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Financial analysts and personal
financial advisors provide analysis and guidance to businesses and
individuals to help them with their investment decisions. Both types of
specialists gather financial information, analyze it, and make
recommendations to their clients. However, their job duties differ because
of the type of investment information they provide and the clients for whom
they work. Financial analysts assess the economic performance of companies
and industries for firms and institutions with money to invest. Personal
financial advisors generally assess the financial needs of individuals,
offering them a wide range of options.
Financial analysts, also called securities analysts and investment analysts,
work for banks, insurance companies, mutual and pension funds, securities
firms, and other businesses, helping these companies or their clients make
investment decisions. Financial analysts read company financial statements
and analyze commodity prices, sales, costs, expenses, and tax rates in order
to determine a company’s value and to project its future earnings. They
often meet with company officials to gain a better insight into the firm’s
prospects and to determine its managerial effectiveness. Usually, financial
analysts study an entire industry, assessing current trends in business
practices, products, and industry competition. They must keep abreast of new
regulations or policies that may affect the industry, as well as monitor the
economy to determine its effect on earnings.
Financial analysts use spreadsheet and statistical software packages to
analyze financial data, spot trends, and develop forecasts. On the basis of
their results, they write reports and make presentations, usually making
recommendations to buy or sell a particular investment or security. Senior
analysts may even be the ones who decide to buy or sell if they are
responsible for managing the company’s or client’s assets. Other analysts
use the data they find to measure the financial risks associated with making
a particular investment decision.
Financial analysts in investment banking departments of securities or
banking firms often work in teams, analyzing the future prospects of
companies that want to sell shares to the public for the first time. They
also ensure that the forms and written materials necessary for compliance
with Securities and Exchange Commission (SEC)
regulations are accurate and complete. They may make presentations to
prospective investors about the merits of investing in the new company.
Financial analysts also work in mergers and acquisitions departments,
preparing analyses on the costs and benefits of a proposed merger or
takeover. |
