What is the Role of Finance Analyst?

A financial analyst is someone who guides businesses on how to make money. They provide advice or suggestions to businesses on how much money they need to spend on stocks or bonds. Finance analysts work in various financial domains such as hedge funds (alternative investment funds), mutual funds, insurance companies, stock brokerages and investment banks. 

Let’s understand the role of finance analyst, financial analyst qualifications required and whether the research analyst is different from financial analyst.

What is Finance Analyst?

A finance analyst is an individual who provides professional guidance services to businesses for making investment decisions and assess the performance of stocks purchased by them. 

A finance analyst does market research to analyze the market trends and financial statement analysis of companies to anticipate future investments. Due to this, the clients of a financial analyst are able to make well informed decisions. A financial statement analysis refers to a detailed analysis of a business entity’s financial statements such as balance sheet, income statement and cash flow statement.

Now, let’s learn about the role of a finance analyst.

What role does the Finance Analyst play?

A finance analyst makes use of financial data in order to assist companies in making business decisions. The following roles are expected to be played by all the finance analysts:

• Helping companies in making business decisions by building financial models for performing financial analysis, anticipating business opportunities and providing other relevant data analyses.
• Compiling financial reports and written suggestions regarding financial statuses.
• Studying corporate and economic trends in the country and abroad to offer context regarding business decisions.
• Measuring all the financial risks which are linked with investment decisions.
• Supporting budgeting efforts at various business entities.
• Creating data-backed reports to help the management team of a company to take strategic business decisions.

Financial Analyst Qualifications Required

For becoming a financial analyst qualifications required are:

• Passed 12th grade with at least 50% grade point average.
• Bachelor's degree in finance or accounting or economics or business administration or a closely related discipline. 
• Having a master's degree might have a competitive advantage but is not necessary.
• The candidate must have completed CFA certification which has three levels: CFA 1, CFA 2, and CFA 3.
• NSE Certification in Financial Market (NCFM) is preferred but not mandatory.

Is a Research Analyst different from a Financial Analyst?

Yes, a research analyst is different from a financial analyst. The job of a financial analyst involves gathering, reviewing and analyzing financial data to assist companies in making business decisions. The finance analysts do an analysis of the financial market trends useful for investment decisions and also examine financial statements of corporations to pinpoint the investment potential of a specific company.

But a research analyst’s job involves performing investigative analysis which can include finding financial data and examining, interpreting and reporting on the data gathered. The role of a Sebi registered research analyst varies from one research analyst to another. While one research analyst might perform equity analysis for stock investment, another research analyst might conduct market research for launching a new product range or analyze and rate debt instruments or bonds.

Simply put, the financial analysts are more likely to make investing recommendations with the help of data analyzed by them. On the other hand, research analysts are generally involved in a broader, more investigative gathering of data and interpretation process.

In Summary

Financial analysts play an important role in the business and financial world. They help the companies to make well-informed investment decisions by offering them professional guidance and recommendations. The financial analysts do a thorough financial statement analysis which is crucial to learn about the potential of various business entities. A research analyst might seem to play a role similar to that of a financial analyst but the former certainly has other additional roles as discussed in this blog post. 

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.