Financial analysts scrutinize clients’ finances, do financial research and make investment recommendations. At times, they might suggest strategies that enable clients to save money. They need to have an excellent understanding of how funds have performed in the past so that they can make predictions about future performance. They also need to stay abreast of how funds are currently performing so they can advise clients to make quick investment adjustments, should the need arise.
Knowing the difference between stocks and bonds or other investment instruments is an important part of a financial analyst’s job. They must know which funds are most compatible with their clients’ goals. Also, they must have expertise in report writing and presentations written in layman’s terms, so the client can understand what is being recommended. In addition, financial analysts do budgeting and assist with year-end accounting. For example, they do journal entries and, if necessary, they close inactive accounts. Auditing is also a task that financial analysts might do.
Job Settings
Financial analysts typically work in banks or brokerage/investment firms. If they are working the “sell-side,” this indicates that they are advising on the selling of assets or investments. If they are working the “buy-side,” it means that they are in the process of acquiring assets for clients and building portfolios for the clients.
In some cases, a financial analyst might be asked to advise corporations or charities that want to increase their financial holdings. A financial analyst might also do research or gather information that enables more profitable stock-trading or options-trading decisions at these organizations.
In banks, financial analysts manage bank assets and invest those assets to get the best return. In this capacity, financial analysts are usually involved in setting rates for loans that banks make helping banks set the rates for interest schedules. They also might be involved in other services to clients. Always, the financial analysts’ goal is to maximize profit.
Schooling
Financial analysts typically attend college to study business or accounting. Coursework consists of calculus, statistics, econometrics, financial reporting, investment theory and financial markets. In addition to classroom work, an internship is often required as part of the college experience for aspiring financial analysts. After college graduation, financial analysts will usually work for three years before pursuing a Master of Business Administration (MBA) in finance or accounting. In fact, the MBA is seen by many as the prerequisite degree for a financial analyst’s ability to have a high-paying career.
Licensure
Licensure or chartering is required for financial analysts on top of a bachelor’s degree and MBA. To attain licensure, financial analysts must show that they have sufficient education and training. Also, analysts must pass the Chartered Financial Analyst (CFA) exam. Once financial analysts attain licensure, they must take continuing education classes every year to ensure that they are aware of the most recent trends in the financial markets. The purpose of these certifications is to better guarantee that financial analysts will be accountable and responsible in their dealings with clients. After all, investing is a serious endeavor, and clients want to be certain that the financial analysts serving them are competent.
While the job of a financial analyst can be financially rewarding and mentally stimulating, it also tends to be a high-stress position. It also can rely heavily on social connections, as do many jobs. So if you’re considering a career as a financial analyst, start forming the network that will help you succeed!
Byline
Markus Preston focuses on finance, financial regulation, banking law, business development, mergers & acquisitions, accounting and other kindred topics; those interested in the financial world should take a peek at the banking jobs with moneyjobs.com by visiting moneyjobs.com.
Image credit goes to Caston Corporate.
