. This is what makes oil and gas trading a bit more unique and outside the box.
Retail/ Consumer Banking
1. Retail/ Consumer Banking
Retail Banking is all about providing basic banking products and services to individuals and small businesses. These are basically the guys at your local bank branch, so everyone from a teller to a loan officer to a salesman to the branch manager gets covered in this category. But that’s just the tip of the iceberg – you also have people managing home loans, car loans, savings and checking accounts, credit cards, the people doing all the analysis at the back office, the guys checking your paperwork and just a whole an army of support staff.
This is as traditional as banking gets. If you want to be at the very center of things and deal directly with people instead of companies, then this is where you want to be. retail banking can be quite rewarding if you know what you want and if your personality suits the job.
- Salary Potential: Low to Medium
- Stress Level: Low
- Academic Requirements: Low to Medium
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2. Wealth Management/ Private Banking
Wealth Managers essentially advise people with significant assets/ income on how to handle their finances. Wealth Management covers everything from investing to taxes to estate and retirement planning and so on. Here is an in-depth article on a career in Wealth Management. Its also known as private banking in some countries.
Wealth management is actually a combination of being a financial advisors and a portfolio manager. You are advising retail clients (who have a lot of money) and then you are investing that money in securities that maximizes their returns, minimizes their risk/ taxes or whatever their goal is. Its a multi-disciplinary career.
- Salary Potential: Medium to High (Depending on your clientele)
- Stress Level: Medium
- Academic Requirements: Medium (Having a good track record and reputation is more important)
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3. Personal Finance
Personal finance is all about managing your personal income, expenses, assets and other financial matters. You can do it yourself, of you can have a professional do it. It’s sort of like wealth