It is the investment analyst's job to make sure all the facts are in place when investment decisions are made. The job is demanding, requiring long hours and frequent travel, but the pay and benefits are good. A majority of current analysts report high job satisfaction. It is also a field with projected high growth in the years ahead, making it an attractive career path for young, motivated people.
- An investment analyst is a financial professional with expertise in evaluating financial and investment information, typically for the purpose of making buy, sell and hold recommendations for securities.
- Buy-side analysts work for fund managers at mutual fund brokers and financial advisory firms and identify investment opportunities for their firm.
- Sell-side equity analysts often work for the big investment banks and issue buy, sell and hold recommendations as well as company-specific research.
- Late-career investment analysts' salary averages under $100,000 per year before bonus, with successful analysts earning upwards of six-figures.
Investment analysts collect information, perform research, and analyze assets, such as stocks, bonds, currencies, and commodities. Investment analysts often focus on specific niches to become experts in their chosen fields, such as a particular industry, a geographical region, or a specific asset class.
The research is then presented to portfolio or investment managers, often as part of a team in which experts in different fields get to weigh their insights against one another before final recommendations and investment decisions are made. Collaboration is a key part of the job, as are giving presentations and sharing information amongst peers.
An investment analyst continuously collects and interprets data, such as company financial statements, price developments, currency adjustments, and yield fluctuations. The information gathering also includes macro developments, such as following a country's political sea changes, climate change and the impact of natural disasters, and emerging industries and service sectors.
There is usually some level of direct interaction that occurs when the investment analyst meets with the management of the companies they are researching or similar key players. They may also meet with stockbrokers, fund managers, and stock market traders. Many investment analysts travel frequently, and they may spend a few years at a foreign location to build local knowledge and forge professional networks.
The current median salary for investment analysts is just over of $67,000, according to Payscale.com in October 2022. Bonus and profit-sharing structures are common, with the bonus being as high as $20,000 and profit sharing up to $12,000. Commissions up to $11,000 annually are also reported. The U.S. Bureau of Labor Statistics (BLS) pegs the median salary at $91,580 in May 2021, which may be explained by the higher number of entry-level respondents in Payscale.com's survey.
There is a dramatic difference in salary with experience. While entry-level salaries typically stay under $60,000, 10 to 20 years of experience brings salaries closer to $100,000. Over 20 years of experience can bring a salary of $140,000, according to Payscale.com.
Average base pay for an investment analyst in the U.S. in 2022, according to Glassdoor.com
Geographic location is another significant differentiator. New York City, San Francisco, Boston, and Denver all report over 20% above-average salaries, while Washington, Philadelphia, and Seattle show significantly lower salaries.
A bachelor's degree in finance or business is the most common minimum requirement. Degrees in accounting, statistics, and economics may also be accepted by prospective employers. MBAs and higher degrees in math or financial disciplines are common, especially among analysts who move into management positions.
Many employers also require a few years of practical experience, such as lower-level analyst positions and economic modeling in related industries.
The primary certification for investment analyst in the United States is Chartered Financial Analyst (CFA). This certification is similar in stature to a Certified Public Accountant (CPA) designation for an accountant. Famous for its three brutal exams with pass rates in the 40-50% range for the first two exams, the CFA is highly regarded in many areas of the financial industry and may open the door to a wide variety of career advancements.
The Certified Investment Management Analyst (CIMA) is another widely recognized certification. The CIMA is granted by the Investments & Wealth Institute (IWI) and requires three years of documented industry experience, two separate background checks, the successful completion of several hundred study hours, and two exams.
There are several impressive-sounding certifications for investment analysts that fall squarely in the diploma-mill category. Claiming such certifications (which typically require no actual work beyond filling out a check) on a resume is likely to call the applicant's judgment into question rather than help land an employment offer.
An analytical mind with a keen sense of mathematical patterns and correlations is the most important tool for an investment analyst. The ability to detect trends early, and using niche expertise to find ways to capitalize on them, is what makes the investment analyst valuable to the company.
Great attention to detail and the ability to make sound judgment calls under time pressure are also important skills. An investment analyst must be able to respond quickly with new recommendations when sudden market changes occur.
Being computer-savvy and having the ability to build advanced predictive models is a definite advantage, as much of the work is done on computers.
Since the job is just as much about communication as it is about crunching numbers, good people skills and presentation skills are vital. A good portion of the working week is spent putting together professional-looking presentations with graphs and charts to illustrate the data and convey convincing recommendations.
The most common career path is to move into a senior investment analyst position (median salary just under $86,000 in 2022) or portfolio manager position (median salary around $91,000, but with considerable bonuses and profit sharing). The step after that is either senior portfolio manager (median salary is around $125,000 plus bonuses and profit sharing) or chief investment officer (CIO) (around $180,000 in 2022 plus bonuses and profit sharing).
Other investment analysts become independent investment consultants, offering their expertise to financial firms on a freelance basis. This option is only available after several years of experience and the development of a network of industry contacts.
Most investment analysts work at larger companies, such as investment banks, insurance companies, institutional investors, private equity firms, stockbrokers, or large charities. Benefits including health, dental, and retirement plans are all but universal in this field.
The job prospects for investment analysts are solid, with a projected growth rate of 9% through the year 2031, according to the BLS.
Working hours can be brutal, with 12-hour days and mandatory weekend work, although the extent of this is influenced by the local culture. Still, as mentioned above, most investment analysts report high levels of job satisfaction.
There is some gender imbalance, where men outnumber women by a wide margin at the entry level. This trend evens out somewhat higher up in the corporate hierarchy. The reasons for the imbalance are not as clear cut. One possible explanation is that males tend to perform better on standardized math tests than females, and that is likely tied to cultural norms.