What Is an Investment Analyst?
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. Brokerage firms,investment advisorsandmutual fund companies hire investment analysts to prepare investment research for multiple purposes.
The most prestigious certification an investment analyst can receive is theChartered Financial Analyst (CFA)designation. They often have to use a variety of formulas and means to identify information.
Key Takeaways
- An investment analyst is a financial professional with expertise in evaluating financial and investment information.
- 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.
The Basics of Being an Investment Analyst
An investment analyst researcheseconomic conditions, company information and market trends to determine business, sector and industry recommendations for buying or selling stocks or mutual funds. A stock analyst stays updated with developments in his industry focus and creates financial models estimating future outcomes for companies and the economy. An analyst evaluates historical and forward-looking financial data, typically through advanced financial models. They study and incorporate research on economic and business trends for a specific industry, geographical region or type of product.
Investment analysts broadly come in two types: buy-side analysts and sell-side analysts. Buy-side analysts work for fund managers at mutual fund brokers and financial advisory firms. They research companies in their employers' portfolios, as well as other companies that may represent profitable investment opportunities. Based on this research, they prepare reports that offer buy and sell recommendations to management.
Sell-sideequity analysts often work for the biginvestment banks, such as Goldman Sachs. Their jobs entail researching the financial fundamentals of companies the bank is considering taking public and determining which ones have the strongest potential to become profitable.
For aspiring financial analysts, one of the most important decisions is whether to specialize as an equity analyst or pursue another niche under the broader umbrella of financial analysis. The following comparison explains some of the subtle differences between a career as a financial analyst and an equity analyst.
$103,020
Average base pay for an investment analyst in the U.S. in 2021, according to the Bureau of Labor Statistics
Analyst Education
An undergraduate student typically majors in finance, computer science, biology, physics or engineering and takes courses in business, economics, accounting and math. Amaster of business administration (MBA)is also often preferred for senior investment analysts. Investment analysts may also seek Financial Industry Regulatory Authority (FINRA) securities licensing which requires corporate sponsorship. Securities licenses often required by investment analysts include theSeries 7general securities representative license and the Series 63uniform securities agent license. FINRA licenses are typically associated with the selling of specific securities as a firm’s registered representative. Investment analysts may also seek to obtain the Chartered Financial Analyst (CFA) certification.
Analyst Positions
Investment analysis expertise is required in numerous senior investment management roles. Aportfolio managerchooses, manages and presents products, industries and regions for a company's investment portfolio. Portfolio management is required for a broad range of responsibilities within the investment management industry. Portfolio managers are hired by investment companies to manage all types of funds with various objectives and fund structures. Portfolio managers are responsible for analyzing market conditions and investment securities and making buy and sell decisions for the fund.
A stock investment analyst works on either the buy-side or sell-side for a business. A buy-side analyst is primarily a portfolio management analyst creating investment research and investment recommendations for portfolios with large amounts of capital such as mutual funds, hedge funds and insurance companies. A sell-side analyst advisesfinancial service companies on securities, such as stocks or bonds.
FAQs
If you're interested in becoming an investment analyst, you can take a few different paths. The most common route is to get a degree in Economics, Finance, or a related field from an accredited university. Many investment analysts also have an MBA or master's degree in Finance.
What do you mean by investment analyst? ›
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.
What is the role of an investment analyst? ›
As an investment analyst, you'll provide research and information to help traders, fund managers and stockbrokers make decisions about investments. The information you provide ensures investment portfolios are well managed and that potential investment opportunities are highlighted.
What qualifications do I need to be an investment analyst? ›
Educational Qualifications
Many advanced analyst positions and investment management positions require a master's degree. Relevant graduate degrees include an MBA with a quantitative focus or a master's degree in finance.
What is the best education for a financial analyst? ›
A bachelor's degree may be enough to get you started in the financial sector, but a master's in finance or business administration may help you advance into more senior roles, the BLS reports. If you want to focus on analytical skills, master's in business analytics programs might be an option.
Can you become an investment analyst without a degree? ›
Financial Analyst Degree and Educational Requirements. There is no specific degree required for a career as a financial analyst, but finding a job will probably be easier if you have a bachelor's degree, and most companies require it. Nearly all financial analysts start with an internship or entry-level position.
Is it hard to be an investment analyst? ›
Investment Banking is an extremely competitive industry. Investment Analyst is an entry-level position and it is usually awarded to candidates during their last year of college or an internship. Landing a position at a firm within a financial hub will be difficult.
What is the highest salary for an investment analyst? ›
Investment Analyst salary in India ranges between ₹ 3.0 Lakhs to ₹ 30.0 Lakhs with an average annual salary of ₹ 11.9 Lakhs. Salary estimates are based on 399 latest salaries received from Investment Analysts. 0 - 7 years exp.
How much do investment analysts make in the USA? ›
What is the total pay trajectory for Investment Analyst?
| Job Title | Salary |
|---|
| Investment Analyst | $146,000 /yr |
| Senior Investment Analyst | $158,645 /yr |
| Principal Investment Analyst | $183,883 /yr |
5 days ago
While younger analysts tend to do a lot of data gathering, financial modeling, and spreadsheet maintenance, more senior analysts tend to spend time on developing investment theses, speaking with company management teams and other investors, and marketing ideas (if they are on the sell-side).
I want to be an investment analyst because the role is ever-changing and you have to take personal responsibility for keeping abreast of industry developments. To be successful in the role you must ensure you analyze emerging trends and opportunities before your competitors do.
What is the job description of an investor? ›
What Is an Investor? Investors commit their own money or their client's money into products, property, or financial ventures in order to gain more money in return. As an investor, you may invest in the stock market and purchase stocks, bonds, mutual funds, options, and futures.
How do I start an investment career? ›
The following steps outline the typical path many investment bankers take.
- Earn a bachelor's degree in finance or a related field. ...
- Consider a graduate degree or MBA. ...
- Register with FINRA and obtain certification. ...
- Take part in on-the-job training. ...
- Advance your career.
There are four steps you must complete to earn CIMA® certification.
- Apply for the certification program by submitting a program application.
- Complete an executive education program through an approved Registered Education Provider.
- Pass a comprehensive certification exam.
Previous experience (minimum 5+ years) working with a research house, superannuation fund, stockbroker, financial advice firm, fund manager or corporate, with an emphasis on product analysis and industry knowledge. Manager research experience across asset classes is desired.
Is being an investment analyst hard? ›
It is extremely hard to become an investment banking analyst. You need the right education, the right connections, and the right personality. And, that is just to get your foot in the door.
Do investment analysts need CFA? ›
Meaning of CFA Qualifications in the Financial Industry
As a private body, there is no legal requirement to hold a CFA certification to work in the fields of investment or finance; you only need to meet the licensing requirements for your occupation set by state and federal regulators.
