Whether you’re at the start of your career or a mid-level executive perusing the available finance jobs online, staying aware of the various roles in your field is key. Take, for instance, that of financial analyst. What does this job entail, exactly? Here is a closer look at this highly skilled (and quite profitable) finance job.
What they do
Financial analysts are consultants of a sort, providing information, opinions and most of all guidance to businesses and individuals. That’s according to the U.S. Bureau of Labor Statistics (BLS), who describe these analysts as also assessing “the performance of stocks, bonds, and other types of investments.”
To stay on top of their duties, they must study current and historic economic trends and financial data, extensively. This applies not just to the overall market in which they are operating, but also to the business they are advising. They must look closely at the company’s financial statements, commodity prices, cost, expenses, tax rates and more to project its future earnings and ultimately estimate the business’ value.
The financial analyst must be a highly informed resource on all factors that could influence any investment decision.
Can this role be broken down into other finance jobs? Yes. The BLS lists four types of financial analyst: fund managers, portfolio managers, ratings analysts and risk analysts.
Fund managers devote their time to hedge and mutual funds. One commonality they share with portfolio managers is that they both have to make split-second, reactionary decisions to buy or sell as the markets they monitor fluctuate.
Portfolio managers oversee a group of people responsible for investing a company’s or individual’s moneys in a portfolio. This might include a scattering of investments across products (stocks, bonds, etc.), industries and regions. In addition to supervising the investment team, portfolio managers are responsible for explaining the team’s decisions as well as its options in meetings with investors.
A ratings analyst is an evaluator of sorts. He studies closely both companies and governments to determine their ability to pay their debts. These debts include not only those to other companies and governments, but simpler debts such as bonds. The analyst does a close examination and reports his findings to a management team, who then determines the company or government’s rating. This is the rate of risk of that entity not being able to repay its debts.
Finally, risk analysts attempt to counterbalance the unsteady and fickle nature of investing. They look at the specific risk of individual investments, and come up with ways to offset those risks in an inherently unpredictable industry. For example, they might advise investing in unrelated stocks or carrying a wide balance of investments in a single portfolio.
What they need
So how does one become a financial analyst or get a related finance job? The typical schooling is a bachelor’s degree in business or a related field followed by a master’s of business administration or master’s degree in finance.
In the States, many of these positions require licensure by the Financial Industry Regulatory Authority (FINRA), the BLS reports. However, when applying for jobs it is not necessary, much of the time, to have this license, because FINRA requires candidates to be sponsored by an employer. Therefore most companies expect financial analysts to get their licensure after they are hired.
To leverage advancement in this field, or open up the possibility of higher-paying finance jobs with Moneyjobs.com down the road, many choose to pursue certification. One popular certification is Chartered Financial Analyst (CFA). This is administered by the CFA Institute, and requires candidates to pass three exams, have a bachelor’s degree and four years of experience before applying.
What they earn
The national average salary for a financial analyst in the U.S. is $86,401, according to CBSalary.com. That figure comes from July, 2013. The BLS reported just three years ago, in May, 2010 — the most recent year for which data was available — that those in the top 10% of financial analysts were making more than $141,700 annually.
Author- The above article was contributed by Alex. He is a career consultant and loves sharing his thoughts. Meet him over Google+.