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- Financial analysts description: What does a financial analyst do?
- Does the financial analysts description complement your education?
- Educational requirements for becoming a financial analyst
- Types of positions a financial analyst may consider
- Prospects of a financial analyst
In the recent decade, the position of an analyst in the finance industry has gained a lot of recognition. There have been countless degrees and certifications in the field of finance that are provided by universities and colleges to instill students with the right skills and knowledge to advance in their careers. However, financial analysts are considered to be the cream of the crop and if you’re aiming to enter that realm, be sure to know the financial analysts description, the different types of roles you can have in this space, salary, and future outlook. Don’t worry as we will take you through all of this to help you in making the right decision regarding your career and education.
Financial analysts description: What does a financial analyst do?
The main role of a financial analyst is to go over all the financial data of a company and come up with a report that identifies business or investment opportunities, weak areas that need improvement, and evaluate business outcomes. Even though a financial analyst provides insights on the financial strength of a company, a financial analysts description or the main responsibility revolves around the investment decisions made by the firm.
A financial analyst should be up to date with all the laws governing finance, the industry scenario in the country they are operating in, and the developments in the field. Financial analysts description involves scrutinizing financial statements and creating financial models to establish a future trend or predict the future of the company. This is vital for the company to make decisions in the short term that will help achieve those predictions.
It is to be noted that the financial analysts description is not limited to just stocks or bonds. These individuals can be hired or can work on analyzing a project within a company or even see whether or not a company’s marketing technique is making revenue relative to the costs incurred. A financial analyst can even be found working for a franchise company where he or she is responsible for identifying the strengths and weaknesses of all the company’s outlets.
Does the financial analysts description complement your education?
Many graduates or even professionals get inspired by investment bankers and financial analysts and start to consider taking that route. However, they need to realize that the job requirements or the financial analysts description should complement their educational background.
For example, those holding a law degree and have a bit of working experience in law might find it difficult to get a job as a financial analyst. However, those working as accountants can easily enter this field and fulfill the financial analyst description laid down by the company. This is because there are certain skills and education levels required to become a financial analyst. Think about it this way. Can a doctor become a financial analyst if he does not hold any education related to finance, accounting, or any related field?
Educational requirements for becoming a financial analyst
To get into a particular field, you need to have the right knowledge. This means your degree should suit your line of work. The interesting thing about financial analysts is that there is no particular emphasis given on what kind of degree is required. This is the opposite of what some fields like law or medicine would require. These fields have minimum criteria of completing a certain number of years of a specific degree and having a minimum number of hours working in it. Many call this internship or an associate program or even a house job (only for medical students).
If you search for a financial analyst job on a job posting platform, you would realize that all the positions require you to have at least a bachelor’s degree in either business, accounting, finance, economics, or any other related field. Things start to get tricky if you’re looking to work for specialized industries.
In cases where you want to work in an engineering firm or a biology firm as a financial analyst, they would prefer that you also have an engineering or biology degree to go with your finance-related degree. This is important as you need to know the knowledge of the industry and the business to be able to add value as a financial analyst.
You may find that the competition in the finance industry is intense and there are a lot of people entering the field thinking they can easily make it because they have a degree and carry out the roles mentioned in the financial analysts description. However, that is rarely the case.
With so much competition, although a bachelor’s degree is a minimum requirement, it might not be enough to succeed in this field. You will come across several professionals who have done their masters or even gotten a chartered accountancy qualification. With everything in life, one must keep on improving if one wants to succeed. We recommend continuing your studies even after your bachelor’s degree if you wish to climb the corporate ladder.
Another factor to keep in mind is the top four or the big investment banks and firms will always hire bachelor graduates from the most elite universities around. This can minimize your chances if you haven’t done your bachelor’s degree from an elite university. However, you can increase your chances by getting a master’s or MBA degree from a top-ranked business school.
Financial analysts description may also mention that certification in finance or accounting would be an added advantage to the profile. An added advantage helps you stand out from the crowd of people who have applied for the same position. Let’s look at some of the certifications that you can consider doing after your bachelor’s degree to make it big in an investment firm.
What certificates does a financial analysts description mention?
If you haven’t majored in economics for your bachelor’s degree or don’t have a master’s, then considering getting additional certificates can boost your chances of making it to the top.
There are many different financial certificate programs however, one of the most prestigious ones that you can get is the chartered financial analyst program or a CFA. The CFA is a three-level course that can take a minimum of 2.5 years to complete if you clear all three papers in one go. That is a difficult task as these papers contain 10 different modules meaning 10 different financial subjects such as investment analysis, portfolio management, ethics, financial reporting, and more.
Other certification programs include financial modeling and valuation analysts, chartered accountancy, Series 7, and Series 63 exams. Many of us believe that after graduating from an undergraduate degree that is when the studies stop. But that is not the case. Just like how other professions require constant updates with additional papers and examinations, a financial analyst is no different. You are required to stay up to date with all the financial laws and in this case, may even give some papers to increase your existing skills or add new ones.
So, what positions can be advertised on a financial analysts description?
Types of positions a financial analyst may consider
As mentioned previously, the finance industry is huge and the financial analyst field is quite vast but there are three main categories associated with a financial analyst job.
Working for buy-side firms
This is where you will find a lot of financial analysts. These are firms that employ financial analysts to help them make decisions on what to buy and when to buy to maximize profits. Financial analysts descriptions in these types of firms entail the professional to advise on buying stocks, bonds, t-bills, or other financial instruments. This is not only limited to firms but also companies who outsource financial analysts to other firms for this purpose fall under this category.
At the end of the day, buy-side financial analysts do not hold any power in decision-making because that is what their employers have. However, their contributions to the companies are undeniable as the amount of work required to keep up to date with the financial laws is tremendous. Therefore, financial analysts are in high demand in these kinds of firms.
Working for sell-side firms
The sell-side firm requires financial analysts to come with a report that indicates market conditions and the stocks to buy and sell. These researches are then used to make decisions for profit maximization. These reports and recommendations of financial analysts in these types of firms or industries hold valuable importance for buy-side firms and individuals in the financial markets.
Using quantitative modeling, sell-side financial analysts play a huge role in banks whereby they analyze the investment products. These products are scrutinized using data and reports are made that project stocks, bonds, and other financial securities. These reports are then given to the bank’s clients allowing them to sell their financial products.
Working for investment banks
Investment banking financial analysts descriptions require them to look at companies and the deals they undergo. Financial analysts are required to look into the mergers and acquisitions and IPOs of shares to determine whether this is the right decision for the company. In doing so, the financial analyst not only has to look at the numbers but how these numbers will add synergy to the already existing business of the company.
Those that find great opportunities in IPOs are referred to as equity analysts. These equity analysts do their research digging deep into the financials of the company and looking at the industry as a whole to determine whether or not these IPOs are undervalued or overvalued. This helps in making decisions on what to buy and what to stay away from. These are some of the highly compensated analysts in this field as they make huge bucks if their predictions are right as they deal in millions of dollars at a time.
What salary should you expect?
Usually, you will find the salary written on top or under the financial analysts description on the job advertisement, however in the end salaries depend on how well you are able to negotiate. Bear in mind that a financial analyst is always in huge demand. If you have the right qualifications and have the perfect experience, you can always demand hefty compensation. Many firms are willing to pay top dollar to attract the best of the best. However, you can expect to get much higher than the average paying job.
According to studies, an average paying job in the United States will pay around $45,000. If you were to get employed as a financial analyst, you can expect to get around $75,000 to $85,000 annually. This is besides the bonus and other incentives that you get which can push your annual compensation for the first year to about $150,000. That’s a large sum of money for a person starting their career.
Prospects of a financial analyst
As the world grows and businesses expand, the need for financial analysts increases too. There were around 350,000 jobs in the finance field with reports stating a 6% rise annually until 2028. This is due to the expected increased economic activity in the country. There are opportunities not only in the States but also in emerging markets whereby market leaders are willing to pay large sums of money to get a qualified and experienced financial analyst on board.
These opportunities will further increase as emerging markets have slowly started playing with many new and different financial instruments. The outlook for a financial analyst looks bright but be sure to keep yourself updated with the right qualifications and skillset. There is tremendous competition in this field and if you’re stuck with an old degree or skills that are no longer required by the industry, you may find yourself in a tough situation. Always keep on checking the financial analysts descriptions and improving your skillset accordingly to compete with others around the world aspiring to be the best financial analyst.