Financial analysts are the backbone of some of the most important decisions taken by an organisation. As financial transactions become more complex, the demand for financial analysts is growing. There are ten different types of financial analysts based on their job roles and specialisation! You read that right!
So, what are they, and what are their job roles? Let’s find out!
10 Types of Financial Analysts
If you aspire to become a financial analyst, then here are ten types of financial analysts to let you know what sparks your interest:
1) Investment Banking Analyst:
Investment banking, the option that most finance enthusiasts aspire to, manages the companies’ investments to help them achieve their investment goals. If the company is new to investing, investment banking involves understanding the goals and risk appetite of the company and identifying the investment opportunities. If the company already holds the investments, then investment banking involves analysing the existing investment to know whether the portfolio needs to be restructured or not. Their job roles involve:
- Creating useful financial models and conducting financial analysis
- Valuation analysis
- Undertaking client transactions
- Project coordination
- Industry and product research
2) FP&A Analyst:
Financial Planning and Analysis (FP&A) analysts essentially focus on the company’s operations and performance to analyse whether the company is meeting its performance targets and goals. They tend to look at the economic and business trends and identify any obstacles and problems the company faces or may face in the future. Their job roles include:
- Overviewing the financial affairs of the company
- Determining the best and worst-performing products and services
- Analysing the cost-effectiveness of the departments
- Preparing and maintaining the financial models
- Preparing the internal reports
3) Risk Analyst:
As the name suggests, risk analysts primarily assist companies willing to invest in new markets or locations. They review the company’s plan, analyse it, and identify significant exposure to risk. It conducts extensive research to help companies make informed financial decisions. The job role of a risk analyst includes:
- Reviewing the financial prospects of the company’s plan
- Cumulating the economic and industry data in which the company is planning to invest
- Preparing models and analysing risks posed by the company
- Mitigating risks
4) Rating Analysts:
Rating analysts analyse organisations’ repayment capabilities, including companies or government agencies. Ratings provided by these analysts act as the foundation for investors’ decisions on whether to invest in a particular asset class or scheme or not. The job role of rating analysts includes:
- Tracking the past credit performance of the company or government agency
- Evaluating the credit risk by analysing the revenues, debt, assets, and other factors
- Developing models and spreadsheets to analyse the instruments and support the findings
- Comparing the results of the instrument or company with similar players in the industry
5) Portfolio Manager:
This is another lucrative opportunity for finance enthusiasts. A portfolio manager essentially involves managing the portfolio of the clients to facilitate the achievement of their financial goals. Their job roles involve:
- Identifying new investment avenues for the investors
- Making investment decisions
- Stay updated on the current affairs and overall economic outlook
- Understand the client’s investment goals and invest according to their risk appetite
6) Hedge Fund Manager:
Hedge funds are actively managed non-conventional investment options that employ various strategies to provide lucrative returns to investors. The funds not only make direct investments in the underlying assets but can also use derivatives to leverage the investors’ returns. They are more aggressive when compared to mutual funds and are therefore managed by expert hedge fund managers. The job roles of a hedge fund manager include:
- Providing investment recommendations to the clients
- Making informed investment decisions
- Identify new assets and opportunities to invest
- Minimising risk while maximising the returns of the investors
- Analyse the performance of the fund and the scope of improvements etc.
7) Budget Analyst:
Budgets are the benchmarks based on which the organisations operate. A budget analyst focuses on the budgetary aspects of the organisation. They monitor the finances of the organisation in line with the budgets. They review and analyse the current and past spending based on which they help the organisations plan for the future budget. The job roles of budget analysts include:
- Analysing and preparing the budgetary reports
- Laying down the methodology for preparing the budget
- Identifying and analysing the reasons for failing to meet budget
- Using the past and current data to prepare future budgets and helping organisations take active steps to achieve the same etc.
8) Equity Research Analyst:
An equity research analyst primarily focuses on researching equity instruments, gathering data and insights, generating reports, and giving recommendations on stocks and companies. It provides services to both buyers and sellers of equities to make informed decisions. The role of an equity research analyst includes:
- Making informed decisions about the holdings of securities
- Analysing stocks and companies
- Overseeing the investment portfolios and restricting the same
- Modelling and research
9) Corporate Development Analyst:
As the name suggests, corporate development analysts focus on the factors necessary to develop corporates. It takes a deeper look into the finances and operations of the corporates to optimise the business processes and improve the organisation’s revenue. The main functions of the corporate development analyst include:
- Performing data interpretation
- Conducting market research
- Improving business processes
- Data gathering and analysis
- Identifying opportunities for expansion, mergers, or acquisitions
10) Treasury Analyst:
Treasury is often linked to government finances. A treasury analyst typically works for the treasury of governmental organisations and companies. They manage the entire organisation’s finances, assets, income, liabilities, expenses, and other areas impacting the organisation’s finances. The primary function of a treasury analyst include:
- Generating reports on income and expenses
- Forecasting future income and expenses
- Recommending optimum use of financial resources
- Developing investment strategies
- Coordinating between finance and investment departments
In a Nutshell
A career as a financial analyst offers a lot of potentials. Based on your interest, you can pick the career of your choice and become the type of financial analyst you aspire to, whether in equities, investments, treasury, or corporate development. Therefore, as the position of a financial analyst is quite crucial in a company, Join Seekho Select Membership to learn finance or join Seekho app today!
