Financial analysts – you might see them at banks, wealth management firms, brokerage firms, and other money/investment-related companies. You might also find them in larger multinational corporations. The average person doesn’t know much about what they do. Well, we know they do something in finance, make a lot of money, and perhaps they look at a lot of charts, but what else?
Here are 4 things you don’t know about financial analysts.
The job scope of a financial analyst is fluid
There is ‘no one strict definition on what constitutes an analyst’, according to Brian Perry, a financial author and portfolio manager/strategist. Generally, the overall duty of a financial analyst is to gather financial information, analyse it, and recommend good financial choices for the client. However, ‘client’ can refer to so many different entities, which makes it impossible to define the job scope of the average financial analyst.
For example, a financial analyst employed at a money management firm will be responsible in researching suitable investment options for clients. On the other hand, a financial analyst employed at a multinational corporation (MNC) will be involved in the overall budget and capital structure to strengthen the company’s financial position.
These are only two broad examples of clients. In reality, ‘clients’ can be broken down further. A financial analyst might have further specialisation, such as the niche industries they are employed in.
Financial analysts can be broadly divided into three types: ‘in-house’, ‘buy-side’ and ‘sell-side’
The ‘in-house’ financial analyst focuses on internal financial strategies rather than external. He/She is hired to evaluate the company’s financial status and budget, and ensure that the company spending is on track and goes where it should go (x). ‘In-house’ financial analysts tend to work for larger corporations, not necessarily in the finance sector.
The ‘buy-side’ refers to financial analysts who work for clients looking to ‘buy’ investments as financial gain or strategy. Clients may include organisations such as fund management companies, insurance companies, hospitals, colleges and universities (x).’Buy-side’ financial analysts might work for money management firms or hedge funds.
The ‘sell-side’, on the other hand, researches financial information (from various sources such as ‘company and industry knowledge, macro and microeconomic information, and current economic happenings’), analyses them, and sells them to buyers who seek the information. Buyers may include the ‘buy-side’ group and other entities (x). ‘Sell-side’ financial analysts might work for banks or brokerages.
Financial analysts have great work-life balance… depending on the location of their work
In 2015, Glassdoor – a website where employees can anonymously provide insight on their professions – rounded up financial analyst as one of the 20 professions with the best work-life balance in the UK. Financial analysts scored their work-life satisfaction rating as 3.5 out of 5 points (1=very dissatisfied; 5=very satisfied).
From the statistics, it is obvious that the career norms and demands can differ from one location to another.
A financial analyst is ‘encouraged’ to go to graduate school for senior positions
In this profession, a college degree is required. Usual college majors that lead to this profession include ‘accounting, business administration, economics, finance, management, and statistics’ (x). It is often considered an ‘entry-level’ job, even though one can be highly successful in it.
In order to be assigned a senior position, some sources say that a graduate degree or Chartered Financial Analyst (CFA) designation is the next step (x, x, x). A new MBA graduate might also be employed in senior positions from the beginning.
Do you want to know more about Financial Analysts?
As stated earlier, the financial analyst profession covers a wide range of responsibilities and norms, depending on factors such as employers and location, among others. As such, the salaries and benefits will be different. If you are interested to know more about this profession, here’s what to expect for U.S. and UK financial analysts.