The term premium for bonds is the excess return for holding a long bond over a series of short rates. Employment of financial analysts is projected to grow 16 percent from 2012 to 2022, faster than the average for all occupations. A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth. A financial analyst career often includes studying and evaluating economic and business trends, as well as current and historical data. Financial analysts determine a company’s value through studying the company’s financial statements, analyzing commodity prices, sales, costs, expenses, and tax rates, and projecting the company’s future earnings.
Two primary types of financial analysts exist: buy side analysts, who create investment plans for organizations with large sums of money for investment, and sell side analysts, who advise financial services sales agents. Financial analysts working for the business media do not qualify as either type of financial analyst; they are considered impartial. Some specific types of financial analysts include: portfolio managers, fund managers, ratings analysts, and risk analysts.
Some financial analyst jobs may require a bachelor’s degree, such as a Bachelor of Accounting degree, Bachelor of Business Administrations degree, or a Bachelor of Finance degree. Related fields of study, such as economics and statistics, are also applicable to financial analysts. Financial analysts need to have a solid grasp on options pricing, bond evaluation, and risk management. Financial analysts typically obtain their licenses after obtaining a financial analyst job, as many licenses require an employer sponsorship.
The Financial Industry Regulatory Authority (FINRA) acts as the main licensing organization for the securities industry. Employers often recommend certification for financial analysts, which may also aid in advancement. After selecting a specific investment field to specialize in, financial analysts must gain experience. A financial analyst may advance in their career to a portfolio manager position or supervise a team of analysts and select the various investments for a company’s portfolio. A financial analyst may also advance in their career to a fund manager job, managing large investment portfolios for individuals. Analysts on the buy side work for companies that have a great deal of money to invest.
In addition to experience, a Master’s degree substantially helps financial analysts advance in their career. Forecast: 23 percent employment growth from 2010 to 2020 for financial analyst jobs, faster than the average for all occupations. Conversely, sell side analysts help securities dealers, such as banks and other firms, sell stocks, bonds, and other investments. The business media hire financial advisors that are supposed to be impartial, and occupy a role somewhere in the middle.