When you’re young, you ask your parents important financial questions; when you grow up, you ask a financial analyst. He is a Chartered Financial Analyst charterholder and is licensed as a Certified Public Accountant in Michigan. Dr. Jennings’ research has been published in Strategic Management Journal, Financial Analysts Journal, Journal of Investing, Advances in Financial Economics, Journal of Wealth Management, Journal of Pension Economics & Finance and Financial Services Review. Buy-side analysts develop investment strategies for companies that have a lot of money to invest. Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.
Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product. Investing is becoming more global, and some financial analysts specialize in a particular country or region. Companies want those financial analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover. Portfolio managers supervise a team of analysts and select the mix of products, industries, and regions for their company’s investment portfolio.
Ratings analysts evaluate the ability of companies or governments to pay their debts, including bonds. Risk analysts evaluate the risk in investment decisions and determine how to manage unpredictability and limit potential losses. Many financial analysts work at large financial institutions based in New York City or other major financial centers. In 2012, about 45 percent of financial analysts worked in finance and insurance industries. Most financial analysts work full time, and about one-third of financial analysts worked more than 40 hours per week in 2012. Financial analysts typically must have a bachelor’s degree, but a master’s degree is often required for advanced positions.
The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. An example is the Chartered Financial Analyst (CFA) certification from the CFA Institute, which financial analysts can get if they have a bachelor’s degree, 4 years of experience, and pass three exams. Financial analysts must process a range of information in finding profitable investments.
As they gain experience, they can become portfolio managers, who supervise a team of analysts and select the mix of investments for the company’s portfolio. Financial analysts must explain their recommendations to clients in clear language that clients can easily understand. Financial analysts must be adept at using software packages to analyze financial data, see trends, create portfolios, and make forecasts. Financial analysts must provide a recommendation to buy, hold, or sell a security.