If you’re thinking about pursuing a master’s in finance, one of the highest paying master’s degrees, you might think about your strengths and skills. Success in the field of finance requires a blend of abilities, including mathematical aptitudes, an understanding of rules and law, and the ability to derive meaning from looking at numbers. Neither math skills nor knowledge of legal regulations are necessarily the most important thing for success in the finance world, but both pieces of the puzzle are crucial for achieving the goal of analyzing financial data to inform real-world financial decisions.
Quantitative Skills in the Finance World
Finance is definitely a numbers-heavy field. Math is important, but it isn’t advanced levels of abstract mathematics that you need to know to succeed in this field. What’s more important is a strong grasp on applied mathematics, specifically a field sometimes referred to as financial mathematics, quantitative finance or even financial engineering.
If you look at the curriculum of a master’s in finance degree program, you’ll notice that advanced calculus, trigonometry and geometry aren’t part of your degree requirements. The math-related courses you will take tend to be more specialized and more relevant to the field of finance, including classes in financial modeling, financial economics and econometrics. Even most undergraduate finance programs don’t require students to take an extraordinarily heavy load of math classes, instead asking aspiring finance professionals to take just one introductory college-level calculus course and a class in business statistics.
The main reason math skills matter for financial analysts is to help you estimate the value of financial investments, according to the United States Bureau of Labor Statistics (BLS). For personal financial advisors, math skills are needed to assess portfolio growth or loss.
Analytical Abilities for Finance Professionals
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Analysis is an important part of success in the field of finance, whether or not your job title actually includes the word “analyst.” Although you might associate analytical skills with math skills, thinking primarily of statistical analysis methods, that isn’t always the case. Aside from performing mathematical and statistical analyses of numerical data, finance professionals also need to have strong reasoning skills to understand what the numbers actually mean in terms of decision-making. All the data in the world won’t help you if you can’t translate numerical information to positive financial decisions.
Once you have analyzed the performance of investment opportunities, you have to interpret that information correctly to decide whether an opportunity is a good fit for your company or client. This is more complex than it may sound, because you have to take into account different timelines and levels of comfort with risk. An investment that makes sense for a client who is willing to take more risks and has a longer timeline to make up losses may be a poor choice for a client with a conservative portfolio who is getting ready to start dipping into their retirement account.
The best finance professionals have reasonably strong math skills but also have the ability to consider these different factors, both quantitative and qualitative, in their analyses of financial data and reports.
Understanding Rules, Regulations and Business Law
The field of finance is heavily regulated. There are financial regulations on banks and other financial institutions that affect how they are allowed to operate. There are rules and license requirements to sell different kinds of financial products, such as securities, according to the BLS. Certain investing moves, like insider trading, are illegal.
Because there are a lot of regulations in the finance world, understanding what the rules are and how to comply with them while doing your job effectively is essential for finance professionals. Often, the coursework in a master’s in finance program will touch on topics of regulations and compliance with classes in business ethics, internal auditing, financial regulation and ethics and multinational financial management courses that examine tax regulations in different countries. Of course, regulations are subject to change as new laws are enacted and new legal cases are decided, so even after you graduate, you still need to keep up to date on the latest developments that could affect your career.
For most finance professionals, understanding laws related to finance is an important part of doing their jobs but not the primary purpose of their work. However, if you’re especially interested in financial regulations, you could pursue a career as a financial examiner.