One of the most desirable jobs in finance is as an analyst. A finance analyst’s primary role is to sift through data in order to uncover opportunities or assess outcomes for corporate choices or investment suggestions. Finance analysts can work at all levels of a company, from junior to senior, and it’s a niche that often leads to other changes. It might be difficult to enter the financial services industry because it is so competitive. If you’re considering a career as a finance analyst, whether as a commercial analyst or a junior analyst, keep reading to learn more about the job description.
Who is a Finance Analyst?
Finance analysts evaluate financial data and apply what they learn to assist businesses in making decisions. Their research is frequently used to help corporations make investment decisions.
To develop predictions regarding businesses, sectors, and industries, finance analysts study macroeconomic and microeconomic situations as well as company fundamentals. They frequently make recommendations, such as purchasing or selling a company’s shares, depending on the company’s overall performance and outlook.
An analyst must be up to date on current events in their industry, as well as prepare financial models to forecast future economic circumstances for a variety of variables.
Required Education and Skills
The requirements for becoming a finance analyst are less strict and well-defined than those for many other high-paying jobs. Unlike law and medicine, there are no educational requirements for the entire career. Whether or not you need any special licensing relies on a variety of criteria, including your company and job responsibilities.
A bachelor’s degree – preferably with a major in economics, finance, or statistics – has become a de facto necessity for becoming a finance analyst in the twenty-first century. Accounting and arithmetic, as well as biology and engineering, are very highly regarded, especially if one wishes to pursue a career as a finance analyst in those fields. To have a serious chance of applying for an analyst employment with less than a bachelor’s degree, the competition is too fierce, and undergraduate or advanced degrees are too common in the job market.
The big investment banks, which pay out huge first-year salaries, almost exclusively recruit at premier institutions and universities, such as Harvard and Princeton. Candidates with less prestigious degrees can improve their prospects by continuing their study and acquiring an MBA from a top-ranked management school. Fresh out of business school, MBA grads are frequently hired as senior analysts.
A successful job as a financial analyst involves strong quantitative skills, skilled problem-solving ability, mastery of reasoning, and above-average communication skills, regardless of degree. Financial analysts must not only crunch numbers, but also communicate their conclusions to their superiors in a clear, concise, and persuasive manner.
Finance Analyst Job Description
Financial analysis is a vast field with many different job titles and career pathways. The three major categories of analysts in the financial/investment industry are those who work for:
- Firms on the buy-side (investment houses that manage their own funds)
- Firms on the sell-side
- Banks that make investments
Local and regional banks, insurance companies, real estate investment brokerages, and other data-driven businesses may hire financial analysts. A financial analyst might potentially offer value to any company that makes important decisions about how to spend money on a regular basis.
Analysts who work on the buy-side
The buy-side is where the vast majority of financial analysts work. They assist their employers in making financial decisions. These include investing in stocks and other assets for an in-house fund, purchasing income properties, or allocating marketing funds. Some analysts work for a third-party organization that provides financial research to its clients, rather than for a single employer. This demonstrates the importance of what a financial analyst performs; a whole business has sprung up around it.
Analysts who work on the sell-side
Analysts at a sell-side business assess and compare the quality of securities in a certain industry or area. They then prepare research reports with specific recommendations based on the results of this study. They also keep track of the equities in a fund’s portfolio to see when and if the fund’s holdings in such stocks should be liquidated. The suggestions of these research analysts have a lot of clout in the financial sector, notably among buy-side employees.
A sell-side analyst at a large investment bank is perhaps the most prestigious (and highest-paid) financial analyst job available. These analysts assist banks in pricing and selling their own financial products in the marketplace. They gather information on the bank’s equities and bonds. Then, they use quantitative analysis to forecast how these assets will perform. They provide buy and sell recommendations to the bank’s clients based on this research. Thus, directing them towards various securities from the bank’s product menu.
Equity Analysts and Investment Bankers
Investment banking analysts are frequently involved in analyzing if certain role transactions, including as initial public offerings (IPOs), mergers and acquisitions (M&A), are possible based on corporate fundamentals. Analysts evaluate current financial conditions and rely largely on modeling and forecasting to give recommendations on whether a particular merger is good for an investment bank’s client or whether a customer should invest venture money in a company.
Equity analysts assist huge banks in making purchase and sell decisions as well as attempting to find promising IPO chances. Their primary concentration is on equity markets; they assist in the identification of companies that offer the most lucrative ownership prospects. Equity analysts are typically among the highest-paid individuals in the financial research sector. This is partly due to their jobs; big investment banks pay top wages to attract the best employees.
Job Prospects for Finance Analysts
The finance analyst profession has a promising future in terms of employment. It’s a competitive field. According to the most recent BLS statistics, there were around 329,500 total jobs in this field in 2018. The profession is expected to grow by about 6% in the decade between 2018 and 28—an increase of 20,300 positions. According to the BLS:
Finance analyst demand tends to rise in tandem with general economic activity. When new businesses are started or current businesses expand, financial analysts will be needed to evaluate investment prospects. Furthermore, emerging markets around the world are presenting new investment opportunities. Thus, necessitating knowledge of the geographic regions in which those markets are located.
California, New York, Texas, Florida, and Illinois are the states with the highest employment levels in this occupation. Washington, D.C., Delaware, Connecticut, and Massachusetts are among the other high-ranking areas. New York, Washington, D.C., Connecticut, Massachusetts, and Alaska are the highest-paying states for analysts.
On the Job: What to Expect
Finance analysts must be watchful in acquiring macroeconomic information as well as information on specific companies, including examining their financial fundamentals via company balance sheets. Analysts will need to read a lot on their own time to stay up to date on financial news. Analysts read financial periodicals and websites such as The Wall Street Journal, The Financial Times, and The Economist.
Working as an analyst often necessitates extensive travel. Some analysts go on site visits to organizations to obtain a firsthand look at how things work on the ground. Analysts usually attend conferences with peers who specialize in the same field.
Analysts learn how to use spreadsheets, relational databases, and statistical and graphical applications in the office. They use these technologies to create extensive presentations and financial reports that include forecasting, cost-benefit analysis, and trend analysis, as well as to provide suggestions for top management. Analysts must also interpret financial transactions and ensure that documents meet regulatory requirements.
Advancement Opportunities
Analysts usually communicate with one other as coworkers in terms of interoffice protocol. This they do while simultaneously reporting to a portfolio manager or other more senior management role. Over the course of three to five years, a junior analyst may progress to senior analyst. Senior analysts who want to develop their careers can work as a portfolio manager, an investment bank partner, or a senior management in a retail bank or insurance firm. Some analysts go on to work as financial advisors or investment advisors.
Set Yourself Up for Success
Junior finance analysts who learn to use spreadsheets, databases, and PowerPoint presentations, as well as other software applications, are the most successful. Senior analysts who not only put in enormous hours but also create interpersonal relationships with superiors and mentor other junior analysts are the most successful. Analysts who advance in their careers learn to improve their communication and interpersonal skills by preparing written and spoken presentations that impress senior management.
Who is a Commercial Finance Analyst?
A Commercial finance analyst looks at a company’s revenue, operations, expenses, and competitors to see how it may improve its financial position. They discover trends and disparities in financial activity using mathematical models and predictive economic studies, and then use this information to advise policy changes and aims to increase profits. Essentially, they examine all aspects of a company’s operations and identify ways to improve its performance.
Commercial finance analysts work with huge organizations most of the time. However, some operate as contractors or consultants for various customers. They operate in traditional office settings, frequently as part of a larger financial analyst team. Commercial Analysts frequently work directly with senior management because they give policy recommendations.
Commercial Finance Analyst Responsibilities and Duties
A Commercial Analyst’s day-to-day work entails doing a number of fundamental tasks in order to examine a company’s financial performance and consider ways to improve it. To find these core Brand Manager roles and responsibilities, we looked at many job postings for Commercial Analysts.
#1. Analyze Sales Data
Commercial Analysts spend a lot of time reviewing sales numbers for different product lines. They go over past years’ and quarters’ records and compare them to current figures for patterns or discrepancies. For example, they might seek to see if a product sells better at a certain time of year, or if sales in a particular city are declining sharply.
#2. Make a list of ways to boost sales.
When the Commercial Analyst discovers profit margins that are too low, they devise strategies to boost sales. Commercial analysts forecast the effects of changes in the business model on sales using detailed economic and mathematical models. They might investigate whether a lower price will result in more sales or whether a more refined supply chain will reduce company costs.
#3. Make suggestions to executives for improvements.
After identifying policy or strategy adjustments, the commercial finance analyst compiles their data and results into papers and presentations that will assist executives in understanding the findings and making better business decisions. This frequently entails the creation of graphs, charts, and other visual aids.
#4. Examine the performance of your competitors and the market.
A commercial finance analyst must closely examine the performance of rivals and the product market to properly comprehend the business environment. This will give them a greater understanding of the business environment, as well as the reasons for the success or failure of a certain product or marketing plan, as well as the possibilities for future strategies.
What do Junior Finance Analysts do?
A junior finance analyst helps senior analysts with accounting and/or financial management tasks. A junior finance analyst may work in the finance or accounting departments, depending on the structure and purpose of the company. Gathering and analyzing market data, as well as preparing financial reports, may be part of the job description for a finance analyst. Research, interviews, and Internet searches can all be used to gather information. Written financial and statistical reports are commonly used to communicate analysis. Preparing monthly accounting statements, analyzing internal financials, monitoring budgets, and noting variations are common accounting activities. At the discretion of senior team members, a junior finance analyst may be relied upon to provide recommendations.
A junior finance analyst works in an office setting during normal business hours, though overtime may be required depending on the company’s demands. They may work with clients or internal resources, depending on the organization.
At least a bachelor’s degree in finance, accounting, business, economics, or a similar discipline is often required. Because the junior finance analyst must undertake data analysis, he or she must be able to use complex spreadsheet software such as Microsoft Excel. The ability to use database software is a desirable skill among junior finance analysts because much of the data acquired and used by them is housed in databases. Companies are also on the lookout for someone who can work autonomously with little supervision.
In Conclusion,
A career as a finance analyst necessitates planning and dedication, whether as a junior or as a commercial analyst. It also has the ability to provide genuine satisfaction that comes from being a vital part of the corporate environment, rather than merely financial rewards.
Finance Analyst FAQs
What does a finance analyst do?
Banks, pension funds, insurance companies, and other companies employ finance analysts. Finance analysts assist organizations and people in making financial decisions. They evaluate the performance of stocks, bonds, and other investment vehicles.
How stressful is a finance analyst job?
Finance analysts who work in investment banks are more stressed than those who work in corporations, and finance analysts who work in growth stage companies are more stressed than those who work in stable companies.
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