As their name clearly states, Financial Analysts are experts in financial data analysis and interpretation. They serve as financial guides for their employers, helping them make economic decisions. Some of the information they handle is essential and of great use for businesses, government agencies, and banking institutions. They use their economic skills and knowledge to provide their employers with a picture of current and future events in the financial world and to advise them about the best possible course of action.
Financial Analysts can either work on the buy-side or on the sell-side. The former specializes in assessing and assisting their employers on matters of investment. They advise their employers on any possible investment they might wish to make by analyzing and calculating risk factors using mathematical and statistical models and principles. On the other hand, sell-side Financial Analysts study the performance of said investments, submitting reports and making recommendations to their clients, including buy-side Analysts, so as to convince them to invest in their products.
Buy-side Financial Analysts usually work for wealthy companies seeking to diversify their investment strategies and portfolio, while sell-side Analysts are mostly employed by specialized financial and brokerage firms.
Here’s a non-exhaustive list of common tasks Financial Analysts are required to complete.
- Crafting or identifying investment strategies aimed at minimizing risks and losses and increasing revenues:
- Conducting risk evaluation research, studying the company’s financial status and future, so as to make better recommendations;
- selecting a group of products, industries, and regions for their company’s investment portfolios;
- coordinating and recording the company’s transactions;
- investigating any procedure that negatively affects the company; and
- managing changes and applying any corrective actions, as required.
- Analyzing investment propositions and financial portfolios in order to assess risk factors, using different tools and mathematical models.
- Advising investors and senior management on investment strategies, explaining and justifying any decision made.
- Evaluating if the company is eligible to invest in products by determining if it has the sufficient funds to do so.
- Monitoring the status and development of investments and other financial projects:
- Analyzing profit margins at the end of every month, reporting observations to senior management and operations leaders.
- Preparing monthly, quarterly, and annual financial statements:
- Performing monthly reviews and analyses on expenses against budget; and
- liaising with Auditors during year-end and quarter-end reviews, assisting in the preparation of reports and annual budgets.
- Overseeing and supporting financial administrative staff to ensure deadlines are being met.
- Advising clients on investment strategies.
- Studying and understanding financial data.
- Analyzing and understanding economic trends.
- Analyzing the company’s financial statements to determine its worth.
- Planning, calculating, and reviewing budgets.
- Drafting sales or purchases contracts.
- Preparing and presenting written financial and economic reports.
The average Financial Analyst salary in USA is $60,511 per year or $31 per hour. This is around 2.1 times more than the Median wage of the country. Entry level positions start at $42,000 while most experienced workers make up to $85,000. These results are based on 5,956 salaries extracted from job descriptions.
- Interpersonal and communication skills:
- Communicating clearly, both in writing and verbally, to effectively explain their recommendations to clients using non-technical language so they can easily understand;
- being discreet regarding their clients’ personal and financial information;
- acting with transparency, keeping executives informed about the decisions to be made and transactions to be executed; and
- establishing and maintaining supportive working relationships.
- Organizational and time management skills:
- Prioritizing and planning work activities in order to manage time efficiently while handling a high volume of work; and
- multitasking; being able to work in a dynamic, fast-paced environment.
- Analytical, problem-solving, and decision-making skills:
- Reviewing and interpreting a large amount of data to provide reasonable recommendations in terms of investments;
- identifying issues and resolving problems in a proactive and timely manner; and
- being able to exercise strategical thinking and mature judgment.
- Strong attention to detail:
- Paying attention to detail while reviewing possible investments since small issues may have large implications for the health of an investment.
- Accounting, mathematical, and computer skills:
- Being able to use software programs, mathematical principles, financial tools and all necessary techniques to analyze financial data, observe and predict trends, as well as to create portfolios.
Economy is a worldwide phenomenon with many branches and specializations. The subject itself is too broad for a single professional to cover all its variants. It is for this reason that Financial Analysts focus their work and study on a single aspect of the economy, setting geographical or political boundaries on their areas of expertise. By setting these limitations, Financial Analysts are able to get a deeper understanding of the laws, regulations, and other factors that affect the economic activity of a specific area or industry.
Financial Analysts need to have completed at least a bachelor’s degree in Accounting, Finance, Economics, or any other related quantitative science. A master’s degree in Business Administration or Finance is also a valuable asset for candidates applying for this position and it might eventually help them get promoted. Most employers will prefer applicants who have between 2 to 4 years of experience working in an Accounting setting.
Additional credentials are usually required for these professionals. The Financial Industry Regulatory Authority (FINRA) is the body in charge of licensing Financial Advisors. However, licenses are not required when applying for a job since employers need to sponsor and encourage employees to get their licenses, especially if they plan to grow in the business.
Additional certifications are useful to receive promotions, have job security, and be able to get a higher salary. In the United States, the field’s most sought-after certifications include, but are not limited to, the following:
- Chartered Financial Analyst (CFA) certification, issued by The CFA Institute;
- Financial Risk Manager (FRM) Certification, issued by The Global Association of Risk Professionals (GARP); or
- Certified Financial Planner (CFP), issued by The Certified Financial Planner Board of Standards Inc. (CFP Board).
Career advancement is possible for Financial Analysts that have gained sufficient experience. Professionals displaying high levels of reliability, resourcefulness, and commitment may be eligible for positions such as Portfolio Managers or Fund Managers.
These professionals usually work on a 40-hour standard schedule; however, it’s not uncommon for Financial Analysts to work outside of office hours, being that they must constantly be aware of the latest trends in their industries. In order to do so, Financial Analysts spend a lot of their time reading the news and reviewing business and financial reports. These tasks are usually catered outside of business hours, as the tasks they have to take care of during their work day are more client-oriented. Moreover, in order to meet with business partners and clients, they usually need to travel to different places around the country.