The success of an investment can turn on factors such as company earnings, the quality of management and economic conditions. Financial analysts process this information to recommend, buy or sell investments. The Financial Analyst Job Description details the tasks, skills, education and training required to render informed opinions and decisions on investments. It also explains the impact of licensing and certification on career prospects.
Job Overview: What Does a Financial Analyst Do?
The Financial Analyst Job Description requires the professional to consider several pieces of data. In fact, financial analysts consider information such as profits, cash flow and management practices to evaluate companies. Furthermore, politics, economic conditions and events in a particular region can also affect firms.
Financial Analyst Job Duties
- Find and recommend individual or groups of investments to acquire or offer for sale.
- Assess a company or firm’s past or present financial performance, such as profits, losses, values.
- Analyze business and economic trends in sectors or categories such as industries, countries and geographic regions.
- Determine a company’s value by examining its financial statements, such as balance sheets, income statements and cash flow statements.
- Research a company’s background, management, organization, activities and performance through reading articles and reports and interviewing directors and officers.
- Prepare reports detailing analysis, performance (past, present and future) and the effects of various events or economic conditions on a firm, industry or economy.
Financial Analyst Job Essential Skills
Analytical Skills. The financial analyst job description involves analyzing financial statements, reports, news accounts and data to determine the suitability of stocks, bonds and other investments.
Decision making Skills. Financial analysts must recommend what investments and when to buy, hold or sell and how to fashion investment portfolios.
Research Abilities. The acquisition of information, even including from obscure sources, shapes the advice and decisions of financial analysts. These professionals must probe company management to learn their strategies and practices. Research also includes finding news accounts, reports, social media posts and other information in the public domain.
Math Skills. Any financial analyst job description includes mandatory math skills. These professionals must be able to calculate cash flows, profits and various financial ratios to arrive at reliable estimates of a company’s value.
Computer Skills. Financial analysts rely upon computers apps and models to forecast future earnings, cash flow and economic indicators such as gross national product.
Becoming a Financial Analyst
Financial analysts usually must earn at least a bachelor of science in business administration or finance. A master’s degree in business administration or finance can enhance job prospects. Many financial analysts seek or take positions, such as securities brokerage or dealing, that require a license from the Financial Industry Regulatory Authority.
Qualifications & Training
As a minimum, a financial analyst must earn a bachelor of science in business administration or finance. However, employers seek those with MBAs or a master’s in finance to hold advanced or supervisory positions. Classes in undergraduate and master’s programs cover subjects such as math, accounting, statistics, finance, economics, pricing and valuation of securities and risk management.
A financial analyst must be registered, or licensed, by the Financial Industry Regulatory Authority to participate in securities transactions for clients. Candidates are tested on subject such as securities regulation, the securities industry and its structure, types of securities and financial operations. Financial analysts must distinguish among bonds, stocks, options and other securities. Some of the tests are required to hold supervisory jobs in the securities industry.
With four years of professional experience, which does not have to involve investment work, and a bachelor’s degree, analysts can test for and obtain certification as a Chartered Financial Anaylst (CFA). The CFA course of study includes subjects such as ethics, financial statements, securities, corporations and tools to analyze markets.
Financial analysts typically begin their work in a specific field or type of security. As experience grows, the financial analyst might turn to portfolio or fund management. As a portfolio manager, a financial analyst selects the right mix of securities for a company portfolio. Fund managers focus on individual investors, taking into account their tolerance for risk and goals for returns. Experience is typically required to sit for licensing exams from FINRA in order to hold these and other positions involving the sale or purchase of securities or supervision of these activities.
According to the U.S. Bureau of Labor Statistics, roughly a third of financial analysts worked more than 40 hours a week in 2014. A survey by ONet Online reveals 89 percent of respondents worked over 40 hours per week. Analysts may research and analyze reports after the close of business. During office hours, financial analysts often place and return calls or email messages.
With corporations operating globally, financial analysts must track events in places or execute trades in markets in different time zones. Even within the United States, financial analysts along the West Coast might start their days as early as 5 a.m. to 6 a.m. to be ready for the opening of markets in New York around 9:30 a.m. Eastern Time.
Job Outlook & Advancement Opportunities
The U.S. Bureau of Labor Statistics reports that, in May 2015, financial analysts averaged a salary of $95,320 per year. The median annual salary stood at $80,310. Moreover, financial analysts in the 90th percentile earned $160,760 or higher a year.
According to the U.S. Bureau of Labor Statistics, financial analyst jobs should grow by 12 percent, or 32,300, from 2014 to 2024. Demand for financial analysts could increase because of complex and diverse securities and other financial products. Investors and financial firms may seek analysts with expertise or knowledge in emerging markets or foreign regions.
To conclude, financial analysts receive education, training, licensing and certifications that prepare them to evaluate investments and companies for individual or institutional clients. As a result, financial analyst career can offer salaries above $100,000, depending on experience, certifications and the ability to land senior or supervisory positions. Candidates can enhance their employment prospects by exhibiting a grasp of international and emerging markets, and being aware of the requirements in financial analyst job description.