Finance vs. Accounting: Which is the Better Career?
On the surface, finance and accounting seem like very similar, even virtually interchangeable, fields. Yet from a career perspective, they can often be quite opposite. Finance is a highly competitive, highly lucrative world, with entry-level investment bankers who actually start out making over $100,000 a year. And it’s a diverse world. Many people who go into finance never get that corner office but end up instead working in advising, real estate, or any one of a dozen areas that pay less than Wall Street. Accounting is a less exciting field with much less variance in salaries. But it’s a valuable and easily marketable skill, and it comes with fantastic job security. If you want to work in business but aren’t itching to get aggressive, accounting is a great opportunity. If you really want to play in the big leagues, finance is the right step.
1. Duties and Responsibilities
The best way to understand the difference between accounting and finance is simply to look at how they deal with a company’s money. It’s common for a business accountant and a company’s financial analyst to work closely together, because finance managers need an accountant to gather information. Accountants deal with financial history. They keep track of cash flow – payroll, transactions, investments, and everything in between – and they see how well the business is doing financially. They also deal with audits, tax paperwork, and other financial obligations. Financial analysts will take this information and make projections. They come up with strategies for the company to make more money and to minimize costs. Of course in finance, you can advise corporations or individuals. You can also end up working in investment banking, where you help a company raise money through trading on the stock market.
2. Passing The CPA
Aspiring business professionals often wonder what the difference is between the certification exams for accounting and finance, and it’s really a difference that mirrors the career paths. To become a Certified Public Accountant, you need to meet both educational and experience requirements and pass a four-part CPA exam. The exam is extremely difficult – the pass rate is about 50 percent. Many people prepare for months and still end up taking it multiple times, but there’s really no substitute for having your CPA in the accounting world. While there are dozens of different certifications you can get in accounting, the CPA is the first and most important. According to the Bureau of Labor Statistics, there are about 2 million certified accountants working in the United States.
3. Passing the CFA
The finance version of the CPA is the Chartered Financial Analyst exam. It’s widely considered to be even more difficult, with a pass rate averaging at 35-40 percent. The CFA Institute, which offers part one of the exam twice a year and parts two and three only once a year, recommends that test-takers prepare 20 hours a week for six months. The test covers everything a financial professional does, from reporting and analysis to investments and planning. Like the CPA, there are educational and experience requirements for taking the exam, with the experience requirements much higher depending on the state. The Institute hands out an average of 6,000 certifications every year, which is minute considering the exam is available all around the world.
Whether or not you choose accounting, finance, or a combination of both for your career, you should focus on what kind of role you want to play in the corporate world. Can you handle the long hours and stiff competition it takes to earn millions? Or do you want to perform an invaluable function and ensure you’ll always be employed in a high-paying position, or even find success as a freelancer? The type of career you can have in these fields varies wildly no matter where your talents or specialties lie. It’s up to you to carve the right path.
Author Brett Harris recommends checking out the Top 10 Online Bachelors in Finance Programs before choosing a college to attend.
Category: Business
