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Career Overview
A financial analyst is someone who helps businesses and individuals when making investments. They perform this task by examining the performance of stocks, bonds, and other types of investments over time. There are two different types of financial analysts: buy-side and sell-side analysts. Buy-side analysts create investment strategies for institutional investors such as hedge funds, and insurance companies, whereas sell-side analysts help financial sales agents sell investments such as stocks. The difference between buy-side and sell-side analysts is that buy-side analysts are working with the process of buying investments while sell-side analysts are working with the process of selling investments (“Financial Analysts.”).
Financial analysts observe trends that are impacting an industry, region, or a specific product in order to assist companies in making important investment decisions. The reason that financial analysts are so essential in the business world today is because as a business becomes more global the need for having a specialist who understands what is happening in foreign markets is just as important for the business or company. Without financial analysts, companies would have no other choice other than to make important financial decisions on their own, with less of an in-depth understanding of how the market is in a certain industry or region has been progressing throughout time. While they could be making smart decisions on their own, it is generally a better idea to have a financial analyst to make these decisions with a deeper knowledge than the company alone would have (“Financial Analysts.”).
There are many different kinds of financial analysts, for example, a fund manager. A fund manager only works with mutual funds or hedge funds. Another specific example is a risk analyst. Risk analysts specialize in evaluating the risk in certain investment ventures. In short, their job is to limit losses in a company (“Financial Analysts.”).
Educational Requirements
The standard requirement to become a financial analyst is achieving a bachelor’s degree. A wide variety of degrees can provide the adequate knowledge needed, however, a degree related to finance such as accounting, economics, or statistics, is necessary. In order to sell financial products, it is required to be licensed through the Financial Industry Regulatory Authority. However, it is not expected to be certified before starting a job due to the fact most often the license requires sponsorship from an employer. While it is not required, some employers prefer certification, such as Chartered Financial Analyst (CFA) certification, from the CFA Institute. In order to achieve this certification, there are a few requirements. The Chartered Financial Analyst certification requires four years of work experience in the field and a completion of three exams. This certification is similar to an accountant’s CPA however it is not required as is the CPA in order to become a public accountant. Financial analysts also have the opportunity to become certified in a specific specialty (“Financial Analysts.”).
There are some qualities that are essential for financial analysts. In order to be a successful financial analyst, it is beneficial for one to have specific analytical skills needed to process a range of information in finding profitable investments (“Financial Analysts.”). As in most forms of business financial analysts need to be able to properly communicate, especially with their clients (“Financial Analysts.”). This means that they will need to be able to explain the information that the customer may not understand. Another skill that is essential is being able to use math. Math is often used to estimate the future value of possible investments (“Financial Analysts.”). Attention to detail is also key because even the smallest of errors could lead to catastrophic results.
Further education beyond a bachelor’s degree is not required in this field of work, however, it could be beneficial when trying to advance in a company (“Financial Analysts.”).
Career Path
There are possible advancements when being a financial analyst, for example, a financial manager. In order to become a financial manager one needs at least a bachelor’s degree, and then 5 or more years of experience being a financial analyst (“Financial Analysts.”). Taking on a management position will mean more responsibilities, such as being responsible for overlooking the financial stability of the company. More specifically, they have the responsibility of preparing the financial statements for the company, supervising those who are working in the field of a companies’ finances, and advising management when making financial decisions (“Financial Analysts.”).
As stated before, there is a minimum requirement of a bachelor’s degree, however, typically an employer would prefer to hire someone with a master’s degree. No certifications are required, however, achieving your CFA is very beneficial, and can set you apart from others during a hiring or promotion process.
After achieving the role of a financial manager, it is still possible for one to advance, for example, becoming a chief financial officer. The responsibility of a chief financial officer is to ensure the overall accuracy of a business through financial reporting. To achieve this role, one would need a past successful experience as a financial manager (“Financial Analysts.”).
Industry and Target Companies
Although not all companies are in need of a financial analyst, there are a fair amount of companies that are in need of one. Financial analysts are more often found working in businesses such as banks or mutual funds. This is because these organizations are heavily reliant on investments, which is what a financial analyst specializes in.
In the Fox Valley, there are many businesses that are looking for financial analysts, the majority being banks, such as Associated Bank. Another example was Thrivent, who is looking for a mutual fund analyst (“Financial Analyst Jobs in Appleton, WI.” ). However, not all the businesses that were looking a financial analyst were directly working with investment opportunities. Another business in need of a financial analyst is ThedaCare (“Financial Analyst Jobs in Appleton, WI.” ).
Salary/Earnings
As of May 2017, the median annual wage of a financial analyst was approximately $84,300 whereas the lowest earning 10% of financial analysts were making approximately $51,780 and the top 10% were making over $165,580 per year (“Financial Analysts.”). In Appleton, the average income of a financial analyst is approximately $19.33 an hour which is 27% below the national average (Financial Analyst Salaries in Appleton, WI.).
Employment Outlook
As of 2016, there were 296,100 financial analysts employed in the United States. There is expected to be an 11% growth within the time period of 2016-2026, that this career is growing faster than most careers in the business field (“Financial Analysts.”). This is growing so quickly because of the ongoing need for in-depth knowledge of different specialties. As the global market expands, the number of investment options also grows. The global market is growing because international business have been becoming more efficient due to the fact that transporting goods overseas has become more effective throughout time. This growth has lead to the need for more financial analysts.
Learnings & Reflections
Something that surprised me was the fact that there were not any required certifications that were necessary to become a financial analyst. The only certification that could be necessary would most likely be employer-sponsored, so one would not need to complete this certification until they for sure had the job. However, this is not enough of a con to deter me from being interested in this career. Something else that was unexpected to me is the fact that the incomes of a financial analyst can vary greatly. More often than not, however, financial analysts are making a large enough salary to support an upper middle-class lifestyle.
After learning more about this career I have found an interest in becoming a financial analyst. The reasoning behind this interest is that I enjoy working with money and I am also intrigued by the stock market and investing money. This is not the exact career I want to go into, however, it would be a good starting career due to the fact I hope to move up in a company someday.