Financial analysts may work for financial institutions as diverse as banks, insurance companies or investment firms. A financial analyst, otherwise known as an equity analyst, investment analyst, research analyst or securities analyst, examines a range of factors influencing the performance of stocks, bonds and other financial instruments in an effort to identify what is and what is not, a good investment. This may involve comparing the performance of a company with others in the industry, or with its own past performance, as well as looking at new products, market prices and trends that may affect future earnings or stock prices. Of course, there can be no guarantees, but financial analysts use the latest, most accurate information available to increase their chances of success.
The principal responsibilities of a financial analyst include collating and analysing financial statements from various sources, such as financial publications and services, investment banking firms, government agencies and other sources, together with the preparation of reports based on the research. The process inevitably involves the use of spreadsheets and other statistical software packages, but as well as "number crunching" the information available from public company records, financial analysts may be required to interview company management to obtain information that may not otherwise be immediately obvious.
The "nuts and bolts" of analysis, study and research are often left to junior financial analysts, while financial planning and decision making based on the results are placed in the hands of senior financial analysts. Indeed, financial analysts are expected to keep themselves abreast of the latest techniques and trends in the industry, with a view to providing better service to the organisation and its clients.
Depending on the exact nature of the employer, financial analysts may be responsible for determining the price at which securities are syndicated or contacting brokers to purchase investments on behalf of companies.
Skills & Qualifications
Financial analysts are typically educated to degree level in business administration or a similar, business-related subject. Indeed, many hold a postgraduate degree, such as a Master in Business Administration (MBA), or have achieved the entry requirements for membership of the Chartered Financial Analyst (CFA) Institute.
The CFA Programme involves three levels of examinations that must be passed, but candidates must also meet professional and ethical criteria in order to earn a CFA charter. Both the MBA and CFA study programmes examine the theory and practice of business, management and investment principles and, as such, can be useful for anyone seeking a position as a senior financial analyst or similar.
Graduates with first degrees in business, economics, statistics and similar disciplines ere eligible for junior financial analyst positions and financial institutions usually offer some level of in-house training. Formal education aside, financial analysts must demonstrate an understanding of corporate accounting, strong analytical and communication skills, orally and in writing and an eye for detail. Many financial analyst roles include an element of internal and/or external auditing, so experience of planning audit projects, advising on audit processes and procedures and managing a team of staff may also be advantageous.