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Information
and resources:
What is this job like?
Financial
analysts and personal financial advisors provide analysis
and guidance to businesses and individuals to help them with
their investment decisions. Both types of specialist gather
financial information, analyze it, and make recommendations
to their clients. However, their job duties differ because
of the type of investment information they provide and the
clients they work for. Financial analysts assess the economic
performance of companies and industries for firms and institutions
with money to invest. Personal financal advsors generally
assess the financial needs of individuals, providing them
a wide range of options.
Financial analysts, also called securities analysts and investment
analysts, work for banks, insurance companies, mutual and
pension funds, securities firms, and other businesses, helping
these companies or their clients make investment decisions.
Financial analysts read company financial statements and analyze
commodity prices, sales, costs, expenses, and tax rates in
order to determine a company’s value and project future
earnings.
Financial analysts in investment banking departments of securities
or banking firms often work in teams, analyzing the future
prospects of companies that want to sell shares to the public
for the first time. They also ensure that the forms and written
materials necessary for compliance with Securities and Exchange
Commission regulations are accurate and complete. They may
make presentations to prospective investors about the merits
of investing in the new company. Financialanalysts also work
in mergers and acquisitions departments, preparing analyses
on the costs and benefits of a proposed merger or takeover.
Personal financial advisors, also called financial planners
or fiancial consultants, use their knowledge of investments,
tax laws, and insurance to recommend financial options to
individuals in accordance with their short-term and long-term
goals. Some of the issues that planners address are retirement
and estate planning, funding for college, and general investment
options. While most planners offer advice on a wide range
of topics, some specialize in areas such as retirement and
estate planning or risk management.
An advisor’s work begins with a consultation with the
client, from whom the advisor obtains information on the client’s
finances and financial goals. The advisor then develops a
comprehensive financial plan that identifies problem areas,
makes recommendations for improvement, and selects appropriate
investments compatible with the client’s goals, attitude
toward risk, and expectation or need for a return on the investment.
Sometimes this plan is written, but, more often, it is in
the form of verbal advice. Financial advisors usually meet
with established clients at least once a year to update them
on potential investments and to determine whether the clients
have been through any life changes—such as marriage,
disability, or retirement—that might affect their financial
goals. Financial advisors also answer questions from clients
regarding changes in benefit plans or the consequences of
a change in their job or career.
Employment
Financial analysts and personal financial advisors held 298,000
jobs in 2002; financial analysts accounted for almost 6 in
10 of the total. Many fiancial analists work at the headquarters
of large financial companies, several of which are based in
New York City. Nineteen percent of financail analsyts work
for securities and commodity brokers, exchanges, and investment
services firms; and 17 percent work for depository and nondepository
institutions, including banks, savings institutions, and mortgage
bankers and brokers.
Training and Qualifications
A college education is required for financial analysts and
is strongly preferred for personal financial advisors. Most
companies require finnacial anlaysts to have at least a bachelor’s
degree in business administration, accounting, statistics,
or finance. Coursework in statistics, economics, and business
is required, and knowledge of accounting policies and procedures,
corporate budgeting, and financial analysis methods is recommended.
A master of business administration is desirable. Advanced
courses in options pricing or bond valuation and knowledge
of risk management also are suggested. Courses in investments,
taxes, estate planning, and risk management also are helpful.
Programs in financial planning are becoming more widely available
in colleges and universities. However, many financial planners
enter the field after working in a related occupation, such
as accountant, auditor, insurance sales agent, lawyer, or
securities, commodities, and financial services sales agent.
Personal financial advisors may obtain the Certified Financial
Planner credential, often referred to as CFP (R), demonstrating
to potential customers that a planner has extensive training
and competency in the area of financial planning. The CFP
(R) certification, issued by the Certified Financial Planner
Board of Standards, Inc., requires relevant experience, the
completion of education requirements, the passage of a comprehensive
examination, and adherence to an enforceable code of ethics.
Personal financial advisors may also obtain the Chartered
Financial Consultant (ChFC) designation, issued by the American
College in Bryn Mawr, Pennsylvania, which requires experience
and the completion of an eight-course program of study. Both
designations have a continuing education requirement.
Job Outlook
Increased investment by businesses and individuals is expected
to result in faster-than-average employment growth of financial
analysts and personal financialadvisors through 2012. Both
occupations will benefit as baby boomers save for retirement
and as a generally better educated and wealthier population
requires investment advice. In addition, people are living
longer and must plan to finance more years of retirement.
The globalization of the securities markets will increase
the need for analysts and advisors to help investors make
financial choices. The rapid expansion of self-directed retirement
plans, such as 401(k) plans, is expected to continue. As the
number and complexity of investments rises, more individuals
will look to financial advisors to help manage their money.
Financial advisors who have either the CFP (R) certification
or ChFC designation are expected to have the best opportunities.
Earnings
Median annual earnings of financial analysts were $57,100
in 2002. The middle 50 percent earned between $43,660 and
$76,620. The lowest 10 percent earned less than $34,570, and
the highest 10 percent earned more than $108,060. Median annual
earnings in the industries employing the largest numbers of
financial analysts in 2002 were as follows:Other financial
investment activities $74,860
Management of companies and enterprises 60,670
Securities and commodity contracts intermediation and brokerage
58,540
Nondepository credit intermediation 51,700
Depository credit intermediation 51,570
Median annual earnings of personal financial advisers were
$56,680 in 2002. The middle 50 percent earned between $36,180
and $100,540. Median annual earnings in the industries employing
the largest number of personal finacial advizors in 2002 were
as follows:
Other finance investment activities $74,260
Securities and commodity contracts intermediation and brokerage
68,110
Depository credit intermediation 51,030
Related Occupations
• Accountants
• financial managers
• insurance sales agents
• real estate brokers and sales agents
• securities, commodities, and financial services sales
representatives
See: • List
of Careers
www.bls.gov/oco/ocos259.htm
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