What are the differences between working in finance at a company and investing at a fund?
I would like to learn about the differences in what I would be doing, what the lifestyle would be like, and the qualifications to achieve it. #finance #financial-services #investment-management #investing
4 answers
Albert ’s Answer
Hi Theo,
Working in finance can mean a couple of things, so let me tell you what it means to work in "corporate finance" first. Corporate Finance department exists in every company, from car makers like General Motors to technology companies like Apple. Its job is to figure out how to pick between products that will make (or save) the most money for the company. Sometimes, building a product may force the company to borrow money first, and the Corporate Finance people will look for borrowing money the cheapest way possible.
On the other hand, if someone tells me, "I work in finance", it could mean any one of many things like (a) stocks/bonds/asset/money management (b) insurance, (c) corporate finance, or even (d) being the receptionist of a company that deals with (a) or (b). It would be okay to follow up by asking "what area of work do you deal with?" to get some clarification.
If your job is in "investing in a fund", then I can assume you work in a company that manages other people's money. Let me give you an analogy. Think about what you would do yourself before buying a stock -> you would first think about what is so great about that company's products (the fancy term is "research"), then you would think about if you should buy this stock or another company's stock (the fancy term is "portfolio management"), then you would go out and buy the stock (the fancy term is "trading"). Large investment companies have specific people doing each of these jobs. Researchers visit companies (and sometimes foreign countries) to understand how bright their futures are, then make their recommendations to Portfolio Managers. Portfolio Managers pick the best ideas coming from multiple Researchers, and give that to their Traders. Traders then go out and buy the stocks/bonds.
You also asked about the qualifications to get these jobs. There are other threads in Career Village answering this question, so feel free to look around. To give you a quick summary though: the old way of getting into Research/Portfolio Management/Trading used to be through majoring in Finance, Economics or Accounting, but our world is increasingly being run by technology and the best people to understand it are those who major in "hard sciences" like Engineering, Physics, Math.
Rebecca’s Answer
On the other hand, for 'investing at a fund' , do you mean you subscribe a fund as an investor or someone works for a fund as investment manager? For the prior case, you can subscribe a fund given that your personal investment experience meets fund risk portfolio. However, for normal case, you need to have academic & professional qualification plus relevant experience to be an investment manager.
Hope this helps!
Michael’s Answer
Great question. Hopefully I can shed some light as I have now had experience on both sides of the wall. I began my career working as a financial analyst at a global Consumer Packaged Goods company. Working in Finance at a diverse company means that you are part of a broader team - think Sales, Marketing, Operations, Supply Chain, etc. Everyone on the cross functional team brings their own set of skills to ensure strong business decisions are made and executed upon. I was responsible for working with my marketing team to build budgets for new product launches, own the P&L for existing business, and to forecast revenues and expenses to ensure proper financial deliverables. It was a great experience, but not what I would consider a 'finance culture'.
I then moved to Sales & Trading at a global bank. I am not personally investing, but I speak with institutional investors daily. In this environment the majority of individuals are finance professionals with a strong passion and focus to their industry. Things are very fast paced, performance driven, and focused more on a companies underlying financial deliverables. I consider my second career to be more fast paced, aggressive, rewarding, and challenging.
Hope this helps.
Richard’s Answer
Working in corporate finance can mean many things, but it generally entails a more specific and more operational focus. In other words, working in corporate finance for a company may involve creating budgets or forecasts to help predict future outcomes and assess performance, analyzing profitability of a specific product or portfolio, creating monthly financial reports with variance explanations to understand cost drivers, or booking monthly journal entries and accruals to ensure financial statement accuracy.