Before beginning, or navigating, your career in Finance, there are a few things you need to know. When you are looking for a job in a new industry it helps to have a clear picture of it. One of the most difficult industries to understand is Finance. At the center of all that confusion is the title of Financial Analyst.
There are quite a few different types of Financial Analysts and I’d like to walk you through them now. To help you find the exact job you’re searching for, I’m going to give you some of the more specific job titles that you can search for.
That Wall Street Life
The first Financial Analyst role that I’d like to teach you is the one people talk about most often. This role exists within Investment Banks and is the analyst job that supports Investment Bankers. Within the industry it is commonly known as the Investment Banking Analyst.
In this job you would be responsible for completing all the research required to analyze your assigned deal. An investment bank’s role is to help a company raise money by issuing an IPO(Initial Public Offering) or a subsequent sale of securities and stock.
The Investment Bank sets the price of the stock based on the valuation of the company. The research done to do this valuation is performed by the Investment Banking Analyst (Financial Analyst). They analyze the financial statements, the company’s industry, their competition and various other factors.
The Investment Banker oversees the analyst’s activities. They spend most of their time involved in the structure of the deal, negotiating terms and managing the relationship. The large amount of research that analysts do in a short time-frame is why you typically work so many hours in these roles.
Investment Banking is similar to Mergers and Acquisitions, which is why Investment Banks perform a lot of M&A activity. The analysts value both companies separately as well as together. Before that can be done, you will have to help your client find a suitable company to merge with.
The client does not always know what company they will merge with before contacting an Investment Bank. The bank in charge of the transaction also has to negotiate terms between the two merging companies.
The lead banker has to determine how the purchase will be made. The company making the purchase may use stock, cash or debt to buy the target company. M&A transactions are more complex than Investment Banking deals, but the analysts are more well-rounded. The deals involve combining legal structures, negotiating the valuations done by both companies and much more.
The investment industry is another area that uses the Financial Analyst title. Analysts assist the Investment Manager with ensuring money is invested to maximize return and minimize risk. The teams managing these investments may work for the company who owns the investments or they may be a separate company managing the investments of numerous companies. In the former relationship, these individuals would work for a bank, insurance company or a trust.
The Investment Manager’s job is vital to the success of the company so earning the maximum amount of return on investment is crucial. The Financial Analysts who work here are expected to know portfolio analysis very well and will need to obtain the CFA Charter. Some more specific names for these positions are Investment Analyst, Fund Analyst, or Portfolio Analyst.
Financial Planning & Analysis
There are a handful of finance jobs that exist within all medium to large corporations. The FP&A (financial planning and analysis) is one such role. This area is the core of the finance department and performs most of the analysis for the company. One of the functions of FP&A is to provide reporting to management on the performance of the company. This reporting includes analysis of growth rates, trends, and other relevant analysis.
The reporting they create will help management make decisions all throughout the company. The FP&A analyst is knowledgeable in Finance, but they have to be very well versed in Accounting. The individual line items within the financial statements are created by Accounting and the FP&A analyst has to know how to read and interpret those numbers. Common titles you will see for this role are FP&A Analyst, Corporate Finance Analyst, or Financial Analyst.
Private Wealth Management
A Private Wealth Management professional works with high net worth individuals to assist them with protecting or increasing their wealth through diversification of financial assets. Their main role is managing the relationship between the financial institution and the client while serving the needs of the client. They will suggest specific funds or risk reduction strategies to help the client protect and grow their money.
Their goal is to increase the company’s funds under management by acquiring new customers or increasing investments from existing customers. As a Private Wealth Management Analyst you will be working with the clients information to develop reporting or analysis around their return on investment or diversification.
You would learn about investment strategies to help clients maximize their investments, reduce risk and maximize tax benefits. Some job titles you will see for these roles are Private Wealth Manager, Private Wealth Analyst, or Wealth Management Analyst
Credit analysts are responsible for evaluating the risk of a company to determine their creditworthiness. This is relevant for evaluating whether or not to give a company a loan and the structure and terms of that loan. The method used to determine the company’s risk is typically through the analysis of their financial statements.
Credit Analysts need to evaluate the profitability and financial stability of a company. They forecast how profitability is going to change in the foreseeable future. The analyst performs ratio analysis, benchmark comparisons and business analysis of the industry and competitors. Companies will call these roles Credit Analysts, Accounts Receivable Analyst, or Underwriter.
Buy-Side / Sell-Side Analyst
The last roles are typically called Financial Analysts, and within the industry they are differentiated by their perspective. A Buy-Side Financial Analyst is evaluating a company to determine if their stock is good to invest in and make part of their investment portfolio. A Sell-Side Financial Analyst has the responsibility of evaluating a company and making a recommendation to the Buy-Side Analysts to either buy or don’t buy.
The main difference between the two jobs is that the Sell-Side Analyst has to do a very thorough analysis of the company. The Buy-Side Analyst uses this analysis to make their stock purchase decision. The Buy-Side Analyst needs to trust that the Sell-Side Analyst has done exceptional research and, therefore, can make a sound recommendation. These analysts will have a track record of their recommendations which determines how easy it is for Buy-Side Analysts to trust them.
In both cases, you will see these positions called Financial Analysts, but there will be verbiage in the job description about whether it is Buy-Side or Sell-Side.
This list of Financial Analyst positions covers the most common roles, but there are many more niche financial jobs. When searching for roles in Finance, be sure to read the job descriptions carefully. Simply looking at the job title will not give you the detail you need to make an informed decision to apply or not.
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