Financial Analyst, Advisor and PlannerFinancial analysts and personal financial advisors recommend investment strategies to businesses and individuals. Financial analysts and personal financial advisors collect information from clients and make financial recommendations, but they each provide different types of financial recommendations.
Financial analysts evaluate a company's financial performance and provide potential investors with this information. They are also known as securities or investment analysts and provide investment recommendations to insurance companies, mutual and pension funds, investment banks, business media, and securities firms. Financial analysts evaluate a company's commodity prices, costs, sales, tax rates, and expenses to project future earnings and determine company valuation. They meet with company representatives to evaluate management effectiveness and determine a company's revenue prospects.
Financial analysts either work on the buy side or the sale side. Buy side analysts work for companies with a lot of money to invest known as institutional investors. Hedge funds, mutual funds, insurance companies, charitable organizations with large endowments such as universities, and money managers are considered institutional investors. They also develop investment strategies for a company's portfolio; whereas, sell side financial analysts assist securities firms and investment banks to sell securities. Moreover, the business media hire impartial financial advisors.
Financial analysts usually specialize in a specific financial product, geographic region, or industry. Big firms with large research departments may also divide specialties into more categories. Specialists analyze business trends, competition, and products as well as stay up to date with new policies and regulations, as well as economic factors affecting investments. Portfolio managers, usually experienced analysts, supervise teams of investors to determine the types of securities and industries a company should invest in. Fund managers supervise mutual and hedge funds. Risk managers evaluate investment decisions and implement strategies to increase revenues and decrease risk through diversification.
Using spreadsheets and statistical software, financial analysts develop forecasts and locate trends. They also use data to determine potential investment risks, and using data, write reports and recommend whether to buy or sell specific securities.
Personal financial advisors determine the financial needs for individual investors. Advisors base their short and long term investment recommendations on their knowledge of securities, tax law, and insurance. Advisors oversee estate, retirement, and college education funding planning, and some sell life insurance and provide tax advice. Some advisors specialize in risk management or estate planning.
Personal financial advisors work with a multitude of clients and often have to recruit their own clients, spending a lot of their time marketing. Advisors also recruit potential clients by holding seminars and giving lectures. One of the most important elements of a financial advisor's job is building a clientele.
After finding a new client, personal financial advisors begin with a consultation, where an advisor determines a client's investment goals. Then a comprehensive plan is developed, aligned with a client's goals and risk preferences. Personal financial advisors sometime consult attorneys or accountants.
Personal financial advisors usually meet annually with clients to update them on new investment opportunities and alter investment strategies to accommodate life changes such as retirement. Advisors also answer investment questions and discuss risk factors with their clients.
Most personal financial advisors buy and sell securities and life insurance. Financial advisors earn commissions from securities and life insurance sales.
Private bankers or wealth managers advise rich investors. These investors have a lot of money and are looking for big returns. Since these investors are wealthy, they invest differently than the public. Private bankers manage the investments of these wealthy investors, and they can use lawyers, accountants, and financial analysts to determine investment strategies. Private bankers usually work with a few clients who they meet with regularly.
Work EnvironmentFinancial analysts and personal financial advisors generally work in office buildings or their personal residences. Financial analysts often work long hours, deal with the stress of meeting deadlines, and travel frequently to meet with investors. They spend a lot of time after the work day is over conducting research because they spend their working hours finding new investors.
Personal financial advisors often work during usual business hours, but they often schedule meetings with clients on the nights or weekends. Many personal financial advisors coordinate seminars and teach evening classes in an attempt to recruit more clients. They also spend a lot of time traveling to conferences and meeting with clients.
Private bankers work normal hours, but since they consult few clients, they have to be flexible to meet with clients.
Education and Training for Financial AnalystsFor those interested in gaining employment as a financial analyst and advisor, a bachelor's degree in an appropriate field is expected. Examples include math, engineering, accounting, finance, accounting or statistics. To obtain a more advanced job, a master's degree could be required with emphasis in finance or possibly business administration. Understanding the use of bond valuation, risk management and options pricing is essential.
Many positions also require a specific license, such as one from the Financial Regulatory Authority. The FINRA is recognized as the foremost organization for licensing in the securities industry. To obtain a license, it is often required that an employer sponsor the licensing process. A license can be the best way to advance to a better job. The Chartered Financial Analyst position, for example, is a certification that requires a specific set of qualifications including a bachelor's degree, experience, and the passing of exams.
Education and Training for Financial AdvisorsA bachelor's degree is generally required for employment in personal finance. A wide variety of degrees are acceptable, such as economics, business, math, finance and law. It is also important to take appropriate classes in areas such as estate planning, tax law and investments.
There are a wide variety of licenses required for those who work as financial analysts, and these licenses are attached to certain products and services. Firms both large and small will be required to register with state and national regulators, such as the Securities and Exchange Commission. State boards issue licenses for personal financial analysts. The North American Securities Administrators Association (NASAA) can provide the appropriate information for obtaining these licenses.
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Pay for Financial AnalystsA median wage of $76,950 can be expected for financial analysts as of May 2012. For the upper 10 percent of earners, pay can reach as high as $148,430. For the lowest 10 percent, wages stand at around $47,130.
Pay for Financial AdvisorsPersonal Financial Advisors median wage in May 2012 was around $67,520. For the high end earners, the top 10 percent can bring home $187,200. The lowest 10 percent of workers will earn less than $32,280.
Job Outlook for Financial AnalystsJob growth for financial analysts is projected to be at 16 percent for the next ten years, which is higher than for all other jobs. Geographical knowledge and a steady growth in types of products are factors that increase the likelihood that growth will be realized.
Expertise in this field will be in demand because of several factors. That includes emerging markets around the world for new opportunities of investment, the increase in products available and the complexity of investment portfolios.
Job Outlook for Financial AdvisorsThe good news for personal financial advisors is that their employment opportunities are expected to grow. Latest numbers indicate a 27 percent increase in jobs in the next ten years, much higher than the average for other jobs.
The population of the world is aging, and that is the main factor that will lead to growth in demand for personal financial advisors. When these "baby boomers" get near retirement age, they will require assistance and advice in financial matters. People are living longer as well, and this will increase the number of opportunities for financial services.
The area of pension funding will experience changes and challenges over the next decade, and this will also increase the need for financial assistance and services.
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