Financial analysts are the business professionals who research financial information. They detect trends that support opportunities or risks in businesses and industries. Depending on their employer, financial analysts help investment fund managers. They provide the information that analysts need to advise their clients about the best investment options for their pension and other investment accounts. Brokerage firms are not the only organizations that value the services of competent financial analysts. Financial analysts are also commonly employed by:
- private companies
- government agencies
- non profit organizations
For example, financial analysts sometimes study the financial status of individual companies rather than groups of them operating within a given industry. These companies use the services of financial analysts to give themselves a financial health check that can help them make decisions about the organization’s strategic direction. Companies who want to maintain their competitive advantage through mergers and acquisitions find the trend data from financial analysts to be invaluable.
Salary
According to U.S. News and World Report, the position of financial analyst is ranked among its picks of best business jobs. The reported average salary of financial analysts in 2012 was $89,410.
Beginning Salary
Many factors like impact the salary range of financial analysts. These include:
- location of job
- industry served
- academic credentials
- certifications
- work experience
Robert Half Finance and Accounting firm reported that the starting salaries of financial analysts were between $38,000 and $46,000 annually.
Key Responsibilities
Financial analysts act as the investigative reporters of the business world. Many companies rely on their findings to pursue new opportunities or avoid threats to their bottom lines. Financial analysts:
- gather appropriate financial data
- examine the data for trends related to revenues and expenses
- present their findings to senior leadership
They often use historic financial data to compare with current numbers to identify forecasted revenues and expenses. Some companies use proprietary financial software to make reports consistent and easy to generate. Most financial analysts present their findings in the form of:
- spreadsheets
- charts
- graphs
Financial analysts also assist department managers with budget and spend plan preparation. Some organizations want a realistic comparison of their company with their close competitors. They employ financial analysts to investigate the financial status of their competitors.
Necessary Skills
Financial analysts must possess strong quantitative problem solving skills. These skills are needed for nearly every function of their job from understanding what data sets need to be examined to forecasting future expenses. Successful financial analysts also have a firm grasp on applied research techniques. They can work either autonomously or in groups as the need arises. Financial analysts need good communication skills to present the results of their work accurately and concisely.
Degree and Education Requirements
Financial analysts have the responsibility of guiding investment decisions for companies and consumers. The organizations that employ them have high academic standards for these finance professionals. At a minimum financial analysts possess undergraduate degrees in one of these:
- finance
- economics
- accounting
- business administration
- a related business discipline
More often employers require financial analysts to also have an advanced degree in business administration or finance. The career of financial analyst is one that involves continuous learning through professional development activities like:
- workshops
- formal training classes
- industry related conferences
Financial analysts who work for large, well known financial services companies are normally encouraged to obtain their Chartered Financial Analyst (CFA) designation from the CFA Institute. This prestigious credential is one of the most difficult to obtain of all the finance related certificates. Many students who have committed to pursuing their CFA credential take additional coursework to prepare for the series of CFA exams.
Pros and Cons About the Position
Just as content is king in journalism, information drives business growth and strategic decision making. Financial analysts are responsible for gathering the financial information needed to guide a company’s investment of its resources. The research that financial analysts conduct can also shape a company’s policies regarding dividend payments and capital structure. Analysts working as corporate financial analysts gain experience in a variety of business areas and functions like:
- managerial accounting
- performing promotion discount analysis
- operating key company financial planning systems
These analysts are aware that they must constantly sharpen their skills because finance analyst positions are in great demand. For ambitious financial analysts who have attitudes of professional excellence, the competition in the industry is actually a great benefit that inspires them to be life long learners.
However, the most prominent challenge that financial analysts face is overcoming the suspicions of colleagues in other divisions. They may believe that financial analysts’ reports are threats to their spending plans for favored projects and future budgets. Financial analysts can also expect to work long hours and travel frequently.
Getting Started
There is a clear, structured career path for financial analysts that points the way to getting started in the position. Earning the requisite academic credentials is number one. Aspiring financial analysts also seek valuable work experience in the form of internships and field studies while still undergraduate students. These experiential learning opportunities have become quite popular in modern business related degree programs. However, some of the best types are very difficult to get due to intense competition. Studying for the Series 7 and Series 63 exams refreshes junior financial analysts’ knowledge of key accounting practices and investment terms. Additionally, preparing for the CFA exams improve the technical, problem solving and critical thinking skills of financial analysts. Those seeking positions as financial analysts should also consider joining professional organizations. These industry associations offer those getting started in the career field:
- important networking opportunities
- professional development options
- a number of other career resources
Future Outlook
The career field of financial analyst a very popular one among business professions. It’s also one of the fastest growing ones according to the Bureau of Labor Statistics. Forecasted growth for the position is 16 percent which is faster than average for all reported industry jobs. The competition for domestic financial analyst positions is notably high. However, there is an industry trend toward hiring financial analysts to keep track of foreign markets because of the increasing globalization of companies. Financial analysts who have cultivated knowledge of key international markets as well as company fundamentals position themselves for greater career growth.
Conclusion
The career field of financial analyst is a critical one that guides financial decision making in many arenas and at many levels. It is a rewarding position that allows practitioners the opportunity to use a wide range of skills that include:
- technical
- quantitative
- communication.
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