The financial career landscape

Posted on by Paul McCormick

Circles showing banking images

When students leave school and arrive at university and first consider careers relating to financial markets, Investment Banking often comes immediately to mind. Furthermore, there is a tendency to immediately think of large Investment Banks such as Goldman Sachs, JP Morgan, Morgan Stanley, UBS, etc. The problem from a career perspective is that such institutions are also in the minds of many UK and international students, resulting in most Investment Banks receiving circa 200 applications for every place – more for the most popular programmes at the largest banks. Indeed, for the likes of Goldman Sachs and Morgan Stanley, this number is circa 250.

Many students have naturally heard about leading investment bank graduate programmes, which represent something of an iceberg: They are highly visible to all graduates who, therefore, target such institutions and apply accordingly. But just as 90% of an iceberg sits below the waterline and is not visible. Similarly, a huge proportion of the financial career graduate job market sits outside Investment Banking, and a smart and targeted approach can significantly reduce those 250-1 odds.

In this blog, we will briefly touch on the dozen or so financial subsectors I recommend all students consider as career and internship possibilities and explore over the next year or so.

Note 1: All such sectors are trying to hire many more female students than previously, and the sectors are open to all, whatever your gender or ethnic background.

Note 2: In all financial sectors we are about to discuss, a university second-year internship is crucial to being offered a graduate job, and a first-year spring week programme, where offered, is often a huge step forward! Beginning your preparation, e.g., financial career exploration, summer work experience (of any kind!), and volunteering is extremely useful, if not essential, before arriving at university.

Investment banking

To increase your chances of getting hired:

  1. Apply to 20+ investment banking spring week programmes in your first month of university i.e., October. Indeed, applying in the month before university is preferable, and these blogs will enable you to do so. It also makes sense to apply for asset management/investment management spring week programmes even if your ultimate goal is Investment Banking.
  2. Apply to a good number of Tier 2 Investment Banks rather than Tier 1 by the end of October, whether you are making a first-year, second-year, or third-year programme application. Again, September applications are preferred. Anything less than 20 applications is a low number. There are perhaps 15 Tier 1 investment banks in London, including the names of the big banks already mentioned, and perhaps 50 Tier 2 institutions, all of which run various programmes. Note: there are a few hundred banks, many in London. Every bank is a potential job target. See my Financial company target list blog for more details.
  3. Carefully consider which investment bank business stream you are applying to. Investment banks consist of sales and trading, corporate finance* (including mergers and acquisitions), research, risk management, operations, compliance and regulation, finance, human resources, and information technology. The front office divisions of sales and trading and mergers and acquisitions attract enormous numbers of global applicants, and individuals need to be aware of the odds of being accepted into such divisions as opposed to other business streams. Risk management, compliance, regulation, and technology have been areas of growth in recent years. *Note: Corporate Finance (including mergers and acquisitions) is often referred to as IBD - Investment Banking Division

Investment management

Investment Management is divided into two distinct categories:

  1. Institutional investment management (also called fund management or asset management). Again, we need to distinguish between Tier 1 and Tier 2 institutions. Both categories add up to a total in excess of 150 institutions in the UK. Tier 1 institutions will certainly run formal first-year spring week programmes. Ultimately, graduates would either go down the route of starting as an Analyst, researching companies and markets, and making recommendations to internal Fund Managers, or down a more commercial client-facing route i.e., Sales/Relationship Management. Note: There will be a number of internship and graduate programmes not associated with investments but focussed on the operational management of running a large business!
  2. Wealth management and financial planning. There are over 500 wealth management and financial planning firms in the UK. The classic role is one whereby you develop your own individual business under the ‘umbrella’ of your firm’s brand. You build up in time, are responsible for a portfolio of private clients, and provide the client, whether a 35-year-old or 75-year-old, with solutions to their financial needs. Strong interpersonal and relationship-building skills, rather than quantitative, are required.

Perhaps to confuse the above distinction, Tier 1 Investment Banks also run wealth management divisions, such as Morgan Stanley Private Wealth Advisors.

Investment management is commonly referred to as the ‘buy side’ and investment banking the ‘sell side’. There are a few other financial market sectors sitting on the buy side worth mentioning:

  • Hedge funds are a form of institutional asset management firm, although they are quite different beasts from classic investment management firms as they involve considerable market speculation using highly sophisticated trading strategies. Graduates normally need a couple of years’ experience before moving into this sector, and even then, they need highly quantitative skills, at least at postgraduate / Master’s level.
  • Pension funds: Every large corporation, from BT to the Royal Mail, has pension fund liabilities that require sophisticated Investment Management capabilities. The route into working in this sector is not as obvious as in other sectors, but it is worth further consideration and exploration.
  • Private equity firms usually acquire, i.e., buy, underperforming companies and often change the management structure, culture, and strategy to turn them around. The private equity firm aims to sell the higher-performing organisation a few years later at significantly higher values. Entry into the sector is challenging, typically requiring an individual to have worked first as an IBD Analyst at a well-known investment bank. So perhaps this sector should not be of immediate interest to you.
  • Venture capital firms have similarities with private equity. Such firms do not take over another company but usually invest funds in a young or ‘start-up’ organisation. Venture capital firms often support young technology, biotech, or ‘life science’ organisations. Again, this is not so useful for early careers as significant previous specialised work experience is needed.

Interdealer brokers

Brokers sit on the sell side/investment banking side of the market. Brokers arrange financial transactions between different Investment Banks. Suppose Bank A wishes to buy a bond, and Bank B wishes to sell that exact bond. The broker would be the intermediary that facilitates this. The environment is one of an investment bank trading floor.

This sector did not use to be a graduate destination as the skills required were more on the relationship-building side than analytical (as brokers take no risk). However, graduates are now required, particularly those combining ‘people’ and ‘mathematical’ skills. (The latter requirement refers to mental arithmetic rather than deep mathematical analysis capabilities). An ability to pick things up quickly and know what is going on without having all the information is also desirable. The sector, however, is much smaller than Investment Banking. Strong interpersonal skills and something of an extrovert personality are required. The sector does not run first-year spring weeks but does run second-year internships.

Credit rating agencies

Another interesting sector is the credit rating agencies. What do these companies do? Credit rating agencies assess the relative credit risk (the risk someone does not pay you back your money!) of specific debt securities or structured finance instruments and borrowing entities (issuers of debt). The issuers of debt/bonds (like loans!) could be corporations or, indeed, governments around the world. Credit Rating Agencies offer interesting careers in themselves but can also be stepping stones to Investment Banking and Investment Management careers. They do not offer first-year spring week but do run second-year internships and then graduate schemes for after university. Note: Lancaster University, at the time of writing, offers a Fitch Credit Rating ‘Year in Industry’ Scholarship programme, and Fitch Learning teaches on some of the academic programmes at the university. The sector is certainly worth consideration, particularly if you have a finance or maths background and the idea of a credit analyst or risk analyst role appeals to you. Like many others listed in this blog, the sector arguably offers a much better work-life balance than investment banking!

Vendors/FinTech

The Vendor/FinTech sector is perhaps the best-kept graduate employment secret despite being a big sector. Vendors and FinTech firms provide the Investment Banking and Investment Management community, as well as other sectors, with financial data and technology, whether that be risk management and trading systems, live and historic equity, bond and foreign exchange prices, not to mention company and market research and news. It involves compliance and regulation, ticker tapes and databases.

The two largest Vendors are Bloomberg and Refinitiv (part of the London Stock Exchange Group), but there are at least 350 other companies in this sector. ‘Bob’s Guide’ is a great resource for learning more about this sector.

What sort of roles are there?

As in any company in the financial world and in all Vendors, the following roles need to be filled at a minimum: sales, research, analyst, human resources, IT development, IT support, project management, business management, finance, and marketing.

The larger Vendors will run formal Graduate and Internship Programmes. Smaller firms will not, requiring a direct approach to that company. In addition to a business or finance degree, an interest in technology, data, and financial markets would be a helpful background combination to apply to this sector.

The sector does not offer first-year spring week opportunities, but there will be various FinTech opportunities for you to get involved in when you arrive at university.

Accountancy

There are many different career paths you can take in Accountancy. The main service lines offered by Accounting firms are Audit, Tax, Advisory and Outsourcing; all recruit graduate-level talent. With that said, there are also many opportunities to train as an Accountant ‘in-house’, within industries such as manufacturing, engineering, construction, tech, retail, hospitality etc. You can train to start life in accountancy in-house as a Financial Accountant or a Commercial/Management Accountant, depending on your skill set and areas of interest.

To increase your chances of getting hired:

  1. Apply to Insight days and weeks at large Accounting firms as an undergraduate student. (BIG 4, Top 10 ranked firms all offer these and are usually open to all undergraduate year groups.) They all offer a range of Insight programmes, some in person and others virtual. Insight programmes are a great way to gain insight and to find out critical information that can make you stand out in an interview later down the line. They usually open in the first term of university.
  2. Firms all offer Summer Internships (usually for undergraduate students in their penultimate year or at the end of their second year of study; many also offer 12-month placements).
  3. Read annual reports before applying, readily available directly on websites; these reports include important information that will help you to understand the values of the organisation but also to gain an understanding of what is important to the firm and its clients (ESG, Diversity & Inclusion, Digitalisation, etc). Annual reports also include financial information.
  4. Working at a firm is a typical entry route for a university graduate into the world of Accountancy; however, many of our students start their careers working as in-house or industry-based Accountants. Every large business will have an Accounting team, and therefore, students engage with employers at careers fairs who offer accountancy-based internships, placements, and graduate schemes.
  5. To make it as an Accountant long-term, it is likely you will need to become chartered; therefore, do familiarise yourself with the accredited bodies, such as ICAEW, ACCA, CIMA, CPA, CTA, ICAS, CIPFA, etc. The qualification you study is likely to be dictated by your employer, as they usually pay for it on your behalf as part of a training contract. (But, not always, always negotiate this into any job offer if not offered upfront initially).
  6. Financial Advisory is known to be the most competitive service line at Accounting firms, and therefore, if you are interested in Risk, Forensic Accounting, Restructuring, or Actuarial, be prepared to brush up on your employability skills.
  7. You are not on your own! Your university, certainly at Lancaster, will support you with all the above.

Financial consultants

The ‘Big 4’ Accounting firms of Pricewaterhouse Coopers (PwC), Ernst & Young (EY), Deloitte, and KPMG do not just do accounting but have huge consultancy arms, including large financial service consultancy divisions. Indeed, with the huge amount of financial regulation hitting the financial world, it is something of a ‘golden era’ for financial consultants. This translates into: they are growing and need interns and graduates!

Besides the Big 4, a whole group of firms provides financial advice to pension funds, particularly around their pension asset and liability management. These firms include Mercer, LCP, Reddington, AON, and WTW. The ‘Big 4’ often offers first-year work experience opportunities.

Retail and commercial banking

This sector has become much more interesting over the last several years or so as the traditional firms of Lloyds, HSBC, Barclays and RBS have moved from a branch network client offer to mobile and digital banking. Furthermore, there is a group of a dozen or so ‘Challenger Banks’, e.g., Metro Bank, Virgin Money, Atom Bank, that is shaking up the sector further. If your CV does not stack up to applying to Goldman Sachs, competing against tens of thousands of applicants, this sector could be of interest.

Insurance

From cyber risk to climate change, you will help people and businesses manage finances and risk, including cyber risk, drones, catastrophes, driverless cars, and much more. The Insurance sector has considerable influence in the economy and international reach.

Compared to other financial sectors highlighted in the Financial Career Insight series, a few significant points about careers in insurance stand out:

  • It is an incredibly broad sector in terms of roles and career paths
  • You have the opportunity to work either locally or nationally
  • It offers a better ‘work-life’ balance than many financial sectors (especially Investment Banks!)
  • It is much more accessible than a sector like Investment Banking
  • It is not a sector well known by students, making it an even better reason to target!

Miscellaneous

There are a number of institutions, both large and small, that do not fit into the above categories; everything from the Bank of England to the Financial Conduct Authority (the main financial regulator in the UK) to economic consultants, investment banking ‘boutiques’, actuarial firms, commodity and energy trading firms and many more – see our Financial company target list for a comprehensive firm-by-firm guide. Indeed, there are many firms in addition to those listed. It can make sense to apply to large firms early in the academic year when looking ultimately for internship and graduate positions and then apply to small and medium-sized firms throughout the year. The more you can move away from relying on applications to the biggest investment banks, the more you will increase your chances of getting hired!

Quick tips:

  • Financial market careers are not solely about investment banking
  • Investment banking careers are not all about sales and trading
  • Investment management, vendors, rating agencies and much more need to be explored
  • First-year spring weeks, second-year Internships, and any early work experience are valuable
  • Graduate programmes are only one way of securing financial market careers
  • Be familiar with all our Financial Career Insight blogs

Additional resources relating to this topic:

Related Blogs

Disclaimer

The opinions expressed by our bloggers and those providing comments are personal, and may not necessarily reflect the opinions of Lancaster University. Responsibility for the accuracy of any of the information contained within blog posts belongs to the blogger.

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