Financial analysts are key members of an organization. They hold this crucial position due to the fact that money, as a resource, is itself the lifeblood of any organization. These professionals shift through the financial data of an organization and help in decision-making with regard to financial investment. Working independently they also help individuals analyze investment plans and stock options. They may also be referred as investment advisers or financial advisers and are often employed by mutual funds and brokerage firms.
Financial analysis has gained importance after the 2008 financial crises, as companies and individuals look for professionals who can guide them through the ups and downs of the market with keen financial acumen. The job profile is suitable for multinational organizations, finance, banking and insurance companies. After gaining experience, they may opt for self-employment as well. Jobs in this sector are expected to increase considerably in this decade. Let's take a look at some important aspects of the job, the educational background required and compensation that can be expected.
Financial Analyst - Job Description
The core job of any financial analyst involves:
General analysis of finance reports obtained from various departments such as sales, marketing, purchase, production, communication, etc.
Preparing reports on their research and making important suggestions on investments for companies as well as individuals.
Determining, planning and foreseeing marketing activities.
Developing new and effective techniques for financial planning, thereby rendering better service to clients.
Reading financial statements of the organization and taking into consideration the sales, expenses and production cost to recommend investments and forecast future earnings of the organization.
Keeping a tab on the latest trends and techniques in the field of financial analysis.
Coordinating with top management as well as other departments, to report the progress and changes, if any.
Assessing competitors, to help the company make necessary changes in their value delivery mechanisms.
Handling audits and working for client information support services.
Planning and decision-making on financial analysis.
Using statistical tools to analyze the facts of their report.
Educational requirements
Generally, a candidate with a bachelor's degree in business administration, finance and accounting, and/or statistics is preferred by organizations and may work as a junior financial analyst. Core education in financial studies must include investment analysis, marketing studies, international business, business laws, and managerial finance. Besides formal training and education, excellent analytical skills, a result-oriented approach and the ability to work in a team, along with excellent written as well as oral communication skills are prerequisites for the job.
Chartered Financial Analyst (CFA)
Many organizations today require that the candidate to be CFAs, a title awarded by the CFA Institute to professionals working in the field of finance and investment banking. The program is an extensive and difficult one, spanning a period of 4 years for the average candidate and involves several exams. Once through the professional is awarded a charter and becomes a charterholder, he can then become a member of the CFA Institute and also his local CFA chapter and apply to companies where there is need of a financial analyst.
FINRA Certification
The Financial Industry Regulatory Authority, or FINRA is a non-governmental body under the purview of the Securities and Exchange Commission (SEC), which serves as a regulator for several exchanges and brokering houses that are its members. It also holds several certification examinations for professionals who wish to work as a financial analyst in the industry. Most companies today have a mandatory requirement for a finance professional to have a FINRA certification, some of which are listed below.
- Series 7 General Securities Representative Qualification
- Series 63 Uniform Securities Agent State Law Examination
- Series 65 & 66 Uniform Investment Adviser Law and State Law Examinations
For analysts having more than $110 million in Assets Under Management (AUM), it is required that they register with the Securities and Exchange Commission (SEC). For those under this AUM limit, however, they are required to register with the state securities regulator. Investment firms usually have set processes which help in the necessary paperwork, however, this may have to be done by the analyst himself in case he is working independently.
Salary Data
| Mean Annual Wages | $87,740 |
| Mean Hourly Wages | $42.18 |
| Employment Opportunities | New York, California, Texas, Massachusetts, Illinois |
| Sector Growth | 23% |
| Number of jobs (2010-2020) | 54,200 |
Financial analysts are compensated well. Studies report that experience counts more than education when determining salary in this field. Moreover, the location of the job also matters a lot in the determination of the salary. An analyst with more than five years of experience may earn anywhere between $ 44,000 to $63,000. A CFA certification is also a positive influence on the salary offered. Senior professionals may find their salaries ranging anywhere between $ 66,000 to $ 120,000. According to the Bureau of Labor Statistics (BLS), a professional with over five years of experience may earn above $ 140,000. These figures may include annual bonuses and other benefits that may vary from employer to employer.
Financial analysis is a good choice for a career in finance. Concentrate on mobilizing knowledge and experience, combine it with cutting-edge performance in the initial days of your career to move forward. Although there is a healthy growth of new jobs in this field, the competition for them is also fierce and one must update ones skill sets often, to remain at the forefront of this exciting career.
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