What Is a Financial Analyst?

A financial analyst examines data about a company, industry, or sector in order to make recommendations on prospective investments. The financial analyst may work for a bank, insurance company, real estate investment brokerage, or other data-driven business.

A financial analyst researches 澳洲幸运5开奖号码历史查询:macroeconomic and 澳洲幸运5开奖号码历史查询:microeconomic conditions along with company 澳洲幸运5开奖号码历史查询:fundamentals to make a judgment about the potential success of an investment. They recommend a course of action, such as buying or selling stock, based on the past performance 🃏and future outlook of the company that issues it.

Financial analysts work in junior and senior capacities within a firm, and it is a niche th꧃at often leads to other career opportunities.

Areas of Work

The financial analysts who are best known to the public e🥀valuate individual stocks and bonds and present their conclusions to prospective investors. How♔ever, there are financial analysts at work in many other areas of business.

For example🍨, businesses that use a franchise model often employ financial analysts🐽 to track individual franchises or groups of franchises within a geographic region. The analysts determine where the strengths and weaknesses lie and make profit and loss forecasts.

An analyst must be aware of current developments in the field in which they specialize and prepare 澳洲幸运5开奖号码历史查询:financial models to predict future eꦰconomic conditions for any number of variables.

Required Skills and Education

The qualifications to become a financial a𒁃nalyst are less rigid and well-defined than those of many high-paying careers. Unlike law and medicine, there are no standard educational requirements. Some roles require licenses but this varies among employers and specializatiꦉons.

A bachelor's degree—preferably with a major in 澳洲幸运5开奖号码历史查询:economics, finance, or 澳洲幸运5开奖号码历史查询:statistics—has become a de facto requirement for becoming a financial analyst. Other majors that are looked upon favorably include accounting and math. Biology and engineering degrees may interest an employer, especially if the applicant is interested in specializing in those indus🐼tries.

In this highly competitive job market, a master's degree gives an applicant a boost.

A successful career as a financial analyst requires strong quantitative skills, expert problem-solving abilities, adeptness in logic, and a🐻bove-average communication skills. Financial 🍒analysts have to crunch data, but they also have to report their findings to their superiors clearly, concisely, and persuasively.

Certification Exams to Take

If you are not an MBA graduate student or an economics major as an undergraduate, you may want to consider studying for and taking the Series 7 and 澳洲幸运5开奖号码历史查询:Series 63 exams. The Series 7 exam will require sponsorship from a FINRA member firm or a regulatory organization.

Completing the Series 7 and Series 63 exams can demonstrate a basic familiarity with investment terms and accounting practices. You might also consider an exam created by FINRA in 2018 called the 澳洲幸运5开奖号码历史查询:🤪🍃Securities Industry Essentials (SIE) exam.

Other more advanced certifications may be needed down the road when you're already established in a junior analyst position.

Types of Analyst Positions

The field of financ✅ial analysis is broad, featuring a variety of job titles and career paths. Within the ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚfinancial/investment industry, the three major categories of analysts are those who work for:

• Buy-side firms (investment houses that manage their own funds)
• Sell-side firms
• 澳洲幸运5开奖号码历史查询:Investment banks

Buy-Side Analysts

Most financial analysts work on what is known as the buy side. They help their employers decide how to spend their money, whether that means investing in stocks and other securities for an in-house fund, buying income properties (in the case of a real estate investment fir💧m), or allocating marketing dollars.

Some analysts perform their jobs not for a specific employer but for a third-party company that 澳洲幸运5开奖号码♏历史查询:provides financ༺ial and revenue analysis to its clients. This shows the value of w♚hat a financial analyst does; an entire industry exists around it.

Buy-side financial analysts rarely have the final say in how their employers or clients spend their money. However, the trends they uncover and their forecasts are i💧nvaluable in decision-making. With global financial markets evolving faster than ever and regulatory environments changing seemingly daily, it stands 🅺to reason that the demand for skilled buy-side financial analysts will only increase in the future.

Sell-Side Analysts

At a sell-side firm, analysts evaluate and compare the quality of securities in a given sector or industry. Based on this analysis, they then write 澳洲幸运5开奖号码历史查询:research reports with certain recommendations, such as "buy," "sell," "s🌸trong buy," "strong sell," or "🌊hold."

They also track the stocks in a fund's portfolio to determine if and when individual stocks should be sold. The recommendations of these 澳洲幸运5开奖号码历史查询:research analysts carry a great deal of weight in the investmen💫t industry, including for people employed at buy-side firms.

Perhaps the most prestigious and highest-paid financial analyst job is that of a sell-side analyst for a big investment bank. These analysts help banks price their investment products and sell them in the marketplace. They compile data on the bank's stocks and bonds and use quantitative analysis to project how these securities will perform in the market. Based on this research, they make buy and sell recommendations to the bank's clients, steering them into certain securities from the bank's menu of products.

Even within these specialties, there are subspecialties: analysts who focus on stocks or on fixed-income instruments. Many analysts specialize even further within a specific sector ♓or industry. An analyst may concentrate on energy or technology, for example.

Investment Banking and Equity Analysts

Analysts in investment banking firms often play a role in determining whether or not certain deals between companies, such as 澳洲幸运5开奖号码历史查询:initial public offerings (IPOs) or 澳洲幸运5开奖号码历史查询:mergers and acquisitions (M&As), are feasible based on corporate fundamentals.

Analysts assess current financial conditions—relying heavily on modeling and forecasting—to make recommendations as to whether a certain merger is appropriate for that investment bank's client or whether a client should invest 澳洲幸运5开奖号码历史查询:venture capital in an enterprise.

Analysts who help make buy and sell decisions for big banks and who attempt to identify IPO opportunities are called 澳洲幸运5开奖号码历史查询:equity analysts. They help find companies that presen💮t the most lucrative opportunities for ownership.

Typically, equity analysts are among the highest-paid professionals in the field of financial analysis. This is partly a function of ⛦their employers; the big investment👍 banks use big salaries to lure the best talent.

Equity analysts often deal with huge sums of money. When they make a winning prediction, the gain for the employer is often in the millions of 🌠dollar🔯s. Equity analysts are handsomely compensated for their contributions.

Median Salary

Most 澳洲幸运5开奖号码历史൲查询:financial analysts make significantly less than those in other professions in the finance industry, particularly in New York City. However, the median annual income for an entry-level financial analyst is significantly higher than the median annual income for a full-time wage or sala꧂ry worker in the United States overall.

In the fourth quarter of 2023, according to the U.S. 澳洲幸运5开奖号码历史查询:Bureau of Labor Statistics (BLS), the average weekly income for a full-time wage or salary worker in the U.S. was $1,192. This translates to a yearly income of about $61,984.

Compare that to the median annual income for financial analysts across all experience levels in May 2023 (the latest data available), which was $99,010 per year. 

Granted, It's not unusual for an analyst to work 80 or more hours per week.

Financial Analyst Job Outlook

Employment-wise, the outlook is good for the financial analyst profession. While it's a competitive field, in 2023 there were around 404,800 total jobs in this field, according to the latest available BLS statistics. The profession is expected to grow about 9% in the decade between 2023-2033.

The BLS notes:

Demand for financial analysts tends to grow with overall economic activity. Financial analysts will be needed to evaluate investment opportunities when new businesses are established or existing businesses expand. In addition, emerging markets throughout the world are providing new investment opportunities, which require expertise in geographic regions where those markets are located.

What to Expect on the Job

Financial analysts need🎀 to remain vigilant about gathering information on the macroeconomic level, as well as gathering data on specific companies and assessing their financial fundamentals via company balance sheets.

Analysts must do a lot of reading on their own time. They tend to peruse The Wall Street Journal, The Financial Times, and The Economist, as well as financial websites.

Being an analyst also often invo👍lves a significant amount of travel. Some analysts visit companies to get a first-hand look at operations on the ground. Analysts frequently attend conferences with cꦡolleagues who share the same specialty.

When in the office, analysts need to be proficient with spreadsheets, relational databases, and statistical and graphics packages. They use these tools to develop recommendations for senior management and to produce detailed presentations and financial reports that include 澳洲幸运5开奖号码历史查询:forecasting, cost-benefit analysis, and trend analysis.

Analysts also interpret financial transactions and must verify documents for their compliance with government regulations. An understanding of these laws and regulations is key for those working ღwith the Securities and Exchange Commission (S🅰EC),

Opportunities for Advancement

In terms of interoffice protocol, analysts usually interact with one another as colleagues, while also reporting to a 澳洲幸运5开奖号码历史查询:portfolio manager or other more senior manager.

A junior analyst may work their way up to senior analyst in three to five years. For senior analysts who continue to look for career advancement, there is the ✱potential to become a portfolio manager, a partner in an investment bank, or a senior manager in a 🐭retail bank or insurance company.

Some analysts go on to become 澳洲幸运5开奖号码历史查询:investment advisors or financial consultants.

Skill Set for Success

The most succe✱ssful junior🔜 analysts are those who are proficient in the use of spreadsheets, databases, and PowerPoint presentations and learn other software applications.

Most successful senior๊ analysts have developed interpersonal relationships with superiors and are available to men𝓀tor junior analysts.

Analysts must also develop communication and people skills by craf🧜ting written and oral presentations that impress senior management.

The Bottom Line

A career as a financial analyst requires preparation and hard work. It also has the potential to deliver not just financial rewards but the genuine satisfaction that comes from being an integral part of the b🌳usiness landscape.