Financial Analyst Careers in India and abroad
Qualifications, responsibilities, career path, salaries
A ‘financial analyst’ goes by many names but there is one thing about this career choice that is unambiguous – he or she is the lowliest in the finance food chain.
But the thing about being a financial analyst is that if you want a ‘sexy’ career in, say, investment banking, mergers & acquisitions or wealth management, you have to cut your teeth as an analyst, keep your nose to the grind and build an unshakeable foundation for a career in high finance.
Responsibilities: What Does A Financial Analyst Do?
As the title suggests, a financial analyst gathers, crunches and analyses all sorts of financial data, both macroeconomic and microeconomic, and market-related, to help their clients make the best possible investment decisions.
While their clients may be companies, mutual funds, banks, pension funds, securities firms, insurance companies or brokerage firms, they assess their clients’ fundamentals to make business, sector and industry recommendations.
An analyst also recommends action, such as buying or selling stocks; looks into a company’s financial health; helps in arriving at a valuation of a company for mergers & acquisitions; and devises financial models to predict economic conditions.
An analyst plays a critical role in any business that his or her firm is representing. They take into account their client’s financial history, the vision of the company and direction it wants to take. They examine their client’s income and expenditure, risk tolerance and assess its current investments.
A good analyst also evaluates the company’s niche in the industry; its performance, prospects and strengths vis-à-vis the competition and its peers; and evaluates projected economic climate of the sector, country, region as well as globally.
He or she does this with a view to advising their client on the financial status of their business, spotting lucrative investment opportunities, drawing up financial strategies, and sometimes suggesting a restructuring of the business towards a more profitable end.
The nature of work varies with the industry the analyst works in, type of employer or client, and the analyst’s training and experience. The scope of work also depends on the size of the company.
So, for instance, an analyst may have a broader scope and much more leeway in a smaller firm but has the opportunity to specialise in a larger firm.
Career Paths For A Financial Analyst
‘Financial analyst’ is an umbrella term that can be broken down into many categories. Budget analysts, also called accountants or controllers, prepare budget reports after examining the operating costs of a company and its many departments.
Credit analysts study credit records to analyse possible risk in extending credit or lending money. Investment analysts or portfolio managers crunch investment data to advise their clients on suitable investments. They also draw up actual investment strategies and advise clients on the pros and cons of each option.
Analysts in mergers & acquisitions are focused on helping a company restructure itself through the purchase and/or sale of companies. Money market analysts live and breathe the money markets and their work focuses on knowing financial instruments such as stocks, shares, bonds and debentures, like the back of their hand.
On the other hand, fund managers oversee hedge funds or mutual funds, while ratings analysts advise companies on whether or not they can repay debts. Risk analysts are even more specialized and specifically evaluate the risks of investments.
Their primary objective is to identify and minimise a company’s risks and losses. Other career tracks include security analyst, tax analyst, treasury analyst and personal financial advisor.
Educational Qualifications Of A Financial Analyst
At the very basic level, an analyst requires a Bachelor’s degree in Business Administration or Finance although a Master’s degree in these specializations helps a great deal at the entry level.
A successful financial analyst is good at critical thinking, and has superior analytical and mathematical skills. He or she must also be computer literate as the job calls for the use of an arsenal of spreadsheet programs such as Excel and other software packages to analyze financial data, monitor trends, create portfolios and make forecasts.
As if this was not enough, take as many courses as you can in accounting, business and economics – you can never know enough. Among the soft skills you should have are excellent communication and interpersonal skills and the ability to articulate vast quantities of complex data into clear, concise presentations.
If you survive the first couple of years and are passionate about what you are doing, then, by all means, dream big. But these dreams come at a stiff price, in this case, more hard work in the form of certification.
Now, certification is not a must but it will instantly boost your career prospects. The gold standard here is the title of Chartered Financial Analyst (CFA). Administered by the CFA Institute in the US, this is a rigorous programme that involves three levels of examinations and takes around four years to master.
An analyst in the US may also acquire certification from the American Academy of Financial Management. If you’re in India, you can obtain certification from the Telangana-based Institute of Chartered Financial Analysts of India.
Salaries Of A Financial Analyst
Is this a lucrative career choice? It will be, if you can stick it out. The first few years will be perhaps more gruelling than you had ever imagined but if you come though unscathed, you are looking at great career prospects and an enviable lifestyle.
According to portals that list salaries for professionals in the finance sector, a financial analyst in the US can expect an annual salary of $80,000, ranging from $48,000 to $152,000. In India, the average annual remuneration is in the range of Rs 10 lakh. You can get more details at www.payscale.com
Before stepping into the shoes of a financial analyst, remember, having the right skill set is not enough.
In a world where the economic climate is ever changing, capital markets are choppy and political stability is tenuous, businesses are impacted by adverse events all the time. So you are always on and one slip could cost you dear.
It’s a job that comes with personal sacrifice and jump in only if you check all the boxes.