What is a Financial Analyst?

Also known as: Entry-Level FInancial Analyst, Chartered Financial Analyst, Financial Research Analyst, Equity Research Analyst, Investment Analyst, Securities Analyst.

A financial analyst is someone who manages 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 financial 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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What does a Financial Analyst do?

Financial 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.

Some financial analysts support the growing “green" industries. These analysts 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. The financial analyst may also be involved in generating venture capital for green startup companies. They 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 financial 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 analyst's 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.

How to become a Financial Analyst

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 in 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.

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Further Reading

  • The Average Starting Salary For A Financial Analyst

    Because the job requires so much research and expertise, the pay is good. Salaries for financial analysts who are just starting out are typically in the lower range of the profession, however.

  • Financial Analyst: Salary

    The best-paid in the profession work in the metropolitan areas of Bridgeport, Conn., New York City and San Francisco.

  • Explore Being A Financial Analyst With Elizabeth Perez

    I am a financial analyst, which is just a big word for someone who deals with numbers all day. I make sure that the company’s finances are under control.

  • A Day In The Life Of A Financial Analyst

    Among the more rigorous yet rewarding career options in the financial services industry is that of a financial analyst. But what, exactly, does a financial analyst do on a daily basis?

  • What’s A Financial Analyst And How Do You Become One?

    Well, the job title itself is actually pretty self explanatory. In simple terms, you collect and analyze financial information, and then make recommendations to your company, customers or clients based on your analysis.

  • Becoming A Financial Analyst

    In the financial services industry, one of the most coveted careers is that of the financial analyst. Financial analysts can work in both junior and senior capacities within a firm and it is a niche that often leads to other career opportunities.

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