Businesses, governments and other entities constantly make decisions affecting their financial status. Many times, these decisions need to be carefully evaluated and assessed before moving forward. In these cases, companies turn to financial analysts, or securities and investment analysts, to help them make these decisions.
In a financial analyst role, responsibilities range from investment recommendations to studying and interpreting industry patterns. Other duties include:
- Analyzing portfolios
- Counseling businesses and individuals on investment opportunities
- Reviewing and assessing financial data
- Meeting with and evaluating members of the management team
Financial analysts work in two different categories – buy-side and sell-side analysis. A buy-side analyst works with companies like hedge funds, insurance companies, mutual funds and nonprofit endowments to map out the best investment strategies. A sell-side analyst helps agents sell bonds, stocks and other investments. Some may also work for research houses or business media.
As a financial analyst, you may work in different aspects of the field. Investing is turning into a more international affair and some analysts focus on certain countries or regions around the world. If you are assigned a specific country, your company may have you learn about that culture, language and business customs.
There are various types of financial analysts, including:
- Risk analysts – look at investment decisions to determine how to avoid the most risk
- Ratings analysts – assess if companies have the ability to pay back debts
- Portfolio managers – manage a company’s overall portfolio of investments
- Fund managers – work with hedge and/or mutual funds
Financial Analyst Job Outlook and Salary
According to the Bureau of Labor Statistics (BLS), employment of financial analysts is expected to grow 12% by 2024, which is faster than average for all occupations. The increasing need for globalization of investments and more ways to invest will contribute to this growth. As with any professional track, geography and market conditions affect job opportunities and salary, so candidates should conduct their own career research.
As of May 2016, financial analysts could expect to earn an average salary of $81,760, according to the BLS. About one-quarter of financial analysts work in securities, commodity contracts and other financial investments. Frequent travel is typically a part of the job as analysts travel to meet clients.
How to Become a Financial Analyst
Financial analysts may start off with a bachelor’s degree, but a master’s degree in business administration or a business-related master’s degree such as an MSABA is usually required for more advanced positions.
In addition to degrees, many positions will also require you to obtain a license from the Financial Industry Regulatory Authority, but most licenses actually need a company sponsorship, so you wouldn’t have to obtain it until after starting a job.
A Chartered Financial Analyst certification from the CFA Institute can also help your chances of moving up in a company. Companies may also want analysts to hold this certification, and you can become certified after obtaining a bachelor’s degree, passing three exams and having four years of related work experience.
Financial analysts will need strong math skills, as they work with numbers and statistics extensively. Attention to detail also is vital for this position, especially when evaluating investment risks and possibilities. They must also be able to analyze a situation and use excellent verbal and written communication skills, as they have to communicate to companies and clients their best investment strategy. Knowledge of computer systems and software is also important, especially as new programs roll out to help analysts effectively do their jobs.
Often, analysts will work independently and will need to show confidence in their decisions, especially since these decisions can affect the future of an organization.