Best Colleges for Finance and Wall Street
Aspiring Wall Street wolves, daydreaming about donning fancy suits and raking in massive annual bonuses from the confines of their high school guidance counselor’s office have many big decisions ahead of them. Among the most pressing issues are where to attend college and what major to pursue. Yet, there are also other more long-term considerations worth pondering such as: what working in finance actually entails, salary expectations, the job outlook in the field, and what further educational pursuits may await them down the line. In the following article, we will explore everything that future financial analysts and would-be Wall Street titans should be investigating prior to starting their collegiate careers.
Do I need to attend a prestigious undergraduate school?
Teens eyeing a career on Wall Street often ask the question, “Does it matter where I go to college?” It’s a fair query as the barriers to entry into many industries can be hurdled through a solid academic performance (at any four-year university), possession of a winning personality, and skills in areas like writing, quantitative analysis, and analytical thinking. However, this is not the case for those entering the world of high finance.
If you are looking to land a job at a top investment bank or hedge fund, attending an elite undergraduate institution is pretty close to a prerequisite. Ultra-competitive institutions with large alumni bases located in the Northeastern United States provide students with a particular edge. The ten most represented U.S. schools at high-powered firms like Blackstone, Barclays, Goldman Sachs, Credit Suisse, or Deutsch Bank includes Ivies like Penn, Columbia, Cornell, Harvard and Princeton as well as NYU, Villanova, and Boston College. Other strong but not hyper-selective schools such as Baruch College and Rutgers University are also well-represented in the industry, in part due to their sheer proximity to Wall Street. For a full list of College Transitions Top Wall Street Feeder Schools click here.
Which college major should I choose?
You don’t need to earn a degree in Finance to land a job as a financial analyst. Investment banks and other Wall Street firms are looking for evidence of accomplishment in a difficult course of study, not a credential from one specific major. Much of the knowledge and skills required to succeed as a financial analyst will be acquired through on-the-job training. Therefore, potential employers will be assessing your ability to learn, rather than your ability to memorize Excel functions. Of course, majoring in Finance will not hurt you, but there are a number of other majors that could prove equally appealing. For example, economics, math, engineering and most science-related majors will endow you with the analytic and quantitative skills needed to impress any Wall Street firm.
What exactly does being a financial analyst entail?
Most teenagers will, understandably, be more focused on getting into the college of their dreams than exploring what their future occupation actually entails on a day-to-day basis. Of course, this is a common phenomenon that affects most American teens; an affliction that at least partially accounts for why so many adults report a lack of satisfaction with their careers. In fact, a majority of financial analysts in many recent surveys report a high level of dissatisfaction with their work life. Thus, it is important to examine what a financial analyst actually does before committing to it as a course of study and potential career.
Most analysts work for brokerage houses, banking or credit institutions, or insurance brokerages. In general, the daily work of a financial analyst includes carefully studying global financial trends for the purpose of accurately predicting future value of stocks, bonds, and companies. This is accomplished, in part, through reading voluminous amounts of research and news material as well as through financial modeling and analysis.
Be prepared for long hours
Seventy to eighty hour weeks are commonplace, especially for those in their first few years in the field (hence the dissatisfaction expressed in the previously referenced surveys). In addition to your work hours, it benefits young analysts to network with potential clients as well as others in the field during their limited free time. Do the math, and it’s easy to see why work/life balance can be a great challenge in this field. Similar to those starting in the legal field, young financial professionals report a higher level of stress and fatigue than peers in less all-consuming lines of work. Symptoms such as depression, anxiety, weight gain, and other health issues are common.
Fortunately your long hours do not go uncompensated. Salary expectations for financial analysts are quite high, especially when considering that base salary doesn’t tell the whole picture. In fact, analysts at many private firms can more than double their base salary through performance bonuses.
The average base salary for financial analysts nationwide is $84,000 with a bonus of $20,000+ for an overall median take-home pay in the six figures. Successful analysts rise to positions such as associate, vice president, director, and managing director which come with astronomical leaps in remuneration. Entry-level jobs at top Wall Street hedge funds pay an average salary in excess of $150,000 with bonus that can actually be higher than the base salary. It is actually possible to make over $300,000 in your first year at a big-time hedge fund.
Financial analyst positions are expected to grow at 6%, as fast as the average occupation, through 2030. However, competition for these job openings is sure to remain fierce. The industry is so cutthroat that many Wall Street banks and private equity firms begin recruiting top-level prospective candidates 18 months before a position even becomes available.
Unlike many other fields, lucrative entry-level employment is a realistic possibility in the financial industry. Still, nearly half of financial analysts move on to pursue MBAs within their first five years of employment. Others pursue professional certifications and licenses through less formal educational means.
Many entry-level financial analysts spend their evenings and weekends studying to become a Chartered Financial Analyst (CFA), a designation awarded to qualified individuals by a non-profit organization called the CFA Institute. To earn the charter, you must have four years of work experience in the financial industry, hold a bachelor’s degree, and pass a Level I, Level II, and Level III test. Each exam takes a minimum of 300 hours to prepare for and pass rates are low. On average, 26% of test-takers pass the Level I exam, 29% pass Level II, and 39% pass Level III.
Those who persevere emerge with an impressive credential that can lead to promotions, raises, and increased desirability for job-seekers on the open market. Analysts interested in entering certain specialty fields will first have to earn licensure in those areas. For example, anyone wishing to buy or sell securities must first demonstrate proficiency on the Series 7 exam administered by the Financial Industry Regulatory Authority. The vast majority of states will also require would-be securities agents to also pass the Series 63, which covers state laws and regulations.
College Transitions’ Bottom Line
Entering this field at the top level is greatly aided by attending a highly-selective undergraduate school and pursuing a rigorous major. Your work as a financial analyst will entail long hours in a highly competitive environment. Those with the right personality and work-ethic may end up “occupying” Wall Street for many years as part of this fast-paced, high-stakes, and lucrative profession.
A licensed counselor and published researcher, Andrew’s experience in the field of college admissions and transition spans two decades. He has previously served as a high school counselor, consultant and author for Kaplan Test Prep, and advisor to U.S. Congress, reporting on issues related to college admissions and financial aid.