World is globalizing and changing. Exponential growth in technology and integration of technology in market operation have transformed the way markets behave. Such integration has also changed the way the financial market operates and the way market participants interact.
Financial operations have seen a dynamic shift. Now, we have as amazing technology as blockchain and we now exchange worth in NFTs and Cryptocurrencies. Similarly, there are plenty of mentionable achievements in todays’ financial achievements.
Despite such powerful developments, there are complications with this tech-economy. Now, the financial environment has become more fragile and manipulative. Unfiltered flow of data has decreased the quality of information. Similarly, the value of financial instruments has decreased over time.
Similarly, financial institutions and participating stakeholders have changed the way they look at the market and operations. Investors and speculators are becoming more aware and are making informed decisions. There is a top notch competition among institutions to provide the profitable business to the clients.
There are more and more individual participants in the market and market analysis has become a greater deal to take competitive advantage. Financial analyst is one of the most coveted careers in such a fintech world.
What is a Financial Analyst ?
A financial analyst is one of the highest paid careers in the field of financial service industry. The average base salary of a financial analyst in different countries are:
|Country||Average Salary (2021)|
|United States||USD 83,000|
|United Kingdom||USD 43,150|
What are the Jobs and Responsibilities of Financial Analyst ?
Financial analysts are responsible for the collection of data. They collect information from a company’s financial operations, macroeconomic factors, industry research relevant to the business and industry. Analysts have a key skill requirement i.e. research and analytics, they use this skill for data processing. In data processing, analysts convert the data into meaningful information which can later be used for some kind of leverage.
Projections and Forecasts
Financial analyst analyzes the processed data for two reasons:
- Situation analysis
- Projection and Forecast
Analysts are responsible to assess the current situation and use the historic information to predict, project and forecast the future. Financial analysts analyze the current premise, back the premise with historical data and arrive at certain projections. Projection and forecast involves a strong sensibility of strong reasoning and analysis, which is another required skill in a financial analyst.
Building the Financial Models
Financial analysts have their presence in the areas like investment banking, corporate finance and equity research. They specialize in these fields. Building financial models to validate their prediction is very significant. Financial analysts develop various models that lead to optimal benefits. Whether it is about effectively utilizing the fund or investing in a certain portfolio or making as crucial a decision as Merger and Acquisition, financial analysts validate their prediction with a model.
Financial Modeling requires a detailed knowledge about the subject matter and know-how of different financial models.
Interpretation of Financial Results
Internal assessment is the integral part of Financial analyst. They are responsible for interpreting the financial results. Financial analysts are responsible for administering capital and operating budget of the company. Similarly, they also oversee the design, documentation and implementation of various integrated systems and applications for periodic financial reporting. Analyst also compiles and analyzes financial information from all the components of the organizational entity. Such work definitions are necessary during situation analysis and projections.
We know, analysts are responsible to analyze the financial information from all the components (functions). Together with this, analysts are responsible for providing leadership, administrative management, and operational coordination to various technical, professional, and administrative personnel. If analysts are in equity research, their role of coordination is even stronger.
Fund, Portfolio and Equity Management
Financial analysts are exclusively working in the field of hedge funds, mutual funds and equity. Analyst supports management teams/equity and fund managers to make better and informed decision making. They play a significant role by providing their expert advice to analyze market and business data.
Risk and Rating Analysis
Analysts look after all the financial information that is related to business operations. Their niche analysis guides business or stakeholders through the best strategies. This involves rating different financial instruments and making a risk assessment. Research activity, data processing will help analysts locate the source for potential losses.
Who can be a Financial Analyst ?
There is no specific inclusion regarding who can be a financial analyst. Anyone with a proper knowledge can be an analyst.
Financial analysts have different roles to play and qualification of an individual for the role depends upon where they work. If one is working as a financial analyst in a structured ecosystem like an organization, s/he must have a defined qualification. If they are working remotely and independently, knowledge without qualification is enough to be a financial analyst.
No matter where you work, a financial analyst must have some skill set. Some of such common skill sets for a financial analysts are:
A financial analyst must be well versed with accounting rules and practices. They must know the accounting principles and understand the rules, regulations and prevailing standards in accounting operation. Together with this, they must have skills needed during accounting applications.
Research and Analytical Skills
As financial analysts are very much involved in data processing, prediction, projection and forecasts, they must have the required research and analytical skills. Decoding the information from data is very essential and extracting the effective information from data requires proper research and analytical skills.
It is a must for financial analysts to know the technical skills of their domain. There are various technical tools, programs, and software which require proper training. Analysts must know some of the basic tools which are generally used for data processing and projections. Data management tools, financial modeling tools etc. are basics for a financial analyst
Some of the job responsibilities of a financial analyst involves idea briefing, client dealing, training, mentoring, supervision etc. Apart from this, analysts require good writing skills as good communication skills wean information more effectively and efficiently.
Problem Solving Skills
A financial analyst must have a problem solving approach. This profession includes excessive use of data and analysis which guide management and the whole organization. They are generally involved in accessing old or historic information to disseminate something important to the organization. That could be any type of solution or suggestion.