Career Paths for Finance Majors - Simplified

[Music] hey guys what's up this is Kyle from the finance major this website is dedicated to simplifying finance for undergraduates as a recent grad I know there's a ton of resources out there and to be honest it's pretty overwhelming we've got hundreds and thousands of websites for students and finance professionals right at your fingertips but yet so many students still feel completely lost I felt the exact same way when I was an undergrad with no direction so really this website was built for you the finance major so because finance is so broad and there's so many different avenues you could go down today we're going to be covering the four main categories for finance majors and covering some of the more popular career paths that finance students actually end up pursuing upon graduation so let's get started so let's cover the four main categories for finance majors first we have accounting corporate finance investment banking and investments inaud it you could get exposure to many different companies learn the way they operate from the back end by learning their processes systems and controls note that travel is very common in this field and auditors are very fond of flowcharts and controls tax is a little more self-explanatory you could be working for a CPA firm preparing taxes or keeping books for individuals working for a large public accounting firm managing taxes for companies this to this field tends to be pretty narrow and focus and it can be tough to change career paths once you're already in too deep people working in tags generally prefer working individually rather than working in teams in my opinion if you're going to be working in accounting I think the best overall experience would be in consulting or advisory services however these roles usually are much more competitive than tax or audit basically consultants advise clients on certain business activities or they provide temporary support for longer-term projects for companies can't all consultants can to be viewed as rental employees because of this taxon audit tend to be pretty popular among undergrads but that's because the big four accounting firms recruit so heavily for these entry-level roles and many universities have well established funnels to these companies tax and audit internships and jobs are generally easier to get the consulting part of the reason for that is because tax and moderate roles are much more well defined whereas consulting requires a lot more intuition and a broader range of skills and capabilities for the job major companies in accounting I'm sure many of you already know the big four Deloitte Ernst & Young known as ey PricewaterhouseCoopers known as PwC and KPMG so moving on to corporate finance for financial planning and analysis think budgeting revenue expense projections forecasting cash flow management return on investment which is ROI internal rate of return which is IRR cost of capital etc so for an internal audit listened if this differs from audit or external audit and that you're actually auditing the company that you're working for again flowcharts and controls are a must here they're mainly concerned with evaluating and improving risk management controls and governance processes in corporate accounting you're basically keeping and managing your company's books and financial statements including the three main financial statements for a company in which every finance major should know this is the income statement the balance sheet and the statement of cash flows this could also include managerial or cost accounting so managing projects inventory costs etc the major companies that I think of our Procter & Gamble and IBM again these are just two of the many companies in corporate finance but almost every company in existence has some type of corporate finance function so next we have Investment Banking this is Wall Street this is the sexier side of Finance many undergrads earlier in their college careers would never admit that they couldn't explain the difference between a retail bank and an investment bank and many of you probably are ready to know the difference but I'm still going to mention it anyway for those who entirely sure in general commercial or retail bank basically provides services to individuals and small businesses whereas an investment bank operates on a much larger scale providing services to large corporations and high net worth individuals so Samson trading is exactly what it sounds like in sales you're basically establishing relationships with clients on behalf of the firm to gain their business and sell your products which are securities to them in trading you're literally buying and selling securities either on the behalf of your client which is known as agency trading or on behalf of the firm known as prop trading or proprietary trading traders are offering often known as market makers because they provide liquidity in the market in general it allows investors to get in and out of positions with relative ease keep in mind that prop trading took a massive blow after the O 809 financial crisis due to regulation most prop trading desks were moved out of investment banks and into hedge funds due to the Volcker Rule which restricts u.s. banks from making several types of speculative and incredibly risky investments with the bank's capital the number of sales and trading roles have generally shrunk in size over time due to increased regulation and algorithmic trading how rythmic trading basically involves writing complex mathematical codes so the computers can make trades with a limited human intervention Equity Research explained simply basically means performing research on public companies and providing a buy sell or hold recommendation for each company's stock or equity you're basically digging into a company's financial statements building financial models producing reports with that information the goal here is to create an insightful equity report that your firm can sell to clients so think of capital markets as the market for capital or money in a general sense this involves helping companies raise capital by issuing debt in the form of bonds or equity in the form of stock companies often raise capital in order to fund expansion for example start-up may approach an investment bank in order to help them launch an initial public offering known as an IPO an IPO means that a company is issuing stock for the first time and this puts a ton of bankers to price the company correctly or else the reputation of both the start-up and the investment bank can be damaged here who gets excited about a new company that appears to be on a downward trend and who wants to do business with an investment bank that can do their job if you want to read more on IPOs I would read up on blue apron and the snap IPO so Capital Markets bankers and investment bankers often work on the deals you're gonna be seeing in the Wall Street Journal headlines snap issues IPO Amazon acquires Whole Foods etc the investment baking department within an investment bank is closely related to capital markets and that you're actually advising the companies through certain transactions this field is incredibly competitive it can be incredibly lucrative but the hours can be incredibly brutal investment bankers provide advisory services for companies involved in mergers and acquisitions notice M&A or restructuring deals and restructuring is basically determining the optimal capital structure for the firm so finding the right balance between debt and equity the use of debt and equity both have pros and cons and each company has different needs some of the major companies as many of you already know in Investment Banking are Goldman Sachs JP Morgan Morgan Stanley Bank of America Citigroup and some of the European banks the foreign banks include Barclays Credit Suisse UBS and Deutsche Bank and last but not least we have investments so financial advising involves advising clients on their investments and managing their money in general financial advisors help individuals assess their goals and risk tolerance allowing their portfolios to meet those needs a financial planner is similar to a financial advisor but a CFP manages most if not all of the clients finances so this would include investments taxes retirement they both fall under the same umbrella but a CFP provides more of a holistic approach to the investors needs so investment management sounds like a very broad category and that's because it definitely is it's kind of a catch-all here this involves investment in asset management firms like Vanguard that create and manage investments like ETFs and mutual funds so an ETF stands for change traded fund so it's it trades basically like a stock they're just some minor differences these companies often have the ability to manage clients money providing personalized services to individuals with assets over a certain threshold and providing Robo advising services to people with assets under that threshold so if you want to succeed in providing investment services to individuals you need to be very good with people I've spoken with several people from the industry and everyone says you're almost more of a counsellor than a financial advisor so some of the major companies that I think of in this investments category would be Vanguard Blackstone and Edward Jones I'm throwing Edward Jones in there just because they have so many retail locations across the US and virtually everyone knows them so that's it for today guys but I hope you learned something and I hope I was able to simplify the main categories of Finance for you please let me know if there's a concept or topic you'd like me to cover next thanks for listening we'll see you next time [Music]

Channel: the finance major.

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Keywords: the finance major, finance major, finance careers, finance simplified, careers in finance, finance student, finance undergrad, finance undergraduate, learn finance, entry-level finance, finance internship, finance job, wall street internship, investment banking internship, finance jobs explained, myth vs reality for careers in finance, finance career paths

Id: nV555JcmQYQ

Length: 9min 59sec (599 seconds)

Published: Sat Feb 24 2018