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Nature of the Work
* A bachelor's degree in finance or a related field is the minimum academic preparation, but many employers increasingly seek graduates with a master's degree and a strong analytical background.
* The need for skilled financial management will spur average employment growth; however, the number of applicants is expected to exceed the number of openings, resulting in competition for jobs.
Practically every firm has one or more financial managers. Among them are chief financial officers, vice presidents of finance, treasurers, controllers, credit managers, and cash managers; they prepare the financial reports required by the firm to conduct its operations and to ensure that the firm satisfies tax and regulatory requirements. Financial managers also oversee the flow of cash and financial instruments, monitor the extension of credit, assess the risk of transactions, raise capital, analyze investments, develop information to assess the present and future financial status of the firm, and communicate with stock holders and other investors.
In small firms, chief financial officers usually handle all financial management functions. In large firms, these officers oversee financial management departments and help top managers develop financial and economic policy, establish procedures, delegate authority, and oversee the implementation of these policies.
Highly trained and experienced financial managers head each financial department. Controllers direct the preparation of all financial reports—income statements, balance sheets, and special reports, such as depreciation schedules. They oversee the accounting, audit, or budget departments. Cash and credit managers monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. For example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements, or whether surplus cash may be invested in interest-bearing instruments. Risk and insurance managers oversee programs to minimize risks and losses that may arise from financial transactions and business operations undertaken by the institution. Credit operations managers establish credit rating criteria, determine credit ceilings, and monitor their institution's extension of credit. Reserve officers review their institution's financial statements and direct the purchase and sale of bonds and other securities to maintain the asset-liability ratio required by law. Managers specializing in international finance develop financial and accounting systems for the banking transactions of multinational organizations. A working knowledge of the financial systems of foreign countries is essential.
Financial institutions—such as banks, savings and loan associations, credit unions, personal credit institutions, and finance companies—may serve as depositories for cash and financial instruments and offer loans, investment counseling, consumer credit, trust management, and other financial services. Some specialize in specific financial services. Financial managers in financial institutions include vice presidents, bank branch managers, savings and loan association managers, consumer credit managers, and credit union managers. These managers make decisions in accordance with policy set by the institution's board of directors and Federal and State laws and regulations.
Due to changing regulations and increased government scrutiny, financial managers in financial institutions must place greater emphasis on accurate reporting of financial data. They must have detailed knowledge of industries allied to banking—such as insurance, real estate, and securities—and a broad knowledge of business and industrial activities. With growing domestic and foreign competition, financial managers must keep abreast of an expanding and increasingly complex variety of financial products and services. Besides supervising financial services, financial managers in banks and other financial institutions may advise individuals and businesses on financial planning.
Financial managers are provided with comfortable offices, often close to top managers and to departments which develop the financial data these managers need. Financial managers typically work 40 hours a week, but many work longer hours. They are often required to attend meetings of financial and economic associations, and may travel to visit subsidiary firms or meet customers.
Financial managers held about 800,000 jobs in 1996. Although these managers are found in virtually every industry, more than a third were employed by services industries, including business, health, social, and management services. Nearly 3 out of 10 were employed by financial institutions—banks, savings institutions, finance companies, credit unions, insurance companies, securities dealers, and real estate firms, for example.
A bachelor's degree in finance, accounting, economics, or business administration is the minimum academic preparation for financial managers. However, many employers increasingly seek graduates with a master's degree, preferably in business administration, economics, finance, or risk management. These academic programs develop analytical skills, and provide knowledge of the latest financial analysis methods and information and technology management techniques, widely used in this field.
Experience may be more important than formal education for some financial manager positions—notably branch managers in banks. Banks typically fill branch manager positions by promoting experienced loan officers and other professionals who excel at their jobs.
Continuing education is vital for financial managers, reflecting the growing complexity of global trade, shifting Federal and State laws and regulations, and a proliferation of new, complex financial instruments. Firms often provide opportunities for workers to broaden their knowledge and skills, and encourage employees to take graduate courses at colleges and universities or attend conferences relating to their specialty. Financial management, banking, and credit union associations, often in cooperation with colleges and universities, sponsor numerous national or local training programs. Persons enrolled prepare extensively at home, then attend sessions on subjects such as accounting management, budget management, corporate cash management, financial analysis, international banking, and information systems. Many firms pay all or part of the costs for those who successfully complete courses. Although experience, ability, and leadership are emphasized for promotion, advancement may be accelerated by this type of special study.
In some cases, financial managers may also broaden their skills and exhibit their competency in specialized fields by attaining professional certification. For example, the Association for Investment Management and Research confers the Chartered Financial Analyst designation to investment professionals who have a bachelor's degree, pass three test levels, and meet work experience requirements. The National Association of Credit Management administers a three-part certification program for business credit professionals. Through a combination of experience and examinations, these financial managers pass through the level of Credit Business Associate, to Credit Business Fellow, to Certified Credit Executive. The Treasury Management Association confers the Certified Cash Manager credential on those who have 2 years of relevant experience and pass an exam, and the Certified Treasury Executive designation on those more senior in treasury management who meet experience and continuing education requirements.
Persons interested in becoming financial managers should enjoy working independently, dealing with people, and analyzing detailed account information. The ability to communicate effectively, both orally and in writing, is also important. They also need tact, good judgment, and the ability to establish effective personal relationships to oversee staff.
Because financial management is critical for efficient business operations, well-trained, experienced financial managers who display a strong grasp of the operations of various departments within their organization are prime candidates for promotion to top management positions. Some financial managers transfer to closely related positions in other industries. Those with extensive experience and access to sufficient capital may start their own consulting firms.
Like other managerial occupations, the number of applicants for financial management positions is expected to exceed the number of openings, resulting in competition for jobs. Those with lending experience, and familiarity with the latest lending regulations and financial products and services, should enjoy the best opportunities for branch management jobs in banks. Those with a graduate degree, a strong analytical background, and knowledge of various aspects of financial management, such as asset management and information and technology management, should enjoy the best opportunities for other financial management positions. Developing expertise in a rapidly growing industry, such as health care, could also be an advantage in the job market.
Employment of financial managers is expected to increase about as fast as the average for all occupations through the year 2006. The need for skilled financial management will increase due to the demands of global trade, the proliferation of complex financial instruments, and changing Federal and State laws and regulations. Many firms have reduced the ranks of middle managers in an effort to be more efficient and competitive, but much of the downsizing and restructuring is complete. The banking industry, on the other hand, is still undergoing mergers and consolidation, and may eliminate some financial management positions as a result.
The median annual salary of financial managers was $40,700 in 1996. The lowest 10 percent earned $21,800 or less, while the top 10 percent earned over $81,100.
According to a 1997 survey by Robert Half International, a staffing services firm specializing in accounting and finance, salaries of assistant controllers range from $41,000 in the smallest firms, to $81,000 in the largest firms; controllers, $47,000 to $138,000; and chief financial officers/treasurers, $62,000 to $307,000.
The results of the Treasury Management Association's 1997 compensation survey are presented in table 1. The earnings listed in the table represent total compensation, including bonuses. The survey also found that financial managers with a master's degree in business administration average $10,900 more than managers with a bachelor's degree.
Table 1. Annual earnings for selected financial managers, 1997
Chief financial officer $142,900 Vice president of finance 138,000 Treasurer 122,500 Assistant treasurer 88,400 Controller 85,100 Treasury manager 66,900 Assistant controller 56,200 Senior analyst 55,600 Cash manager 51,600 Analyst 40,500 Assistant cash manager 38,800 SOURCE: Treasury Management Association
Salary level depends upon the manager's experience and the size and location of the organization, and is likely to be higher in larger organizations and cities. Many financial managers in private industry receive additional compensation in the form of bonuses, which also vary substantially by the size of the firm.
Financial managers combine formal education with experience in one or more areas of finance, such as asset management, lending, credit operations, securities investment, or insurance risk and loss control. Workers in other occupations requiring similar training and ability include accountants and auditors, budget officers, credit analysts, loan officers, insurance consultants, portfolio managers, pension consultants, real estate advisors, securities analysts and underwriters.
For information about financial management careers, contact:
American Bankers Association, 1120 Connecticut Ave. NW., Washington, DC 20036.
Financial Management Association, International, College of Business Administration, University of South Florida, Tampa, FL 33620-5500.
For information about financial careers in business credit management; the Credit Business Associate, Credit Business Fellow, and Certified Credit Executive programs; and institutions offering graduate courses in credit and financial management, contact:
National Association of Credit Management (NACM), Credit Research Foundation, 8815 Centre Park Dr., Columbia, MD 21045-2117. E-mail address: nacm@nacm.org Homepage: http://www.nacm.org/
For information about careers in treasury management from entry level to chief financial officer, and the Certified Cash Manager and Certified Treasury Executive programs, contact:
Treasury Management Association, 7315 Wisconsin Ave., Suite 600 West, Bethesda, MD 20814.
For information about the Chartered Financial Analyst program, contact:
Association for Investment Management and Research, 5 Boar's Head Lane, P.O. Box 3668, Charlottesville, VA 22903. Homepage: http://www.aimr.com/
For information about financial management careers in the health care industry, contact:
Healthcare Financial Management Association, Two Westbrook Corporate Center, Suite 700, Westchester, IL 60154.
State bankers' associations can furnish specific information about job opportunities in their respective States, or write directly to a particular bank to inquire about job openings. For the names and addresses of banks and savings and related institutions, as well as the names of their principal officers, consult the following directories:
The American Financial Directory (Norcross, Ga., McFadden Business Publications).
The U.S. Savings and Loan Directory (Chicago, Rand McNally & Co.).
Rand McNally Credit Union Directory (Chicago, Rand McNally & Co.).
Polk's World Bank Directory (Nashville, R.L. Polk & Co.).
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