What is a Financial Analyst? 

A financial analyst provides informed financial insight to businesses and individual investors regarding the market and economic trends. They must identify and forecast future risks and trends based on the current and past markets. Their reports offer strategy and guidance that is data-driven, carefully researched, and organized. 

A financial analyst typically spends his day doing the following tasks.

Gathering and Organizing Data: A financial analyst researches and gathers internal and external data, such as historical financial reports, macroeconomic data, and industry research. They may also include accounting data, stock price information, and industry statistics in their reports, which they organize into a single database. 

Analyzing Data: They analyze the information, paying close attention to ratios and metrics within the organization. They also analyze trends within the industry, comparing them to the organization’s performance. 

Forecasting: They create forecasts and projections about the fiscal future based on objective data analysis. While they may use one or more of the standard forecasting methods, a bit of “informed assumption” is also at play. 

Making Recommendations: Based on their findings, a financial analyst offers a recommended course of action regarding specific financial decisions and investments. Since analysts work in the business sector—typically as employees of a specific organization—a financial analyst reports to the CEO, CFO, or board of directors. 

Generating Models and Reports: Financial analysts spend significant time building financial models, writing presentations, and generating reports and dashboards. All the financial data they compile must be accurate, timely, and easy to understand. 

Required Skill Sets 

Financial analysts hold a highly technical role. Needed technical skills include these –

  • Financial literacy.
  • Data analysis. 
  • Accounting knowledge. 
  • Corporate finance knowledge. 
  • Financial software knowledge. 
  • Proficiency in Microsoft Excel and PowerPoint.
  • Proficiency in math. 

However, many soft skills are also imperative –

  • Communication. 
  • · Critical thinking. 
  • · Problem-solving. 
  • · Research skills. 
  • · Attention to detail and accuracy. 
  • · Collaboration. 

Types of Analyst Positions 

A wide variety of job titles and careers fall within financial analysis; however, each title falls into one of three general categories: 

1. Buy-side Analysts: They help their employers spend their money—whether they’re purchasing securities, other companies, or other assets. Their employers typically are institutional investors, mutual and hedge funds, insurance companies, nonprofit organizations, and independent money managers.

2. Sell-side Analysts: They help their employers—typically, financial institutions such as banks, stockbrokers, or insurance agencies—sell products and financial services. They help determine if it’s time to sell stock within a particular fund, help price and sell investment products, and project how an institution’s stocks and bonds will perform in the marketplace. 

3. Investment and Equity Analysts: They work for investment banks and help determine the feasibility of their clients’ mergers, acquisitions, and initial public offerings. Equity analysts walk banks through buy and sell decisions within equity markets.

Education Requirements 

Unlike some other roles within the finance industry, financial analysts are not legally required to have certification. However, in most instances, analysts will need a bachelor’s degree in finance, accounting, economics, or statistics. Some employers and positions require experience. Some require different licenses and certifications, depending on the role itself. As always, adding certifications and credentials to your name in accounting and finance pushes you along further and more quickly. 

Salary and Outlook 

According to the U.S. Bureau of Labor Statistics, the median salary for financial and investment analysts is $95,080. In addition, the bureau projects an 8% growth in the field through 2032, which is faster than the average occupational growth rate. 

No matter where you are in your career journey, The Robert Joseph Group can help you find your next step. With only the highest levels of excellence, we match top-tier talent to top-tier firms. Contact us today, and let’s get started!