What Do Finance Workers Do? Key Roles & Responsibilities

The finance industry facilitates the flow of money and capital across various sectors. It involves managing funds, making investments, and developing financial strategies. This field enables economic activity by connecting those with savings to those who need capital for investment. Finance professionals contribute to economic stability by providing credit, managing liquidity, and offering risk management services. Their work supports businesses, individuals, and governments in achieving financial objectives.

Working in Corporate Finance

Corporate finance professionals operate within companies, focusing on the financial well-being and strategic financial decisions of the organization itself. Their primary aim is to enhance the company’s value for its owners. This involves managing the company’s cash flow to ensure sufficient funds are available for daily operations and long-term growth. They oversee financial planning and budgeting, which includes forecasting revenues and expenses and allocating financial resources across departments.

Financial planning and analysis (FP&A) teams are part of corporate finance. They are responsible for budgeting, forecasting, and financial analysis to support major corporate decisions. They collect data, analyze historical performance, and project future financial outcomes. This analysis helps management understand the company’s financial health, identify opportunities, and mitigate potential problems.

Corporate finance also involves capital investment decisions, determining which projects a company should undertake to increase its long-term profitability. These professionals assess the financial viability of potential investments and decide how to fund them, whether through debt, equity, or retained earnings. Another area of focus is managing mergers and acquisitions (M&A), where they evaluate potential deals, conduct financial due diligence, and advise on transaction structures.

A Chief Financial Officer (CFO) leads the corporate finance function. They oversee all financial activities, from tracking cash flow to analyzing financial strengths and weaknesses. CFOs ensure accurate financial reporting in accordance with accounting principles like Generally Accepted Accounting Principles (GAAP) and relevant regulations. The CFO also advises the Chief Executive Officer (CEO) and the board, influencing overall business strategy.

Working in Investment and Market Finance

Professionals in investment and market finance operate within financial markets. They manage and facilitate the exchange of financial assets for clients or institutions. A primary activity involves raising capital for companies, governments, and other entities by underwriting new debt and equity securities. This includes guiding companies through initial public offerings (IPOs) or bond issuances, helping them access capital for expansion or operations.

Investment bankers advise clients on financial transactions, such as mergers, acquisitions, and reorganizations. They assess company valuations, structure deals, and negotiate terms to achieve the best outcomes. This advisory role requires market knowledge and negotiation skills.

Portfolio managers and research analysts are important to investment finance. Portfolio managers oversee investment portfolios for individuals or institutions. They make decisions about which securities to buy, sell, or hold to meet specific financial goals and risk tolerances. They monitor market trends, economic indicators, and company-specific news to adjust portfolios.

Equity research analysts conduct analysis of publicly traded companies and industries. They provide recommendations to investors on whether to buy, sell, or hold particular stocks. They examine financial statements, build models to forecast performance, and assess market potential. Their reports and insights are used by institutional investors, hedge funds, and other clients to make informed investment decisions.

Sales and trading professionals facilitate the buying and selling of securities in the secondary market. They act as intermediaries, connecting buyers and sellers and executing trades for institutional clients. This function helps maintain market liquidity and provides pricing for various financial instruments.

Working in Personal and Advisory Finance

Personal and advisory finance professionals assist individuals and small businesses in managing their financial resources to achieve personal goals. They develop financial plans tailored to a client’s circumstances, covering various life stages and financial needs. This planning involves understanding goals, educating clients on financial strategies, and monitoring progress.

Advisors provide guidance on retirement savings, helping clients understand options like 401(k)s and Individual Retirement Accounts (IRAs). They assist in selecting retirement strategies and investments to ensure financial security. Managing personal investments is another service, where advisors craft diversified portfolios based on a client’s risk tolerance and financial objectives.

Planning for education expenses, such as college savings, is an area of advice. Advisors help clients explore options like 529 plans and other investment vehicles for educational funding. They also offer guidance on insurance needs, helping clients determine coverage for life, health, disability, and property to mitigate financial risks.

Estate planning is a component of advisory finance. It ensures assets are distributed according to a client’s wishes upon death or incapacitation. This process involves creating wills, establishing trusts, and planning for potential estate taxes. Advisors help clients navigate legal and financial considerations to protect their loved ones and assets.

Working in Risk, Compliance, and Accounting

Professionals in risk, compliance, and accounting specialize in safeguarding financial systems, adhering to regulations, and ensuring accurate financial records. Risk managers identify, assess, and mitigate financial risks that could impact an organization. These risks include market risk, credit risk, liquidity risk, and operational risk. They develop strategies, using financial instruments, to protect against potential losses.

Compliance officers ensure an organization operates within financial laws, regulations, and internal policies. They monitor activities to prevent violations, such as those related to anti-money laundering or consumer protection laws. Compliance roles involve interpreting regulatory frameworks and implementing controls to ensure adherence, protecting the organization from legal penalties and reputational damage.

Auditors provide assessments of an organization’s financial statements. They ensure the statements present a “true and fair view” of its financial position. They examine financial records, internal controls, and processes to identify any material misstatements, whether due to error or fraud. Auditors communicate findings in audit reports, providing assurance to stakeholders like investors and regulators.

Accountants maintain accurate financial records and prepare financial reports. They record financial transactions, reconcile accounts, and produce financial statements, including the balance sheet, income statement, and cash flow statement. These reports, prepared in accordance with standards like GAAP, provide a clear picture of a company’s financial performance and position. Accountants also play a role in tax compliance, preparing and filing tax returns while ensuring adherence to federal and state tax laws.