Financial analysts might be called financial geniuses by many companies and individuals because it is usually on their recommendation that a client chooses to make moneymaking investments. It’s often been said that you have to spend money to make money. You might also have to have a good financial analyst to make money. Becoming a finance analyst can be the start of a rewarding and lucrative career.
What They Do
Financial analysts, also called investment analysts or securities analysts, play an important part in the success of a company or an individual. They study the stock market, monitor its trends and assess the performance of bonds, stocks, and similar investments. As part of their duties, they:
- Determine the strength of the company’s management team
- Evaluate historical financial data
- Examine the company’s financial statements
- Assess business and economic trends
- Prepare written reports
- Meet with company officials and go over their recommendations
Financial analysts may be either sell-side analysts or buy-side analysts. Financial analysts work in mutual funds, banks, pension funds, insurance companies, securities firms and similar businesses.
How to Become One
Most financial analysts have at least a bachelor’s degree, which requires completion of a four-year program. The major may be in finance, economics, accounting, statistics or mathematics. Financial analysts working in the securities industry must be licensed through the Financial Industry Regulatory Authority. In most situations, the employer will assist the analysts in obtaining licensing by sponsoring the employee.
Depending on the employer, the analyst may also be required to obtain certification through the CFA Institute. To obtain this certification, the candidate must have the degree, at least four years of work experience in this field and pass three tests. The analyst can also choose a specific area of specialization.
Types of Financial Analysts
Financial analysts may work in different capacities. Depending on his career choice and place of business, the individual may be one of the following types of financial analysts:
- Portfolio managers help determine the overall performance of a company’s portfolio. They choose a group of industries, products and regions for a business’s investment portfolio and explain their selections to stakeholders and managers.
- Fund managers monitor the stock market conditions and decide whether to buy or sell based on changes in the market. They deal exclusively with mutual funds or hedge funds.
- Risks analysts evaluate the risks in certain investments and decide how to limit potential losses and manage the unpredictability of the constantly changing market.
- Rating analysts research and evaluate a company’s ability to pay bonds on other debts and provide the company with a risk rating based on their evaluations.
Career Outlook for Financial Analysts
Financial analysts are predicted to experience job growth of 11 percent during the decade of 2016-2026. This prediction comes from the U.S. Bureau of Labor Statistics, which also states that financial analysts will continue to be in demand. As of May 2018, the average annual wage earned by financial analysts was $99,430, although some earned wages as high as $165,580 or more. Geographic location and the employer are two factors that can play a role in the financial analyst’s wage potential.
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With the economy growing as it has in recent years, it’s never been a better time to become a financial analyst. Candidates choosing this career can have the satisfaction of helping their clients and themselves make wise investments and increase their wealth.