When Should You Quit the Financial Industry?
Have an interest in finance or investments? You will likely be joining the financial industry.
The hottest jobs includes Fund Manager, Private Banker and Investment Banker. Though chances of you getting in are extremely low.
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Many get into roles such as Personal Banker, Priority Banker, Financial Advisor, Treasury Specialist, Insurance Specialist, Investment Advisor and Assistant Private Banker. There are a lot more that gets into middle office roles such as operations, settlements, KYC (Know-Your-Client) and compliance.
Getting in is easy, but what about getting out? When should you quit the financial industry?
No. 1 Is there a good time to quit the financial industry?
If you already have a well-connected circle in the financial industry, quitting is rarely on your mind. Especially when you are up & rising or in the elite circle where relationships are strong, and opportunities would be abundant.
Be it a downturn or crisis, banks and financial institutions continue to form a core foundation to any economy, so getting a role is not too difficult unless there are numerous mergers.
If you have made your money, found the working hours too insane, or want to start a career in another industry, anytime is actually a good time to quit the industry.
No. 2 How about quitting the financial industry before the downturn is here?
If anyone could guess when the next downturn is here, most would be rich simply by shorting the market.
Tell-tale signs of a downturn in the financial industry:
- Reduced lending in banks
- Increasing conservatism in internal credit approval
- Increasing attention only on large deals
- Tightening of spending policies (travel, meals, claims)
- Less business initiatives and more operational initiatives
- Less sales incentives / bonuses
- Often misreading local / regional / global economic signals
- Benign stock market and sentiments
- Increasing debt expense to income ratio
Do you believe a downturn is coming and what if you are wrong? What if you leave too early or too late?
No. 3 What if a crisis comes suddenly?
In the 1990s, when computer came in, many traders lost their jobs. With the development of online trading in early 2000s, many stockbrokers suffered significant drop in income. The impact became greater in the late 2000s as the advancement of mobile devices enabled low-cost and faster trading and information access, further diminishing the importance of stockbroker / traders.
Inevitably, banks and financial institutions always shrink and expand with economic downturn and growth.
- List of Economic Crisis Since 1900 – 2015
- Bloomberg: The European Debt Crisis Visualized
- Bloomberg: The Russian Crisis Explained in Two Minutes
- ABC News: Grexit 2011; The Greek Debt Crisis Explained
- The Mexican Peso Crisis of the Mid-1990s
- The 1970s Energy Crisis: Demand Exceeds Supply – The Oil Crisis
No. 4 I have a portfolio of clients, wouldn’t I be safe?
If you are serving institutional clients, your job security is highly dependent on your superior, since you don’t own the clients.
If you are managing a portfolio of individual clients, your job security is dependent on how sticky the clients are to you or to your financial institution.
Regardless, you will always be vulnerable since you are not able to operate (even with the best skills & knowledge) without a financial institution’s platform. Your clients’ portfolio might also decreased drastically, depending on the assets allocated. Additionally, your clients might pull out the funds entirely for business or investment purposes.
For Wealth & Investment Professionals, joining non-banks platform such as independent financial firms, asset management firms or insurance companies gives you more ownership of clients, making your job dependency relative to your ownership of your clients.
No. 5 I want to be in the thick of action – investments, stocks, bonds, foreign exchange, interest rates etc.
The only platforms that allow you to practice all these are in Brokerages, Retail Banks, Private Banks, External Asset Managers and Hedge Funds.
This also means you are susceptible to the ups and downs of the economy. You also should not be quitting the financial industry, since the non-financial industry rarely offers you such opportunities unless you are managing the corporate treasury for companies and Multi-National Corporations.
No. 6 Should I make my money quickly during good times and quit the financial industry?
That’s what a good financier does – knowing when to sell / quit.
However for Wealth & Investment professionals, the duty of care, fiduciary duty and ethics as commonly cited in regulations and professional certifications such as Chartered Financial Analyst (CFA) presents a huge dilemma to any practitioners.
Advise clients to liquidate and sell accelerate or help realise the prophecies. Make lots of money and quit means you might had placed your self-interests first before clients – you ain’t selling vacuum cleaners or general insurance policies that could be effectively used in daily life, resold or protect general risks. You are managing money / assets which could be your clients’ entire life-savings.
On the other hand, neither would your financial institution provide a duty of care to you during bad times.
No. 7 Really, when is a good time to think about quitting the financial industry?
- Before the Economic Boom is over
- When being taken over is a constant threat
- When your job might be obsolete
- When fees are dropping too much for the business to be sustainable
- When returns are extraordinarily low
But if your judgement is wrong?
No. 8 Can I return to the financial industry?
Yes, but it takes time. The the financial industry is very fast-pace. Every second, new economic data and change in stock price could cost millions and billions of value.
Many cannot take the pressures and demands of the global financial markets, face demanding clients and ever-changing regulations and procedures.
Add on the pre-requisite of being fundamentally strong in numbers, finance and perhaps soft-skills (if client facing) means you might excel much easier in other industries.
What do you think? When should you quit the financial industry? When is the best time to quit? Or should you even think about quitting?
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