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
you