The official definition of a financial analyst, per the Bureau of Labor Statistics (BLS), is someone who provides help with making investment decisions to businesses and individuals. It’s a financial analyst’s job to review and interpret the performance of securities and other investment assets. Specific job titles include insurance underwriters, financial advisers, budget analysts and financial managers.
Financial analysts are commonly separated into the buy side and the sell side. Buy-side analysts work for those with money to invest (institutional investors) and are busy managing very large portfolio returns. Analysts on the sell side are responsible for helping companies and issuers price their securities or other financial instruments.
Not all jobs fall into these neat categories, however. Financial analysts are often market-level thinking budget managers or production cost analysts. The key aspect is studying, interpreting and/or predicting financial performance.
Pursuing a Career in Financial Analysis
Financial analysis, as a service, can take place through portfolio management, market research, as a complimentary service to the selling of securitized investments or many other forms. Hedge funds and pension funds certainly need financial analysts, but so do any companies that purchase, sell or hold investments.
There are various careers in financial analysis. Many of them require a master’s degree in a related field and/or professional licenses, and all of them require at least a bachelor’s degree. Degrees in finance, business management, economics or statistics are the most common.
Most financial analysts begin as junior analysts or perform some other entry-level duties for a few years before accepting analyst roles. Working on the buy side of the market is more common for large financial institutions, although there are sell-side positions there as well. Sell-side analysts tend to work for clients or companies that are smaller.