Defining entrepreneurship, types of entrepreneurship and outlining skills you need to be a successfu Read More
Few segments of the modern economy are changing as rapidly as the financial sector. The Online Master of Business Administration degree program at Northeastern University’s D’Amore-McKim School of Business can provide graduates with the skills they need to succeed in a financial industry that’s rapidly evolving. This includes work as a financial analyst, a career with stability despite turbulence in the world of finance and investment.
Financial analysts work for organizations like banks, investment firms, insurance companies, and other businesses in the financial sector to research and understand financial data. This is often used to inform investment decisions made by the analyst’s company. Alternatively, some analysts work as consultants or on a staff of experts who report on trends shaping a particular industry or segment of the economy and sell their findings to other businesses.
The nature of a financial analyst’s work depends on the employer’s business model. In the financial industry, analysts are usually categorized as either “buy-side” or “sell-side.” Buy-side analysts work for an investment firm and provide advice on how to manage a certain set of assets. On the sell-side, the analyst’s employer is not directly involved in investing. Instead, sell-side research may be used more as a sales or marketing tool, rather than a profit-generating service of its own.
What financial analysts do
Financial analysts can conduct their work in a few different ways. The most straightforward approach is through number-crunching. Under the principles of fundamental analysis, financial analysts will take information contained in publicly available statements and compare it against ideal standards. For example, an analyst might compare the earnings performance of several different publicly traded companies in the same industry to determine which one may make for a better investment. Or, the analyst might compare known variables within a single company to determine if its shares are over- or undervalued. Earnings per share is one of the most common metrics used in this sort of analysis.
In addition to fundamental, quantitative analysis, analysts will also usually try to gain more qualitative information about the financial markets. The differences between what the numbers say about a company and what people are saying can often reveal valuable insights for analysts. They are often expected to attend conference calls with other analysts and shareholders of public corporations, which are required to hold such regular meetings and disclose certain financial information. This happens once per quarter as well as once annually for most businesses with stock traded on public exchanges.
Required skills and experience
The financial analyst is aided by a number of technologies and skills essential to their work. According to O*Net, these technical skills include knowledge and experience with:
- Database and analytical software tools like SAS, IBM Cognos, Oracle Business Intelligence, and structured query language (SQL).
- Financial analysis software such as Longview Performance Management Platform, Oracle E-Business Suite, and Wolfram Research Mathematica UnRisk Pricing Engine.
- Enterprise resource planning software like Microsoft Dynamics, Oracle PeopleSoft, and SAP Business Objects.
Many of these programs, and the financial analyst role in general, will require in-depth experience and education in fields like:
- Business administration, economics, and accounting, particularly in how financial markets operate within these principles.
- Applied math subjects including calculus, statistics, and algebra.
- Computer science and the fundamentals behind writing code or creating software.
- Communication skills in both written and oral forms, as well as the principles of mass media communication.
Financial analysts are generally well-compensated and face favorable prospects in the modern job market. According to the U.S. Bureau of Labor Statistics, workers in this field reported a median salary of almost $82,000 in 2016. The BLS recorded more than 296,000 financial analysts working in the U.S. that year, and expects that number to grow by an additional 11 percent from 2016 to 2026—faster than the anticipated average rate of job growth.
The BLS also found that while most worked full time, only 3 out of 10 reported working more than 40 hours per week throughout much of the year. Compared to others in the high-stakes financial industry, these expectations might seem more favorable. Still, most analysts need to be comfortable with flexibility in their work schedules, as their jobs often require them to listen into conference calls at odd hours or keep tabs on international markets outside of normal business hours.
Financial analysts are some of the most in-demand positions in the corporate world today. Still, employers have set a high bar for standards in prospective candidates. With many financial analysts expected to attain higher levels of education and experience, it’s important, yet more challenging, to stand out in this industry. More advanced technical knowledge is often required of financial analysts in certain roles, particularly those involved in studying very specific financial markets or only concerned with one form of analysis. Many career analysts are highly proficient in mathematics and statistical analysis, and have the education and experience needed to understand how to apply complex, cutting-edge research in these fields to their work.
On the other hand, the principles of financial analysis make the role a great fit for many generalists in the business world, too. Any candidate for a position as a financial analyst who can demonstrate a strong grasp of core financial principles and apply them to informed decisions on trading or capital allocation, should be well-prepared for a successful career in this field.
The Online Master’s in Business Administration degree program at Northeastern University’s D’Amore-McKim School of Business can be a stepping stone to the top jobs in the modern corporate world, including work as a financial analyst. With these credentials, job candidates may find even more career possibilities available to them while making connections with leaders and innovators in the industry that could prove invaluable. Get in touch with an enrollment advisor to learn more about the program and how it can benefit your career.