Financial analysts provide financial guidance to individuals and companies making financial investment decisions. They analyze the performance of individual securities, bonds, and various other forms of investments. Analysts assess historical and current financial data. With the help of this information they make recommendations to investors. They help manage risk by providing investment management services.
To become an analyst in the financial industry, you need to have a four-year bachelor’s degree along with a master’s degree. You should also obtain the required experience in finance. This experience can be obtained through internships or working with firms that specialize in financial investments. Companies may hire analysts from within the organization or outsource the work to agencies or outside firms. There are a number of industries that rely on financial analysts such as:
o Insurance. Financial analysts make recommendations to senior management about how to manage risk. They look at the insurance company’s portfolio to identify areas of risk and how to contain them. The insurance industry has specific regulations about when an analyst can make recommendations to senior management about changing policies. They must also be licensed by the government to provide professional advice to insurance companies. Associate degrees and professional certifications can help you achieve the analyst position in the insurance industry.
o Energy sector. Energy sector relies on financial analysts to make technical and fundamental analysis of their investments. They examine the company’s pipelines, drilling and development programs, production data, as well as their capital budgeting and financial projections. To be eligible for a good energy analyst career, it is important to have a bachelor’s degree, with a focus on energy studies, before entering the job industry.
o Commercial Banking. Many banks hire financial analysts to monitor and improve their customer service practices. A commercial banking analyst can focus on customer retention, increasing the bank’s profitability, improving customer relations, and providing an overall image of the bank to increase its market share.
o CFA. Or Certified Financial Analyst. A CFA (Chief Financial Officer) is usually a former investment banker or other financial analyst. They have the knowledge of industry trends and financial statements and can communicate these concepts to the upper management team. CFAs must have at least a three-year degree, but typically a four-year degree is required to become a CFA. A CFA has to pass the CFA exam, which can be administered by CFA associations around the United States.
o CFA Training. In order to become certified as a CFA, you will need to complete an associate’s degree at a community college or a trade school that has a financial training program. After you complete the coursework, you will need to take the CFSA exam, which is a nationally recognized examination that is administered about a year after you graduate. The exam is a combination of written and analytical questions, and it is based on the same exam that is taken by CFAs in the United States. Once you pass the test, you will receive your CFSA charter and a CFA logo. However, while you are still certified, it is recommended that you become an entry-level financial analyst within your company first, because the financial statements of a small company will not be as complex as those of a larger corporation.
As a financial analyst, you will play a significant role within a company. You will conduct studies on how the company should invest its money, create financial statements for reporting purposes, and help make recommendations for changes in strategy and practice. Your analysis and expertise will be greatly used by finance department managers, stockholders, management, creditors, and mortgage brokers. You will also be involved in the formulation of policies and strategic plans for growth, budgeting, investment, financing, marketing, mergers and acquisitions, and internal controls. A career path in finance can lead to many other opportunities such as executive positions, investment banking, investment management and investment technology.