If you’ve ever seen Wall Street, Margin Call, or any other classic money movie, the no-life working-man attitude in finance is hard to forget.
Hollywood is partially responsible for this glum finance reputation. It’s why many people envision finance roles (and financial analyst roles in particular) as high-stress. However, a study by the United States Bureau of Labor Statistics showed that stress levels in finance fields were on a downward trend in the 1990’s, and that there were less than 2 incidents or serious mental incapacity per 10,000 workers due to stress in finance1.
This statistic sounds silly, but the reality is that the level of stress for financial analysts truly differs by industry and company, notably between investment banks and companies.
In short, the rule of thumb is that financial analysts in investment banks have higher stress levels than those in companies, and financial analysts working in growth stage companies endure more stress than those in stable companies. That said, a good manager and a positive working culture can mitigate the strain in any environment.
This article will explore stress levels for financial analysts in investment banks, growth companies, and stable companies, all through the lens of statistics from the U.S. Bureau of Labor Statistics.
Most Stressful Finance Jobs: Investment Banking
When it comes to stress in finance, a financial analyst in investment banking gets hit the hardest. The role essentially consists of scrutinizing historical and current data to either determine how a firm should invest its cash (buy-side), or evaluate securities for sale in the financial marketplace (sell-side).
While not overwhelmingly complex at its core, the data analysis tasks associated with investment banking are difficult. They require near-constant attention to important details, the ability to manage levels of logical and mathematical relationships on an ongoing basis, and advanced Excel and data software knowledge.
Not only is the work difficult, but it’s also overwhelming. Financial markets for securities never stop moving since the sun is always shinning somewhere, and exchange rates securities continue developing even when normal markets are closed for the evening.
This means financial analysts in investments banks always have a backlog of work to do. Junior analysts regularly pull all-nighters in the office to meet profit goals, and often burn out within their first year of work.
Finally, the atmosphere in many investment banks is grueling. The banking culture is so analytical and elite that it leads to a constant sense of competition and pressure, which adds lateral stress to the vertical stress of the work.
However, there is significant compensation for this work. Financial analysts (aka securities analysts) make a median salary of $145,640 in New York as juniors2. Pay of this scale is incredibly hard to come by in financial analyst positions within companies. In fact, salaries of this caliber are usually reserved for executives in companies.
Least Stressful Finance Jobs: Companies
On the flip side, financial analysts in companies live a different situation. They have challenging but manageable tasks, a workload that flows with the business, and normal hours with the exception of quarter and year ends, when accounting books must be closed.
The corporate financial analyst role consists of using commercial and financial data to understand operations, sales, costs, and funding opportunities. In my roles as a corporate analyst, I’ve worked on tasks as varied as:
- Revenue driver analysis
- Cost driver analysis
- Cost splitting
- Budget development
- M&A valuations
- M&A due diligence
- Project management
- Tax estimation analysis
- FX impact calculations
With that said, the level of stress depends on the financial performance of the company. When companies need to grow, or when they need to turn around from a losing situation, stress levels can be high. On the other hand, in companies with stable income, stress levels are lower. Let me explain the differences with four criteria:
- Difficulty of tasks.
Growth companies. Workload in growth companies is typically higher because the company’s activities are expanding. There are more tasks to complete in order to generate new streams of revenue, and financial analyst skills become incredibly important in determining the profitability of those endeavors.
Moreover, tasks associated with growth are not stable. Growth inherently implies change, which means tasks can become more complex and more varied. Compounded with a growth in the amount of workload, this difficulty can increase stress levels.
To top it off, company culture can become more competitive in growth stages. Executives want improvement, which means stricter control of employee performance and profit generation. I have seen first-hand a manager fire a subordinate because s/he feared that executives would switch their roles.
Stable companies. Workload in stable companies is what you might expect – stable. This doesn’t mean that the workload is low. In fact, in many companies it can be heavy. But it’s much easier to manage a stable flow of heavy work, rather than an erratic flow of very heavy, then very light, work. The latter is typically the case in growth companies.
In addition, the difficulty of the tasks performed is easier. It’s not that they are easier in essence, but that analysts build up a sense of understanding and speed when they repeat a set of regular tasks with minimal variation. When you know what you’re doing, you are less stressed (you might become bored, but you’re not typically stressed).
Finally, the culture in a stable company is agreeable. Since the company performs well, there is little need to crack down on performance of individual analysts. There may be goals, but they’re typically reasonable and achievable. Financial analysts in stable companies undergo less scrutiny, and therefore undergo less stress.
How to Keep Stress Levels Low Working in Finance
I spoke with 6 financial analysts to understand how they mitigate their stress levels. Three work in investment banks, and the other three in companies.
The investment bank analysts noted two common techniques, while the corporate analysts expressed 3. Let’s look at them here.
Investment Banks: Stress Mitigation as a Financial Analyst
- Have a sense of humor. There are some things you can’t change in investment banking. You will always work long hours, always have steep performance goals, and always face a tough working culture. The biggest tool to have in your arsenal against stress is a good sense of humor. For example, crack jokes with your teammates to lighten the mood. Kid around about the stakes of your work, which somehow makes them feel less severe. One interviewee even said making light of the most extreme situations, burnout and being fired, just tends to make you work better. The ultimate goals here is laughter. Laughing calms the nerves.
- Plan every task in your calendar by hour. As mentioned, one of the biggest challenges in investment banking is the sheer amount of work on your desk. It can be overwhelming to the point that you struggle to focus, and the best way to lower that stress is to develop an efficient planning technique. Investment bank financial analysts are keen on planning their work directly in their calendar, which means they complete tasks in order, on a strict time schedule. They should, however, leave some buffer between items to allow for light breaks. That said, it’s not always possible to predict the exact time needed to complete a task. In this case, the analyst should copy/paste the initial booking into a new time slot, then shrink it down by the amount already completed. In this way, the technique evolves on a rolling basis.
Company: Stress Mitigation as a Financial Analyst
- Choose a good boss. As the adage goes, “employees don’t stay for the job; they stay for the boss.” A good boss makes a difference in any job, but for financial analysts the reward can be even higher. The nature of the work is detail-oriented and sometimes very manual, even for the slightest degree of insight. Good bosses for financial analysts in companies are capable of picking up some of the leg work, teaching you how to move faster, and maintaining a high-level view to back up low-level analysis (sometimes called sanity checks). They ensure that analysts are highly responsible, but that they feel supported in this endeavor, which lowers stress levels.
- Build good relationships with teammates. The nice thing about corporate analysts teams is that the skillsets can be very diverse, whereas in an investment bank, team members often have very similar skills. This means that the feeling of direct intra-team competition is lower. By building good relationships with your teammates, you’re able to leverage each other’s skills, which will lower stress levels in growth stage companies where new tasks shows up regularly.
- Develop skills the team doesn’t have. Normally, this is advice for career growth. But make no mistake, it’s also a great way to lower your stress. The reason is that you diversify the value you bring, which means you can support your team better. The more you support them, the more they want to support you. And human connection and cooperation relieve stress from anyone.