The job of an investment analyst is to ensure that all facts are in place when making investment decisions. This job is demanding and requires long and frequent business trips, but the salary and benefits are good. Most current analysts report high job satisfaction. This is also an area that is expected to achieve rapid growth in the next few years, making it an attractive career path for motivated young people.
- Investment analysts are financial professionals with expertise in evaluating financial and investment information, and their usual purpose is to provide securities buying, selling, and holding recommendations.
- Buy-side analysts work for mutual fund brokers and fund managers of financial consulting companies, and identify investment opportunities for their companies.
- Sell-side stock analysts usually work for large investment banks, issuing buy, sell, and hold recommendations as well as research on specific companies.
- The average annual salary of investment analysts before receiving bonuses is less than $80,000, and successful analysts have annual salaries as high as six figures.
Investment analysts collect information, conduct research, and analyze assets such as stocks, bonds, currencies, and commodities. Investment analysts usually focus on specific areas to become experts in their chosen field, such as a specific industry, geographic region, or specific asset class.
The research is then submitted to a portfolio or investment manager, usually as part of the team, where experts in different fields can weigh their insights with each other before making final recommendations and investment decisions. Collaboration is a key part of the job, as is the presentation and sharing of information among peers.
Investment analysts continuously collect and interpret data, such as company financial statements, price developments, currency adjustments, and yield fluctuations. Information collection also includes macro developments, such as tracking the impact of a country’s political changes, climate change, and natural disasters, as well as emerging industries and service industries.
When investment analysts meet with the management of the company they are studying or similar key players, some degree of direct interaction usually occurs. They may also meet with stockbrokers, fund managers and stock market traders. Many investment analysts travel frequently, and they may stay abroad for a few years to build local knowledge and build professional networks.
According to Payscale.com May 2021 data, the current median salary of investment analysts is slightly higher than $66,000. Bonuses and profit sharing structures are common, with bonuses up to 21,000 USD and profit sharing up to 13,000 USD. Commissions of up to $4,000 per year are also reported. The US Bureau of Labor Statistics (BLS) set the median salary for May 2020 at $83,660, which may be the reason for the large number of entry-level respondents in the Payscale.com survey.
There is a huge difference between salary and experience. Although entry-level salary is usually less than $60,000, 10 to 20 years of experience makes the salary close to 100,000 US dollars. According to Payscale.com data, more than 20 years of experience can bring a salary of $140,000.
According to data from Glassdoor.com, the average base salary of US investment analysts in 2021
Geographical location is another important differentiating factor. Salaries in New York City, San Francisco, Boston, and Denver are all more than 20% higher than average, while salaries in Washington, Philadelphia, and Seattle are much lower.
A bachelor’s degree in finance or business is the most common minimum requirement. Accounting, statistics, and economics degrees may also be accepted by potential employers. MBAs and higher degrees in mathematics or finance are common, especially among analysts entering management positions.
Many employers also need several years of practical experience, such as lower-level analyst positions and economic modeling in related industries.
The main certification for investment analysts in the United States is the Chartered Financial Analyst (CFA). This certification is similar in status to the Certified Public Accountant (CPA) title of an accountant.CFA is known for its three brutal exams with a pass rate of 40-50% in the first two exams. It is highly valued in many areas of the financial industry and may open the door to various career developments.
Certified Investment Management Analyst (CIMA) is another widely recognized certification. CIMA is awarded by the Investment and Wealth Institute (IWI) and requires three years of industry experience, two separate background checks, successful completion of hundreds of study hours and two exams.
For investment analysts, there are a few impressive-sounding certifications that fall into the category of diploma factories. A statement on the resume that this type of certification (which usually does not require actual work other than filling out a check) may question the applicant’s judgment rather than help obtain employment opportunities.
An analytical mind with a keen insight into mathematical patterns and correlations is the most important tool for investment analysts. The ability to spot trends early and use expertise to find ways to use them makes investment analysts valuable to the company.
High attention to detail and the ability to make reasonable judgments under time pressure are also important skills. When sudden market changes occur, investment analysts must be able to respond quickly to new recommendations.
Being proficient in computers and being able to build advanced predictive models is an obvious advantage, because most of the work is done on computers.
Since this job is about communication as well as processing numbers, good interpersonal skills and presentation skills are essential. Most of the work week is spent combining professional-looking presentations with graphs and charts to illustrate data and convey compelling recommendations.
The most common career path is to enter the position of senior investment analyst (median salary in 2021 is slightly less than $85,000) or portfolio manager position (median salary is approximately $87,000, but there are substantial bonuses and profit sharing) . The next step is either a senior portfolio manager (median salary of approximately $124,000 plus bonuses and profit sharing) or the Chief Investment Officer (CIO) (approximately $170,000 in 2021 plus bonuses and profit sharing).
Other investment analysts become independent investment advisors and provide professional knowledge to financial companies as freelancers. This option can only be used after many years of experience and the development of industry contact networks.
Most investment analysts work for larger companies, such as investment banks, insurance companies, institutional investors, private equity firms, stock brokers, or large charities. Benefits including health, dentistry, and retirement planning are almost universal in this area.
According to data from the US Bureau of Labor Statistics, the job prospects of investment analysts are solid, with an expected growth rate of 5% by 2029.
Working hours may be cruel, working 12 hours a day, and must work on weekends, but the extent is influenced by the local culture. Nonetheless, as mentioned above, most investment analysts report high job satisfaction.
There are some gender imbalances, and the number of men at the entry level far exceeds that of women. This trend is higher in the company hierarchy.The reason for the imbalance is unclear. One possible explanation is that men tend to perform better than women in standardized math tests, which may be related to cultural norms.