Financial Analyst

Financial Analyst Career Overview

Financial analysts work within a company researching microeconomic and macroeconomic conditions along with company fundamentals to make a variety of financial recommendations. Included in the analyst's recommendations is a course of action, such as to buy or sell a company's stock based on various market indicators.

Financial analysts must be up to date about current developments in their field, as well as in preparing financial models to predict future economic conditions. They must evaluate data, identify patterns, and make predictions about buying or selling various investment and securities products. Financial analysts with asset management responsibilities often make selling and purchasing decisions for their clients, and some focus on determining risk levels connected with different investment opportunities.

Financial Analyst Training and Education

A bachelor's degree is absolutely vital for a career in this field. With tough competition, employers simply do not need to higher anybody with an associate's or a certificate.

As an undergraduate, the best courses to take to prepare for a career as a financial analyst are business, economics, accounting, and math. Junior analysts hired by firms usually have a background in these subjects, while those holding MBA's are often hired immediately as senior analysts.

Financial Analyst Career and Salary Outlook

Employment for financial analysts will continue to grow in the foreseeable future due to the expansion of both individual and business investment. As investment continues to increase in popularity, and as the next generation prepares to retire, financial analysts will be there to provide them with the services they need. Investment banking will also continue to need financial analysts to generate funds and assess company moves.

In 2002, the median salary for financial analysts was just over $57,000. The salary of the middle half ranged from $43,600 to $76,620 while the bottom 10th percent brought in less than $34,570. The Top 10th percent earned in excess of $108,060. There are financial planners whose incomes reach well into the six figures each year.

Career Fields/Specializations

Financial Analyst Career Fields and Specialization

Financial analysts usually specialize their expertise based on the type of company they work for. Analysts can be employed by banks, investment firms and banks, or insurance agencies. Three basic categories of financial analysts include those that work for “sell-side” investment companies, those that work for “buy-side” firms, and those that are employed by investment banks.

Buy-Side and Sell-Side Financial Analysts

Most analysts work for either buy-side or sell-side investment firms within the investment industry. Those working for buy-side firms research stocks for an in-house fund, whereas sell-side analysts write research reports for buy-side firms. In buy-side firms, analysts research companies as they look for stocks to add to an investment fund. Once the stocks are added to the fund, the research analyst then tracks the stock in order to determine when or if the fund's position in that stock should be sold.

Sell-side financial analysts evaluate and compare securities in a given sector, and make reports with certain recommendations based on their findings. Recommendations such as buy, sell, or hold carry a great deal of weight in the investment industry.

There are even more specific subspecialties within these specialties. Examples include individuals who specialize in equities or analyzing fixed-income instruments. Analysts may also specialize even further within a specific sector or industry, such as energy or technology.

Banking Firm Financial Analysts

Financial analysts in investment firms play a role in determining whether or not certain deals are feasible for a firm based on the company's fundamentals. This type of financial analysis includes IPOs, mergers, and acquisitions. Banking firm analysts assess financial conditions and depend on modeling and forecasting to make recommendations to senior partners.

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