Real economy or financial sector – which way to go for a young finance professional?

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09/16/2019

Real economy or financial sector – which way to go for a young finance professional?

Since at least the late 1990s work as a banker, finance director or trader has been the dream of many a Russian kid (and many an adult too). Data from the Russian opinion poll center VTsIOM show that the Russians still believe that finance is the best profession to be in and the best paid. Russian universities specialized in finance and economics continue to set records for student enrollment numbers and tuition fees.

The graduate with a degree in finance can choose between two paths: go serve in the financial sector (banks, finance, analytical, and other firms with finance as a core product), or climb the ranks in the real sector (companies creating physical products or services).

The Big Four is a great place to start any career. A few years in an entry-level position at KPMG, EY, Deloitte or PwC could lead to a promotion or (more likely) a good offer from the real sector. But you must be ready to sacrifice your life on the altar of work – the Big Four expect no less. A viable alternative is to go straight to the real sector, where goals are more straightforward and you have time to live your own life.

Who knows what’s best? Somebody who has worked both in the real sector and in finance. Here are some insights from the COO of Zamwell. After seven years in the real sector as CFO at a well-known Russian publishing house, he took a job leading the investment portfolio at a management company with assets in the US, the UAE,Russia, and CIS.

Key differences

Financial sector

Real sector
The financial sector is the “natural” environment for a finance professional. It is where your theoretical knowledge and practical skills find most application, where you “fulfill your potential”, from analyzing data to building strategies, increasing the value of an asset, creating the right ecosystem, finding co-investors, and getting integrated with the professional community.

The appeal of the real sector is more “deep“ than “broad”. In the real sector, a finance professional is not (or not usually) in the front line: his/her job is to improve the business from inside, keep the wheels turning and enhance competences relating to the product or service offered. The CFO of a real-sector company deals with earning capacity, debt load, finding the right balance between growth and leverage, and ensuring that dividends meet shareholders’ expectations.

Who does it suit better?

Financial sector

Real sector

The financial sector offers excitement: a finance professional in banking, consulting, and research is always in the front line. The ideal candidate is someone who loved studying finance, who is vibrant, sociable, has good presentation skills, and knows how to persuade.

A job in investment banking and other branches of finance is for the young and ambitious – someone who can accept crazy workloads and the sacrifice of free time and private life. Assignments can arise at any time of day or night and on any day of the week, and foreign partners and customers aren’t impressed by time-zone differences.

A finance professional in the real sector — from rank-and-file up to CFO — is a back-office employee most of the time. About 80% of his/her work consists of day-to-day operations.

The ideal candidate is a perfectionist, well-organized and exact. Someone who does not shy away from monotonous work but is ready to polish and polish until a thing shines. But he/she should also be a good strategist and not afraid of change, provided that the change is beneficial and risk-assessed.

The real sector is for someone who appreciates the right work-life balance and stability in employment and income.

Upsides

Financial sector

Real sector

Diversity, quick-fire change of tasks and activities. The chance to try your hand in different projects, to handle tasks globally and creatively.

Communication with all sorts of people. The opportunity (often necessity) to build relationships with customers, partners and the business community, in all its international and multicultural diversity. International travel, the chance to develop and use language skills and create your own business network.

The challenge and interest of grasping a company’s operations from the inside and in detail: understanding the tasks of each division and how they interact, the specifics of product manufacture and service provision. This takes a particular mindset, so a big industrial company that needs a finance manager will usually look for an experienced professional in the real sector rather than in the financial sector.

Another major benefit: a work-to-rest balance that an investment banker can only dream of (and that only in the short time left for sleep).

Pay

Surprisingly, a finance professional in the real sector can often earn just as much as he/she would in the financial sector, but there is one important difference.

Financial sector

Real sector

A front-office financial sector worker can expect a decent incentive package on top of his/her salary.

An experienced financer can count on a decent and stable salary. But bonuses and perks are much less frequent than in finance.

All in all, graduates who choose the financial sector and those who choose the real sector are entering two different worlds. When making your choice, don’t just look at the job description – what it wants from you. Think hard about what you want from it.

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