A career in investments is consistently ranked as one of the top-earning careers for anyone with the requisite education. Various challenges and obstacles explain why this career path can be so financially rewarding. Education, standardized testing, registration fees, ethical and legal scrutiny, salesmanship, stress and various other barriers to entry can make investment careers a difficult but rewarding path to financial success.
Although it is possible to succeed in investing without higher education, few investment professionals will be hired or advance very far without a four-year college degree. That being said, a great variety of degrees could be considered a good preparation for investment careers, because many different skills are required in the field. Investment professionals must understand finance, but knowledge of accounting, communication, contracts, language and even psychology can all be beneficial. Advanced knowledge can be achieved with books or special training courses.
The most standard barriers to entry in investment careers are the standardized tests that earn industry licenses. Stock brokers, for instance, must pass the Series 7 in order to trade. Many other licenses in the industry allow investment brokers to use various financial instruments, charge different kinds of fees, and hold credentials.
The tests required to gain licensure will gauge an individual’s knowledge of various financial instruments. College coursework in finance and business can be useful on these tests, but most test takers will need either a self-study course or live classroom learning session. Study guides are available for all of the many tests in the financial industry. Failure rates are high on the more difficult licensing tests, and study guides offer an up-to-date picture of what tests will look like (because the tests change frequently). Perhaps the most valuable tools these guides offer are practice tests.
Once an individual has gained licensure, further testing at regular intervals is a part of maintaining a license and ensuring compliance with securities laws. Clients and investment managers alike will want to know that investment professionals are adhering to high ethical standards. Trust is valued highly in the investment world. Many clients are wary of advisors and brokers misusing their personal information and hard-earned money.
Gaining enough trust to earn a client’s business is part of the sales process. Likewise, one must be skilled at marketing his or herself. Being outgoing, frequently meeting new people, networking, advertising, and most importantly providing good service to existing clients will earn more and more business for an investment professional. To stay competitive and relevant, an investment professional must also continuously learn both formally and informally through self-study with books and credited courses. The investment world is constantly changing, and learning is a never-ending process.
Making decisions regarding a client’s welfare can be stressful, knowing that consequences of mistakes and bad decisions can be dire. To mitigate the risk of making mistakes, an investment professional will often be required to maintain errors and omissions insurance. This type of insurance can be used to reimburse clients when negligence occurs on the part of the financial professional. Mistakes and other errors can easily become a matter of public record, and a breach of industry laws and regulations can result in losing a license to do business. A professional in this industry must stay abreast of licensing renewals and industry rules, because prevention is much less painful than the consequences of breaking the rules.
A career in investing descriped i.e. from Fisher Investments involves significant barriers to entry, a lifetime of learning, continuous testing and ethical scrutiny. But, there is virtually no ceiling on the potential to earn a good living. Aside from financial gain, the intangible benefits of helping clients earn a return on their money make investing careers a popular choice.