A financial analyst can also be known as a securities analyst, research analyst, equity analyst or investment analyst.
An analyst will write reports on the companies they are supposed to cover, trying to describe the businesses and their opinion of the company's investment potential, usually from a fundamental analysis standpoint. They also summarize that report with a rating, such as "buy", "sell", "market perform", "overweight", "hold", etc
The analysts get their information by studying public records of the company and by participating in public conference calls where they can ask direct questions to the management.
Financial analysts, also called securities analysts and investment analysts, work for banks, insurance companies, mutual and pension funds, securities firms, and other businesses, helping these companies or their clients make investment decisions. Financial analysts employed in commercial lending perform "balance sheet analysis," examining the audited financial statements and corollary data in order to assess lending risks. In a stock brokerage house or in an investment bank, they read company financial statements and analyze commodity prices, sales, costs, expenses, and tax rates in order to determine a company's value and project future earnings. In any of these various institutions, the analyst often meets with company officials to gain a better insight into a company's prospects and to determine the company's managerial effectiveness. Usually, financial analysts study an entire industry, assessing current trends in business practices, products, and industry competition. They must keep abreast of new regulations or policies that may affect the industry, as well as monitor the economy to determine its effect on earnings.
A Day in the Life
Financial analysts gather information, assemble spreadsheets, write reports, and review all non-legal pertinent information about prospective deals. They examine the feasibility of a deal and prepare a plan of action based on financial analysis. Being an analyst requires a vigilant awareness of financial trends. Analysts have a heavy reading load, keeping abreast of news stories, market movements, and industry profiles in financial newspapers, magazines, and books. Most analyst jobs are in banking houses or for financial-advising firms, which means following corporate culture and wearing corporate dress. If a deal demands it, they must be prepared to travel anywhere for indeterminate lengths of time. Those who wish to rise in the industry should note the necessity of significant “face time,” attending social events and conferences and spending downtime with people in the profession, which can be expensive; this social circle tends to gravitate to high-priced attire and costly hobbies, habits, and diversions. Analysts sacrifice a lot of control over their personal lives during their first few years, but few other entry-level positions provide the possibility of such a large payoff come year’s end.
Many employers use bonuses, which can be equal to or double the beginning analyst’s salary, to attract and hold intelligent personnel. Successful financial analysts become senior financial analysts or associates after three to four years of hard work at some firm. Those with strong client contacts and immaculate reputations start their own financial consulting firms. Many work as analysts for about three years and then return to school or move on to other positions in banking. Financial analysts work long hours, and deadlines are strict. “When you have to get the job done, you get the job done. Period,” emphasized one. The occasional fifteen-hour day and night spent sleeping in the office is mitigated by the high degree of responsibility these analysts are given. The long hours breed a close kinship. Over 65 percent called their co-analysts extremely supportive, and many labelled them a major reason they were able to put up with the demanding work schedule. Most people become financial analysts because they feel it is the best way to immerse themselves in the world of finance and a great way to earn a lot of money. They’re right on both counts, but be aware that the immersion is complete and somewhat exclusive, and although people earn a lot of money, few have the free time to spend it all how they’d like to.
THE JOB
A financial analyst assesses a company’s financial needs and strategies. Various forms of financial budgeting are a key part of the job.
One of a financial analyst’s main purposes is to find ways to increase company profitability.
When working at public companies, financial analysts may also spend time justifying -- or trying to push for an increase in -- the organization's stock price.
Some financial analysts review potential acquisitions and sales.
SKILLS
A financial analyst needs to have a thorough understanding of corporate finance, including balance sheets, income statements, cash flow, capital budgeting, profit and loss, time value of money, pro forma statements, and mergers and acquisitions. A good understanding of capital markets is also likely to be required.
Being able to communicate this information on paper and in conversation to audiences with varying levels of understanding is also critical.
Knowing how to effectively use financial software (Excel, Lotus, etc.) is also necessary for success in this field.
EDUCATION
A bachelor's degree in finance or business is usually a prerequisite for financial analyst positions; sometimes an MBA is necessary.
Professionals in investment banking sometimes seek the Chartered Financial Analyst (CFA) designation, which is governed by the Association for Investment Management Research.
OUTLOOK
The outlook for financial managers is good overall. However, the banking industry, which employs the most financial managers, is expected to continue to consolidate and reduce the number of financial managers.
Some financial managers may be hired on a temporary basis to see a company through a short-term crisis or to offer suggestions for boosting profits. (Sources; Wikipedia, Princeton Review and Monster)
