Did you know that the financial sector is one of the most important parts of many developed economies? It is made up of a broad range of industries that provide financial services to commercial and retail customers, such as banks, investment companies, insurance companies, and real estate firms. The financial sector helps keep the economy stable, creates jobs, and promotes growth. But what exactly is the financial sector and why is it so important for the economy and society? And what skills, qualifications, and opportunities are available for working in the financial sector? In this blog post, we will answer these questions and more.
What is the Financial Sector
The financial sector is a section of the economy that includes firms and institutions that provide financial services to commercial and retail customers. These services include:
- Lending and borrowing money
- Investing and managing funds
- Issuing and trading securities
- Providing insurance and risk management
- Facilitating payments and transfers
- Offering financial advice and planning
The financial sector encompasses several industries, such as banking, investment, consumer finance, mortgage, money markets, real estate, insurance, and retail. Some of the largest and most recognizable companies in the financial sector are JPMorgan Chase, Wells Fargo, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, Berkshire Hathaway, Visa, Mastercard, PayPal, American Express, BlackRock, Vanguard, State Farm, Allstate, Prudential, MetLife, etc.
The financial sector is one of the largest portions of the S&P 500 index, which tracks the performance of 500 large-cap U.S. companies. As of December 2020, the financial sector accounted for about 10% of the total market capitalization of the S&P 500.
Why is the Financial Sector Important for the Economy and Society
The financial sector plays a vital role in supporting the economy and society in various ways. Some of the main benefits of a strong and well-functioning financial sector are:
- It promotes financial stability by ensuring that financial systems and markets operate smoothly and efficiently. It also helps build countries’ capacity for crisis management and prevention by implementing sound regulations and supervision.
- It fosters economic growth by providing capital and credit to businesses and households. It also enables innovation and entrepreneurship by facilitating access to finance for new ventures and projects.
- It enhances social welfare by improving financial inclusion and literacy. It also offers a range of products and services that help people manage their needs, expand their opportunities, and improve their living standards. For example, finance can help people access better housing, health care, education, start a small business, or use insurance products to protect themselves from shocks.
- It contributes to global development by mobilizing resources and investments for addressing global challenges such as poverty, climate change, health care, education, etc. It also helps connect countries and regions through cross-border flows of funds and payments.
What Skills, Qualifications, and Opportunities Are Available for Working in the Financial Sector
The financial sector offers a variety of career paths and opportunities for people with different skills, qualifications, and interests. Some of the common skills that are in demand in the financial sector are:
- Numeracy and analytical skills: These skills are essential for working with numbers, data, and models in finance. They help perform calculations, analyze trends, evaluate risks, and make decisions based on evidence.
- Communication and interpersonal skills: These skills are important for working with clients, colleagues, and stakeholders in finance. They help convey information, persuasively, and respectfully. They also help build trust, rapport, and relationships.
- Problem-solving and critical thinking skills: These skills are useful for working with complex and uncertain situations in finance. They help identify problems, generate solutions, and evaluate outcomes.
- Creativity and innovation skills: These skills are valuable for working with new ideas and opportunities in finance. They help generate novel approaches, adapt to changes, and seize competitive advantages.
Depending on the specific industry or role within the financial sector,
different qualifications may be required or preferred. Some of the common qualifications that are relevant for working in the financial sector are:
- Academic degrees: These qualifications demonstrate a level of education
and knowledge in a certain field or discipline. For example, a degree in finance, accounting, economics, business, mathematics, statistics, or computer science may be useful for working in various areas of finance.
- Professional certifications: These qualifications indicate a level of expertise and competence in a certain skill or practice. For example, certification as Chartered Financial Analyst (CFA), Certified Public Accountant (CPA), Certified Financial Planner (CFP), or Financial Risk Manager (FRM) may be beneficial for working in various finance roles.
- Licenses and registrations: These qualifications authorize a person or entity to perform certain activities or services in the financial sector. For example, a license or registration from the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), or the National Futures Association (NFA) may be required for working in securities, brokerage, or futures markets.
The financial sector offers a wide range of opportunities for working in different industries, functions, and locations. Some of the common industries that employ people in the financial sector are:
- Banking: This industry provides deposit, lending, and payment services to individuals and businesses. It includes commercial banks, investment banks, savings banks, credit unions, and online banks.
- Investment: This industry provides investment management and advisory services to individuals and institutions. It includes mutual funds, hedge funds, private equity funds, venture capital funds, asset management firms, and financial advisors.
- Insurance: This industry provides protection and compensation for losses or damages to individuals and businesses. It includes life insurance, health insurance, property insurance, casualty insurance, and reinsurance companies.
- Real estate: This industry provides property development, management, and financing services to individuals and businesses. It includes real estate developers, agents, brokers, appraisers, investors, lenders, and REITs.
Some of the common functions that employ people in the financial sector are:
- Accounting: This function involves recording, reporting, and analyzing financial transactions and information. It includes accountants, auditors, bookkeepers, controllers, and tax specialists.
- Finance: This function involves planning, managing, and allocating financial resources and risks. It includes financial analysts, managers, planners, consultants, and strategists.
- Trading: This function involves buying and selling financial instruments and commodities in the markets. It includes traders, brokers, dealers, market makers, and analysts.
- Research: This function involves conducting research and analysis on financial markets, instruments, trends, and opportunities. It includes research analysts, economists, statisticians, and data scientists.
Some of the common locations that employ people in the financial sector are:
- Financial centers: These are cities or regions that have a high concentration of financial activities and institutions. They include New York, London, Hong Kong, Singapore, Tokyo, Shanghai, Frankfurt, Paris, etc.
- Emerging markets: These are countries or regions that have a high potential for economic growth and development. They include China, India, Brazil, Russia, Mexico, Turkey, Indonesia, etc.
- Remote work: This is a mode of work that allows people to work from anywhere with an internet connection. It includes freelancers, contractors, consultants, entrepreneurs, etc.
Working in the financial sector requires a range of skills that can help you succeed in various roles and scenarios. Some of the essential skills that are valued by employers and clients in the finance industry are:
- Analytical thinking: This is the ability to review data, identify patterns, discrepancies, or opportunities, and draw logical conclusions. Analytical thinking is crucial for finance professionals, as they often deal with complex and large amounts of information, such as financial statements, market trends, or investment portfolios. Analytical thinking can help you evaluate financial performance, assess risks, or make informed decisions.
- Communication: This is the ability to convey information clearly and effectively, both verbally and in writing. Communication is important for finance professionals, as they often need to collaborate with others, present financial reports, or explain financial concepts to non-financial audiences. Communication can help you build rapport, persuade others, or simplify complex ideas.
- Problem-solving: This is the ability to identify and resolve issues that arise in financial situations. Problem-solving is important for finance professionals, as they often face challenges such as cash flow shortages, budget constraints, or regulatory changes. Problem-solving can help you find creative solutions, optimize resources, or mitigate risks.
- Teamwork: This is the ability to work well with others towards a common goal. Teamwork is important for finance professionals, as they often work in teams with different functions, backgrounds, or perspectives. Teamwork can help you leverage diverse skills, share ideas, or support each other.
These skills can be applied in different roles and scenarios in the financial sector. For example:
- If you are an accountant, you need analytical thinking to prepare and analyze financial statements, communication to report and explain financial information to stakeholders, problem-solving to handle tax issues or audit findings, and teamwork to coordinate with other accountants or departments.
- If you are a financial analyst, you need analytical thinking to research and evaluate financial data, communication to present and communicate your findings and recommendations, problem-solving to deal with market volatility or data discrepancies, and teamwork to collaborate with other analysts or clients.
- If you are a chief financial officer (CFO), you need analytical thinking to oversee and direct the financial strategy and operations of an organization, communication to communicate the financial vision and goals to internal and external parties, problem-solving to address financial challenges or opportunities, and teamwork to lead and motivate the finance team.
To develop and improve these skills, you can pursue various education, training, and experience opportunities. For example:
- You can enroll in formal education programs that offer courses or degrees in finance-related fields, such as accounting, economics, business administration, or financial management. These programs can help you gain theoretical knowledge and practical skills in finance.
- You can participate in online courses or workshops that focus on specific finance skills or topics, such as financial analysis, budgeting, investing, or financial literacy. These courses or workshops can help you update your skills and learn new techniques or tools in finance.
- You can seek professional certifications or licenses that demonstrate your proficiency and credibility in finance-related areas, such as Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), or Financial Risk Manager (FRM). These certifications or licenses can help you validate your skills and stand out from the competition.
- You can gain hands-on experience by working in finance-related roles or projects that expose you to real-world financial situations and challenges. You can also seek mentorship or feedback from experienced finance professionals who can guide you and help you improve your skills.
By developing and improving these essential skills for working in the financial sector, you can enhance your career prospects and performance in the finance industry.
Different qualifications have different advantages and disadvantages in terms of cost, duration, recognition, and career prospects. For example:
- Degrees tend to be more costly and time-consuming than other qualifications, as they involve paying tuition fees and spending several years of full-time or part-time study. However, degrees tend to be more widely recognized and respected than other qualifications, as they reflect a high level of academic achievement and rigor. Degrees can also open up more career opportunities and pathways than other qualifications, as they can qualify you for various roles and sectors in finance.
- Certifications tend to be less costly and time-consuming than degrees, as they involve paying exam fees and spending several months or years of self-study or preparation courses. However, certifications tend to be more specialized and niche than degrees, as they reflect a high level of expertise and competence in a specific area of finance. Certifications can also enhance your career prospects and performance than degrees, as they can differentiate you from other candidates and increase your value and marketability in the job market.
- Licenses tend to be the least costly and time-consuming among the qualifications, as they involve paying application fees and meeting certain criteria such as education, experience, or background checks. However, licenses tend to be the most limited and restrictive among the qualifications, as they reflect a minimum level of qualification and compliance in a specific activity of finance. Licenses can also limit your career options and mobility more than other qualifications, as they can vary by state or country and require renewal or updating periodically.
- Professional memberships tend to have moderate costs and durations among the qualifications, as they involve paying membership fees and maintaining certain standards or requirements such as ethics, education, or experience. However, professional memberships tend to have mixed recognition among the qualifications, as they reflect a degree of affiliation and involvement with a particular group of finance professionals. Professional memberships can also have mixed effects on your career prospects than other qualifications, as they can depend on the reputation and influence of the association or society that you join.
The best qualifications for different goals and aspirations in the financial sector depend on various factors such as your current situation, your desired role or sector, your preferred learning style or method, or your available resources or opportunities. For example:
- If you are a recent graduate who wants to pursue a generalist role or sector in finance such as corporate finance or banking, you may benefit from obtaining a degree in finance or a related field that can provide you with a broad overview of the financial industry and its functions.
- If you are an experienced professional who wants to pursue a specialist role or sector in finance such as financial analysis or risk management, you may benefit from obtaining a certification in your chosen area that can provide you with an in-depth knowledge of the concepts and practices involved.
- If you are an aspiring entrepreneur who wants to start your own business or venture in finance such as financial consulting or investing, you may benefit from obtaining a license that can authorize you to offer your services or products legally and ethically.
- If you are a seasoned expert who wants to expand your network or influence in finance such as becoming a mentor, speaker, or leader, you may benefit from obtaining a professional membership that can connect you with other finance professionals and offer you various opportunities and benefits.
If you are interested in working in the financial sector, you will be glad to know that there are various opportunities available for you to explore and pursue. Some of the opportunities that you can find in the financial sector are:
- Jobs: There are many types of jobs in the financial sector, ranging from entry-level to senior-level positions, and from generalist to specialist roles. You can work in different areas of finance, such as accounting, banking, investing, insurance, or consulting. You can also work in different sectors that use finance, such as healthcare, technology, or government. Some examples of jobs in the financial sector are:
- Bank teller: A bank teller is a person who handles customer transactions at a bank branch, such as deposits, withdrawals, transfers, or payments. A bank teller needs to have good customer service, communication, and math skills. The average salary for a bank teller in the U.S. is $30,000 per year.
- Financial analyst: A financial analyst is a person who analyzes financial data and provides insights and recommendations to clients or employers. A financial analyst needs to have strong analytical, problem-solving, and communication skills. The average salary for a financial analyst in the U.S. is $64,000 per year.
- Portfolio manager: A portfolio manager is a person who manages a portfolio of investments for clients or employers. A portfolio manager needs to have extensive knowledge of financial markets, products, and strategies, as well as good decision-making and leadership skills. The average salary for a portfolio manager in the U.S. is $102,000 per year.
- Internships: Internships are short-term work experiences that allow you to gain exposure and learn from professionals in the financial sector. Internships can help you develop your skills, network with potential employers or mentors, and explore your career interests and goals. Internships can be paid or unpaid, part-time or full-time, and offered by various organizations or institutions in the financial sector. Some examples of internships in the financial sector are:
- Accounting internship: An accounting internship is an opportunity to work with an accounting firm or department and learn about accounting principles, practices, and software. An accounting intern may assist with preparing financial statements, reconciling accounts, or auditing records. An accounting intern needs to have basic accounting knowledge, attention to detail, and computer skills. The average hourly wage for an accounting intern in the U.S. is $16.
- Investment banking internship: An investment banking internship is an opportunity to work with an investment bank and learn about its services and operations. An investment banking intern may assist with conducting research, creating financial models, or preparing pitch books. An investment banking intern needs to have strong analytical, quantitative, and communication skills. The average hourly wage for an investment banking intern in the U.S. is $25.
- Financial planning internship: A financial planning internship is an opportunity to work with a financial planner or advisor and learn about their role and responsibilities. A financial planning intern may assist with gathering client information, analyzing financial data, or developing financial plans. A financial planning intern needs to have good interpersonal, organizational, and ethical skills. The average hourly wage for a financial planning intern in the U.S. is $15.
- Projects: Projects are specific tasks or assignments that allow you to apply your knowledge and skills in the financial sector. Projects can help you showcase your abilities, demonstrate your value, and improve your portfolio or resume. Projects can be self-initiated or assigned by others, individual or collaborative, and formal or informal. Some examples of projects in the financial sector are:
- Budgeting project: A budgeting project is a task that involves creating a budget for a personal or professional purpose. A budgeting project requires you to estimate your income and expenses, allocate your funds accordingly, and monitor your progress and performance. A budgeting project can help you improve your financial literacy, planning, and management skills.
- Investing project: An investing project is a task that involves investing a certain amount of money in a chosen asset class or product. An investing project requires you to research the market trends, evaluate the risks and returns, and execute your investment strategy. An investing project can help you enhance your financial analysis, decision-making, and risk-taking skills.
- Consulting project: A consulting project is a task that involves providing financial advice or solutions to a client or employer. A consulting project requires you to understand the client’s needs and goals, collect and analyze relevant data, and present your findings and recommendations. A consulting project can help you develop your communication, consulting, and problem-solving skills.
- Networking events: Networking events are opportunities to meet and interact with other professionals in the financial sector. Networking events can help you expand your contacts, learn from other’s experiences and insights, and discover new opportunities and trends. Networking events can be online or offline, formal or informal, and organized by various groups or platforms. Some examples of networking events in the financial sector are:
- Career fair: A career fair is an event that brings together employers and job seekers in the financial sector. A career fair allows you to explore different job openings, submit your resume, and interview with potential employers. A career fair can help you advance your job search, impress your recruiters, and land your dream job.
- Webinar: A webinar is an online event that features a speaker or a panel of experts who share their knowledge and expertise on a specific topic in the financial sector. A webinar allows you to learn from the best practices, tips, and advice of industry leaders. A webinar can help you update your skills, gain new perspectives, and ask questions.
- Meetup: A meetup is an informal event that connects people who share a common interest or passion in the financial sector. A meetup allows you to socialize with like-minded peers, exchange ideas and opinions, and have fun. A meetup can help you build your community, find your mentors or partners, and enjoy your hobbies.
Working in the financial sector can offer many benefits and challenges for your personal and professional growth. Some of the benefits of working in the financial sector are:
- Salary: The financial sector is known for offering high-paying jobs that can reward your hard work and talent. According to the U.S. Bureau of Labor Statistics, the median annual wage for business and financial occupations was $72,250 in May 2020, which was higher than the median annual wage for all occupations of $41,950.
- Growth: The financial sector is constantly evolving and expanding with new technologies, products, and regulations. This creates many opportunities for learning and advancement in your career. According to the U.S. Bureau of Labor Statistics, employment in business and financial occupations is projected to grow 5% from 2019 to 2029, faster than the average for all occupations.
- Diversity: The financial sector is diverse and inclusive, with people from different backgrounds, cultures, and perspectives working together. This enriches your work environment and experience, as well as your personal and professional network. According to a report by Deloitte, diversity, and inclusion can also improve business performance, innovation, and customer satisfaction in the financial sector.
Some of the challenges of working in the financial sector are:
- Competition: The financial sector is highly competitive and demanding, with many qualified candidates vying for limited positions and resources. This requires you to constantly improve your skills, knowledge, and performance to stand out from the crowd and achieve your goals.
- Stress: The financial sector is often stressful and fast-paced, with high expectations, deadlines, and risks involved. This requires you to cope with pressure, uncertainty, and change effectively and efficiently.
- Education: The financial sector is often regulated and specialized, with various qualifications and requirements needed for different roles and activities. This requires you to pursue ongoing education and training to maintain or enhance your credentials and competence.
To inspire you further, here are some success stories and testimonials from people who work in the financial sector:
- “I love working as a financial planner because I get to help people achieve their financial goals and dreams. I enjoy building relationships with my clients, understanding their needs and preferences, and creating personalized plans that suit their situations. I also appreciate the flexibility and autonomy that my job offers me.” – Sarah Jones, Certified Financial Planner
- “I chose to work as a portfolio manager because I have a passion for investing and managing money. I like researching market trends, evaluating the risks and returns, and executing my investment strategy. I also like working with a team of talented professionals who share my vision and values.” – David Smith,
- “I decided to switch careers to finance after working as an engineer for several years. I wanted to challenge myself and learn new skills in a different field. I enrolled in an online course on finance fundamentals that helped me prepare for a job as a financial analyst. I enjoy working as a financial analyst because I get to use my analytical skills to solve problems and provide insights.” – Lisa Chen,
The financial sector is a diverse and dynamic sector that provides financial services to commercial and retail customers. It is essential for the economy and society as it promotes financial stability, economic growth, social welfare, and global development. It also offers a variety of career paths and opportunities for people with different skills, qualifications, and interests. If you are interested in working in the financial sector, you should explore the various industries, functions, and locations that suit your goals and preferences. You should also develop the skills and qualifications that are in demand and relevant for your chosen field or role. Working in the financial sector can be rewarding and challenging as you help shape the future of finance.
If you are interested in working in finance, you should take the next step toward achieving your career goals. You can start by applying for a job that matches your skills and interests, enrolling in a course that enhances your knowledge and credentials, or joining a community that connects you with other finance professionals and enthusiasts.