What does a Financial Analyst do?

By Robert Half on 8 March 2024

Since China's accession to the WTO, the capital market and various economic fields have been faced with great challenges.

China urgently needs to get in line with international standards in terms of improving the effectiveness of capital markets, open-end fund management, the establishment and operation of the Growth Enterprise Market, the demutualization of commercial banks, the operation of asset securitization, the introduction and application of financial derivatives such as stock exchange index futures in risk management, which leads to the increasing demand for financial talents in the market.

According to the Industrial Digital Talent Research and Development Report (2024), 97% of financial institutions still have a talent shortage. It is estimated that from 2024 to 2028, the total demand for fintech talents will exceed 1.15 million.

Employed by trust companies, mutual fund companies, pension fund companies, hedge fund companies, brokerage firms, banks, investment banks, insurance companies and other investment research institutions, Financial Analysts are very important in the financial sector.

In terms of the research content, Financial Analysts can be divided into stock analysts, bond analysts, macro analysts, and so on.

In terms of institutions, Financial Analysts can be divided into buy-side analysts (mainly serving internal investment research teams), sell-side analysts (brokerage research department) and independent analysts/research institutions (selling reports, serving customers).

Financial Analysts can provide reasonable investment strategy guidance through an accurate grasp of the market to help investors reduce risks and improve returns.

The work of Financial Analysts can directly influence investment decisions and capital allocation, and have a significant impact on the investment decisions of companies and investors.

In addition, Financial Analysts are also an important force driving economic development.

Through their research on industry trends, they can help enterprises make correct strategic decisions and promote industrial and economic development.

Job duties of a Financial Analyst

Financial Analysts can engage in the analysis of various projects such as stocks, bonds, funds, futures, options, foreign exchange, and derivatives.

The majority of Financial Analysts work in the banking sector, followed by the securities and fund sectors.

The main job functions of Financial Analysts are as follows:

  • Collecting and collating various important financial and economic data information, such as financial statements, market dynamics, industry trends, and macroeconomic data, to provide a data analysis basis for macro research, capital market (such as bond market) research, and rating industry research;
  • Creating financial models based on comparative financial statements, financial ratios, fundamental analysis, technical analysis, financial leverage, credit risk, financial management, investment management, P/E ratio, etc., and conducting quantitative and qualitative analysis of financial data;
  • Tracking domestic and international economic development and changes, making timely observations on major events, policies and data changes based on market hotspots, providing timely research results and opinions, writing in-depth financial analysis reports on specific topics, and predicting future market trends;
  • Using professional financial analysis to evaluate the investment value of enterprises, projects, budgets and other financial-related matters, and to provide investment strategy support to potential or existing shareholders and clients, and investment analysis on when to buy, sell, or hold company shares;
  • Communicating with clients and colleagues, reporting to superiors, explaining and presenting the analytical process and conclusions, answering questions, and solving problems;
  • Constantly learning and updating financial knowledge and skills, paying attention to changes and developments in the financial market, and improving their professional level and competitiveness.

Necessary skills for Financial Analysts

A good Financial Analyst needs to have a strong mathematical background, solid financial knowledge, technical analytical skills, compliance knowledge, and master certain financial theories and tools, such as financial statement analysis, budget management, financial modeling, macroeconomic analysis, and portfolio management.

A relevant bachelor's degree background in finance, economics, accounting, business administration, and statistics that demonstrates the ability to understand and process data and financial information is usually a prerequisite for being a Financial Analyst.

Many companies require applicants to have a master's degree in finance or a related MBA degree.

In addition, Financial Analysts also need to have professional qualifications and certifications, which can prove their professional level and ability and improve their market competitiveness and development space.

Common professional qualifications and certifications for Financial Analysts are as follows:

1. Certified Financial Analyst (CFA)

CFA is a globally recognized highest qualification for Financial Analysts, issued by the CFA Institute in the United States. It requires applicants to pass three levels of exams, covering knowledge of financial theory, ethics, analytical methods, and investment tools, and the applicants must have at least four years of relevant work experience;

2. Certified International Investment Analyst (CIIA)

CIIA is an internationally recognized qualification for Financial Analysts, issued by the Association of Certified International Investment Analysts (ACIIA). It requires applicants to pass two levels of exams, covering knowledge of financial theory, analytical methods, and investment instruments, and the applicants must have at least three years of relevant work experience;

3. Financial Risk Manager (FRM)

FRM is a globally recognized qualification for financial risk managers, issued by the Global Association of Risk Professionals (GARP) in the United States. It requires applicants to pass two levels of exams, covering knowledge of the theory, methods, tools and other aspects of financial risk management, and the applicants must have at least two years of relevant work experience.

Among them, the Chartered Financial Analyst (CFA) is the most important and influential certification for Financial Analysts.

In addition to professional background and skills, in order to maintain a productive career as a Financial Analyst, you need to master a range of skills, including:

a) Communication and presentation ability

Financial Analysts need to maintain close communication with various industry experts and market players to keep abreast of industry developments. They need to be able to express their opinions and suggestions clearly and persuasively, and write financial reports and articles in professional and layman’s terms;

b) Logical and innovative ability

Financial Analysts need to have rigorous logical and innovative thinking abilities, have a strong interest in financial analysis, and be able to find rules and problems from complex financial data and propose novel and valuable analysis methods and solutions;

c) Data and computer skills

Financial Analysts need to have good data sensitivity and processing ability, be proficient in statistics, use various financial data processing software and data visualization tools, such as Excel, SPSS, SAS, Python and R, and be able to use various financial models and algorithms to carry out efficient and accurate analysis;

d) Learning ability and adaptability

Financial Analysts need to have a strong sense of learning and adaptability, be able to keep up with changes and developments in the financial market, update their knowledge and skills in a timely manner, and cope with various complex situations and challenges.

In the CFA system, analysts can be divided into two categories. The first category is generalists, such as analysts in new media, e-commerce and education industries.

Most of these analysts have a financial background and need to learn more industry knowledge.

The other category is professionals, such as analysts in the medical and pharmaceutical industry and the communications industry with high knowledge barriers.

Such analysts usually have professional backgrounds related to science and engineering and need to learn financial knowledge.

If you are interested in becoming a Financial Analysts or looking for job opportunities, contact us today. We will provide you with professional consulting and recruitment services to help you achieve your career goals and dreams.

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