5 Finance Jobs Explained (and what they pay) Pt1

Summary

In this video, Kenji explains five key career paths in finance: Financial Planning and Analysis (FP&A), Trading, Investment Banking, Equity Research, and Financial Audit. He discusses each role's work-life balance, salary expectations, and required skills, focusing on entry-level positions and early career stages. Kenji also touches on the differences between similar finance roles and provides examples of companies in each field. The video aims to help viewers decide which career path suits them best, with a promise of more content on other finance roles if the video performs well.

Takeaways

• 💼 The video covers five career paths in finance: financial planning and analysis (FP&A), trading, investment banking, equity research, and financial audit.
• 📝 FP&A involves forecasting, budgeting, and allocating resources for companies, with a work-life balance of 50-60 hours per week and a salary range of $60,000 to $90,000.
• 📊 Trading focuses on buying and selling securities, including stocks, bonds, and derivatives, with high-pressure work due to performance tracking. Traders often work 60 hours a week, earning $70,000 to $100,000, plus potential bonuses.
• 🏦 Investment banking revolves around financing (e.g., IPOs and bonds) and advisory (e.g., mergers and acquisitions). It's known for long hours (around 80 per week) but high compensation, starting at $85,000 plus significant bonuses.
• 📈 Equity research involves producing reports and recommendations for clients about investment opportunities. It offers a work-life balance of 60-70 hours per week and a base salary of $85,000, with bonuses slightly lower than in investment banking.
• 🔍 Financial audit ensures the accuracy of financial statements, involving either internal or external auditing. The role often requires a CPA certification and has a salary range of $60,000 to $70,000, with peaks in work hours during the year-end.
• 🖥 FP&A requires strong skills in Excel, finance, accounting, and strategic thinking, as it's not limited to finance companies but applies to various industries.
• 📈 Trading requires strong numerical skills, fast decision-making, and emotional resilience, along with licensing, like the Series 7 exam in the U.S.
• 💰 Investment banking demands proficiency in financial accounting, corporate finance, and presentation skills, with significant sales responsibilities as one advances in their career.
• 📊 Equity research requires strong analytical skills, knowledge of statistics and programming languages like SQL and VBA, and a clear ability to write detailed reports.

Q & A

What are the five career paths discussed in the video?

The five career paths discussed are Financial Planning & Analysis (FP&A), Trading, Investment Banking, Equity Research, and Financial Audit.

What is the role of Financial Planning & Analysis (FP&A)?

FP&A involves forecasting and budgeting a company's finances, such as estimating future revenue, net income, and allocating budgets to different departments. It plays a crucial role in implementing strategies set by senior executives.

What skills are required for an FP&A role?

Key skills for FP&A include proficiency in Excel, finance and accounting knowledge, and strategic thinking to align financial planning with company goals.

What is the typical work-life balance in FP&A?

FP&A professionals generally work 50 to 60 hours per week, with busier periods at the end of the year when financial accounts are being closed.

What does a trader's job entail?

Traders buy and sell securities such as stocks, bonds, and derivatives. They may trade using their own money, the company’s money, or on behalf of clients. The job can be stressful due to market unpredictability and performance-based evaluations.

What are the important skills for a trading career?

Key skills for trading include quick decision-making, strong numerical abilities, and being able to manage stress while remaining unemotional during high-pressure situations.

How do investment bankers assist companies?

Investment bankers help companies raise money through financing (e.g., stocks or bonds) and provide advisory services, such as mergers and acquisitions.

What is the typical work schedule for investment bankers?

Investment bankers typically work around 80 hours per week due to the deal-oriented nature of their work, which often involves tight deadlines.

What does equity research involve?

Equity research involves analyzing investment opportunities and producing reports that recommend whether to buy, hold, or sell stocks, bonds, or other financial instruments.

What are the responsibilities of a financial auditor?

A financial auditor verifies the accuracy of a company's financial statements, checking for errors or potential fraud. This can be done internally within the company or externally by firms like the Big Four.

Outlines

00:00

💼 Introduction to Finance Career Paths

Kenji introduces the topic of finance career paths and outlines five specific roles he will cover: Financial Planning and Analysis (FP&A), Trading, Investment Banking, Equity Research, and Financial Audit. He notes that many people don't fully understand the differences between these roles and aims to clarify them in this video. Kenji will also discuss work-life balance, pay, skills required, and company examples for each role. He mentions that this is not a complete list and hints at a possible follow-up video covering other roles.

05:01

📊 Financial Planning and Analysis (FP&A)

Kenji explains that FP&A focuses on forecasting and budgeting a company's finances, such as revenue and expenses. FP&A teams can be found in both finance and non-finance companies. Senior executives create high-level goals, and the FP&A team implements strategies to achieve them. Key skills include Excel, finance, accounting, and strategy. Typical work hours range from 50-60 per week, with peak periods at the end of the year. Salaries vary by location and industry, but an entry-level role in a large U.S. city typically pays $60,000-$90,000.

10:04

📈 Trading

Trading involves buying and selling financial instruments like stocks, bonds, options, and derivatives. Traders may manage their own money, their company's, or trade on behalf of clients. The job is high-stress due to the potential for rapid gains and losses. It requires strong numerical skills, quick decision-making, and emotional resilience. Most traders need to pass the Series 7 exam in the U.S., and their companies usually sponsor it. Salaries vary widely, with entry-level positions in major financial cities paying around $70,000-$100,000. Bonuses can significantly increase earnings.

💼 Investment Banking

Investment banking focuses on two core functions: financing, which involves raising capital through stocks and bonds, and advisory, such as mergers and acquisitions. It is a deal-oriented job with long hours, often averaging 80 hours per week. Compensation is high, with base salaries around $85,000 in major U.S. cities and bonuses potentially reaching $50,000 or more. Skills needed include financial accounting, corporate finance, and proficiency with Excel and PowerPoint. As professionals progress in their careers, strong sales and presentation skills become more important.

📊 Equity Research

Equity research involves creating reports and recommendations on investment opportunities, typically focusing on stocks. It exists within investment banks but operates differently from trading teams. Research analysts advise whether to buy, hold, or sell securities. Work hours are less intense than in investment banking, averaging 60-70 hours per week, and the role is less deadline-driven. Base salaries are around $85,000, with bonuses slightly lower than in investment banking. Important skills include statistics, economics, finance, accounting, and writing. Programming knowledge and the CFA designation are often beneficial.

📑 Financial Audit

Financial auditors verify the accuracy of a company's financial statements, either as internal or external auditors. Internal auditors work within a company, while external auditors typically come from Big Four firms. External auditors rotate between clients, auditing each for a few weeks. Auditors work toward earning a CPA designation. Typical work hours are around 60 per week, peaking during the year-end close. Salaries for entry-level auditors in major cities range from $60,000-$70,000. Key skills include finance, accounting, Excel, and presentation abilities, which become more important over time.

📈 Closing Remarks and Potential Part 2

Kenji concludes by acknowledging that there are many other finance roles he hasn't covered, such as private banking, commercial banking, and quantitative roles. He hints at a potential second video if there is enough interest. He encourages viewers to like, subscribe, and comment on positions they'd like to see in the future.

Keywords

💡Financial Planning and Analysis (FP&A)

FP&A involves forecasting and budgeting for a company's finances. It helps in determining how much revenue or net income a company might generate in the future and allocates budgets for various departments. This role is important for both finance and non-finance companies, like Apple, and entails a lot of strategic decision-making and financial management, often using tools like Excel.

💡Trader

A trader buys and sells financial securities such as stocks, bonds, options, and futures. This role is high-pressure due to the money involved and the need for quick decision-making. Traders may work on behalf of themselves, companies, or clients. Success is measured by profit and loss, with key skills including fast thinking, numerical agility, and emotional control.

💡Investment Banking

Investment banking primarily deals with financing and advisory services for corporations. It involves raising capital through methods like IPOs or bond issuances and advising companies on mergers and acquisitions. This is a highly competitive and lucrative career path with long working hours, especially during deal closures. Investment banking teams work in high-stress environments due to tight deadlines and complex transactions.

💡Equity Research

Equity research is about analyzing financial data to recommend whether investors should buy, hold, or sell stocks or other securities. It requires writing detailed reports and making informed investment recommendations based on company performance. The role involves a significant amount of analysis and knowledge of financial markets, and the work tends to be more structured than investment banking.

💡Financial Audit

Financial auditors verify the accuracy of a company's financial statements, checking for errors or fraud. This role can be either internal (working for the company being audited) or external (auditing as a third party, often as part of a 'Big Four' firm). Auditors work with financial data and often pursue certifications such as CPA. Peak periods for auditors are during financial year-end reporting.

💡Work-life Balance

Work-life balance refers to the number of hours worked and the intensity of the job. In the video, each finance role is discussed in terms of the time commitment required, ranging from 50-60 hours a week in FP&A to up to 80 hours a week in investment banking. Certain roles, like trading, have intense hours when markets are open, while others, like equity research, are more structured.

💡Salary Range

The salary range for finance roles varies significantly based on position, experience, and company. In the video, entry-level salaries for finance roles range from $60,000 to $100,000, with large differences in bonuses based on performance. For example, traders and investment bankers can earn significant bonuses if they perform well, while FP&A roles offer a broad range depending on the industry and location.

💡Skills Required

Different finance roles require a variety of skill sets. Common skills across roles include proficiency in Excel, financial accounting, and strategy. Certain positions, such as trading, require quick decision-making and emotional control, while equity research requires statistical analysis and report writing. As employees move up the ranks, communication and sales skills also become crucial, particularly in investment banking.

💡Licenses and Certifications

Many finance roles require specific licenses or certifications. For traders, a common requirement is passing the Series 7 exam, which is usually paid for by the employer. Equity research professionals often pursue the Chartered Financial Analyst (CFA) designation, and auditors may work toward the Certified Public Accountant (CPA) certification. These credentials are necessary for career advancement and compliance in various finance industries.

💡Mergers and Acquisitions (M&A)

M&A refers to the process of companies merging or one company acquiring another, which is a key area within investment banking. Investment banks advise companies on these deals, helping them evaluate the financial implications and structuring the transactions. An example given in the video is Amazon's acquisition of MGM, a major deal that required extensive advisory services from investment bankers.

Highlights

Introduction to five key finance career paths: Financial Planning and Analysis (FP&A), Trading, Investment Banking, Equity Research, and Financial Audit.

The speaker explains common confusion between different finance roles such as investment banking, trading, and equity research.

The focus of the video is on entry-level positions and career growth within the first few years.

FP&A focuses on budgeting and forecasting for companies, with responsibilities including revenue forecasting, marketing allocation, and employee compensation.

FP&A roles exist not only in finance firms but also in large companies like Apple and ExxonMobil, handling financial planning tasks.

Trading involves buying and selling securities like stocks, bonds, options, and other derivatives, with high pressure due to the financial stakes involved.

Traders often work in fast-paced environments with performance being constantly measured and evaluated.

The Investment Banking role focuses on two main tasks: raising money for companies (through IPOs, bonds, etc.) and advisory services (like mergers and acquisitions).

Investment banking is highly deal-oriented, often requiring long hours and tight deadlines.

Equity Research involves producing detailed reports and recommendations on investments (buy, hold, sell), with a focus on companies' financial statements.

Equity Research roles within investment banks often overlap with other divisions, adding to the confusion about different finance roles.

Equity research analysts analyze companies like Apple and generate detailed reports used by clients for investment decisions.

Financial Auditing ensures the accuracy of companies' financial statements, with roles in both internal auditing (employed by the company) and external auditing (big four firms like PwC).

The speaker emphasizes the importance of certain qualifications like the Series 7 exam for traders, the CFA for equity research, and the CPA for financial auditing.

The video mentions the varying pay ranges for these roles, with investment banking and trading offering higher bonuses compared to others.

The speaker encourages viewers to engage with the video for a potential part two, which would cover other finance-related careers such as private banking and quant roles.

Transcripts

what's up everyone kenji here and in this video  i thought i'd share five career paths in finance  

now i realized that quite a lot of people don't  really seem to understand the differences between  

investment banking and trading or equity  research and other sort of finance related  

roles so in this video i'm gonna try my best to  explain those and hopefully you can decide what's  

most suited to you so the five that i've  picked are financial planning and analysis  

trading investment banking equity research and  financial audit and i'll mainly be focusing on  

these roles for entry level as well as maybe one  two years down the line too so i'll be discussing  

the work life balance the pay as well as the  skills required and with that i'm also gonna  

provide examples of companies in each career path  and obviously this is just five positions right  

this is by no means a complete list but if this  video does well i will consider making a part two  

covering some other things like what might be  private banking commercial banking as well as  

quants and other things like that i've also made a  similar video on business career paths if you want  

to check that out i'll leave it in the description  but for now let's jump into this one so the first  

one is fp a which stands for financial planning  and analysis and this basically has to do with  

forecasting and budgeting a company's  finances so things like what will our revenue  

look like in three years time what about our net  income or how much money should we allocate to  

the marketing team how much should we pay our  employees other things like that will typically  

be solved by the fbi team and i do want to clarify  that fp a isn't necessarily for finance companies  

so apple say or exomobile or any other large  company really also has a finance team right  

and within it it's probably going to have an fpna  team as well and generally how it works is that  

the senior executives will come up with a macro  level plan like what might be hey reach 10 billion  

in revenue by in five years time or something  like that and then the fpa team is going to be in  

charge of actually implementing certain policies  so that that can actually be achieved and for this  

kind of a role you can either get hired fresh out  of college like some of my friends have or you can  

spend a couple years working say at a big four  or something like that and then make the switch  

for the skills required it's mainly got  to do with excel work so spreadsheets  

secondly finance and accounting obviously as well  as some strategy too so you know where the company  

might be heading towards ray as for the work  hours i'd say from 50 to 60 is more or less the  

average so it's nothing say exaggerated it is  a good amount of work though there's obviously  

some peak seasons right so typically when the year  ends that's when the account closes and obviously  

you need to work slightly more during that period  right as for the pay it obviously varies depending  

on location right the thing with fpa is that it's  such a broad thing that it can either be you can  

be working in fpa at the local hotel or you can be  working in fpna at apple right which is obviously  

going to pay you a lot more but i'd say a typical  range in a say a big u.s city could be something  

like 60 to 90 000 us dollars the second one has to  do with that of a trader which basically entails  

buying and selling securities so these might  be things like stocks and bonds or more complex  

things like what might be options futures swaps  or other derivatives like that now typically for  

the dynamics of this it's either you trade your  your money or your company's money or you can also  

trade on behalf of clients now the job is known  to be quite stressful and that's mainly because  

you're dealing with money right and that  money goes up just like it goes down sometimes  

which can be very unpredictable and stressful  for some people also you're constantly measured  

on your performance right it's very obvious to  tell if you're winning or losing money because  

all you have to do is look at your account as  for the hours it's usually around 60 hours a week  

basically the most intense hours are when the  markets open in the u.s i believe that's around  

from nine to four thirty and before that and after  that you're basically gonna be planning doing some  

research and getting ready for the market open  time right some of the big skills required for  

this kind of a role is being good with numbers  being really a fast thinker fast decision maker  

in that sense because you can win and lose money  in just a couple seconds and then thirdly has to  

do with being relatively unemotional right it's  obviously going to help your decision making too  

also you usually need a license to become a trader  and in the us at least that's typically through  

the series 7 exam now most of the cases the  company that you're employed at will usually pay  

for the course work as well as well as the test as  for the salary it really varies hugely here that's  

primarily because some people make tons of money  and through bonuses and other things like that  

they might be able to really increase that whilst  others just don't make that much maybe they're  

not as good at trading right but i'd say a good  estimate for the big financial cities is around  

70 to 100 000 and some of the companies with  entry-level trader roles include the investment  

monks oil and gas companies as well as the big  asset managers like blackrock or vanguard as well  

and i'll leave this article linked as well where  a trader basically goes through his day in the  

life if you're interested now the next path  is investment banking and this is definitely  

one of the most popular ones out there so let me  briefly explain what they do and at its core it's  

really two main things number one has to do with  financing which is basically raising money for  

companies so for instance that might be through  stocks like airbnb's recent ipo or through bonds  

like apple recently selling 14 billion worth of  bonds where the investment bank helps out in the  

process right then on the other hand you have what  is called advisory which basically has to do with  

advising companies on financially related matters  right a common example here has to do with mergers  

and acquisitions and an example of that happening  in real life has to do with say amazon buying  

mgm recently for around 8.5 billion the job is  highly deal oriented which basically means that  

you have to work very long hours in order to meet  the deadlines of those deals right and sometimes  

they can also be quite unpredictable so i'd say  an average week could be around the 80 hour mark  

which is definitely a lot more than your average  brain that said you do get compensated quite a  

lot typically in a big u.s city like say new york  you'd probably start with a base salary of around  

85 000 and then the bonus depending on performance  it is quite high it can reach something like  

50 000 or so in performance as well as for  the skills required for the job it mainly  

has to do with financial accounting and corporate  finance and then on the computer side of things  

excel and powerpoint and then later on as you  move up the ranks as you become a bit more senior  

the ability to sell being a good salesman being a  good presenter obviously starts taking more of an  

importance as well and i'll leave this resource  linked in the description as well which basically  

goes over the day in the life of an analyst i  did make a day in the life video myself as i was  

working at goldman sachs in their investment  banking division as an intern if you want to  

check that out i'll leave a link as well the next  role is equity research and this one basically  

has to do with producing reports as well as  recommendations on investment opportunities  

for clients now i do realize that this does get  a bit confusing in that within investment banks  

there are equity research teams and there are also  traders within an investment too and the reality  

is that investment banks are so big nowadays  that they actually have a lot of different  

divisions some of which do overlap with some  of the roles that i'm talking about here today  

so i can understand why some people might get  a bit confused on that so apologies for that in  

advance but at its core equity research is about  whether you should buy hold or sell a particular  

investment now these investments could be stocks  which is the case most of the time or it can also  

be bonds funds or other instruments like that and  here's an example of what that report might look  

like this one's from morgan stanley's research  team as they analyze apple and give an estimate  

of a price target right and as you can take  a look here it is quite extensive it is quite  

detailed i mean it's quite a long document i'll  leave it in the description just in case you're  

interested too so you can take a closer look i did  find this one online for free on the internet so  

you can definitely find a lot more too as for  the work hours unlike investment banking equity  

research isn't so deal oriented so typically you  do have quite a bit of a structure in that say  

you're giving a set number of companies that you  should be researching and based on that you're  

obviously gonna know when each one's coming up  with new financial statements and other things  

like that right so there's no surprises in the  same way right so i'd say around 60 to 70 hours  

a week it's quite normal it is still more than  your average work but they do get paid fairly  

well i'd say around 85 000 as the base salary  just like investment banking but the bonus is  

typically slightly less even though it can still  reach 100 000 plus as for the skills required it  

is quite technical so you do need a good knowledge  of statistics economics finance and accounting and  

other things like that it is also important to  know how to write as you can obviously see by the  

by the reports that i showed you earlier and in  addition to that people are typically somewhat  

knowledgeable with some programming languages  like what might be sql or vba too also the cfa  

which is short for chartered financial analyst is  a common designation for equity research as well  

and i'll leave this article going over a day in  the life in equity research as well if you're  

interested so this brings us to our final path  which is financial audit that's basically got to  

do with verifying the accuracy of the financial  statements of a company so it's really about  

investigating whether there's potentially any  errors or even fraud somewhere in there this can  

either be in the form of an internal auditor or an  external auditor internal auditor basically means  

that you're employed by the company that you owed  it so for example i could be employed by coca-cola  

not be auditing coca-cola's financial statements  internally right and then on the other hand you  

have external auditors which are typically the  big four you've probably already heard of them  

and you go around auditing different companies  out there so typically you might spend say two to  

three weeks in a particular company auditing their  accounts and then move on to the next company and  

so on and so forth it's actually what i did myself  for a summer at pwc for instance also while at the  

job auditors do work towards a designation known  as the cpa which stands for the certified public  

accountant in the us at least and usually as for  the work hours it's typically around 60 hours a  

week something along those lines it does peak it  does go slightly higher in the winter months which  

is basically when the companies are closing all  of their accounts so it does get slightly busier  

obviously as for the pay i'd say it's around 60  to 70 000 us dollars a year in the big financial  

cities and then lastly looking at the skill set  this mainly has to do with obviously finance and  

accounting and then some excel work even though  that's not that heavy on the end as well as some  

more presentation and other skills like that  especially as you move further down the road  

so those are five i do realize that there's a  ton of other finance roles out there which i'd  

like to cover at some point maybe in a part 2 if  this video does well so make sure you hit that  

like and subscribe button do comment down below if  there's any particular position that you'd like me  

to cover though that's all for this video i hope  you enjoyed it and i'll catch you in the next one

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