How to Become a Financial Analyst

The role of securities markets and investment banking is drastically becoming more dynamic and important, with each passing fiscal year. Apart from increasing stock and securities trading, compliance and risk management are two factors that play a significant role in the financial markets. The need for more financial analysts and financial advisers is being felt.

Financial Analyst Information

Any aspiring individual to wants to know how to become a financial analyst will benefit from understanding the following three facets of a financial analysts’ profession. Here, a financial analysts’ role in the business world, the educational requirements, and his/her potential career path, has been discussed briefly.

Job Description
The financial analyst job description, is quite broad and you will notice that there are several variable and conflicting definitions.

To put it in simple worlds, financial analysts principally advise entrepreneurs, investors, and businessmen when to buy/sell, why to buy/sell, what to buy/sell, and, overall, anything that relates to financial management and transactions. It does not mean that financial analysts give out such advice on the basis of sheer instinct; mammoth research is conducted to back it up. It is a common myth that analysts deal only with securities and fiscal markets. Such analysts can potentially advise any entrepreneur. Practically, analysts also advise production industries, service and software industries, banks, media and entertainment industries, and, potentially, any business or non-business organization.

To sum up the total potential duties of a financial analyst, we put it into the following points.

– Research and advise upon stock market and securities market orations (the foremost duties of a financial analyst)
– Advise upon taxation and compliance
– Advise about national and international economy
– Keep up with the inventory and production
– Study and analyze all incomes and expenditures of the company, and also execute related financial planning
– Manage all financial transactions of the company including credit, debt, and insurance
– Advise about new potential revenue options
– Raise adhered capital requirements for businesses and companies
– These analysts have the responsibility of purchase and sale of securities, debts, and instruments

Thus an analyst is any person who possesses a good command over the financial and economic matters of the business world.

Requirements
The analyst requirements are not that difficult and basic qualifications include knowledge about accountancy, taxation, economics, and statistics. The qualification for a financial analyst is the Chartered Financial Analyst charter holding, which is offered by the CFA institute. Apart from this charter MSF (Master of Finance) or MBA (Master of Business Administration) can also do good. Some other qualifications also include, CPA (Certified Public Accountants), CIA (Certified Internal Auditors), CMA (Certified Management Accountants) and ABA (Accredited Business Accountants).

Career Prospects
There are a wide number of career opportunities for financial analysts due to the fact that there is always a need for good and reliable analysts. Financial analysts are usually employed by different companies in their finance departments. Financial institutions and banks are the largest employers of financial analysts. Analysts employed or contracted by financial organizations are divided into two types, namely buy side and sell side analysts, who decide the purchase and sale of financial securities. Financial analysts also, often, work freelance and as consultants. Some of them are also personally hired by investors and businessmen.

A financial analyst has to enjoy number crunching and interpreting from figures and large numerical data. Also he/she should be well-informed about the economy and the markets in order to be abreast of all the financial developments around the world.

Duties of a Financial Advisor

A personal financial advisor is entrusted with the job of evaluating the performance of companies or that of a portfolio of securities and providing valuable guidance to individuals regarding the suitability of investments.

Responsibilities of a Financial Advisor

Advising Investments
A financial advisor is responsible for assessing market conditions, compiling and analyzing socioeconomic data, and advising clients on the best investment opportunity. He is expected to be comfortable with tax laws and insurance and suggest suitable investment alternatives. Working with detailed financial records and charts are all a part of the game. The advisor is also expected to forge relationships with clients by focusing on need-based sales of investment products. The advisor is required to have the knowledge of legal and regulatory requirements and the guidelines laid down by the Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission (SEC). Suggesting investments such as mutual funds, stocks and bonds; suggesting contributions to Individual Retirement Accounts (IRAs), retirement planning, real estate investment advice and many other services, come under the purview of his/her responsibilities.

Clarifying Risk and Reward
A financial advisor cannot ignore the client’s ability and the willingness to assume risks. The ability and the willingness to undertake risks coupled with the appropriate investment decision-making prowess will influence the return on investment. This is because risk and reward are directly proportional. Clients, who have a great deal of money and a long term investment horizon, may be better-off investing in more risky assets. People with a short term investment horizon need to have enough liquidity to meet their financial obligations. Hence, in such cases one of the duties of a financial advisor is to suggest investments that have a short maturity. Despite having the capacity for wealth generation, a person may choose not to invest in what he/she feels is a risky proposition. In this situation, the financial advisor should explain to the reluctant investor the concept of risk and reward, clarify the need for liquidity and make sure that time horizon of the investor matches the need for liquidity. A person, who is in his/her late 40s and has two children will generally have 3 time horizons. One coinciding with his/her retirement and the other two with the children’s college education. A good advisor will ensure that the return from investment coincides with the aforementioned time horizons when the need for liquidity is predominant.

Finding and Maintaining Relationships with Clients
Financial advisors essentially have the job of creating and maintaining their own client base. Client relationships have to be forged by suggesting superior management and wealth creation strategies. Meeting with clients on a regular basis, preparing and delivering presentations and seminars to clients are also important since they may enable the advisor to communicate the benefits of certain investments and the prudence of avoiding a few others.

Qualifications
A financial advisor should have one of the following qualifications: Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or Chartered Financial Consultant (ChFC). Although, people with Series 6, 7, and 63 may also be qualified to advise one regarding investments, it’s preferable if such advisors have at least 3-5 years of experience. Given that these advisors occupy a position of trust and confidence, advisors with significant assets register with the Securities and Exchange Commission (SEC). The Investment Advisors Act of 1940, a federal law that is enforced and interpreted by the Securities and Exchange Commission (SEC), applies to them.

Hopefully, the above article would have given one an idea about the responsibilities and the duties of a financial advisor. Choosing a financial advisor is a job that requires a great deal of thought and contemplation, since the advice that is dispensed may secure or ruin one’s financial position.

Questions to Ask a Financial Planner

A financial planner is a practicing professional who helps people deal with personal financial issues in areas like cash flow management, retirement planning, investment planning, risk management, tax planning, estate planning, and even business succession planning. Basically he/she is a person who will help you, if you have no clue on how to go about handling and managing your finances. In case you are hiring the services of a planner, there are certain things that you should be clear.

Important Questions to Ask

What are your areas of specialization (if any)?
It is always better to have a person who specializes in an area that you need help with – be it taxes, investments, or insurance. A specialized person can definitely help you better than someone who is a jack of all trades.

For how many years have you been in this profession?
This question helps to build credibility since you don’t want a dabbler to handle all your finances. It is also better to have references from credible clients. Do not hesitate to confirm the credibility, after all, you need to establish trust to hand him/her the rights to plan your financial matters.

How exactly can you help me manage my expenses?
This question will help you fathom, how exactly your relationship will work. This is an important question which will define the terms and conditions of the contract, and the responsibilities of your planner.

Do you have clients with similar needs?
This will guarantee whether the planner has experience in providing advice on similar products or a specific product that you are looking for. It would help if you can contact these clients and get their feedback on his/her services.

What is the remuneration that you are looking for?
Be very clear and specific while discussing the remuneration, since money matters are to be handled very carefully. Make sure you have a documented record or contract to define your agreement on the remuneration.

Do you have any questions for me?
It’s fairly obvious that there’s a correlation between how well an adviser understands your needs and the quality of the advice you get. That said, it’s important that your planner asks the kinds of questions to help you meet your goals, even the ones you haven’t thought to identify.

Remember, there are three important things that you should seek in a financial planner – his ability to guide you in matters of finance, to help you grow financially, and most importantly to ensure security of your investments.

What are the Duties of a Financial Planner

A financial planner is a professional who helps us with our financial issues. He is of great help in areas such as personal financial planning, investment planning, risk management, and insurance, as also in cash flow management. Here we take a look at the duties of financial planners and their job responsibilities.

Duties

He provides his clients with valuable guidance in taking major financial decisions and informs them about the short-term and long-term consequences of the same.

He helps the clients assess their financial assets, determine their financial goals, and weigh their economic resources to take investment decisions.

The duties of a financial planner also include the setting of financial goals with the client, gathering the client’s financial information, analyzing it, and designing a financial plan for him. It is a financial planner’s duty to implement the planned financial strategies and monitor the client’s financial decisions.

A financial planner helps the clients in risk management by assisting them in choosing suitable insurance schemes. He helps them plan for the future by providing them with well-suited investment options. He helps the client ensure financial independence on retirement, by helping him choose the proper retirement investment plan. He advises the client on how to reduce his tax liabilities and enhance cash flow. A financial planner also deals with the conservation and distribution of the financial assets of his client.

Job Description

A financial planner studies the different aspects of the financial status of his client and provides a suitable solution for existing and potential financial problems, if any. Some financial planners deal with the various facets of personal finance, while others specialize in fields like risk management or retirement planning.

The job of a financial planner can be described by means of a 6-step process given by the ISO.

– The first step is of setting financial goals with the client.
– The second step includes gathering relevant financial information from the client.
– The third step is of analyzing the gathered information.
– This is followed by the creation of a financial plan.
– The last two steps include tasks such as implementing the plan’s strategies and monitoring the implementation of that plan.

Financial planning is one of the most speedily growing industries as it deals with managing the most important means of living – money.