Have a good head for numbers? Enjoy tracking the ups and downs of the stock market and various other investments? These are the qualities that make a career in financial analysis interesting, challenging, and rewarding.
Broadly speaking, someone who chooses a career in financial analysis manages the various aspects of other people’s money. Some analysts work as investment advisors, either on their own or with a brokerage firm. Depending on the wealth and size of their clients, they may manage portfolios worth millions of dollars. Other analysts work for banks or insurance companies, ensuring that even when a loan defaults or a claim is paid, the company maintains a positive cash flow. Still others specialize in mergers and acquisitions, determining the profitability of two companies combining their forces in a merger or one company buying another company in an acquisition.
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Analysts evaluate the financial situation in their area of expertise and generate appropriate reports, both written and oral, regarding their recommendations. They monitor and interpret available data such as industry and economic trends, forecast the current trends into probable future profitability, determine a fair market value for the sale of company stock, and recommend action to their company or investors.
Take a job in financial analysis that supports the growing “green" industries. Such an analyst may evaluate a vacant building for the feasibility of retrofitting it, or he or she may analyze the costs and benefits of including green technologies in new construction. He or she may also be involved in generating venture capital for green startup companies. An analyst may monitor and interpret climate change data or clean water data in order to calculate supply and demand, or whether or not to invest in water rights, energy futures, and other tradable commodities within the green industry.
Successful analysts are excellent critical thinkers; they can logically determine the best course of action regarding any potential investment. They should be lifelong and active learners in order to remain current regarding market conditions and new technologies, and to be able to predict the long-term results of their investment decisions.
An analyst identifies potential problems within his or her investment options and either seeks a solution to the problem or opts out of the opportunity. Excellent communication skills, combined with the ability to distill large quantities of complex data into clear, concise presentations, allow an analyst to convey his or her investment opportunities in a manner that encourages clients to sign on.
An analyst is willing to take risks in order to generate profit, but he or she is also an expert in risk management and is sensitive to the acceptable risk level for his or her clients. Integrity, dependability, attention to detail, and initiative are hallmarks of a successful analyst.
Financial analysis is a fast-paced, cutting-edge, and highly competitive career choice. A thorough knowledge of ones chosen field on both the macroeconomic and microeconomic level enhances an analysts opportunities for advancement within his or her area of specialty. Virtually all analysts rely on publications such as The Wall Street Journal, The Financial Times, and The Economist as well as various electronic media in order to remain at the top of their field.
Individuals choosing a career in financial analysis will need to successfully complete a bachelor’s degree to qualify for an entry-level position. Students with a strong background in higher mathematics and business will excel in achieving a Bachelor of Science in Finance. Coursework will include statistics, managerial finance, business laws, investment analysis, ethics, accounting, international business, and marketing.
Many positions require a Masters Degree of Business Administration. At this level of education, students typically study advanced theories in business and management and concentrate on one specific financial area, such as international investment or project management.
In addition to a bachelor’s degree or a master’s degree, most individuals pursuing a career in financial analysis need to maintain appropriate industry certification. The CFA Institute offers certification to those analysts who have a bachelor’s degree and four years of field experience. The CFA certification involves two to five years of study and the successful completion of three examinations.
Professional licensure is a requirement for those analysts choosing a career in stocks, bonds, or other legal issues. The Financial Industry Regulatory Authority offers securities licensure for current employees, should their company sponsor them.
Most analysts work in an office environment. Some analysts travel to visit potential investors, potential investments, and perform hands-on evaluations that enable them to accurately decide the value and potential risk of each investment. Financial institutions and insurance industries employ the majority of analysts, usually in financial centers in North America and worldwide.
According to the Department of Labor, the median wage of an analyst in North America is $76,000 per year, with the lowest ten percent (entry-level positions) earning an average of $45,000 per year and the highest ten percent (experienced analysts) earning an average of $142,000 per year. However, nearly one-third of all analysts work an average of 50 to 70 hours per week.
The Department of Labor anticipates a higher than average growth rate for careers in financial analysis. It anticipates a growth rate of 23 percent between 2010 and 2020. This growth will occur for a number of reasons - emerging markets, emerging technologies, an increase in investment opportunities, and the increasing complexity of investment portfolios.