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A financial analyst is a
professional A professional is a member of a profession or any person who work (human activity), works in a specified professional activity. The term also describes the standards of education and training that prepare members of the profession with the partic ...
undertaking
financial analysis Financial analysis (also known as financial statement analysis, accounting analysis, or analysis of finance) refers to an assessment of the viability, stability, and profitability of a business, sub-business, project or investment. It is per ...
for external or internal clients as a core feature of the job. "Financial Analyst"
''
Princeton Review The Princeton Review is an education services company providing tutoring, test preparation and admission resources for students. It was founded in 1981, and since that time has worked with over 400 million students. Services are delivered by 4,0 ...
''
The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. Financial Analysts
Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor. It is the principal fact-finding agency for the government of the United States, U.S. government in the broad field of labor economics, labor economics and ...
Financial Analysts
collegegrad.com
The job title is a broad one:What does a financial analyst do?
Rasmussen College
Financial Analyst job description guide
Robert Half
Financial Specialists
Bureau of Labor Statistics
In banking, and industry more generally, various other analyst-roles cover financial management and (credit)
risk management Risk management is the identification, evaluation, and prioritization of risks, followed by the minimization, monitoring, and control of the impact or probability of those risks occurring. Risks can come from various sources (i.e, Threat (sec ...
, as opposed to focusing on investments and valuation.


Role

Financial analysts can work in a variety of industries. A large proportion of them are employed by mutual- and
pension fund A pension fund, also known as a superannuation fund in some countries, is any program, fund, or scheme which provides pension, retirement income. The U.S. Government's Social Security Trust Fund, which oversees $2.57 trillion in assets, is the ...
s,
hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...
s, securities firms, banks,
investment bank Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...
s, insurance companies, and other businesses, helping these companies or their clients make investment decisions. In corporate roles, financial analysts perform budget, revenue and cost modelling and analytics as part of their responsibilities; credit analysis is likewise a distinct area.Credit Analysts
Bureau of Labor Statistics
Financial analysts invariably use
spreadsheet A spreadsheet is a computer application for computation, organization, analysis and storage of data in tabular form. Spreadsheets were developed as computerized analogs of paper accounting worksheets. The program operates on data entered in c ...
s (and
statistical software The following is a list of statistical software. Open-source * ADaMSoft – a generalized statistical software with data mining algorithms and methods for data management * ADMB – a software suite for non-linear statistical modeling based on C+ ...
packages) to analyze financial data, spot trends, and develop forecasts. The analyst often also meets with company officials to gain a better insight into a company's prospects and to determine the company's managerial effectiveness. Analysts specializing in advanced
mathematical modeling A mathematical model is an abstract and concrete, abstract description of a concrete system using mathematics, mathematical concepts and language of mathematics, language. The process of developing a mathematical model is termed ''mathematical m ...
and programming are referred to as "quants"; see for an overview, and for the various roles.


Securities firms

In a stock
brokerage A broker is a person or entity that arranges transactions between a buyer and a seller. This may be done for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neith ...
house or investment bank, the analyst will read company financial statements - applying
financial statement analysis Financial statement analysis (or just financial analysis) is the process of reviewing and analyzing a company's financial statements to make better economic decisions to earn income in future. These statements include the income statement, bala ...
- and analyze commodity prices, sales, costs, expenses, and tax rates in order to determine a company's value and project future earnings. On the basis of their results, they write reports and make presentations, usually making recommendations—a " trade idea"—to buy or sell a particular investment or security. Typically, at the end of the assessment, an analyst would provide a rating recommending or investment action: to buy, sell, or hold the security. Senior analysts may actually make the decision to buy or sell for the company or client if they are the ones responsible for managing the assets. Other, "junior" analysts use the data to model and measure the financial risks associated with making a particular investment decision. See . Usually, financial analysts study a specific industry—called " sector specialists"—assessing current trends in business practices, products, and industry competition. Among the industries with the most analyst coverage are
biotechnology Biotechnology is a multidisciplinary field that involves the integration of natural sciences and Engineering Science, engineering sciences in order to achieve the application of organisms and parts thereof for products and services. Specialists ...
,
financial services Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...
,
energy Energy () is the physical quantity, quantitative physical property, property that is transferred to a physical body, body or to a physical system, recognizable in the performance of Work (thermodynamics), work and in the form of heat and l ...
,
mining Mining is the Resource extraction, extraction of valuable geological materials and minerals from the surface of the Earth. Mining is required to obtain most materials that cannot be grown through agriculture, agricultural processes, or feasib ...
and resources, and computer hardware, software and services. Analysts must keep abreast of new regulations or policies that may affect the industry, as well as monitor the economy to determine its effect on earnings. As equity analysts divide securities by distinct sectors, companies which fall outside or across multiple sectors are sometimes
neglected ''Xestia castanea'', the grey rustic or neglected, is a moth of the family Noctuidae. It is found from central Europe to Morocco, Turkey, Lebanon, Israel, Jordan and Syria. Technical description and variation The wingspan is 36–42 mm. F ...
; the impact on returns (and on "
earnings management Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain.Schipper, Katherine. 1989. “Commentary on Earnings Management.” ''Accounting Horizons'' (December): 91� ...
") here is debated. Analysts also specialize in fixed income. Similar to equity analysts, ''fixed income analysts'' assess the value and analyze the risks of various securities, here focusing on interest rate- and fixed income securities, particularly bonds. They may further specialize, but here by issuer-type: i.e.
municipal bond A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often ...
s,
government bond A government bond or sovereign bond is a form of Bond (finance), bond issued by a government to support government spending, public spending. It generally includes a commitment to pay periodic interest, called Coupon (finance), coupon payments' ...
s, and corporate bonds; the latter specialization is often decomposed into
convertible bond In finance, a convertible bond, convertible note, or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in ...
s, high-yield bonds, and distressed bonds; some cover
syndicated loan A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers. The syndicated loan market is the dominant way for l ...
s. The reporting focuses on the ability of the issuer to make payments—similar to the credit analysis described below—but also on the relative value of the security in question, and in context of the overall market and
yield curve In finance, the yield curve is a graph which depicts how the Yield to maturity, yields on debt instruments – such as bonds – vary as a function of their years remaining to Maturity (finance), maturity. Typically, the graph's horizontal ...
. See
Fixed income analysis Fixed income analysis is the process of determining the value of a debt security based on an assessment of its risk profile, which can include interest rate risk, risk of the issuer failing to repay the debt, market supply and demand for the secu ...
. Analysts are generally divided into 'sell-side' and 'buy-side'. The buy-side is sometimes considered more prestigious, professional, and scholarly, while the sell-side may be higher-paid and more like a sales and marketing role. It is common to begin careers on the sell-side at large banks then move to the buy-side at a fund. * A sell-side analyst's work is not used by its employer to invest directly, rather it is sold either for money or for other benefits by the employer to buy-side organizations. Sell-side research is often used as 'soft money' rather than sold directly, for example provided to preferred clients in return for business. Writing reports or notes expressing opinions is always a part of "sell-side" (brokerage) analyst job and is often not required for "buy-side" (investment firms) analysts. It is sometimes used to promote the companies being researched when the sell-side has some other interest in them, as a form of marketing, which can lead to
conflicts of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations in whi ...
. * A buy-side analyst, such as a fund manager, works for a company which buys and holds stocks itself, on the analyst's recommendation. As they gain experience, analysts often move from buy-side research, concerning individual securities and sectors, into portfolio management itself, selecting the mix of investments for a company's portfolio. They may also become fund managers and manage large investment portfolios for individual investors. Typically, analysts use
financial statements Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to un ...
analysis, including accounting analysis and
ratio analysis In mathematics, a ratio () shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...
, but also consider overall economic situation and specific factors including interest rates, employment, production, management and tactical evaluation of the market environment. Analysts obtain information by studying public records and filings by the company, as well as by participating in public
earnings call An earnings call is a teleconference or webcast in which a public company discusses its financial results for a reporting period, often providing earnings guidance for future performance. The term stems from earnings per share (EPS), calculated ...
s where they can ask direct questions to the management. Additional information can be also received in small group or one-on-one meetings with senior members of management teams. However, in many markets such information gathering became difficult and potentially illegal due to legislative changes brought upon by corporate
scandals A scandal can be broadly defined as the strong social reactions of outrage, anger, or surprise, when accusations or rumours circulate or appear for some reason, regarding a person or persons who are perceived to have transgressed in some way a ...
in the early 2000s. One example is
Regulation FD Regulation FD (Fair Disclosure),
Retrieved January 25, 2011.
ordinarily referred to as Regula ...
(Fair Disclosure) in the United States. Many other developed countries also adopted similar rules. Analyst performance is ranked by a range of services such as StarMine owned by
Thomson Reuters Thomson Reuters Corporation ( ) is a Canadian multinational corporation, multinational content-driven technology Conglomerate (company), conglomerate. The company was founded in Toronto, Ontario, Canada, and maintains its headquarters at 1 ...
or Institutional Investor magazine. Research by Numis found that small companies with the most analyst coverage outperformed peers by 2.5 per cent — while those with low coverage underperformed by 0.7%. See
Neglected firm effect ''Xestia castanea'', the grey rustic or neglected, is a moth of the family Noctuidae. It is found from central Europe to Morocco, Turkey, Lebanon, Israel, Jordan and Syria. Technical description and variation The wingspan is 36–42 mm. ...
.


Investment Banking

Financial analysts in the
investment banking Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by und ...
departments of securities or banking firms often work in teams, analyzing the future prospects of companies, and selling shares to the public for the first time via an
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...
(IPO), or issuing bonds; this task is often identical to that of a securities analyst. On this basis, they will then make presentations to prospective investors re the merits of investing in the new company, presenting their " pitch books" on a " roadshow"; see bookrunner and securities underwriting. An additional component of the IB role here: analysts ensure that all forms and written materials necessary for compliance with
Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
regulations are accurate and complete. Many IB analysts work in
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...
(M&A) departments, similarly preparing analyses on the costs and benefits of a proposed merger or takeover, and assisting with regulatory submissions; here there are both buy-side- and sell-side analysts. See . The analysis is somewhat more specialized than for an IPO, as it must consider valuation pre- and post-merger, a function of efficiencies, synergies, or increased market share, financing employed, including M&A specific considerations such as the swap ratio, and tax optimization, both re the transaction and for the new entity. At more senior levels, vice presidents (VPs) or Senior VPs will manage the workflow and deliverables—with modelling performed by Associate VPs—but not be involved in the line-by-line detail ''per se''. Directors will be responsible for "rainmaking" and maintaining existing client relationships. The latter role incorporates a significant advisory element—guiding the client regarding their profile and exposure in the
capital markets A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...
, and advising on M&A and other corporate activity (and liaising with
sales and trading Sales and trading is one of the primary front-office divisions of major investment banks. The term is typically reserved for the trading activities done by sell-side investment banks who are primarily engaged in making markets for institutional cl ...
). Investment banks, and large trading houses, often employ an economics team or group. This team produces the
economic forecast Economic forecasting is the process of making predictions about the economy. Forecasts can be carried out at a high level of aggregation—for example for GDP, inflation, unemployment or the fiscal deficit—or at a more disaggregated level, fo ...
s informing the various valuations and overall
investment strategy In finance, an investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Individuals have different profit objectives, and their individual skills make different tactics ...
; see and Economic analyst.


Middle office

Within banking, there are other non-quant analyst roles (not necessarily titled "financial analyst"), mainly within the "middle office"; these are generally linked, at least by dotted line, to both the Finance and Risk Management areas. * Corporate Treasury is responsible for an investment bank's funding, capital structure management, and
liquidity risk Liquidity risk is a financial risk that for a certain period of time a given financial asset, security or commodity cannot be traded quickly enough in the market without impacting the market price. Types Market liquidity – An asset cannot be ...
monitoring; see . It is then (co)responsible for the bank's
funds transfer pricing The Fund Transfer Pricing (FTP) measures the contribution by each source of funding to the overall profitability in a financial institution. Funds that go toward lending products are charged to asset-generating businesses whereas funds generated by ...
(FTP) framework, allowing for comparable financial performance evaluation among business units * Product Control is primarily responsible for "explaining" the P&L; i.e.: attributing returns to individual desks, decomposing these into their
risk factors In epidemiology, a risk factor or determinant is a variable associated with an increased risk of disease or infection. Due to a lack of harmonization across disciplines, determinant, in its more widely accepted scientific meaning, is often ...
, and ensuring that traders' positions are reflected at their market values; the tools here are often built by a separate quant team, possibly front office, but maintained by Product Control. * Credit Risk monitors the bank's debt-clients on an ongoing basis, as described below; it is additionally responsible for tracking the
risk capital A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital ...
and risk adjusted returns on these clients, and reporting re concentration risk and risk appetite. These areas, together with the various dedicated Risk Groups, allow the Finance department to advise senior management regarding the firm's global risk exposure and the profitability and structure of the firm's various businesses; see . A
comptroller A comptroller (pronounced either the same as ''controller'' or as ) is a management-level position responsible for supervising the quality of accountancy, accounting and financial reporting of an organization. A financial comptroller is a senior- ...
(or financial controller) is a senior position, responsible for these analyses and
internal control Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broa ...
more generally, usually reporting to the bank's
chief financial officer A chief financial officer (CFO) is an officer of a company or organization who is assigned the primary responsibility for making decisions for the company for projects and its finances; i.a.: financial planning, management of financial risks, ...
, as well as copying the
chief risk officer The chief risk officer (CRO), chief risk management officer (CRMO), or chief risk and compliance officer (CRCO) of a firm or corporation is the executive accountable for enabling the efficient and effective governance of significant risks, and re ...
.


Corporate and other

As outlined, the job title is a broad one, and analyst-roles also include financial management and (credit) risk management.


Financial planning and analysis

Financial analysts within corporatesCareers in Finance
§1.4 in
Financial Analyst Job Description
Corporate Finance Institute
provide inputs into all elements of the firm's financial management.
Bureau of Labor Statistics
* The short term focus is on
working capital management Working capital (WC) is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is consi ...
, and includes tasks such as profitability analysis, cost analysis, variance analysis, and
cash flow forecasting Cash flow forecasting is the process of obtaining an estimate of a company's future cash levels, and its financial position more generally. A cash flow forecast is a key financial management tool, both for large corporates, and for smaller entr ...
(often overlapping
treasury management Treasury management (or treasury operations) entails management of an enterprise's financial holdings, focusing on the firm's liquidity, and mitigating its financial-, operational- and reputational risk. Treasury Management's scope thus inclu ...
). * Medium term elements are
budgeting A budget is a calculation plan, usually but not always financial plan, financial, for a defined accounting period, period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including tim ...
and planning; their models here form the basis for
financial forecast A financial forecast is an estimate of future financial outcomes for a company or project, usually applied in budgeting, capital budgeting and/or valuation. Depending on context, the term may also refer to listed company (quarterly) earnings gui ...
ing,
scenario analysis Scenario planning, scenario thinking, scenario analysis, scenario prediction and the scenario method all describe a strategic planning method that some organizations use to make flexible long-term plans. It is in large part an adaptation and gen ...
(sometimes re corporate strategy), §39 "Corporate Planning Models". See also, §294 "Simulation Model". and balance sheet optimization. Budget Analysts
Bureau of Labor Statistics
The latter, extends to involvement with
dividend policy Dividend policy, in financial management and corporate finance, is concerned with Aswath Damodaran (N.D.)Returning Cash to the Owners: Dividend Policy/ref> the policies regarding dividends; more specifically paying a cash dividend in the pr ...
, and
capital structure In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt (borrowed funds), and preferred stock, and is detailed in the ...
; relatedly, forecasts here also feed into group ALM. * Analysts are also involved with long term "
capital budgeting Capital budgeting in corporate finance, corporate planning and accounting is an area of capital management that concerns the planning process used to determine whether an organization's long term capital investments such as new machinery, repla ...
", i.e. decisions relating to "project" selection and valuation and related funding considerations; these forecasts feed through to the debt capital markets team, "DCM", responsible for securing and managing long-term funding. * Risk analytics will span all perspectives. Similar to treasury though, the team may reside in a separate unit; see Three lines of defence. Management of these deliverables sits with the financial manager (FM); while
budget analyst A budget is a calculation plan, usually but not always financial, for a defined period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environment ...
, cost analyst, treasury analyst or manager, risk analyst or manager and corporate finance analyst are often specialized roles. The area overall is sometimes referred to as "
FP&A Financial planning and analysis (FP&A), in accounting and business, refers to the various integrated financial planning, planning, financial analysis, analysis, and Financial_modeling#Accounting, modeling activities aimed decision support, at sup ...
" (Financial Planning and Analysis). What is FP&A?
Association for Financial Professionals The Certified Treasury Professional (CTP) is a certification awarded by the Association for Financial Professionals (AFP) of Bethesda, Maryland to individuals who meet eligibility criteria and demonstrate current competency standards measured th ...
The financial director or chief financial officer (FD, CFO) has primary responsibility for managing the company's finances, including financial planning, management of financial risks, record keeping, and financial reporting.


Credit analysts

There are several analyst roles related to
credit risk Credit risk is the chance that a borrower does not repay a loan In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay ...
, macro or micro. Ratings analysts (who are often employees of ratings agencies), evaluate the ability of companies or governments that issue bonds to repay their debt. On the basis of their evaluation, a management team assigns a rating to a company's or government's bonds. Financial analysts employed in commercial lending perform balance sheet analysis, examining the borrower's audited financial statements and corollary data in order to similarly assess lending risks, and to confirm that yield is appropriate given risk; this task is both upfront and on a monitoring basis thereafter. The focus is on current and forecasted debt- and liquidity ratios generally, and specifically those related to any
loan covenant A loan covenant is a condition in a commercial loan In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for t ...
s, such as
debt service coverage ratio The debt service coverage ratio (DSCR), also known as the debt coverage ratio (DCR), is a financial ratio that measures an entity's ability to generate sufficient cash to cover its debt obligations, including interest, principal, and lease paymen ...
(DSCR) and
loan-to-value ratio The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In real estate, the term is commonly used by banks and building societies to represent the ratio of the first ...
(LTVR). In
retail banking Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the general public, rather than to companies, corporations or other banks, which are often described as wholesale banking (corporate ...
, credit analysts build models to determine an applicant's creditworthiness, assign an initial
credit score A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bu ...
, and monitor this and the loan on the basis of an ongoing "behavioral" score. In this and the latter role, impairment- and provision-modelling are a prominent deliverable (see
IFRS 9 IFRS 9 is an International Financial Reporting Standard (IFRS) published by the International Accounting Standards Board (IASB). It addresses the accounting for financial instruments. It contains three main topics: classification and measureme ...
); the
probability of default Probability of default (PD) is a financial term describing the likelihood of a default over a particular time horizon. It provides an estimate of the likelihood that a borrower will be unable to meet its debt obligations. PD is used in a varie ...
(PD), exposure at default (EAD) and loss given default (LGD) statistics or models are (often) provided by a separate (but dedicated) credit-quant team.


Accounting analysts

Some financial analysts specialize as accounting analysts; they will collect industry data (mainly balance sheet, income statement and capital adequacy in banking sector), merger and acquisition history and financial news for their clients. They then typically "standardize" the different companies' data, facilitating peer group analysis: the main objective here is to enable their clients to make better decisions about the investment across different regions. They also provide the abundance of
financial ratio A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall fin ...
s calculated from the data gathered from financial statements, and possibly other sources.


Qualification


General

In general, a business-related bachelor's degree majoring in Accounting, in Finance, or in Economics is a minimum requirement for an entry or junior role. Given the nature of the work, (some) proficiency in Excel is typically a recommendation (and analysts may be expected to learn
database In computing, a database is an organized collection of data or a type of data store based on the use of a database management system (DBMS), the software that interacts with end users, applications, and the database itself to capture and a ...
software " on the job"); see further under
Financial Modeling Financial modeling is the task of building an abstract representation (a model) of a real world financial situation. This is a mathematical model designed to represent (a simplified version of) the performance of a financial asset or portfolio o ...
. With seniority, often, analysts are expected to earn an
MBA A Master of Business Administration (MBA) is a professional degree focused on business administration. The core courses in an MBA program cover various areas of business administration; elective courses may allow further study in a particular a ...
, having gained 2–3 years experience in the junior role. Increasingly, it is preferred that, even to enter, analysts hold a Master of Finance degree.''Determine If a Master's in Finance Is the Right Move''
usnews.com, Feb. 9, 2015.
More specific qualifications may be required additionally:Financial Managers
collegegrad.com
* In (senior) financial management roles, a professional accounting certification – the CPA, CA, CMA, or CIMA – is often a prerequisite; this, given the overlap with tax and financial reporting. * Risk managers increasingly require the FRM / PRM, or an actuarial qualification such as CERA. * Credit analysts in technical-roles may require these also (or at a minimum, specified math-credits);C. Morah (2021)
Analyzing a Career in Credit Analysis
investopedia Investopedia is a global financial media website headquartered in New York City. Founded in 1999, Investopedia provides investment dictionaries, advice, reviews, ratings, and comparisons of financial products, such as securities accounts. It ...
.com
in commercial-lending roles, an industry certification, such as the CBA from the NACM may be specified. * In
treasury management Treasury management (or treasury operations) entails management of an enterprise's financial holdings, focusing on the firm's liquidity, and mitigating its financial-, operational- and reputational risk. Treasury Management's scope thus inclu ...
roles, analysts often hold the ACT or CTP credential.


Securities and Investment banking

In securities and IB roles, it is lately preferred that, similarly, even to enter, analysts earn a Master of Finance or the CFA designation—in Europe, the CIIA also—with the MBA still common at senior levels. Often, there are also regulatory requirements. For example, in the United States, sell-side or Wall Street research analysts must register with the
Financial Industry Regulatory Authority The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...
(FINRA). In addition to passing the ''General Securities Representative Exam'' ( Series 7), these candidates must pass the ''Research Analyst Examination'' ( Series 86/87) in order to publish research for the purpose of selling or promoting publicly traded securities. For other jurisdictions, see List of securities examinations. For sector specialists—with approximately five years industry experience—less weight is placed on finance qualifications, as a relevant advanced degree or qualification in the field is often necessary. Equity Research Recruiting: The Definitive Guide
Luis Miguel Ochoa
(They will later be encouraged to earn the CFA, CIIA, or MBA.) For example, valuing financial service firms and valuing mining corporates requires specialized knowledge regarding their valuation-, regulatory-, and
accounting standard Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on t ...
s; and, respectively, qualifications in
actuarial science Actuarial science is the discipline that applies mathematics, mathematical and statistics, statistical methods to Risk assessment, assess risk in insurance, pension, finance, investment and other industries and professions. Actuary, Actuaries a ...
, and
mining engineering Mining engineering is the extraction of minerals from the ground. It is associated with many other disciplines, such as mineral processing, exploration, excavation, geology, metallurgy, geotechnical engineering and surveying. A mining engineer m ...
or
geology Geology (). is a branch of natural science concerned with the Earth and other astronomical objects, the rocks of which they are composed, and the processes by which they change over time. Modern geology significantly overlaps all other Earth ...
will then be required. Other sectors may similarly require specific technical qualifications: e.g. in pharmacy /
life sciences This list of life sciences comprises the branches of science that involve the scientific study of life – such as microorganisms, plants, and animals including human beings. This science is one of the two major branches of natural science, ...
for "bio-tech"; in
electronic engineering Electronic engineering is a sub-discipline of electrical engineering that emerged in the early 20th century and is distinguished by the additional use of active components such as semiconductor devices to amplify and control electric current flo ...
for (some) areas in "
high tech High technology (high tech or high-tech), also known as advanced technology (advanced tech) or exotechnology, is technology that is at the state of the art, cutting edge: the highest form of technology available. It can be defined as either the ...
" (e.g.
semiconductors A semiconductor is a material with electrical conductivity between that of a conductor and an insulator. Its conductivity can be modified by adding impurities (" doping") to its crystal structure. When two regions with different doping levels ...
). Many large teams will also include a CPA or CA in a dedicated technical role. (In
the Commonwealth ''The'' is a grammatical article in English, denoting nouns that are already or about to be mentioned, under discussion, implied or otherwise presumed familiar to listeners, readers, or speakers. It is the definite article in English. ''The ...
, the CA qualification is often sufficient to access (junior) analyst roles.See e.g
"Career Paths"
as discussed by SAICA
) Banks often also recruit analysts with
accounting qualifications Accounting, also known as accountancy, is the process of recording and processing information about economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys ...
to the middle office roles. The economics team is usually
led A light-emitting diode (LED) is a semiconductor device that emits light when current flows through it. Electrons in the semiconductor recombine with electron holes, releasing energy in the form of photons. The color of the light (corresp ...
by a
PhD A Doctor of Philosophy (PhD, DPhil; or ) is a terminal degree that usually denotes the highest level of academic achievement in a given discipline and is awarded following a course of graduate study and original research. The name of the deg ...
in the discipline, while a masters in economics is the typical requirement to join the team.


See also

*
Quantitative analyst Quantitative analysis is the use of mathematical and statistical methods in finance and investment management. Those working in the field are quantitative analysts (quants). Quants tend to specialize in specific areas which may include derivative ...
* Risk analyst *
Securities research Security (finance), Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts", "research analysts", or "securities analysts"; all the foregoing terms ar ...
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Stock valuation Stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit from price movement � ...
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Structurer In investment banking, a structurer Joris Luyendijk (2012)Interview: Head of Structuring equity-derivatives ''theguardian.com'' is the finance professional responsible for designing structured products. Their solution will typically deliver ...


References


Further reading

* Comlay, Elinor (10 September 2009)
Lehman bust highlights analyst "group-think disease"
Reuters Reuters ( ) is a news agency owned by Thomson Reuters. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide writing in 16 languages. Reuters is one of the largest news agencies in the world. The agency ...

Financial Analysts
US Bureau of Labor Statistics {{Authority control Finance occupations Financial analysts Financial data analysis Financial services occupations Valuation (finance)