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Friday, January 11, 2013

Careers in finance: Bankers vs. financial planners

By Amy Knapp

According to a recent report, careers in banking and financial services are some of the highest paid in Australia. But are they worth it? Is the $90,000+ salary worth the high stress and fiduciary responsibility, long hours and lack of freedom?

Regulations require professional licensing
Investment banking is competitive
Careers in banking can be very lucrative, especially at the senior management level. But before you jump into a degree in finance or a low level banking job in hopes of a big promotion, consider some of the things you might be dealing with on the job.

Anyone who works at a bank is obliged to the CEOs and shareholders. Bank employees are under constant scrutiny to bring in the big dollars required meet constant demand for sky-high salaries and year-end bonuses. Because of the bonus tradition, there will almost always be pressure from someone higher up.

Not your sky-high salary, of course. You’ll spend the greater part of your career working your way up to a position you may never get. Senior management positions often require a postgraduate degree, years of experience and an outstanding track record. At the very least.

What’s more, you will rarely get any thanks or appreciation. In corporations that large, no one is going to pat you on the back. In some ways, it can be a thankless profession. All work and no play.

Most important to recognise is that you will always be an employee. Even when you get to the upper echelons of the banking industry, long hours will always be required of you. Your vacations will always be regulated. While you may not need to get them approved, you will inevitably have to navigate around your employer’s priorities.

So why independent financial planning?

If you’re truly set on a career in the financial world, you might consider a career as an independent financial planner. Successful people in this profession get a lot of the same perks bank employees do, but without the downside. For example: It’s personal; in a bank you rarely get to build long-term relationships with clients. As you are promoted or moved around in the corporation, your clients are transferred to other advisors. As an independent financial planner, you take your clients with you your whole life long. Relationship building is all part of the fun.

You can offer clients honest, comprehensive services. Banks are limited to the products they offer. When you work for yourself, you can offer virtually any product you think may be good for the client. Service can be customized in a way that is simply not possible at a bank. You can’t put a price on this kind of integrity. At the end of the day, you can be confident you offered the best, most appropriate service to your clients.

You can choose your own hours. At the bank, the clients are sent to you directly. No muss, no fuss. The corporation advertises for you and sends the clients to your door. As an Independent Financial Planner, you have to hustle. Early in your career, you’ll be putting in hours of cold calling and making the hard sales. The bonus is that you will be creating a clientele that is your own, that will return to you again and again for their needs. The fee-for-service model means you can set your own schedule, decide how much you want to make, how many hours you want to work and go from there.

You’re self-employed. Need more be said on that subject? You vacation when you want and work as much as you want. You choose your own desk. If you don’t want to work in a bland, grey office you don’t have too.

You build a residual income. This is perhaps the biggest factor of all. When you work independently, you earn a small percentage of the returns on all of the amount of money you manage. After ten years on the job, your residual income represents a substantial amount of money annually.  When you work for a bank, all of that income goes back to the bank. If you want to make the move to lucrative jobs in self-employment, you start at zero. Is that enough motivation for you?

About the author: Amy Knapp is an HR blogger for InsideTrak, where you can search jobs with anonymous employees reviews from employers across the country.

Image attribution: US-PDGov


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