Five Highest Paying Jobs in the Financial Industry
How to land the most lucrative financial jobs
How to land the most lucrative financial jobs
The financial industry is easily one of the most competitive when it comes to finding a job. This is even true in regard to entry-level positions, as it’s almost entirely unheard of to jump into and build a successful career in the industry without starting at the bottom and working your way up. The desks of finance professionals around the world are littered with resumes of students and executive wannabes hoping for a break that they believe will set them on course to be young and rich “masters of Wall Street.” But the highest-paying, and therefore the most competitive, jobs in the financial industry – which include four chief executive positions and investment professionals at hedge funds – are even harder to land. We hope you enjoy this guide to the Five Highest Paying Jobs in the Financial Industry.
The financial sector encompasses a broad variety of firm types that provide financial services to individuals, businesses, and government entities. The financial services industry is a key component of developed economies and has become more important in the past half-century. It made up approximately 10% of all business profits in 1950, but as of 2010, financial services companies accounted for nearly 50% of total business profits. Worldwide, publicly-traded financial firms rank first in both total earnings and total market capitalization. Conglomerates that offer a virtual marketplace of financial services in one location are the largest players in the industry, but there are still plenty of major, successful firms that specialize in providing just one type of financial service, such as personal investment advice.
Retail banking is still the cornerstone of the financial industry. Retail and commercial banks provide deposit accounts, credit and debit cards, personal and business loans, and mortgages. They also facilitate money transfers and offer foreign currency exchange services. The current trend in retail banking is offering increasingly specialized financial services to each customer, tailored to their individual needs. The highest salaries in retail banking usually belong to loan officers and major corporate executives, such as the chief financial officer (CFO) and chief risk officer (CRO).
Investment banks provide major financing for corporations and governments through both equity capital markets and debt capital markets by handling stock and bond issues for their clients, as well as arranging general debt financing. They also manage the purchase and sale of companies through activities such as mergers and acquisitions (M&A), representing clients on both the buy and sell sides. Additionally, they manage investments for their clients. M&A is typically the business that brings in the most money for investment banks. Therefore, the highest paid employees at investment banks tend to be individuals who can successfully manage large M&A deals.
Insurance companies are a major component of the financial sector, representing a subsector of financial services that is focused on providing individuals or corporations with tangible ways to manage risk. Insurance firms also assist investment bankers in assessing and underwriting the risks associated with the capital markets financing they provide for their clients. The final wall of risk protection is provided by reinsurers, which are companies that sell insurance to other insurance companies. The insurance is designed to offer insurers financial protection against catastrophic losses. The highest earners in the insurance industry are the agents who sell insurance policies.
Brokerage firms, which include such well-known names as Charles Schwab and Fidelity Investments, facilitate the buying and selling of securities for their clients, and also offer financial advisory and money management services. Brokerage firms also typically create and offer investment in their own mutual funds or exchange-traded funds (ETFs). Portfolio managers who create and manage such funds are among the highest-paid individuals at brokerage firms.
Hedge funds and other private investment partnerships primarily serve the investment needs of high net worth individuals (HNWI) and large institutional investors, offering investment and money management services in return for management fees and a percentage of profits from the investments. Successful hedge fund managers are among the highest-earning individuals in the financial industry.
Private equity and venture capital firms provide major investment capital to start-up businesses or to businesses needing large amounts of financing for a major growth project, such as expanding their business internationally. Private equity investors offer funding in exchange for a sizeable equity interest in, or profit participation with, a company. Private equity funding launched a number of technology firms in the 1990s, but since the turn of the century has been more focused on healthcare companies. Like hedge fund managers, managers in private equity firms are some of the highest-paid individuals in the financial sector.
There are also a number of other companies that operate in specific areas of the financial industry, such as accountants, tax preparation firms, payment processors that handle purchase transactions, and software developers that create investment portfolio management software and other financial software programs for financial services firms, or their clients, to use.
The first challenge in landing one of the top five highest paying jobs in the financial industry is the sheer number of hopefuls aspiring for the same positions, a number that tends to climb when the market is booming. When the market is down, the number of open positions drops considerably, but so does the level of competition, the number of people looking. Your first tip in securing one of these prized positions is that you may fare better looking for one during a bear market.
If your dream is to land a coveted position in the financial industry, then it’s imperative that you pursue your dream in the most effective way possible. In this guide, we’ll run down the five highest paying financial industry jobs for you, and also offer a guide to help you increase your odds of securing one for yourself.
Let’s start with the tips for landing any of these choice positions.
Regardless of which of the prized financial industry jobs you’re aiming for, higher education is a virtual necessity. For most of these choice positions, you’ll likely need an MBA or some other finance-related graduate degree in order to be even considered.
If you’ve already earned a degree in a different major, don’t stress out or give up. Financial companies are more inclined to look favorably on individuals with computer and traditional science majors, such as physics and engineering. Even if your major falls into the humanities category, it’s not necessarily the end of the road for your millionaire career as a financial industry executive. You can bolster whatever your background education is with additional coursework or continuing education studies in math, accounting, statistics, or specific financial studies. Your demonstrated eagerness to keep learning may be just the boost you need to set your application apart from others.
Most candidates applying for high paying positions in the financial world all have excellent GPAs and an impressive course catalog under their belt. In order to stand out, you need to step up your game. There are a number of ways to go above and beyond in a way that makes your qualifications stand out from the pack.
Earning a designation will definitively set you apart from other candidates, as it shows your commitment and drive for excellence.
You may also want to consider a practical designation like the Financial Modeling and Valuation Analyst (FMVA)™ program offered by CFI.
Being investment- and finance-savvy requires more than mere numerical smarts. Regardless of the position, you’ll be required to read a lot. And while understanding and analyzing financial reports will most likely be a key part of your job, you should also be aware of, and be fluent in, economic policies, events, and major trends at home and abroad.
Stay on top of financial and social trends, labor issues, and political events. Almost anything that’s financially newsworthy could eventually have an impact on the investing world and ultimately, on whatever financial firm you end up working for. Invest in subscriptions to key financial periodicals, such as The Wall Street Journal, Investor’s Business Daily, The Financial Times, Forbes, Fortune, and Futures, and keep yourself up-to-date with events and stories from around the world and about the global economy.
Consider specializing your knowledge in order to gain an additional competitive advantage in the job marketplace. You can tailor your reading and study so as to develop yourself into an expert on, for example, China’s economy, a particular industry or market sector, or specific types of investments, such as private equity investments, real estate, or exchange-traded funds (ETFs).
Nearly all of the top five highest paying jobs in the financial industry require a high level of what is known as “soft skills,” such as leadership and communication skills (including public speaking). While you may have limited opportunities for on-the-job training in such skills as you’re working your way up the financial industry ladder, there are other avenues by which you can acquire and hone your soft skills. For example, you can gain valuable leadership experience by joining local volunteer organizations and taking on roles that enable you to lead and work in a team environment. Develop and refine your public speaking and presentation skills by joining a speech club like Toastmasters International or by taking a class in public speaking at a community college.
It likely goes without saying that pretty much anyone in the financial world – or just about any part of the upper-level management of a company, organization, or institution. Chief executives, regardless of their industry, typically take home the biggest paychecks at the end of the day. This is particularly true in the world of finance. Competition is incredibly fierce at the executive level, due in large part to the potential yearly earnings, and also due to the fact that such positions are especially hard to come by.
Let’s get a little more specific. If you’re thinking of fighting for a top-tier position, you might want to knock chief executive officer (CEO) off your list. Unless you’re founding your own financial firm, CEO positions are notoriously difficult to attain, especially if you don’t have an extensive history with the company, come from a top 15 business school (Harvard, Yale, Wharton, etc.), and have a deck full of backroom network connections to put a good word in on your behalf with the board of directors.
You can more easily aim for one of these other top-tier management positions, all of which happen to be among the highest paying jobs in the financial industry: chief technology officer (CTO), chief financial officer (CFO), chief risk officer (CRO), or chief compliance officer (CCO). You might not make quite as much money as the CEO, but you’ll still make a bundle, regularly augmented with performance bonuses, in any of these other highly coveted spots.
The average salary compensation for these positions ranges from a mere $156,000 a year for CFOs to $189,000 a year for CROs (just under the $200,000 a year average for a CEO). That low-to-high breakdown alone should tell you something: Managing a financial firm’s money is important – but being able to successfully manage risk is considered an even more valuable, or at least more rare, skill.
By the way, those salary figures are just the average. Many of the three-letter job title crowd have a base salary in the neighborhood of seven figures.
The fact that these positions are among the financial industry’s highest paying jobs offers substantial insight into what moves the industry and, specifically, what helps most to ensure a financial firm’s success. The high dollars offered to CTOs tip you off to the major importance of technology in today’s financial world. All those impressive trading algorithms developed by analysts aren’t worth a thing until they’re successfully integrated into a company’s computer system or trading platform. A good CTO is usually a person who manages to combine high-level executive skills with the specialized knowledge of a “computer geek.”
It’s doubtful whether CCO was among the highest paid financial industry jobs as recently as 20 years ago. But one thing that’s risen to new record highs more frequently than the Dow or S&P 500 Index in the recent past is the level of government regulation of the financial industry. Record-keeping, reporting, registration, and all other areas of compliance have steadily increased and have become more complex as government regulation of the industry has expanded dramatically with the passage of the Dodd-Frank Act in the United States in 2010, along with similar legislation in other countries. Just keeping up with all the various legal requirements for financial firms is a challenge. If you have both a head and a knack for cost-efficiently dealing with regulatory requirements, then you’re well-suited to be a CCO.
Outstanding CFOs and CROs are critical to a financial firm’s success because in the end, yes, it really is all about the money.
The CFO is the executive with primary responsibility for overseeing all the financial operations of a business. CFO duties include tracking assets and liabilities, managing cash flow, debt, and the company’s capital structure, and perhaps most importantly, financial planning for the company’s future growth. Accounting, financial planning, and financial modeling are all among the necessary skill sets for a CFO.
A CRO is a position especially important to financial firms. He or she is the watchdog for any financial events that might threaten, first, the company’s profitability, and second, its financial solvency. The CRO monitors the firm’s investments, and also works with the CCO to ensure that the firm is not threatened by any shortfalls in legal compliance. CRO educational backgrounds vary from accounting to law, but the best CROs are almost inevitably highly analytical, with superior problem-solving skills, and simply a strong, intuitive feel for risk assessment.
Keep in mind that any three-letter title usually comes with strict educational and experience requirements. You may have to spend a decade or more working as an analyst, managing director, or in other positions, but diligence and hard work can eventually land you a spot on an executive perch. If you’re a bit short on the educational side for whatever position you’re angling for, use the time while you’re climbing the corporate ladder to boost your academic credentials. Most major financial firms will be happy to fund your studies to become more qualified, and more valuable to them as an employee.
If you’ve always dreamed of being a hedge fund manager or other investment professional working within a hedge fund, then your dream has been to make the MOST money in the financial industry. The average hedge fund investment professional makes a whopping $410,000 a year. You can’t match that even with the average salary for a CRO and a CCO combined.
Even relatively junior employees in this arena – for example, an analyst in charge of overseeing the hedge fund’s investments in one particular industry, with less than two years of experience – still command an annual salary of $100,000 or more.
The hedge fund managers who make the most money are, logically enough, those with the best performance. Most hedge fund managers are paid based on some variation of the “two and twenty” plan; they receive a 2% management fee, applied to the total of funds under management, plus 20% of the fund’s profits. So the key to making multi-millions as a hedge fund manager is, ultimately, to be an outstanding investment strategist. That’s also the skill most likely to get you in the door at a hedge fund – being able to demonstrate the ability to generate significantly above average investment returns.
Beyond being a very savvy investor, being a successful hedge fund manager also requires superior interpersonal and sales skills. It takes being both personable and persuasive to convince a few billionaires or pension funds to let you manage a large chunk of their investment capital.
Well, now you know where the top compensation dollars are in the financial industry – the five highest paying financial jobs. There is always a level of competition when it comes to finding a job, any job, but that level increases significantly when talking about the highest paying financial career positions, the ones that have the potential to make you a millionaire fast. Regardless of which one of these high-level positions you may be aiming for, the one constant requirement for getting the job is that you need to find ways to set yourself apart from other applicants. Make sure that you put together the educational support and work experience necessary to bolster your bid and help you to land that dream position in the financial industry.
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