Financial analysts evaluate the economic performance and financial situation of companies and industries on behalf of companies and institutions which invest money. Financial analysts evaluate the feasibility of a deal and develop a plan of action based on financial analysis. Financial analysts make investment decisions or recommendations. They're also called investment analysts and securities analysts.
Financial analysts are employed by investment banks, pension funds, insurance companies, mutual funds, securities firms, the business media and other types of businesses. They often focus on a particular industry, product or region. In addition, a financial analyst must keep up-to-date with movements of the markets, news stories and industry profiles.
Financial analysts that are employed on the "buy side" work for institutional investors. They develop investment strategies for a company's portfolio. Financial analysts that are employed on the "sell side" assist security dealers at investment banks, securities firms and other businesses with selling their products.
Financial analysts fields of specialization:
- Credit analysts
- Ratings analysts
- Budget analysts
- Risk analysts
- Money market analysts
- Tax analysts
- Investment analysts
- Wall Street analysts
- Security analysts
- Mergers and acquisitions analysts
- Develop investment strategies for a company's portfolio
- Analyze company financial statements
- Stay current with new policies and regulations that might affect investments
- Evaluate current trends in business practices, competition and products
- Assess the ability to repay debts by governments and companies that issue bonds
- Assist security dealers with selling their products
- Create reports and make presentations
- Observe the economy in order to determine its effect on earnings
- Assist companies with creating their investment portfolio
- Perform cost, budget and credit analysis
A financial analyst needs to have good analytical, math and problem solving skills. Good communication skills, being detail oriented and the ability to work independently are also important. They need to be able to interact well with clients. In addition, dealing with deadlines is often part of the job.
Financial analysts need a strong foundation in the economy, money markets and tax laws. They should also have good computer skills. The job sometimes involves traveling in order to visit potential investors or companies. They sometimes work more than 40 hours per week. They also spend a lot of time in meetings and telephone conversations.
The Bureau of Labor Statistics forecasts the employment of financial analysts will increase by 34% from 2006 to 2016 which is much faster than the average for all occupations. The major factors for the expected employment growth are the complexities of investments, the growth of the industry and the demand from mutual fund companies.
More than two out of five financial analysts are employed in the finance and insurance industries. Some work for the government and also throughout private industry.
In 2006 the median annual earnings, including bonuses, for financial analysts was $66,590. Bonuses can be a significant portion of their total earnings. Many companies offer lucrative bonuses in order to attract and keep important employees.
Financial analysts have opportunities to take positions as finance or portfolio managers, which manage the investments of a company or a customer. A qualified financial analyst can move up to a senior financial analyst position or an associate position. Some financial analysts start their own financial consulting firm. Some financial analysts become investment bankers, management consultants and financial consultants.
Education, Certification, and Licensing
Most employers require financial analysts to have at least a bachelor's degree in finance, economics, statistics, accounting or business administration. Courses in economics, statistics and business are typically required. Advanced courses in bond evaluation and options pricing are useful. Some employers prefer candidates that have a master's degree in finance or business administration.
Candidates should have knowledge of corporate budgeting, accounting policies and procedures, and financial analysis methods. A strong foundation in risk management is also useful.
The firms provide training. Financial analysts frequently attend seminars and training sessions in order to stay current with the latest developments.
The main licensing organization for the securities industry is the Financial Industry Regulatory Authority. Most of the licenses require sponsorship from an employer, thus companies don't expect workers to have licenses before they begin the job.
Most of the jobs are provided by investment banks, financial advising firms, mutual funds, investment funds, insurance companies and hedge funds.
Schools for Financial Analysts are listed in the Browse Schools Section.