Become a Financial Analyst

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Become a Financial Analyst

A financial analyst is responsible for company’s financial situation such as a financial report, financial plans, and decisions for investing. Financial analysts evaluate investment opportunities. They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other business. For those who work in the insurance company, they do money management. For those who work for a bank, they are responsible for analyzing a stock, bonds, or other financial instrument. Therefore, your duties depend on the type of analysts’ job.

Financial analyst's duties mostly are; recommendation individual investment and collections of investments, which are known as portfolios; evaluating current historical financial data; studying economic and business trends; examining a company’s financial statement to determine its value; meeting with company officials to gain better insight into the company’s prospect; and lastly assessing the strength of the management team and preparing written reports.

Proceeding systematic, the financial analyst typically starts by specializing in a specific investment field such as a bond, stocks, foreign exchange or derivatives markets. As they gain experience, they can become portfolio manager and depend on experience and knowledge, and they can become fund manager which is bigger investment managing. In addition, a junior analyst works his or her way up to a senior analyst in a period of three to five years. For the senior analyst, there is a potential to become a portfolio manager, a partner in an investment bank or senior management in a retail bank or an insurance company. Some analysts can also become investment advisors or financial consultants.

There are four types of financial analyst, which are a portfolio manager, fund manager, rating manager and risk analyst. Portfolio managers are responsible for portfolio and managing the money that stakeholders invested. Therefore, they can use all kind of investment instruments to return stakeholders’ money with profit. Fund manager wok with a hedge fund or mutual fund. They manage more money than portfolio manager does. They make buy or sell decision in reaction to quickly changing market conditions. Risk analysts evaluate the risk in investment decision and determine how to manage unpredictably and limit potential losses. Lastly for rating analysts, such as Standard & Poor's (S&P), Moody's, Fitch Group, rates the risk of a company of government not being able to repay its bonds.

For the education requirement of financial analyst, the minimum requirement is a bachelor's degree for an entry-level financial analyst position. For permanent and advanced position, according to Bureau of Labor Statistic (BLS), master's degree is requiremented. In reality, degrees are generally finance, accounting, and economics. However, other degrees such as mathematics, engineering, and physics are acceptable, and lastly, for an advanced financial analyst position, generally requires MBA degree with master's degree in finance.

To be a professional financial analyst, you will be expected to possess the knowledge of finance, economics, and math. Moreover, you should have also expert level financial modeling skills, strategic thinking skills, great presentation skills, knowledge of ERP system and related technologies, strong understanding of Sarbanes-Oxley. A financial analyst also should be able to manage time organized and to multitask and meet constant deadlines.

Most company requires a license and to be able to be a financial consultant, you must have a license. Two main licenses required for financial analyst position are Financial Industry Regulatory Authority (FINRA) and Chartered Financial Analyst (CFA). They are required either before starting the job or during the begging. The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. The Charted Financial Analyst (CFA) certification from the CFA Institute and financial analyst can become CFA certified if they have a bachelor's degree, 4 years of qualified work experience and pass three exams.

For those who want to know what a financial analyst salary is, the median annual wage was $81,760 in May 2016. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $50,350, and the highest 10 percent earned more than $165,100. Financial analyst with 0-2 years’ experience is expected to earn around $49,459 in 2014. A senior financial analyst who has more than 4 years’ experience will earn around $74,265 annually.

According to Bureau of Labor Statistics, financial analysts held about 277,600 jobs in 2014. The largest employers of financial analysts were as follows; securities, commodity contracts, and other financial investments and related activities 24%; management of companies and enterprises 14%; credit intermediation and related activities 13%; professionals, scientific, and technical services 12%, insurance carry and related activities 8%.

As a part of finance, technology plays a huge part in the lives and careers of financial analysts today. One of the most common requirements for a financial analyst is an understanding enterprise resource planning (ERP) systems, in-depth knowledge of big data and data analytical systems, as companies are stressing the importance of data-driven decision over intuition-driven decisions.

In conclusion, a career as a financial analyst requires preparation and hard working. Gathering information on the macro economy as well as information about a  specific company and the fundamental micro of their balance sheets. It also requires a lot of reading news to stay on top of the financial news. Being a financial analyst also often tends to involve a significant amount of travel to get a first-hand look at company operations on the ground level. Financial analysts work in primarily in offices, and many financial analysts work at large financial institutions based in New York or other major financial center.

The most successful junior analysts are ones that develop proficiency in the use of spreadsheets, databases, PowerPoint presentations and learn other software applications. Most successful senior analysts, however, are those who not only put in long hours, but also develop an interpersonal relationship with superior and mentor other junior analysts. Genuine satisfaction comes from being an integral part of the business landscape.

                                                                                                                                Ridvan Raphael Kol

  

Works Cited

Spiech, Steve . “How to Be a Great Financial Analyst.” Institute of Management Accountants. 2005.

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016-17 Edition, Financial Analysts, on the Internet at bls.gov/ooh/business-and-financial/financial-analysts.htm