Financial Analyst, Advisor and Planner
Financial analysts and personal financial advisors recommend investment strategies to businesses and individuals. Financial analysts and personal financial advisors collect information from clients and make financial recommendations, but they each provide different types of financial recommendations.
Financial analysts evaluate a company’s financial performance and provide potential investors with this information. They are also known as securities or investment analysts and provide investment recommendations to insurance companies, mutual and pension funds, investment banks, business media, and securities firms. Financial analysts evaluate a company’s commodity prices, costs, sales, tax rates, and expenses to project future earnings and determine company valuation. They meet with company representatives to evaluate management effectiveness and determine a company’s revenue prospects.
Financial analysts either work on the buy side or the sale side. Buy side analysts work for companies with a lot of money to invest known as institutional investors. Hedge funds, mutual funds, insurance companies, charitable organizations with large endowments such as universities, and money managers are considered institutional investors. They also develop investment strategies for a company’s portfolio; whereas, sell side financial analysts assist securities firms and investment banks to sell securities. Moreover, the business media hire impartial financial advisors.
Financial analysts usually specialize in a specific financial product, geographic region, or industry. Big firms with large research departments may also divide specialties into more categories. Specialists analyze business trends, competition, and products as well as stay up to date with new policies and regulations, as well as economic factors affecting investments. Portfolio managers, usually experienced analysts, supervise teams of investors to determine the types of securities and industries a company should invest in. Fund managers supervise mutual and hedge funds. Risk managers evaluate investment decisions and implement strategies to increase revenues and decrease risk through diversification.
Rating analysts determine whether companies and governments issuing bonds will be able to pay these debts. Rating analyst managers assign credit ratings to bonds and securities to assist potential investors making investment decisions. Some analysts perform cost, budget, and credit evaluation.
Using spreadsheets and statistical software, financial analysts develop forecasts and locate trends. They also use data to determine potential investment risks, and using data, write reports and recommend whether to buy or sell specific securities.
Personal financial advisors determine the financial needs for individual investors. Advisors base their short and long term investment recommendations on their knowledge of securities, tax law, and insurance. Advisors oversee estate, retirement, and college education funding planning, and some sell life insurance and provide tax advice. Some advisors specialize in risk management or estate planning.
Personal financial advisors work with a multitude of clients and often have to recruit their own clients, spending a lot of their time marketing. Advisors also recruit potential clients by holding seminars and giving lectures. One of the most important elements of a financial advisor’s job is building a clientele.
After finding a new client, personal financial advisors begin with a consultation, where an advisor determines a client’s investment goals. Then a comprehensive plan is developed, aligned with a client’s goals and risk preferences. Personal financial advisors sometime consult attorneys or accountants.
Personal financial advisors usually meet annually with clients to update them on new investment opportunities and alter investment strategies to accommodate life changes such as retirement. Advisors also answer investment questions and discuss risk factors with their clients.
Most personal financial advisors buy and sell securities and life insurance. Financial advisors earn commissions from securities and life insurance sales.
Private bankers or wealth managers advise rich investors. These investors have a lot of money and are looking for big returns. Since these investors are wealthy, they invest differently than the public. Private bankers manage the investments of these wealthy investors, and they can use lawyers, accountants, and financial analysts to determine investment strategies. Private bankers usually work with a few clients who they meet with regularly.
Work environment. Financial analysts and personal financial advisors generally work in office buildings or their personal residences. Financial analysts often work long hours, deal with the stress of meeting deadlines, and travel frequently to meet with investors. They spend a lot of time after the work day is over conducting research because they spend their working hours finding new investors.
Personal financial advisors often work during usual business hours, but they often schedule meetings with clients on the nights or weekends. Many personal financial advisors coordinate seminars and teach evening classes in an attempt to recruit more clients. They also spend a lot of time traveling to conferences and meeting with clients.
Private bankers work normal hours, but since they consult few clients, they have to be flexible to meet with clients.
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