What is finance?
"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. Because individuals, businesses and government entities all need funding to operate, the field is often separated into three sub-categories: personal finance, corporate finance and public finance.
All three categories are concerned with activities such as pursuing sound investments, obtaining low-cost credit, allocating funds for liabilities, and banking. Yet each has its own specific considerations. For example, individuals need to provision for retirement expenses, which means investing enough money during their working years and ensuring that their asset allocation fits their long-term plans. A large company, on the other hand, may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities.
What are some of the different finance jobs?
There are a wide variety of professional positions in finance. They include the following:
Financial Analyst – A financial analyst researches macroeconomic and microeconomic conditions along with company fundamentals to make business, sector and industry recommendations. They also often recommend a course of action, such as to buy or sell a company's stock based upon its overall current and predicted strength. An analyst must be aware of current developments in the field in which he or she specializes as well as in preparing financial models to predict future economic conditions for any number of variables.
Financial analysts tend to specialize based on the type of institution they work for. Analysts are hired by banks, investment firms, insurance companies and investment banks. Of these specialties, three major categories of analysts are those that work for 'sell-side' investment firms, those that work for 'buy-side' investment firms and those that work for investment banks.
Chief Financial Officer – A chief financial officer is the senior manager responsible for overseeing the financial activities of an entire company. The CFO's duties include financial planning and monitoring cash flow. He or she analyzes the company's financial strengths and weaknesses and suggests plans for improvement. The CFO is similar to a treasurer or controller in that he or she is responsible for overseeing the accounting and finance departments and for ensuring that the company's financial reports are accurate and completed on time.
The CFO reports to the president, but has a major say in the company's capital structure, investments and how the company manages its income and expenses. The CFO works closely with other executives and plays a major role in any company's success, especially in the long run. Becoming a CFO requires extensive financial management experience as well as educational credentials in finance and/or accounting.
Financial Administrator - A financial administrator is responsible for all financial matters concerning a person, company or organization. They may be hired to oversee the accounts of a product identification company, or may be hired to direct the financial affairs of a university's program or a city's health department.