5 Finance Careers Explained (and what they pay) | Pt2

What's up everyone, Kenji here and in this video I thought I'd share 5 career options in finance. So this is actually a part 2 video, I made a part 1 a couple weeks back and a lot of you requested a follow-up video so here it goes. So the 5 jobs I've picked are Quants, Investment Analysts, Financial Advisors, Commercial Bankers and Brokers. I'm mainly going to be focusing on entry level as well as a couple years down the line and we'll be looking at things like their work-life balance, the skills required, the salary and I'll also be providing some examples of companies in each category so you can look further if you want to apply to them. And just like the part 1 video, if this video does well I will consider making a part 3 where I cover other jobs like private banking or portfolio management so make sure you hit that like and subscribe. Alright, let's get into the video. So the first job we'll be looking at is Quants, which is short for Quantitative Analysts. So this role consists of creating algorithms and statistical models specifically to solve problems in the financial markets. And as you can imagine their backgrounds are in fields like physics, computer science or mathematics. Now this role is actually relatively new and it's increasingly high in demand especially as the finance industry has transitioned into more computer-based. Now within the Quant world there's actually many different roles, some are more focused on risk management so trying to control the risk of certain trades, others are more focused on algorithmic trading so trying to develop an algorithm that will markets for them, while there's many other roles like front office quants, library quants and so on but that's maybe for another video. And all sorts of financial institutions employ quants, so the investment banks, the asset managers and so on, but the most famous ones are probably the Quantitative Hedge Funds. So these are the likes of D.E. Shaw, Citadel or Two Sigma. And as for the skills required for this kind of a role, it's obviously quite numerical, most of these people know how to code already and it's not uncommon to have advanced level degrees so the likes of a master's or a PhD, although it's usually not required. Now it's for good reason that they're called the rocket scientists of Wall Street. As for the pay, it's extremely high especially because they're in high demand and at the same time they also compete with the big tech firms which are also known to pay a lot, so I'd say around 120,000 in a big financial city like New York is not unheard of. When it comes to the hours, they're actually not as short as some people might expect, I'd say it's more like a 12-hour day so 16 hours a week. Now it is longer than the average 40-hour work week but at the same time they are compensated quite well. So this brings us to our next role which is an investment analyst and ironically enough they don't actually invest money themselves, that's usually done by the trader, instead what they do has to do with analyzing data, researching and creating presentations for the portfolio manager or the investment manager who's basically their boss. And there's tons of different companies that employ investment analysts from asset managers like BlackRock to investment banks like Goldman Sachs to even insurance companies like AXA as well. Overall there is a big split between the buy side and the sell side, so the buy side is looking to invest money while the sell side is about doing research for the broker to sell securities to clients. But because investment analyst is actually such a vague title, they usually specialize in a specific asset, geography or even industry. So for instance you might have an investment analyst that's dealing with government bonds in the US, another one that only deals with tech stocks in the UK and so on and so forth. As for your work hours, around 50 hours a week is normal so it's nothing outrageous say but at the same time you gotta keep in mind that it is quite a high pressure environment when it comes to dealing with money right? As for skills required, spreadsheets or excel skills are usually one of the big ones as well as general finance as well as accounting. At the same time you do have to present so presentation skills can come handy as well. When it comes to the designation, the CFA is very very popular here. Some jobs as investment analysts that you might look to apply to even might require say having at least a level 1 or something like that. In the CFA there's actually 3 different levels before you get to the full certificate or the full designation. As for your salary, I'd say around 75,000 is a good rough guide but you gotta keep in mind that it is a very big industry and there's many different roles so it may vary depending on that. Next up is the financial advisor role and in short this is all about advising clients on what they should do with their own money. It's also sometimes called a financial planner and a typical example of what they might have to do is say you're looking to retire by the time you're 60 years old so they look through your taxes, your insurance, your billings and so all of the other money related stuff and try to make an estimate of how much you should be saving, how much you should be spending and so on. Among the big pros of this kind of a role is that if you do things well you can really have a positive impact on some people, right? On the other hand, on the con side, if your recommendations don't work out and they end up losing money, that can obviously be very stressful. At the same time, if you're just starting off it's always very very hard to get your first few clients, especially because you don't actually have any experience yourself, right? So that can be a hard start. I'd say when it comes to the work hours, especially as you move later on, it does become quite flexible so it depends on what the client's needs are but at the first couple years I'd say around 50 hours, 50 to 60 hours is quite common. The skills for this kind of a role are obviously finance but at the same time a lot of the interpersonal, communication as well as sales skills are very important, right? At the end of the day you're trying to persuade them that you can handle their money so you really need to convey some trust there. When it comes to designations, the Chartered Financial Planner is probably the most common but it's not uncommon to also have the CFA or the CPA as well. Salary-wise it's usually a combination of a fee and a commission. The fee is basically for managing that money every year so they might take something like 1% for instance and on the other hand there's a commission for using their products. Sometimes some advisors only do fees or they only do commissions as well. So salary-wise it's actually going to vary quite a lot depending on that. So for instance if you have a lot of commission revenue then that salary is obviously going to be boosted. Same goes if you have a lot of clients and there's a lot of fees for you. But overall I'd say around 60,000 is a good estimate. Among the big names when it comes to financial advisors are Fidelity, State Street as well as Vanguard. Alright moving on to commercial banking and if you don't know what commercial banking is, in short it's just two main things. Number one has to do with offering deposits and number two has to do with lending money to people like you and I say and companies of all sizes so small, medium and large. Usually if you're fresh out of college you'll start off as a credit analyst and in this kind of a role you're providing clients with credit products like term loans, lines of credit, mortgages and other products like that and the goal here is obviously for them to be able to pay you back right? So you're looking through their credit history, their financial statements, spending habits and so on and based on that assessing whether they'll be able to pay the bank back. As you can probably imagine the skills for this kind of a role are quite numerical so Excel, math and finance knowledge can definitely come handy. A common designation to work towards is the credit risk certification. When it comes to hours I'd say around 50 hours a week is quite normal so I don't think that's anything outrageous. Salary wise around $70,000 a year is a good estimate. Now when it comes to the types of companies out there it's basically all of the different commercial banks that you see out on the street right? So in the US that's probably the likes of Chase, Bank of America or Capital One. Overall people do regard commercial banking as quite a stable career in which there's a good work-life balance and it does have quite a competitive pay as well. Now if you want to learn more about the differences between a commercial bank and an investment bank I have made another video just on that so you can go somewhere up here where I'll leave it linked. And the last job we'll look at is a broker and in short a broker buys and sells securities on behalf of the client's wishes. So these securities can range from shares to bonds to options and much more than that. Now at this point you might wonder well what's the difference between a broker and a trader? Basically I am simplifying a bit here but a broker executes trades on behalf of the client's wishes whilst a trader executes trades on behalf of the portfolio manager or the investment manager's wishes. So a broker does have a lot more of a people element as well because there's obviously many different clients that he or she handles right? When it comes to the hours it's not your average 40-hour work week. It does start very very early in the morning primarily because the markets open quite early right? So in the US it starts at 9.30 the market open time so they have to be in there quite a few hours in advance in order to get everything ready, have the research ready, catch up on the news and so on and so forth. Overall around 55 hours I'd say is a good estimate and you've got to keep in mind that these hours where they're working are actually very very stressful especially when the markets open as there's a lot of money to be made or lost really. When it comes to the pay there is a big myth that all stock brokers are millionaires. That's probably because of the wolf of Wall Street but realistically as an entry level broker you'll probably be making around $60,000 and then there is a high upside though depending on how much you can earn off commission so there is a good potential in that sense. Among the most useful skills are communication, working well under pressure especially when the market is open and sales because mainly they depend on them for earning a commission right? When it comes to licenses the Series 7 as well as the Series 63 are some of the main ones primarily because they give you the authority to trade on behalf of clients. When it comes to companies there's actually a big split between what's known as a full service broker and a discount broker. A full service broker does provide investment advice as well so they might do some research for you, they might analyze things for you as well whilst a discount broker doesn't do any of that instead it just does the trade right? Overall obviously a full service broker does have a higher commission than a discount one for those obvious reasons but some examples of full service brokers include Citi or Morgan Stanley while some examples of discount brokers could be Fidelity or Charles Schwab as well. So those are 5. When it comes to salaries do take it as a bit of a rough guide mainly because it depends on the city you're in and other things like that and same goes for the work hours because well you might have a bad boss and that makes you work longer than usual right? Also do let me know in the comments if you'd like me to explain some other jobs or maybe even have a part 3. Lastly go follow me on Instagram for some behind the scenes footage and getting to know me a bit more personally if you want to. Hope you found the video useful, if you did feel free to like and subscribe and I'll hopefully catch you in the next one.