When it comes to working in financial positions, traditionally an accounting qualification was one that would be sought after. However, this type of educational background fails to provide much assistance when it comes to investing knowledge beyond managing the treasury, which is essentially the cash balance available to the business that’s unused overnight.
For startups and larger businesses, the entrepreneur’s behind them often don’t understand how economics truly works or how both private and listed investments are managed on behalf of a company. This lack of knowledge leaves a gap in the skillset present in the finance department or at the senior executive level of many SMEs and startups that are entrepreneurially minded.
Educational Option to Focus on the Economy & the Markets
To bridge the knowledge gap, the master of financial economics is an online MFE degree program that focuses broadly on understanding economic theory, such as the idea of the efficient market hypothesis (the idea that markets price in news very quickly and are largely efficiently priced most of the time, making them difficult to beat in the index).
Portfolio theory is also studied in this type of financial course. Learning how to manage portfolios correctly includes topics such as diversification to avoid being overloaded with a single type of asset class and rebalancing on a six month or yearly basis to bring the valuation of each asset class back to the target levels. By managing assets well and not letting their allocations drift too far from the targets set in the investment plan, the risk levels remain at or near the expected levels. Doing so hopefully avoids unexpected declines in value for the portfolio outside of expected levels.
Finance Teams Are Under-Resourced with the Markets
When you look at most finance departments, you have a Chief Financial Officer (CFO), some senior accountants, then accounts billable, and so on. While the CFO is likely to have some investment knowledge through his or her own qualifications, perhaps including an MBA, most regular accountants won’t understand much more than overnight money market accounts or treasury accounts where cash balances earn minuscule amounts outside of operating hours.
Any businesses that are sitting on unused venture capital series round funding or reinvestment profits needs qualified staff who understand investment without needing to hire a Wall Street wealth manager with their high fees and questionable motivations.
Advancing Staff Internally
With companies that prefer to promote from within, it’s a good idea to consider letting an accountant study for the master of financial economics course. The learning process is gradual, taken online and can be completed in their own time. With each module completed, their knowledge increases and ability to assist the CFO along with it. The CFO is then free to share the benefit of their financial knowledge to provide in-house practical experience along with skills provided on the course.
If you’re a person who enjoys working with entrepreneurs and startups, then making yourself more knowledgeable on corporate investment and capital markets is highly useful. Backing this up with additional education gives this knowledge more credibility too.
