What types of firms are there in finance and what all do they do? Today firms are becoming more fluid, one firm may do several different parts of the traditional finance industry. But when we look at the industry across the board there are a few major types of institutions. Understanding these different areas of the industry can help you identify what you are really interested in and what field you might excel in. When I first came to NYC I knew “Finance” meant a lot of different things, but you would be surprised just how much variation there is.
- Investment Banking:
- Typically what people think of when they think of big Wall Street banks. These banks are usually focused on debt offerings for companies, initial public offerings, mergers & acquisitions, and sales & trading.
- Wealth Management:
- A very client-focused role in the industry with a high level of advisory. The typical financial advisor for wealthy clients looking to manage and invest their money well.
- Real Estate:
- Real Estate investing is highly profitable and usually is over the course of many years. There are multiple areas in real estate such as developing property or just owning and managing buildings.
- Retail and Commercial Banking:
- Typical banking for everyday customers or for larger corporations.
- Private Equity:
- These firms use investor money to buy and sell other companies. Each firm will have its own strategy but the goal is to buy a growing firm and make it even better, then sell in a few years for large profits.
- Hedge Fund Management:
- Hedge Funds are investing money from clients in stocks and bonds to generate really high-value returns. They are expensive for clients but are designed to make unique investments that pay off.
- Venture Capital:
- Similar to private equity but usually around developing new startups or even ideas into great companies. VCs invest early in a business career with the hope of them becoming a home run for them.
- Accounting firms work on audits and back end accounting for companies and clients to not only manage their books but to find ways to make better returns.
- Insurance is a massive industry and these firms can be selling insurance to individual clients, small businesses, and complex large companies.
Starting your career in each of these industries will build certain skill sets and develop your career path. Some of these industries are particularly hard to break into and require work in other segments before getting your first job. For example, usually private equity firms want people who have worked in investment banking. Some of these jobs are also so specialized that it can make it harder for you to switch over to a different segment. For Example, Wealth Management usually isn’t a path people use to get into high-level investment banking.
In future posts we will break down in detail a few more of these segments but now that you know what all is out there; start searching the types of jobs each segment offers and what types of people do well. There is a lot to learn about each of these careers!