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Banking and Finance Graduate Jobs and Programs
The financial industry is concerned with the creation, management and allocation of money and non-monetary assets. Financiers are involved in all areas of lending, borrowing, buying, selling and investing money. They trade commodities, shares and securities on the financial and capital markets. Financiers base their decisions on the “rate of return”, estimated using various financial instruments, the principle of the time value of money and factors in the macro- and micro-environment like uncertainty, industry trends and the financial health of the creditor.
Most graduate jobs in the finance industry are with financial services firms, such as banks, credit unions, brokerage services, investment funds, super funds and wealth management services. These firms service the three categories of finance: personal finance, corporate finance and public finance. Large commercial enterprises will also have finance departments, and it is possible for graduates to find a position in one of these companies too.
What do you need to get a job in this industry?
Areas of Financial Study
Competition for jobs in a financial institution is always extremely high, so applicants must be well-qualified, usually with undergraduate degree in a relevant area like Commerce or Economics (with a major in Finance). Since the finance industry is so large, and the services provided by the financial services industry are so encompassing of the various commercial and financial operations conducted by individuals and organisations at the personal, corporate and public level; there are a wide variety of specialisations available for study. These include wealth management, venture capital, futures and risk management, international banking and behavioural finance.
It is possible however for a candidate to be successful in securing a specialised job in finance without a commerce degree – for example in the area of quantitative analysis it is common for recruits to be graduates with a degree in mathematics or engineering. Science graduates are in particular demand, since the analytical skills taught by a science degree are useful and transferrable to the finance industry. Even humanities students may find work in financial services after graduation, as institutions seek to expand their research capabilities. Graduates with double degrees are particularly sought-after.
After graduating with a relevant undergraduate degree, many entrants into the banking and finance industry work for a financial services firm for a few years, before going back to study, either for a professional certification or a postgraduate degree.
Types of Financial Institutions:
Financial institutions fall into three main categories: Authorised Deposit-Taking Institutions (ADIs), Non-ADI institutions and fund managers and insurers. ADIs are corporations that have been authorised by APRA to carry out banking business under the Banking Act 1959. These include commercial banks, investment banks and credit unions. Non-ADI institutions include general financiers and securitisers. Insurers and fund managers include super funds, life and general insurance companies, hedge funds and trust funds.Some major banks offer investment, hedge-fund and insurance services in different bank divisions. Some of the most common financial institutions are listed below:
- Commercial Bank
A commercial bank offers financial services, such as accepting and keeping deposits, giving credit and mortgages, to the general public and other corporations. They are involved in corporate and personal finance. Banking that takes place directly with consumers (through ATMs, personal loans, mortgages etc.) is known more specifically as retail banking, however most large banks provide retail banking as well as business-to-business commercial banking services, and both services can fit under the umbrella term of “commercial banking”.
- Investment Bank
An investment bank creates capital for individuals and corporations by trading shares, currencies and securities and underwriting (accepting risk on a new venture). They may also provide companies with merger and acquisition assistance, and provide investment advice. Unlike a commercial bank, they do not accept deposits.Common jobs in an investment bank include financial analyst, risk manager and strategist.
- Merchant Bank
The services of a merchant bank (such as underwriting, financial consulting and international investment) overlap with those of an investment bank. However while an investment bank usually focuses on public (ASX) listed corporations, a merchant bank provides services to small-to-medium businesses, through private equity.
- Credit Union
A credit union is a member-owned financial cooperative, which provides low-interest loans and other financial services to its members from its pooled deposits. Profits to the credit union are shared among the members, and the board is democratically elected. Credit unions can be formed by any group of individuals, but are usually set up by large organisations or companies for the benefit of employees or members. Workers’ unions often set up credit unions for members, such as the Teachers’ Credit Union and the Police Department Employees’ Credit Union.
Insurers are paid small regular sums of money in exchange for guaranteeing a payment for the more uncertain risk of loss to something (like loss of property to natural disaster or theft, loss of life or health, loss of money from being sued for negligence). There are many types of insurance offered by various insurance companies – the most common being life insurance, health insurance, house and auto-insurance, property insurance and liability insurance. Graduates getting jobs in insurance is often an un-looked industry.
- Superannuation Fund
Super-funds are trusts into which workers pay part of their annual income, in order to build up savings for retirement. There are several types of super-funds, including industry super-funds (such as Industry-Super), retail funds (like ING Direct), employer stand-alone trusts, and self-managed super-funds (SMSFs). Often super-funds will invest the trustee’s savings, in order to increase it.
- Hedge Fund
Hedge funds are portfolios of high-value investments managed aggressively across multiple domestic and international markets in order to generate maximum returns. This involves speculation and risk, since they operate on a principle of absolute returns, regardless of the position of the market. Hedge funds are exclusive to sophisticated investors with assess in excess of $1million, and often control billions of dollars in assets.
- Venture Capital Fund
Venture Capital (VC) funds provide capital for small high-risk, high-potential start-up companies with innovative technologies or business models, in exchange for equity in the company, and some decision-making power over the business. VCs are particularly active in industries characterised by rapid technological change, such as the IT industry, software development and biotechnology.
Types of Finance Jobs:
- Financial Analyst
A financial analyst obtains financial and management information from a business entity and the wider market environment; and uses it to evaluate whether or not the entity is a profitable investment. They are are employed in most financial institutions, especially investment banks, hedge funds, insurance companies and super-funds.
Sources of information for financial analysts include public reports, conference calls with company management, merger and acquisition history and other documents from which insight can be drawn about the nature of the micro- or macro-environment, which in turn has an impact upon the health and future of the business entity. Financial analysts are fluent in the use of a variety of statistical tools such as spreadsheets and other software. At the end of their assessment, the financial analyst compiles a report on the entity, making a recommendation whether or not to buy or sell an investment. This report is presented to investors.
Financial strategists advise investors on the investment strategies to use in different trading markets (e.g. the commodities market, currency market, stock exchange). Their work overlaps with that of a financial analyst.
- Financial Advisor
Financial advisor is a general term used to describe someone who renders financial services to individuals or organisations. Often a financial advisor will act as a representative of a financial service firm, like an insurance or accounting company. Other types of financial advisor include brokers, investment advisors and financial planners. Even lawyers may be financial advisors. Some financial advisors (such as financial planners) are required to become CFP (Certified Financial Planner) registered. Others, such as accountants, are desired with the CA or CPA.
- Quantitative Analyst (Quant)
Quantitative analysts apply mathematical methods (such as partial differential equations, statistics, probability and econometrics) to products like derivatives or investments, to identify profitable opportunities, develop trading strategies, set prices and manage risk.They work in most financial institutions, particularly investment banks, merchant banks and hedge funds.
- Financial Risk Manager
Financial risk managers work in corporate finance, identifying, measuring and managing risk (such as credit risk, market risk, liquidity risk, foreign-exchange risk and inflation risk). They are essential to all money-managing institutions because the value that these companies create for their clients is dependent on factors in the micro- and macro-environment and therefore involves risk. Financial institutions do not want to do away with or avoid risk altogether; but must engage with it appropriately. Risk management is often undertaken as part of a firm manager’s duties, but is also performed by advisors, auditors and analysts.
- Portfolio Manager
Portfolio managers decide on the buying and selling strategy of a financial institution – making a decision based upon the recommendations and information from buy-side and sell-side analysts, as well as from information gathered from the market and company managers. Ultimately, they are responsible for the investment decisions of the company. Their work is a continual balancing act – treading a precarious path between risk and reward; security and growth; debt and equity; market threats and opportunities.
- Financial Commentator
Financial commentators work in the media, either as writers in print or online media, or as verbal presenters on television or radio. They stay abreast of all developments in the markets; they have an intimate and up-to-date knowledge of the financial health of major corporations; they have a deep understanding of the interconnecting factors (both financial and non-financial) at work in the macro-environment (such as technological change, government policy, financial crises, interest rates), and they can make astute comment on the changing implications of these interplaying factors. Financial commentators must be exceptional communicators, with a keen interest in the wider financial environment, and a firm grasp of financial models and theories.
Because of the high salaries earned by those in the finance and banking industry, there are few industries with higher competition. As such, those looking to get a job with one of the major financial institutions (especially an investment bank or hedge fund), should try to put in some undergraduate work experience (as an internship or a vacation position). This kind of experience also exposes the job-seeker to company structure, policies and politics, and allows them to start building up valuable networks.
The difficulty involved with getting industry experience depends on the type of financial institution. Retail positions with commercial banks (as a teller or call-centre operative) are relatively common and easy to get. In contrast, experience in an investment bank is offered only to a select few, and competition is fierce for these positions.
While all work experience adds to a candidate’s employability, developing technical, operative and interpersonal skills, the most valuable internships and vacation positions are those which provide experience in a wide range of specialised and difficult roles. Those wishing to differentiate themselves as exceptional to employers should apply for internships and vacation positions in the investment and financial decision-making side of a financial services firm, which provide intensive on-the-job training and experience. In the most desirable and exclusive positions, interns are given substantive work and real responsibility, exposed to every level of the company – attending client meetings, working on financial modelling, making market reports, working on such things as recapitalisations and acquisitions – all under the guidance of a senior mentor. This kind of work experience, while very competitive and difficult to secure, is a job-seeker’s fast-track to a prestigious and lucrative graduate position.
Professional Financial Certification and Industry Compliance
There are a number of financial regulations relating to the sale of financial products and the giving of financial advice with which an Australian finance worker must comply. RG 146 mandates the level of knowledge, competence and experience required to sell any kind of financial product or advice to the general public (retail banking). It consists of an examination and ongoing professional development.
After graduating, depending on the area of work, it may be advantageous to work towards gaining professional certification as a Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Financial Risk Manager (FRM) or Chartered Accountant (CA or CPA). These certifications require further study and training, as well as several years work experience. Many financial institutions sponsor their employees to gain certification, and provide support systems and guidance throughout the process. Kaplan is a well known institution for these certifications.
Finance and Banking Macroeconomic Trends and Work Prospects
The financial services industry is the largest in Australia, contributing 11% to the national economy and employing over 400 000 people. Despite turmoil and uncertainty in the international economy, and increased government regulation of financial institutions, which have challenged companies and reduced growth, the jobs market in the finance and banking industry is essentially stable and diverse.
As always, demand is high for graduates with technical skill and a history of academic excellence however these qualities are no longer the priority of employers, who increasingly look beyond graduates with finance or economics degrees and “number-crunching” abilities to graduates from a wider range of disciplines such as science and humanities. Employers seek candidates with sound analytical reasoning skills, good judgement and decision-making abilities, excellent communication, teamwork and relationship management capabilities. As such, an increasing number of internships and graduate positions are opening up for applicants with more than “just” business skills.
Demand for different jobs in the financial services industry will depend on location. The bulk of the industry is clustered in major cities, with the majority of investment banks, hedge funds, international traders, wealth management and insurance services to be found in Sydney and Melbourne. Commercial and retail banks are spread across the country, with a high concentration of branches to be found in urban areas, with a smaller proportion to be found in rural areas. The greatest number of jobs available in the finance departments of major corporations is to be found in the major states of NSW and Victoria, but also in the booming resource-rich states of Western Australia and Queensland. General financiers and merchant banks can be found in all states, servicing the small to medium business market, while the majority of public finance jobs are in the ACT.
Salary Estimates for Finance Graduates
Although those working in the finance industry (especially for those working in investment banks and hedge funds), can expect to eventually become very wealthy, recent finance graduates should not form an unrealistic picture of their immediate prospects. Graduate finance jobs are not much more lucrative than graduate positions in other industries, and salaries in many finance jobs may actually be less than starting salaries for high-demand industries like engineering, mining and ICT.
The average starting salary for a finance graduate going into commercial banking or general financial advisory is around $50-70k. The range varies depending on the institution and role. Graduates involved in the value-creation side of financial services (such as graduates working in investment banking or hedge funds) earn more than those working in a sales or advisory position. Investment banking graduates can earn a base salary from $80-100k, with bonuses of up to 100% depending on the amount of money they help bring to the bank. The downside to investment banking and similar high-paying entry level finance jobs is the high-stress environment and the extremely long hours (many investment bankers and hedge fund managers work until midnight or later every night). These jobs are also very few and highly competitive.
Financial service firms such as commercial banks and the Big Four offer great benefits packages to employees, usually including such things as monetary bonuses for performance, employee share plans, credit union membership, insurance and investments, discounted personal finance services, gym membership and community service leave.