Finance Today
The role of financing in a business is very important. Finance is required to promote or create a business, gain assets, develop products, run market surveys, advertise. The conventional view of finances focuses on being reactive, efficient, quantitative and risk averse. New innovative views focus on being vision-oriented, opportunity and growth focused, intuitive and risk-taking.
Finance Careers
Accountant - Also known as auditors, accountants can work for clients of all
kinds, including state and federal governments, high-powered corporations,
non-profit companies or individuals. Responsible for compiling, maintaining and
analyzing financial records, an accountant ensures that clients pay their taxes
accurately and punctually. Accountants must earn a bachelor's degree in
accounting. All accountants benefit from achieving certification by becoming a
certified public accountant (CPA), which requires successfully passing an
examination as well as demonstrated practical work experience.
The U.S. Bureau of Labor Statistics reports that accountants and auditors earned an average salary of $67,430 in 2009.
Financial Analyst- Financial analysts monitor the status of investments, including stocks, bonds and commodities, to guide clients into making sound investment decisions. Clients include banks, insurance companies, securities firms and a variety of businesses, large and small. They can also help determining its value in the economy. By understanding a company's worth, financial analysts can inform business owners how new and existing policies and trends will affect the company's investments. Due to the complex nature of their work, financial analysts must possess a bachelor's degree. Some positions also require financial analysts to hold a master's in business administration (MBA) or related financial discipline.The U.S. Bureau of Labor Statistics reports that financial analysts earned an average salary of $85,240 in 2009.
Actuary- As essential components in the insurance industry, actuaries compile information to predict the probability that risks will occur, helping clients minimize the cost of potentially dangerous financial situations. Possible risks threatening the financial health of an individual or organization include death, illness, injury or disability, as well as property destruction or loss. Actuaries often work for health insurance firms, where they help develop policies by predicting which illnesses can occur in specific populations that share some common characteristic, such as their city of residence. Actuaries are also qualified to guide companies through the investment process, informing them how to use resources to maximize profits. An actuary's work involves a strong background in statistics as well as business. They must possess a bachelor's degree in math, statistics, actuarial science, finance, economics or business. Many employers also require actuaries to be certified by the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS).
The U.S. Bureau of Labor Statistics reports that accountants and auditors earned an average salary of $67,430 in 2009.
Financial Analyst- Financial analysts monitor the status of investments, including stocks, bonds and commodities, to guide clients into making sound investment decisions. Clients include banks, insurance companies, securities firms and a variety of businesses, large and small. They can also help determining its value in the economy. By understanding a company's worth, financial analysts can inform business owners how new and existing policies and trends will affect the company's investments. Due to the complex nature of their work, financial analysts must possess a bachelor's degree. Some positions also require financial analysts to hold a master's in business administration (MBA) or related financial discipline.The U.S. Bureau of Labor Statistics reports that financial analysts earned an average salary of $85,240 in 2009.
Actuary- As essential components in the insurance industry, actuaries compile information to predict the probability that risks will occur, helping clients minimize the cost of potentially dangerous financial situations. Possible risks threatening the financial health of an individual or organization include death, illness, injury or disability, as well as property destruction or loss. Actuaries often work for health insurance firms, where they help develop policies by predicting which illnesses can occur in specific populations that share some common characteristic, such as their city of residence. Actuaries are also qualified to guide companies through the investment process, informing them how to use resources to maximize profits. An actuary's work involves a strong background in statistics as well as business. They must possess a bachelor's degree in math, statistics, actuarial science, finance, economics or business. Many employers also require actuaries to be certified by the Society of Actuaries (SOA) and the Casualty Actuarial Society (CAS).
Finance Mentors
Mentor- Bill Leder
Career- Financial Advisor
1. What is your career?
I am a Certified Financial Planner but usually call myself a Financial Advisor.
2. When and how did you get involved in this work?
I began in college as an intern for Northwestern Mutual Life. I decided that I didn't want to be a life insurance agent only. I wanted to be a Financial Planner and help people get their whole financial house in order. I've had several different jobs with several companies through the years but I have been at the same place now for 9yrs.
3. What was your training and background?
I have a Finance degree from Oregon State University (after attending Ricks College for 2yrs). While an intern with Northwestern I got my insurance license. After college I got my Series 7 license which allowed me to sell investments like stocks, bonds, & mutual funds. I also received the Certified Financial Planner (CFP) designation. The CFP designation was the hardest of them all but I believe the most helpful and most worthwhile. Getting the insurance license and Series 7 license is required by regulations but the CFP designation is optional.
4. Is this typical for people in your position and in similar positions?
Yes I would say so. However, not everybody receives the CFP designation.I wish it were required but it is not.
5. What’s a typical day like for you or someone in a similar position?
This answer can vary extremely widely so it is hard to answer. I will briefly explain. I now own my own business with a little over 100 clients. I am not able to hire an assistant right now so I am responsible for ALL functions of the business. That means I handle client service work like filling out forms & paperwork and getting that paperwork processed, I handle my own business bookkeeping, I have to handle my tech support problems, and of course I work directly with clients to invest their money and help them plan for retirement. So everyday I'm doing a little bit of each of those things.
6. What do you like most about your work?
I like helping people handle their money because they are unsure how to do so. In some ways it can be a complex task and many people rely on me for help & support in this area. I get my greatest satisfaction working directly with clients and making them feel comfortable & confident about their financial situation.
7. What do you like least?
I am getting tired of the client service work and wish I could hire an assistant to take some of that load from me. That is mostly all of the follow up work that needs to be done like changing client addresses, setting up new accounts, transferring accounts, getting withdrawals from client accounts. If I could simply work with my clients and have someone else handle the follow up service work I would be much happier.
8. What talents or skills do you think are the most crucial to success in this work?
People skills. You can learn everything else, but you have to be good with people. If you're best at working with numbers and reading financial charts and economic data, then there are positions within the industry that are better suited for a person like that, but if you're going to be a Financial Advisor who is facing clients, you primarily need people skills. Of course, having an interest and lovefor finance and investments is important but it comes secondary to people skills.
9.What attitudes or values are important?
A desire to help people. Extremely high personal ethical standards.
10. Knowing what you do now, would you approach this career (or job) in the same way? If not, what would you do differently, and
why?
No, I would not approach it the same way I did. Someone from BYU-I asked me previously if I would recommend this field to others and I had to answer
No. It is an extremely tough field to become established in. There is no pre-defined path to follow. A person's experiences will differ greatly depending on how they start in this field. This field can lead to a long hard and frustrating struggle to become established or to get to a point where you want to be. I believe the barriers to entry and growth are slowly changing and I believe there are larger investment or financial advisory companies out there that are able to hire, train & grow people into a fruitful career, but they are the exception not the norm. If I had to start over I would find a large enough Advisory company that could offer a good path with advancement potential. Anyone entering this field should look almost solely at working with independent companies, not company names like Edward Jones, Merrill Lynch, Prudential, etc. The explanation is too hard to summarize in one small paragraph. Suffice it to say that anyone entering this field should do extensive due diligence about which direction to take.
With that said, it can be rewarding field with great flexibility. For example, this year I took almost the entire month of July off for family vacations and our
church trek. Then I took a week off in October to make repairs to my house. During the Christmas & New Years I will take at least a week off and the other week will be very light work. That is because I own my own company now and don't have a set amount of vacation days. I earn recurring fees (not commissions) that don't stop coming in when I am not working. As a testament to the potential rewards of this career, it regularly gets ranked as one of the top careers in America as seen in this link: http://money.cnn.com/pf/best-jobs/2012/snapshots/6.html
Career- Financial Advisor
1. What is your career?
I am a Certified Financial Planner but usually call myself a Financial Advisor.
2. When and how did you get involved in this work?
I began in college as an intern for Northwestern Mutual Life. I decided that I didn't want to be a life insurance agent only. I wanted to be a Financial Planner and help people get their whole financial house in order. I've had several different jobs with several companies through the years but I have been at the same place now for 9yrs.
3. What was your training and background?
I have a Finance degree from Oregon State University (after attending Ricks College for 2yrs). While an intern with Northwestern I got my insurance license. After college I got my Series 7 license which allowed me to sell investments like stocks, bonds, & mutual funds. I also received the Certified Financial Planner (CFP) designation. The CFP designation was the hardest of them all but I believe the most helpful and most worthwhile. Getting the insurance license and Series 7 license is required by regulations but the CFP designation is optional.
4. Is this typical for people in your position and in similar positions?
Yes I would say so. However, not everybody receives the CFP designation.I wish it were required but it is not.
5. What’s a typical day like for you or someone in a similar position?
This answer can vary extremely widely so it is hard to answer. I will briefly explain. I now own my own business with a little over 100 clients. I am not able to hire an assistant right now so I am responsible for ALL functions of the business. That means I handle client service work like filling out forms & paperwork and getting that paperwork processed, I handle my own business bookkeeping, I have to handle my tech support problems, and of course I work directly with clients to invest their money and help them plan for retirement. So everyday I'm doing a little bit of each of those things.
6. What do you like most about your work?
I like helping people handle their money because they are unsure how to do so. In some ways it can be a complex task and many people rely on me for help & support in this area. I get my greatest satisfaction working directly with clients and making them feel comfortable & confident about their financial situation.
7. What do you like least?
I am getting tired of the client service work and wish I could hire an assistant to take some of that load from me. That is mostly all of the follow up work that needs to be done like changing client addresses, setting up new accounts, transferring accounts, getting withdrawals from client accounts. If I could simply work with my clients and have someone else handle the follow up service work I would be much happier.
8. What talents or skills do you think are the most crucial to success in this work?
People skills. You can learn everything else, but you have to be good with people. If you're best at working with numbers and reading financial charts and economic data, then there are positions within the industry that are better suited for a person like that, but if you're going to be a Financial Advisor who is facing clients, you primarily need people skills. Of course, having an interest and lovefor finance and investments is important but it comes secondary to people skills.
9.What attitudes or values are important?
A desire to help people. Extremely high personal ethical standards.
10. Knowing what you do now, would you approach this career (or job) in the same way? If not, what would you do differently, and
why?
No, I would not approach it the same way I did. Someone from BYU-I asked me previously if I would recommend this field to others and I had to answer
No. It is an extremely tough field to become established in. There is no pre-defined path to follow. A person's experiences will differ greatly depending on how they start in this field. This field can lead to a long hard and frustrating struggle to become established or to get to a point where you want to be. I believe the barriers to entry and growth are slowly changing and I believe there are larger investment or financial advisory companies out there that are able to hire, train & grow people into a fruitful career, but they are the exception not the norm. If I had to start over I would find a large enough Advisory company that could offer a good path with advancement potential. Anyone entering this field should look almost solely at working with independent companies, not company names like Edward Jones, Merrill Lynch, Prudential, etc. The explanation is too hard to summarize in one small paragraph. Suffice it to say that anyone entering this field should do extensive due diligence about which direction to take.
With that said, it can be rewarding field with great flexibility. For example, this year I took almost the entire month of July off for family vacations and our
church trek. Then I took a week off in October to make repairs to my house. During the Christmas & New Years I will take at least a week off and the other week will be very light work. That is because I own my own company now and don't have a set amount of vacation days. I earn recurring fees (not commissions) that don't stop coming in when I am not working. As a testament to the potential rewards of this career, it regularly gets ranked as one of the top careers in America as seen in this link: http://money.cnn.com/pf/best-jobs/2012/snapshots/6.html
Key Terms
- ROI- The earning power of assets measured as the ratio of the net income (profit less depreciation) to the average capital employed (or equity capital) in a company or project
- Net Present Value- The difference between the present value of the future cash flows from an investment and the amount of investment. Present value of the expected cash flows is computed by discounting them at the required rate of return.
- Stocks- Equity capital raised through sale of shares.
- Bonds- A written and signed promise to pay a certain sum of money on a certain date, or on fulfillment of a specified condition. All documented contracts and loan agreements are bonds.
- Stockholders- An individual, group, or organization that holds one or more shares in a company, and in whose name the share certificate is issued. Also called shareholder.
- Government Securities- Bonds, notes, and other debt instruments sold by a government to finance its borrowings. These are generally long-term securities with the highest market ratings.
- Mutual Fund- An investment vehicle managed by finance professionals that raises capital by selling shares (called units) in a chosen and balanced set of securities to the public.
- SEC- US federal agency established in 1934 to help protect investors by enforcing securities-related laws, and by setting mandatory standards for disclosure of financial and other pertinent information about firms whose securities are traded over a stock exchange. Its five commissioners (appointed by the US President and confirmed by the Senate) serve for staggered five-year terms, and at any time no more than three of them may be from the same political party.
- Stock Markets- a place where shares are bought and sold, i.e. a stock exchange
- Initial Public Offering (IPO)- First offering of a firms' stock (shares) on the stockmarket, at the time it 'goes public.' Because a stock market usually values the stock on the expectations of the firm's future growth and income, IPOs are typically an opportunity for the founders and other early investors to make high profits by cashing their stockholdings.
- Venture Capital- Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specialized financial institutions (development finance houses or venture capital firms). Also called risk capital.
- Interest Rate- The annualized cost of credit or debt-capital computed as the percentage ratio of interest to the principal.
- Dow Jones Industrial Average- Price weighted (see weight) average of 30 actively traded shares of the blue chip US industrial corporations listed on the New York Stock Exchange. The trend in the movement of the market value of these shares is considered to be an indicator of the movement of the entire US stock market.