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What is a Financial Analyst?

By Cassie L. Damewood
Updated Mar 02, 2024
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A financial analyst is the person who examines and investigates a company’s assets, debts, investments and growth potential. She may do this for the general interest of one or several shareholders, but more often, the information she gathers is used as a guideline for potential investments, mergers or divestitures. A person with this job may work as an independent consultant or for a corporation, government agency, bank, stock brokerage firm or insurance company.

While some in this position provide general analyses of all of an organization’s financial operations, she may specialize in stocks, bonds, real estate or other common areas of investment. She may concentrate on only one area of a company, such as pension funds or 401(k) plans. If she works for a stockbroker, her area of expertise may be limited to advising customers on making investments that meet their needs and growth potential goals.

Industry segments that are particularly large, like health insurance, frequently hire an analyst or team of analysts to study all financial aspects of their segment. This normally involves the analysis of individual companies and their investments, services and products. Anything that may influence a company’s stock prices or comparative earnings is normally of interest to a financial analyst.

The research sources of a financial analyst may be as academic as researching a company’s publicly accessible financial statements or as personal as interviewing the firm’s top executives to garner information on their financial health and prognosis. She may enlist the aid of corporate insiders to access internal memos, reports and documents. Although she is normally perceived as objective, an analyst is commonly accused of occasionally overstepping professional boundaries in performing her job.

In addition to field work, interviewing and general research, a financial analyst normally utilizes statistical and industry-specific software to conduct her investigation. She is frequently required to provide spreadsheets and narrative reports to reflect her findings. It is common for a financial analyst to be constantly connected to several websites that monitor international financial markets and activities 24 hours a day. To be successful in this position also normally requires excellent communication skills to gain access to sensitive information and build strong relationships within the industry.

To qualify for this position requires a bachelor’s degree in finance, economics, business administration or a closely related field. A master’s degree in business administration (MBA) is becoming an increasingly necessary requirement for this position. Regardless of an applicant’s educational background, she is generally trained on an organization’s in-house policies and procedures upon being hired.

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Discussion Comments

By bluedolphin — On Oct 29, 2014

For those interested in becoming a financial analyst, I suggest taking some courses on the various software programs that analysts use to input their data. This is a huge part of the job and a qualification that every employer seems to be looking for. I think most people who have studied economics or finances will have familiarity with these programs. But I can't emphasize enough how important they are.

By fify — On Oct 28, 2014

@burcinc-- Oh yes, of course. That's why a financial analyst is hired -- to make sense of the data and advise their clients.

Some firms do have a financial analysis team and in that case, one person such as the senior financial analyst may be dealing with most of the communication with the clients. The other analysts may be responsible for the data collection and research. But if a firm is hiring a single financial analyst, he or she is expected to advise them based on the financial information of the company. That's definitely an area that every analyst must be capable in. Interpersonal skills are important, it's not just about research and the numbers.

By burcinc — On Oct 28, 2014

Is the financial analyst always in touch with the shareholders? I mean, does the financial analyst provide the information and any advice they may have to offer to the business and its shareholders? Or does the analyst simply investigate and utilize the data and that's it?

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