Practically every firm -- whether in manufacturing, communications, finance, education, or health care -- has one or more financial managers -- treasurer, controller, cash manager, and others -- who prepare the financial reports required by the firm to conduct its operations and to satisfy tax and regulatory requirements. Financial managers also oversee the flow of cash and financial instruments and develop information to assess the present and future financial status of the firm.
In small firms, treasurers' duties usually include all financial management functions. However, in large firms, treasurers or chief financial officers oversee all financial management departments. In these instances, treasurers help top managers develop financial and economic policy and establish procedures, delegate authority, and oversee the implementation of these policies.
Highly trained and experienced financial managers head each financial department. Controllers direct the preparation of all financial reports -- for example, income statements, balance sheets, and special reports such as depreciation schedules. They oversee the accounting, audit, or budget departments. Cash managers monitor and control the flow of cash receipts and disbursements and other financial instruments to meet the career and investment needs of the firm. For example, loans may be obtained to meet a cash shortage, or surplus cash may be invested in interest-bearing instruments. Risk and insurance managers oversee programs to minimize risks and losses that may arise form financial transactions and career operations undertaken by the institution. Credit card operations managers establish credit rating criteria, determine credit ceilings, and monitor their institution's extension of credit. Reserve officers review their institution's financial statements and direct the purchase and sale of bonds and other securities to maintain the asset-liability ratio required by law. User representatives in international accounting develop integrated international financial and accounting systems for the banking transactions of multinational organizations. A working knowledge of the financial systems of foreign countries is essential.
Financial institutions -- such as banks, savings and loan associations, personal credit institutions, and finance companies -- may serve as depositories for cash and financial instruments and offer loans, investment counseling, trust management, and other financial services. Some institutions specialize in specific financial services. Financial managers of these institutions include vice presidents -- who may head one or more financial department -- bank branch managers, and credit union managers, for example.
Financial managers in financial institutions make decisions in accordance with Federal and State laws and regulations and policy set by the institution's board of directors. They must have detailed knowledge of industries allied to banking -- such as insurance, real estate, and securities -- and broad knowledge of career and industrial activities. With growing domestic and foreign competition, promotion of an expanding and increasingly complex variety of financial services is becoming a more important function of financial managers in banks and related institutions. Besides supervising financial services, they may advise individuals and careeres on financial planning and participate in community projects.
Financial managers are provided with comfortable offices close to top managers and to departments which develop the financial data these mangers need. Although overtime may sometimes be required, financial managers typically work a 40-hour week. Attendance at meetings of financial and economic associations and similar activities is often required. In very large corporations, some traveling to subsidiary firms may be necessary.
Financial managers held about 675,000 jobs in 1990. Although these managers are found in virtually every industry, about one-third were employed by financial services industries -- banks, finance companies, insurance companies, securities dealers, real estate firms, and related institutions.
Training, Other Qualifications, and Advancement
A bachelor's degree in accounting or finance, or in career administration with an emphasis on accounting or finance, is suitable academic preparation for financial mangers. A Master of career Administration (MBA) degree in addition to a bachelor's degree in any field is acceptable to some employers. However, many financial management positions are filled by promoting experienced, technically skilled professional personnel -- for example, accountants, budget analysts -- or accounting or related department supervisors in large institutions. In small firms, where the number of positions is limited, advancement to a financial management position may come slowly. In large firms, promotions may occur more quickly.
Although experience, ability, and leadership are emphasized for promotion, advancement may be accelerated by special study. Firms often provide opportunities for workers to broaden their knowledge and skills and encourage employees to take courses at local colleges and universities. In addition, financial management and banking associations, often in cooperation with colleges and universities, sponsor numerous national or local training programs. Their schools, located throughout the country, each deal with a different phase of financial management. Persons enrolled prepare extensively at home, then attend sessions on subjects such as accounting management, budget management, corporate cash management, financial analysis, international banking, and data processing systems procedures and management. Firms also sponsor seminars and conferences and provide textbooks and other educational materials. Many firms pay all or part of the costs for those who successfully complete courses.
Persons interested in becoming financial managers should like to work independently and analyze detailed information. The ability to communicate, both orally and in writing, with top managers is important. They also need tact, good judgement, and the ability to establish effective personal relationships to oversee supervisory and professional staff members.
Financial analysis and management have been revolutionized by technological improvements in computers and data processing equipment. Knowledge of their applications is vital to upgrade managerial skills and to enhance advancement opportunities.
Because financial management is critical for efficient career operations, well- trained, experienced financial managers may transfer to closely related positions in other industries. Some are promoted to top management positions. Financial managers with extensive experience and sufficient capital may head their own consulting firms.
Employment of financial managers is expected to increase about as fast as the average for all occupations through the year 2000. The growing need for skilled financial management in the face of the increasing variety and complexity of services -- including financial planning -- offered by financial institutions, more domestic and foreign competition, changing laws regarding taxes and other financial matters, and greater emphasis on accurate reporting of financial data should spur demand for financial managers. At the same time, expanding automation -- such as use of computers for electronic funds transmission and for data and information processing -- makes financial managers more productive. Most job openings will result form the need to replace those who transfer to other fields, retire, or leave the occupation for other reasons.
Because of the increasing number of qualified applicants, competition for financial managerial positions is expected to stiffen. Familiarity with a range of financial services -- for example, banking, insurance, real estate, and securities -- and with computers and data processing systems may enhance one's chances for employment. Developing expertise in a rapidly growing industry, such as health care, may also prove helpful.
Once employed, financial managers are likely to work year round, even during periods of slow economic activity, because cyclical swings in the economy seem to have little immediate effect on financial management activities.
The median annual salary of financial managers was $34,100 in 1990. The lowest 10 percent earned $18,200 or less, while the top 10 percent earned over $55,100. The salary level depends upon the size and location of the organization, and is likely to be higher in large institutions and cities. Many financial managers in private industry receive additional compensation in the form of bonuses, which also vary substantially by size of firm.
Financial managers generally receive fringe benefits typically offered other managers -- vacations, sick leave, health and life insurance, and pensions, for example.
Financial managers combine formal education with experience in one or more areas of finance -- such as asset management, lending, credit operations, securities investment, or insurance risk and loss control. Workers in other occupations which require similar training and ability include accountants and auditors, budget officers, credit analysts, loan officers, insurance consultants, pension consultants, real estate advisors, securities consultants, and underwriters.
Sources of Additional Information
For information about financial management careers, contact:
American Financial Services Association, Fourth Floor, 1101 14th St. NW, Washington, DC 20005. Financial Executives Institute, Academic Relations Committee, P.O. Box 1938, Morristown, NJ 07962-1938.
National Corporate Cash Management Association, P.O. Box 7001, Newton, CT 06740.
For information about financial management careers in banking and related financial institutions, contact:
American Bankers Association, Reference Librarian, 1120 Connecticut Ave. NW, Washington, DC 20036.
For information about financial management careers in savings and loan associations and related financial institutions, contact:
Institute of Financial Education and Finance Managers Society, 111 E. Wacker Dr., Chicago, IL 60601.
For information about financial management careers in credit unions, contact:
Credit Union Executives Society, P.O. Box 14167, Madison, WI 53714.
Additional information on careers in credit management is available from:
National Association of Credit Management, World Headquarters, 8815 Centre Park Dr., Suite 200, Columbia, MD 21045-2117.
For information about financial management careers in the health care industry, contact:
Healthcare Financial Management Association, Suite 700, Two Westbrook Corporate Center, Westchester, IL 60154.
Information about careers with the Federal Reserve System is available from:
Board of Governors, The Federal Reserve System, Personnel Division, Washington, DC 20551, or from the personnel department of the Federal Reserve bank serving each geographic area.
State bankers' associations can furnish specific information about job opportunities in their State. Or write directly to a particular bank to inquire about job openings. For the names and addresses of banks and savings and related institutions, as well as the names of their principal officers, consult one of the following directories. The American bank Directory (Norcross, GA, McFadden career Publications).
The U.S. Savings and Loan Directory (Chicago, Rand McNally & Co.).
Rand McNally Credit Union Directory (Chicago, Rand McNally & Co.).
Polk's World Bank Directory (Nashville, R.L. Polk & Co.).