What is a Financial Analyst?
A financial analyst is someone who handles various aspects of other people’s money. Some analysts work as investment advisers, either on their own or with a company. Depending on the wealth and size of their clients, they can manage portfolios worth millions of dollars. Other financial analysts work for banks or insurance companies, ensuring that even when a loan defaults or a claim is paid, the company maintains positive cash flow. Others specialize in mergers and acquisitions, determining the profitability of two companies combining their forces in a merger or a company buying another company in an acquisition.
What does a Financial Analyst do?
Financial analysts assess the financial condition of their area of expertise and produce appropriate reports, both written and oral, on their recommendations. They monitor and interpret available data such as industry and economic trends, forecast current trends in likely future profitability, determine a fair market value for the sale of company shares, and recommend shares to your company or investors.
Some financial analysts support the growth of “green” industries and can analyze the costs and benefits of including green technologies in new construction. They can monitor and interpret climate change or clean water data to calculate supply and demand, or invest in water rights, energy futures and other marketable products within the industry.
Successful financial analysts are excellent critical thinkers; They can logically determine the best course of action with respect to any potential investment. They must be permanent and active learners to keep up-to-date with market conditions and new technologies, and to be able to predict the long-term results of their investment decisions.
An analyst identifies potential problems within his investment options and looks for a solution to the problem or opts for the opportunity. Excellent communication skills, combined with the ability to communicate large amounts of complex data in clear and concise presentations, allow the analyst to convey their investment opportunities in a way that encourages clients to sign.
An analyst is willing to take risks in order to generate profits, but is also an expert in risk management and sensitive to the level of risk acceptable to his clients. Integrity, reliability, attention to detail, and initiative are the hallmarks of a successful analyst.
Financial analysis is a fast-paced, cutting-edge, and highly competitive career. A thorough knowledge of the chosen fields at the macroeconomic and microeconomic level increases an analyst’s opportunities for advancement within their area of specialty.
What is the workplace of a Financial Analyst like?
Most financial analysts work in an office environment. Some analysts travel to visit potential investors and conduct practical assessments that allow them to accurately decide the value and potential risk of each investment. Financial institutions and insurance industries employ the majority of analysts, usually in financial centers around the world.
What are the different areas of finance that a financial analyst can work on?
Aside from the typical office environment where financial analysts work, you also need to consider the different areas of finance in which they may work.
Investment banking is the area that most people associate financial analysts with, but some financial analysts secure jobs in corporations and businesses that are not totally focused on investing. These companies can participate in any business area. The financial analysts who work for those companies are there primarily to manage financial portfolios and act as advisers. For example, they can manage budgets and advise on the condition of the company’s finances. However, if they measure a potential area where the corporation or business can expand or invest, they can advise relevant personnel to carry out the appropriate expansion or investment. That is why financial analysts are an invaluable asset to companies.
Is Financial Analyst Becoming a Good Career Choice?
Depending, it could be a challenging, rewarding career choice, or it could be an arduous and exhausting career choice.
Certainly this is a good career for anyone excited about risk management, numbers and algorithms, and a fast-paced work environment.
This is an especially suitable and good career if you are capable of risky thinking and keen visionary skills regarding finances and budgets, but are also comfortable communicating these in a simple and effective way.
The financial rewards of being a financial analyst are certainly attractive, but they should not be your primary motivation for entering this career. Satisfaction, for a financial analyst seeking a career with longevity, will come from engaging in critical thinking each work day and conducting constant detailed analysis.