What Do You Do in Finance? Common Roles & Activities

Finance is a broad and dynamic field centered on the management of money and assets. It encompasses a wide array of activities, from making investment decisions to assessing financial risks. For individuals, businesses, and governments, finance provides the frameworks and tools necessary to allocate resources effectively and pursue economic objectives. This complex field plays a significant role in the global economy, influencing everything from daily transactions to large-scale infrastructure projects. Understanding its various facets helps clarify how financial systems operate and contribute to economic stability and growth.

Understanding Finance Disciplines

The expansive field of finance is structured into several distinct disciplines, each with a specific focus on managing financial resources.

Corporate Finance

Corporate finance primarily addresses how businesses secure funding, manage their capital structure, and make investment decisions to enhance shareholder value. It involves strategic planning, analyzing potential projects, and determining the optimal mix of debt and equity financing. This discipline also includes managing working capital and distributing profits.

Investment Management

Investment management focuses on the professional management of various securities and assets to meet specific financial goals for clients. This involves developing strategies to grow wealth, preserve capital, or generate income over time. Professionals in this area analyze market trends, evaluate investment opportunities, and construct diversified portfolios tailored to client risk tolerance and objectives. The scope includes managing mutual funds, hedge funds, pension plans, and individual investment accounts.

Personal Finance

Personal finance addresses the financial decisions and activities of individuals and households. Its objective is to help people manage their income, expenses, and savings to achieve personal financial goals, such as buying a home, funding education, or planning for retirement. This discipline covers budgeting, debt management, insurance planning, investment planning, and estate planning, providing a comprehensive approach to individual financial well-being.

Public Finance

Public finance examines the role of government in the economy, specifically how public entities generate revenue, manage expenditures, and handle debt. This discipline explores taxation policies, government budgeting processes, and the allocation of public funds for services like infrastructure, education, and public safety. Public finance aims to ensure the efficient use of public money and contribute to economic stability and social welfare. It also considers how government financial decisions can influence income distribution and market efficiency.

Risk Management

Risk management is a cross-cutting discipline focused on identifying, assessing, and mitigating financial risks. Its goal is to minimize potential financial losses and uncertainties for individuals, businesses, or government entities. This involves analyzing exposure to market, credit, operational, and other financial threats, then developing strategies to manage these exposures. Professionals use statistical methods and financial theory to evaluate the probability and cost of adverse events, helping organizations make informed decisions to protect assets and ensure stability.

Common Finance Roles and Activities

Within these finance disciplines, various professionals undertake specific activities to achieve financial objectives.

Financial Analyst

A Financial Analyst typically gathers and analyzes financial data to assess investment opportunities or evaluate business performance. They often build complex financial models, forecast future performance, and prepare reports and presentations to communicate their findings and recommendations to stakeholders.

Investment Banker

An Investment Banker works on capital-raising activities and mergers and acquisitions (M&A) for corporations and governments. Their tasks involve preparing detailed financial analyses, valuation models, and pitch books to attract investors or advise on deal structures. They facilitate transactions such as initial public offerings (IPOs), bond issuances, and corporate restructuring.

Portfolio Manager

A Portfolio Manager is responsible for constructing and managing investment portfolios for clients, aiming to achieve specific return objectives within defined risk parameters. These professionals make buy, sell, and hold decisions for various securities, continuously monitoring market conditions and economic indicators. They conduct in-depth research, rebalance portfolios as needed, and communicate performance and strategy to clients or fund investors.

Financial Advisors

Financial Advisors work directly with individuals to help them manage their personal finances and achieve long-term financial goals. Their activities include assessing a client’s financial situation, developing personalized financial plans, and providing advice on budgeting, investment products, retirement planning, and insurance needs. They guide clients on topics like contributing to tax-advantaged accounts and help navigate complex financial decisions.

Trader

A Trader executes buy and sell orders for financial instruments like stocks, bonds, currencies, or commodities, either for their firm or on behalf of clients. Traders constantly monitor market prices, news, and economic data to identify potential trading opportunities and manage risk. They make rapid decisions and utilize specialized trading platforms for timely and accurate execution of trades.

Risk Manager

A Risk Manager identifies, assesses, and mitigates financial and operational risks that could impact an organization’s assets or earnings. Their responsibilities involve analyzing data to measure exposure to various risks and developing strategies to limit potential losses. They also ensure compliance with regulatory requirements and contribute to contingency planning.

Actuary

An Actuary specializes in analyzing the financial costs of risk and uncertainty, particularly in the insurance and pension industries. They use advanced mathematical, statistical, and financial theories to estimate the probability and economic impact of future events. Actuaries design and price insurance policies, pension plans, and other financial products, ensuring their long-term financial soundness and regulatory compliance.

Chief Financial Officer (CFO)

The Chief Financial Officer (CFO) is a top-level executive who oversees all financial activities of a company. Their duties include financial planning and analysis, managing cash flow, and ensuring accurate financial reporting. CFOs play a strategic role, advising the CEO and board on capital structure, investment decisions, and long-term financial strategy.

Skills and Education for Finance Careers

A successful career in finance requires a combination of specialized hard skills and adaptable soft skills.

Hard Skills

Hard skills are technical abilities directly applicable to financial tasks, including strong analytical thinking and quantitative analysis to interpret complex financial data. Proficiency in financial modeling is also highly valued. Technological proficiency with spreadsheet software, financial databases, and analytical tools is fundamental for data manipulation and reporting.

Soft Skills

Beyond technical expertise, soft skills are equally important for finance professionals. Effective communication, both written and verbal, is essential for presenting complex financial information clearly to diverse audiences. Problem-solving abilities allow finance professionals to identify issues, analyze potential solutions, and develop strategies to address financial challenges. Attention to detail ensures accuracy in financial reporting and analysis. Ethical judgment and integrity are also foundational, as finance professionals handle sensitive information and make decisions that can affect many stakeholders.

Education

Educational pathways to finance careers typically begin with a bachelor’s degree in fields such as finance, economics, accounting, or business administration. These programs provide a foundational understanding of financial principles, markets, and analytical techniques. Many roles may benefit from or require advanced degrees.

Certifications

Professional certifications further enhance career prospects and demonstrate specialized knowledge. The Chartered Financial Analyst (CFA) designation is recognized globally for investment professionals, covering investment tools, asset valuation, portfolio management, and wealth planning. Earning the CFA charter requires passing rigorous exams. The Certified Financial Planner (CFP) certification focuses on personal financial planning, requiring specific coursework, a bachelor’s degree, and a comprehensive exam. For those in accounting roles within finance, the Certified Public Accountant (CPA) license is a common credential, demonstrating expertise in accounting principles, auditing, and tax regulations.