Financial accountants and investment bankers do important — often well-compensated — work. And yet for many people, the differences between these jobs can be vague and mysterious. What are these career paths like, and what does it take to get one of these jobs?
In this article, we answer those questions and more about these top financial positions. Read on to learn all about financial accounting and investment banking.
What Do Financial Accountants Do?
If the world of finance was like a sporting team — and really, it is not — then financial accountant would be a little like the team captain. They know the game. They understand all the players, and they are best positioned to take that knowledge and make something of it.
They might spend their days taking a look at the reports generated by other financial sections of a business. Such as accounting, billing, payment processing, etc. These departments that interact with numbers, but don’t necessarily analyze them.
As with anyone who works with data, they are looking into the past, but their real interest lies in what will happen in the future. They take a look at those numbers and search for a pattern. The beginnings of a story. Their job is to figure out what will happen next.
They can’t tell the future, of course, but by recognizing patterns and interpreting how they will continue, they help businesses make decisions that support their growth and development well into the future.
Because of this, financial accountants are often hired during times when a business is poised to make a major decision. If company X wants to buy a competitor, but they aren’t entirely sure how it will play out, they might hire a financial accountant to draft potential scenarios. Make predictions that will take a lot of the uncertainty out of the process.
Well, you think to yourself, I don’t know how confident I am in my ability to tell the future.
Fear not, financial professional of the future. You don’t have to be. So much of modern analysis work is done with algorithms. Databases, and software that can navigate and interpret them. You will need to be able to make sense of the numbers in front of you, but you won’t at all be on your own. Tech and years of training will help you and your customers achieve the best possible outcomes.
Investment Bankers
Investment bankers actually exist on the same spectrum as financial accountants. In fact, you might consider the investment banker to be the final form of the financial accountant. They make financial predictions and anticipate what will happen in the markets in the future.
Much of their responsibility is exactly that — understanding what will happen in the market and timing their decisions accordingly to make the largest possible yields on their profits.
Becoming an investment banker certainly does not have to be the goal of a financial accountant, but the skills are similar. You need to understand business, understand money, and be prepared to help businesses leverage large quantities of it to make even more money.
Because the sums are often very high in this profession, pressure tends to be proportionate. There is a lot of stress in the job. A lot of risks. And there are also periods of boredom. After all, there is not always a big power move to be made, right?
Salary
Investment bankers have an average salary of approximately $250 thousand. High by any metric, but also considerably larger than the average salary of a financial accountant, which currently sits at around $120 thousand.
Of course, any six-figure salary will put you in the upper range of earners in the United States. Still, it is hard to ignore just how significant the salary differences are in this case. If income is your primary career motivator, you might want to make investment banking your ultimate ambition.
Education
Most investment bankers have a master's degree in investment banking. Additionally, they must have received their FINRA licensure — a requirement that can vary in terms of specifications based on where you live.
While these are fairly strenuous qualification hurdles, it is actually not so different than what future financial accountants can expect to encounter. While a master’s degree is not explicitly required, most professionals who are hoping for an upward career trajectory will eventually get one.
Work-Life Balance
When it comes to work/life balance, financial analyses come out considerably ahead. While both jobs are challenging, the stakes in investment banking tend to be significantly higher for the simple reason that enormous sums of money can hang in the balance of your every decision.
Financial accountants make recommendations and guide businesses toward decisions, while investment bankers wind up calling many of their own plays. This distinction can lead to a lot of stress. If you’re thinking, I can handle lots of stress if it doubles my salary, maybe consider giving that some more thought.
Certainly, this is the case for some people. For many others, it isn’t. In fact, work/life balance consistently outranks salary as a driving factor in how people make their career choices. Money is nice and everything, but if you are too busy and stressed out to enjoy it, what good does it actually do you?
Making the Choice
There is no one size fits all answer for which career path you should choose. These careers are in the same ballpark, so you might even find that you try both on for size at some point in your life. Many people who want to get into investment banking may actually start in financial analysis and work their way up the ladder.
Many others may decide to stick with the job that they have. It is largely a question of what motivates you. If you want the prestige, the responsibility, and the compensation that comes with them, you might try out investment banking. If, on the other hand, you would like a rewarding career that comes with built-in downtime, financial analysis might be more your speed.
