Finance vs Consulting

Careers in the finance and consulting sectors hold great appeal to many young graduates preparing to enter the job market. Both jobs offer great perks like interesting work, travelling and top salaries. Both sectors also attract the best talent which means that one’s colleagues will not only be interesting to work with but also serve as propellers for growth and development. 

While they bear the aforementioned similarities and more, there are however important differences between these two professional tracks that you should be aware of before you commit to one or the other. We will start with definitions of each career, will then talk about various options for both careers and end the discussion with the top firms in each sector.

What is Finance? 

The simple definition of finance is it’s the management of large amounts of money, especially by governments or large companies. It could also mean the process of raising funds or capital for any kind of expenditure. It’s the process of acquiring various funds in the form of credit, loans, or invested capital and channelling them to those economic entities that most need them or can put them to the most productive use. Thus a person who seeks a career in finance will have to deal with money in one form or the other. Your career may deal with the management, creation, and study of money and investments

What is consulting?

Consultancy can be simply defined as being engaged in the business of giving expert advice to people working in a professional or technical field.  A consultant is called to give expert advice to other professionals. As a whole, consultants are professionals who specialize in helping clients resolve their organizations’ most pressing problems, issues, or projects. They work across a vast range of roles and industries and share their gift of analyzing information and identifying the best path for each business/organization to take.

Career Options for Finance 

The career options available to you if you choose a finance career are quite vast. Let’s take a glance at the various career options in finance available for you:

Investment Banking

To some, this is the most prestigious finance career option under finance. As an investment banker, you will work with investment banks which are essentially consulting firms that provide advice on initial public offerings (IPOs), mergers, stock repurchases, and corporate refinancing. As an investment banker, you will help clients arrange loans whether it is a term loan or cash credit loan, arranging equity, IPO funding, etc. Investment bankers need to have financial modelling skills, the ability to see the big picture, and the tact to work with clients to make a career in finance.

Accounting

Accounting is the field of communicating the financial information of a business to different stakeholders like managers and shareholders. Your main responsibility as an accountant will be recording and monitoring the flow of money in your client’s organisation. As an accountant your work will involve reviewing and handling financial system data, maintaining financial schedules and journal entries, and keeping track of where a firm’s obligations are. The most notable firms in this field are the ‘Big Four’. In the UK, to practice as an accountant and act on behalf of clients, one needs to register with Her Majesty’s Revenue and Customs (HMRC).

Financial Planner

A financial planner is a qualified financial advisor who advises clients on investments, insurance, tax, retirement and estate planning. In the UK, there’s also the possibility of going a step further by being a Certified Financial Planner (CFP). CFP refers to the certification awarded by the Chartered Insurance Institute. A CFP designation means that you are among the best and most qualified financial planners in the UK. It is the gold standard within the profession.

Other areas of finance that are popular and you can enjoy a satisfying career include operations, Fintech, actuary, risk management, private equity and corporate finance. 

Career Options for Consulting

The most popular is the first one we’ll look at.

Management Consulting

Management consultancy is when the management of an organization seeks the expertise of external people to manage their organization effectively, to improve certain metrics. As a management consultant, you will help organisations to solve issues, create value, maximize growth and improve business performance. This industry is quite lucrative; it was estimated to be worth $891.88 billion in 2021.

Financial Consulting 

As a financial consultant, you will be called by your clients to provide an independent, expert opinion on proposed business plans or/and decisions. Financial consultants are usually called upon by large corporations, government agencies and individual clients. Financial Consultants can be employed for both business and personal purposes. When being employed in a business setting, the client has a specific plan they want an outside opinion about. The role of the consultant in this setting is to review the proposed plan and identify strengths and weaknesses. Firms like BearingPoint and KPMG are known for their excellent financial consultancy practice.

Strategy Consulting

Strategy consulting involves when an organization contracts a third party to offer an outside unbiased expert opinion or strategy concerning their issues. The main responsibility of a strategy consultant is to help the client to reach a strategic answer by carrying out an in-depth analysis of the contracting firm’s business and objectives. If you want to become a great strategy consultant you will need to learn how to employ a holistic look, look at the bigger picture and assist with the long-term vision of a company. McKinsey, Bain and BCG (MBB) are firms that are known for their strategy consulting practices.   

Education for Both

For a career in the financial services sector, you should be good with numbers, active in analysis and have the capability to convert the number data of the organization into valuable information that would help it in its growth. Thus a bachelor’s degree in courses like finance, accounting, economics, statistics, mathematics, business studies and other related fields will take you quite far. You could be required to take further courses depending on various factors: on the sector of finance you want to specialize in if the firm asks for one, and you want a faster career progression. Education is quite important as a good amount of the skills you’ll need for the career will be sharpened and developed through professional studies and expert training on the subject.

Meanwhile, for a career in Management Consulting, the above-mentioned degrees for finance will suffice because it’s quite rare for there to be a degree specifically designed for the consulting roles. Thus a bachelor’s degree in business administration, marketing, human resources, business management, accounting and finance will work. However, if you know the area of consulting you want to pursue a career in then you might want to get a degree in that area. For example, if you are performing management consulting for IP companies, a degree in intellectual property law will be useful.

Skills Needed For a Financial Career

While the skills you will need for a successful career will vary in some cases because of the firm you are working in and the sector; there are certain skills synonyms with a financial career. For a financial career you’ll need to master the Microsoft office products, that is, you should be very good with Excel, PowerPoint, and Word. Furthermore, you’ll need to develop specific technical skills, such as accounting, financial statement analysis, valuation, sensitivity analysis and financial modelling. Great emphasis is placed on financial modelling in the finance world.

Skills Needed for a Successful Consulting Career

In one of our related articles, we wrote that there are four major skills consulting firms look for in potential consultants; we shall restate some of them here. First, you need to hone your communication skills. This is because as a consultant the fulcrum of your role is to share/pass your knowledge to your clients to help their businesses achieve their aims for employing you. Tied with this skill is an interpersonal skill. Your ability to interact effectively with clients and your ability to employ a creative approach will take you far. You also need to be good with Microsoft Office products, especially PowerPoint.

Salary of Both Careers

Though the pay you will get in both careers is dependent on the area of each career you want to specialize in it is common knowledge that a career in finance is more lucrative than a career in consultancy. For example, let’s use a popular area of each career as examples: Investment banker and Management consultant. 

The average salary for an Investment Banker in the UK is £60,361 while the average salary for a Management Consultant in the UK is £49,631. These salaries may also be affected positively and negatively depending on the status of the company you are with, your experience and your qualifications. For both careers, the higher the qualification the more you can earn. 

The Top Finance and Consulting Firms

For a financial career, you cannot go wrong with Goldman Sachs, JP Morgan, Morgan Stanley, Barclays, HSBC, Royal Bank of Scotland, Wells Fargo, The Big Four – PwC, EY, KPMG and Deloitte and Lloyds. In the consulting world, the top tier firms are McKinsey & Company (McKinsey), Boston Consulting Group (BCG) and Bain & Company (Bain) which are collectively known as the Big Three or MBB. They are the top guns and the most prestigious in their industry. Consultants who have one of these firms’ names on their resumes generally enjoy a list of many exciting post-consulting exit opportunities. 

Some of the above firms are hybrids in the sense that they are good at providing excellent opportunities in both careers. A great example is The Big Four accounting firms which are well known as the biggest firms in the accounting world but have also developed great consulting practices that rival the traditional consulting firms.

Conclusion

One thing for sure is that both careers are demanding in nature and would require great effort if you want to make a success of the career. But you can rest assured that whatever field you choose, there will be real potential to earn a ‘killing’ and engage in challenging work. Thus, to conclude, you can choose between any of the two careers – finance or consulting – since both are great career options. As always, choosing a career depends entirely on your abilities, natural skill sets, and your interest. 

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Charles is a writer, practising lawyer and personal trainer who loves learning and developing himself. He graduated from Middlesex University, London with eight first-class grades in the second and third years of his law degree, and received a postgraduate offer from Cambridge University. He loves strength training, boxing and encouraging people to succeed in their pursuits (legal ones)

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