Finance is a very interesting domain. There are many aspiring students that go through years of education in Finance to obtain jobs in Investment Banking, Private Equity and M&A. As you can imagine, those are some of the best paying sectors.
There is a perception of Finance that we want to break. It is perceived that Finance is extremely analytical and only involves numbers and models. While that is mostly true, there are multiple dimensions to finance. And in today’s world, those are highly relevant. Let us look at some of the key traits required in Finance today
Finance is not just math, it requires people skills too. Consider the role of an analyst in a Venture Capital industry. When you deal with investments in VC, you are required to be creative. Information is not available at first sight. Financial analysts in VC have to engage directly with startups and scaleups, in addition to their financial modelling job profile.
The concept of creative accounting is becoming mainstream today, unfortunately. Creative accounting is the process of designing financial statements and categorizing metrics such that the net result, i.e. profits, are as positive as they can be. In some case, creative accounting has bordered on illegal and cost companies millions of dollars in lawsuits. Financial analysts have to be aware of this and raise potential red flags.
By presentation, we don’t just mean designing a kickass PowerPoint and communicating it to stakeholders. Financial analysts and managers often have to present to a non-financial audience, meaning that they have be crisp, concise and simple enough whilst presenting facts. This required significant communication skills.
Creativity is crucial in finance. We will use the case of deal structuring in this case. Beyond financial modeling skills, structuring a deal requires an ability to grasp tons of concepts and bring them all together to create the ideal structure. This is a different kind of creativity, though, and can be learned and assimilated.
Finance and accounting are sectors that are constantly disrupted by technology. And yet, in most companies, analysts use outdated tools. As the years pass by this will change and finance professionals need to be aware of technological changes happening in the sector.
So, as you can see, finance is like every other function when it comes to skill development. Job descriptions for finance professionals seem to be evolving, with more skills required from such professionals. Best to be prepared!