This research paper provides information about various employment opportunities for financial analysts working in the banking sector. It reviews the banking industry in the United States, provides a summarized job description for financial analysts as well as a review of the employment outlook and trends in the field. Additional information such as salaries for financial analysts and the level of education required for the field are also provided. Also presented in this paper are the findings of a research study I carried out in the banking sectors of Ohio and Iowa to establish the rate of employment for financial analysts in the two sectors.
a)Summary of the Banking Sector/Industry
The banking industry is one of the oldest industries in the United States of America, for instance, the Bank of New York which is one of the oldest banks in America was established in late 1783 (Gilbart 7). Gilbart also affirms that the banking sector is one the oldest and largest sectors in the United States economy (11). Since the introduction of barter trade and currencies, the banking system has become one of the most important sectors of the economy.
Banks provide a variety of financial services to the governments, individuals as well as business organizations. The banking sector in the United States provides various financial services such as deposit taking and lending as well as prevention of financial frauds, money laundering and usury lending. In the recent years, the banking industry has been targeting low-income populations.
Due to high risks involved in the provision of financial services such as fraud, all banks are regulated by specific regulatory authorities. In the United States, the banking industry is controlled and regulated by both the federal and state governments. In addition, banks in the United States are also regulated by agencies such as the Federal Reserve System, Federal Depository Insurance Corporation (FDIC), Office of Thrift Supervision (OTS) and the Office of the Comptroller of the Currency (OCC). According to Gilbart, the type of regulation in which a bank is subjected to in the U.S. is determined by the type of charter and structure of the bank (37). Thus, a bank may be subjected to regulation by two or more regulatory agencies depending on its structure and charter.
This aspect of multiple regulations differentiates the United States banking industry from other banking industries in countries such as the United Kingdom, Canada and China where the banking sectors are regulated by a single authority, usually state-owned central bank. Individual cities in the U.S. are also allowed by the federal government to enact their own financial laws and regulations. In addition, the United States has fully-fledged bank regulatory agencies at both state and federal government levels that are separate from regulatory agencies for other financial sectors such as security markets and insurance industries. All commercial banks in the United States that accept deposits from customers are required to obtain insurance covers from the Federal Deposit Insurance Corporation (FDIC). In addition, every commercial bank must have at least one primary regulator. All state-owned banks are regulated by the Federal Reserve System whereas non-state or private banks are regulated by the Federal Deposit Insurance Corporation.
The Federal Reserve System is the central banking system of U.S.A. The Federal Reserve System was created in 1963 as a response strategy financial crisis experienced in the U.S. between 1959 and 1963 (Gilbart 28). Today, it is responsible for formulation and implementation of monetary policies, supervision and regulation of banks and provision of financial services to the U.S. government and depository institutions.
Categories of Banks
Banks in the U.S. are broadly categorized as Credit Unions, Federal Savings, Federal Savings Association and National Banks. According to Paulet, JPMorgan Chase, Citigroup, Wells Fargo, Bank of America and Goldman Sachs are the largest top-five commercial banks in America (41).
Performance of the U.S. Banking Sector
The banking industry has been thriving well despite various economic challenges faced by key industries in the U.S. For example, the banking sector recorded a growth rate of fourteen percent between 2009 and 2011 despite the numerous economic challenges caused by the 2008/2009 economic recession (White 81). A research study by Haraf William and Rose Kushmeider on various sectors of the economy in the United States revealed that the banking sector is a major contributor to economic growth and development (65). For example, the asset base for the top-five largest banks in the U.S. was equal to fifty-six percent of the U.S. economy as at December 31, 2011 (Haraf & Rose 69). In my view, this indicates that the banking industry controls a large portion of the U.S. economy.
The high growth rate of the banking industry implies that more new jobs are likely to be created in the future. According to data released by the Bureau of Labor Statistics, the banking industry employed approximately four million people and created more than two hundred thousand new jobs in 2011 (137). According to the FDIC, there were eight thousand four hundred and fifty commercial banks in the United States as of August 22, 2008. However, this number did not include banks not insured by FDIC; hence the number of commercial banks must be higher than 8,450. Thus, there are thousands of employment opportunities in the banking sector.
b)Job Description/Summary of a Financial Analyst
A financial analyst is a person who examines and inspects the financial position of an organization. Financial analysts usually prepare reports and give recommendations after evaluating and analyzing the financial position of an organization. Financial analysts collect financial information about an organization, analyze the information and then give recommendations. Reports and recommendations prepared by the financial analysts are usually used by the management of the organization to make decisions relating to investments and proper management of organizational resources. Financial analysts also provide forecasts of business performance in the future based on currently available information and prevailing economic conditions. They also evaluate and compare the performance of various firms across an industry based on their financial information. Financial analysts also assess the impacts of economic factors such as changes in demand and prices on the financial position and performance of an organization.
Areas of Specialization
Financial analysts may specialize in budget analysis, credit analysis, financial risk analysis, tax analysis, investment analysis and security analysis. This indicates that financial analysts have a broader field for employment than other business professionals such as administrators.
For a person to become a financial analyst, he or she must posses a bachelor’s degree in a business-related course with a major in finance. Moreover, financial analysts with graduate degrees and professional certifications in relevant fields such as bond evaluation, credit management and risk management usually have higher chances of getting better jobs.
Financial analysts are some of the best paid professionals. The basic salaries for financial analysts usually range from three hundred and fifty thousand to one million two hundred thousand U.S. dollars annually. However, the salary usually varies depending on the employing organization, place of employment, level of education, title and experience amongst other factors. For example, Haraf and Rose estimate that an undergraduate employed as a junior financial analyst usually earns between 30,000 and 75,000 U.S. dollars monthly (120). Moreover, financial analysts who work as consultants in private firms and banks often earn more than their counterparts employed in the public sector (Bureau of Labor Statistics 162). According to Haraf and Rose, most financial analysts who work for topnotch banks in the United States usually earn more than three million U.S. dollars every year (126).
Employment Outlook and Trends
According to Gilbart, professionals in the field of finance such as financial analysts and advisers and accountants are the most sought after employees (105). This is because of their integral roles in almost every organization. Thus, financial analysts can be employed in manufacturing firms, trading organizations, non-governmental organizations, government agencies and ministries and insurance firms.
The banking industry is the largest employer of financial analysts. For example, between June 2009 and July 2010, more than 25,000 finance graduates were employed as financial analyst trainees in the banking industry (Bureau of Labor Statistics 171). Data on employment opportunities in the banking sector provided by the Bureau of Labor Statistics estimated that 140,000 people were employed as financial analysts between January 2010 and December 2010 (189). Professionals with post-graduate degrees in finance had better opportunities for employment in the sector.