A Financial Analyst collects and analyzes financial information (e.g. economic forecasts, trading volumes and the movement of capital, financial backgrounds of companies, historical performances, and future trends of stocks, bonds, and other investment instruments) in order to assist Bankers, Investors, and Corporate Finance Officers with mergers, acquisitions, and stock/bond offerings, as well as corporate expansions and restructuring. Financial Analysts are employed by a wide range of establishments throughout the private and public sectors, such as banks, brokerage houses, insurance companies, investment companies, manufacturing firms, trust companies, utility companies, and underwriting firms.
Financial Analysts can be divided into two broad categories. Buy-side Analysts and Sell-side Analysts. The former consists of financial professionals who develop investment strategies for companies that have a lot of money to invest. These companies, known as institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and non-profit organizations with large endowments, such as universities. On the other hand, Sell-side Analysts advise financial services sales agents who sell stocks, bonds, and other investments. However, some Financial Analysts work for the business media and belong to neither of the aforementioned categories.
Here’s a non-exhaustive list of common tasks Financial Analysts are required to complete.
- Evaluating the financial risks, preparing financial forecasts, financing scenarios, and other documents concerning capital management, and writing reports and recommendations for a company or the company’s clients:
- Planning short and long-term cash flows and assessing the company or the individual’s financial performance;
- analyzing investment projects;
- advising on and participating in the financial aspects of contracts and calls for tender;
- following up on financing projects with financial backers;
- processing bank reconciliations;
- assisting in preparing operating and investment budgets;
- building appropriate financial controls;
- managing changes and applying any corrective actions, as required, for existing financial controls;
- creating standard operating processes/procedures for billing and invoicing; and
- assisting in preparing documentation and communicating with Auditors during year-end and quarter-end reviews, including tax provisions and balance sheets.
- Preparing a regular risk profile for debt portfolios:
- Developing, implementing, and using different tools to manage and analyze financial portfolios.
- Preparing monthly, quarterly, and annual financial statements:
- Performing monthly reviews and analyses on overhead spending against budget;
- assisting during the preparation of the annual budget; analyzing profit margins at the end of every month, reporting observations to senior management and operations leaders.
- Selecting a group of products, industries, and regions for their company’s investment portfolio:
- Explaining investment decisions and strategies to investors and senior management.
- Evaluating the company or government entity’s ability to pay their debts, including bonds:
- Rating the risk of a company or government entity not being able to repay its debts or bonds based on their evaluation.
- Evaluating the risk in investment decisions and determining how to manage unpredictability and limit potential losses for the company:
- Making investment decisions, such as selecting unrelated stocks or having a combination of stocks, bonds, and mutual funds in a portfolio.
- Overseeing and supporting financial administrative staff to ensure deadlines are being met.
- Recommending individual investments and collections of investments (portfolios) to clients.
- Evaluating current and historical financial data.
- Studying economic and business trends.
- Reviewing the company’s financial statements to determine its value.
- Meeting with company officials to gain a better insight into the company’s prospects and management.
- Preparing and presenting written financial and economic reports.
- Meeting with investors to explain their recommendations.
The average Financial Analyst salary is $69,289 per year or $36 per hour. This is around 2.1 times more than the Median wage of the country. Entry level positions start at $49,000 while most experienced workers make up to $97,000. These results are based on 705 salaries extracted from job descriptions.