Financial Analyst

Markets may shift like sand, but sound investment advice is timeless like the ocean. Financial Analysts evaluate investment opportunities and guide businesses and individuals to determine the best use of resources to achieve business objectives.

What do Financial Analysts do?

A Financial Analyst would typically need to:

1. Work collaboratively across the entire finance team to analyze business performance and strategy, which helps senior management make tactical and strategic decisions based on the findings and insights.
2. Look at current financial performance; identify trends and opportunities for performance improvement across the organization.
3. Spearhead annual and quarterly budgeting; forecast future revenue and expenditure to suggest budgets for upcoming projects.
4. Develop financial models, initiatives and policies that may improve financial growth.
5. Analyze current and past financial data as well as other financial information to produce forecasts of business, industry, and economic conditions to make informed investment decisions.
6. Monitor the economy to determine its effect on earnings; recommend the best times to invest.
7. Prepare plans of action for investment based on financial analyses.
8. Interpret data affecting investment programs, such as price, yield, stability, future trends in investment risks, and economic influences.
9. Maintain knowledge and keep abreast of new regulations or policies that may affect the investments they are watching.
10. Recommend individual investments and collections of investments, which are known as portfolios.
11. Prepare reports based on findings; communicate the insights to the broader business.
12. Present oral and written reports on general economic trends, individual corporations, and entire industries as well as monthly reports with key metrics, financial results, and variance reporting.

Many Financial Analysts work at large financial institutions based in New York City or other major financial centers. Financial Analysts work primarily in offices but frequently travel to visit companies or clients. The dress code for Financial Analysts depends on the location, sector, size, and type of company but would be business formal for the most part.

Aspiring Financial Analysts must obtain three-plus years of experience in corporate finance, financial planning & analysis, statistical analysis, investment banking, and financial modeling.

Most positions as a Financial Analyst require a bachelor's or master's degree in business, accounting, mathematics, economics, finance, statistics, or law.

The most common specialization is in finance, although some analysts recommend starting with an accounting degree, as it provides a stronger foundation for analyzing the workings of financial statements. Though not required, an MBA may be preferred. Knowledge of the economy, tax laws, and money markets is desirable.

Benchmarking studies done at several financial institutions show that logical ability combined with numerical ability and domain knowledge show the strongest correlation to a financial analyst's success.

Certification in Microsoft Excel Specialist will make your resume that much more attractive. A license is generally required to sell financial products, which may apply to some Financial Analyst positions.

Most companies nowadays expect Financial Analysts to have good knowledge of spreadsheets and standard statistical packages. Because most of the licenses require sponsorship by an employer, companies do not expect individuals to have these licenses before starting a job.

The role of a Financial Analyst is one of the most coveted in the financial services industry. Financial Analysts can work in both junior and senior positions within a firm, and it is a position that often leads to other career opportunities in the financial services industry.

Financial Analysts typically start by specializing in a specific investment field. As they gain experience, they can become Portfolio Managers and select the mix of investments for a company's portfolio. They can also become Fund Managers and manage large investment portfolios for individual investors.

Despite employment growth, there will be stiff competition for Financial Analyst positions. Growth in financial services may create new posts, but there are still far more people who would like to enter the occupation than jobs in the profession. Having certifications and a graduate degree can significantly improve an applicant's prospects.

Employers often recommend certification, which can improve the chances of advancement. An example is the Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial Analysts can become CFA certified if they have a bachelor's degree, four years of qualified work experience, and pass three exams. Financial Analysts can also become certified in their field of specialty.

A master's degree in finance or business administration can improve an Analyst's chances of advancing to the position of a Portfolio Manager or Fund Manager.

Financial Analysts are responsible for tracking a company's financial performance against a plan and analyzing business performance and market conditions to create forecasts and help with strategic decisions by the management.

Not all Financial Analysts work with financial institutions or help their employers make investments. For example, a company may hire a Financial Analyst to measure the effectiveness of various marketing campaigns relative to cost.

Most Financial Analysts tend to work for any of the three kinds of firms, namely buy-side investment firms, sell-side firms, and investment banks.

Buy-Side Firms

Buy-side investment firms include mutual funds, hedge funds, insurance companies, independent money managers, and charitable organizations, such as universities and hospitals, with large endowments. Buy-side Financial Analysts work to devise investment strategies for a company's portfolio. Their job responsibilities include researching stocks for an in-house fund.

Sell-Side Firms

Sell-side firms include securities firms. Financial Analysts evaluate and compare the quality of securities in a given sector/ industry and provide recommendations such as: buy, sell, strong buy, strong sell or hold. These recommendations carry a great deal of weight in the investment industry, including analysts working within buy-side firms.

Investment Banks

In investment banks, Financial Analysts determine the feasibility of deals based on researching the fundamentals of the companies involved in the agreement. This type of analysis can include (Initial Public Offering) IPOs or mergers and acquisitions. Analysts assess current financial conditions and rely heavily on modeling and forecasting to make recommendations to senior partners on risk and profits for mergers or investments.

Focusing on an Industry, Region or Product

Analysts generally focus on trends affecting a specific industry, geographical region, or type of product. For example, an analyst may focus on a subject area such as the energy industry, a world region such as Eastern Europe, or the foreign exchange market. They must understand how new regulations, policies, political situations, and economic trends may affect investments.

Investing is becoming more global, and some Financial Analysts specialize in a particular country or region. Companies want those Financial Analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover.

A Diversity of Roles

A Financial Analyst's role would differ depending on the type of company they work for. Financial Analyst bank jobs include investment banking, research, sales & trading, and commercial banking. Institutional roles include private equity, research, and portfolio management. Positions at corporations include investor relations, corporate development, treasury, and financial planning and analysis (FP&A).

Portfolio Managers

These managers select the mix of products, industries, and regions for their company's investment portfolio. They are responsible for the overall performance of the portfolio. They should explain investment decisions and strategies in meetings with stakeholders.

Fund Managers

They work exclusively with hedge funds or mutual funds. Both fund and portfolio managers frequently make, buy or sell decisions in reaction to quickly changing market conditions.

Ratings Analysts

They evaluate the ability of companies or governments to pay their debts, including bonds. Based on their evaluation, a management team rates the risk of a company or government not being able to repay its bonds.

Risk Analysts

They evaluate the risk in investment decisions and determine how to manage unpredictability and limit potential losses. Risk Analysts make investment decisions such as selecting dissimilar stocks or combining stocks, bonds, and mutual funds in a portfolio.

A Financial Analyst is a high-profile job position, and it doesn't come easily. You will have to invest yourself entirely and dedicate several years to become eligible. A lot of sweat and personal sacrifices go into the making of a successful Financial Analyst. But once you make it, you will have a lucrative salary and a lot of power, with the possibility of going far in your career.