Finance industry - Layers and roles

Time is money and the finance industry works to manage money, thereby helping/managing clients and investors worldwide achieve their financial objectives. The business structure, strategy and profile vary from department to department. This article aims discuss and differentiate the various layers and levels of the finance industry.

We are all aware of the recession which started in 2008 and impacted almost every industry globally, but more importantly it led to some permanent structural changes in most of the larger financial institutions in India. However, it is very encouraging to see that all of these changes still could not hold back fresh people entering into this field and carving out long term career prospects from it.

The main intent for writing this article is-

• To brief on what kind of finance related jobs one can expect post their graduation.

• How the finance industry is structured and what are its key pros and cons?

• And what are the different myths associated with it?

Most of you would accept that it is quite competitive to break into finance industry especially as a fresher with non-financial background, but the toughness or competitiveness would also depend on the kind of profile you are looking for. To break it in laymen terms, we have categorized the job roles in financial firm in three broad categories –

1. Middle office: Most of the profiles in this category are related to banking operations, trade and settlement, portfolio risk attribution and analysis, derivatives (e.g. trade book migration, price verification, etc), product control including structured trade reviews, fair price valuation, pitch book reporting, credit card analytics, actuaries, fxed income etc. The exposure to financial market and direct interactions to client / investors in all of such kind of jobs are largely very minimal. However, on the positive note, you will definitely get a chance to work with a portfolio manager or a trader who generally has more than 8-10 years of experience in the domain.

2. Back office: There is a very thin line between backend and mid office jobs, but most of the profiles in this category belong to financial IT, accounting and MIS reporting. In most of the cases, there is no exposure to financial markets or direct investors. However, there are some very interesting and unique job profiles you can find in this category. Professions related to algorithmic trading (a new concept emerging fast in India and around the world) and financial engineering including product structuring are in great demand in the industry but there are only hand full of suitable people available to do the job.

3. Front office: This would perhaps be one of the most lucrative job categories in the industry. This includes a wide range of job profiles such as Portfolio Managers, Sell Side Equity Analysts, Investment Bankers, Private Bankers and Wealth Managers, Private Equity Analyst, Hedge Fund Managers, Sales and Trading teams, etc. Most of the jobs which fall in these categories are very demanding; require long working hours including weekends and correspondingly it does compensate you with an equivalent remuneration. You expect to get maximum market exposure and a 100% direct interaction with client or investors. Also, this is one of the toughest categories to break into with not many opportunities in India.

Having differentiated the various levels of the financial industry, you will find that there are many different and challenging roles that financial industry has to offer and it often takes years of expertise for the aspiring individuals to find a suitable position which would fit them like a glove. On a brighter side, we believe that most of the graduates with strong analytical and mathematical background have higher probability of starting their career in fields like quantitative finance as compared to research or consulting roles (which mostly belong to front end category).

To conclude, as aspiring individuals it is very important to understand the industry and the kind of job prospects it has to offer in the long term rather than just jumping into it because every other friend of yours is diving into that field. It is very important for you to do some soul-searching and analyze that although a career in finance industry appears to be very flamboyant from outside, it may not be the actual reality. Remember the quote – Grass on the other side is always green. Although, it is true that the finance industry is the most rewarding, but then it is also essential to know that jobs in this industry are very demanding and often associated with uncertainties, market ups and downs. There could always be some small or big financial crises popping out somewhere in the world and there is every chance that you or your company would have some direct or indirect exposure to it. Thus, it is very essential for you to take measured decision and understand the bigger impact before you zero down as to which career path you would like to choose.