What is an 'Analyst'
An analyst is a financial professional who has expertise in evaluating investments and puts together buy, sell and hold recommendations for securities. Analysts are typically employed by brokerage firms, investment advisors or mutual funds, doing the grunt work for brokers and preparing the research that brokers use. The most prestigious certification an analyst can receive is the Chartered Financial Analyst (CFA) designation.
BREAKING DOWN 'Analyst'
A financial analyst researches economic conditions and company basics to determine business, sector and industry recommendations for buying or selling stock. An analyst stays updated with developments in his specialty and creates financial models estimating future economic conditions.
An undergraduate student typically majors in finance, computer science, biology, physics or engineering and takes courses in business, economics, accounting and math. A Master of Business Administration (MBA) is preferred for graduate students. Securing a sponsorship from the Financial Industry Regulatory Authority (FINRA) or a self-regulatory organization and passing the Series 7 General Securities Representative Qualification Examination and Series 63 Uniform Securities Agent State Law Examination or completing the chartered financial analyst (CFA) program also aids in career development.
A portfolio manager chooses, manages and explains products, industries and regions for the company's investment portfolio. A fund manager handles the same type of responsibilities for hedge funds or mutual funds. Both positions require quick buying and selling decisions based on changing market conditions. A ratings analyst evaluates risk in investment decisions, manages unpredictability and limits potential losses by investing in dissimilar stocks, bonds or mutual funds.
A financial analyst works on either the buy-side or sell-side for a business. A buy-side analyst develops investment strategies for institutional investors with large amounts of capital for investing, including mutual funds, hedge funds, insurance companies, independent money managers and nonprofit organizations with large endowments. A sell-side analyst advises financial services agents selling securities, such as stocks or bonds. An analyst may work independently of the buy and sell side in business media or another research facility.
An analyst evaluates historical and current financial data and studies economic and business trends for a specific industry, geographical region or type of product. For example, he may focus on the energy industry, Eastern Europe or the foreign exchange market to understand how new regulations, policies, and economic and political trends affect investments. The analyst examines financial statements to determine a company's valuation and meets with executives to gain greater insight into a company's prospects. He recommends individual and group investments for portfolios and prepares written reports on his findings.