What Are The Careers in Financial Analysis?January 25, 2018
As with every key skill, Financial Analysis opens many doors be it a financial controller on the Buy Side or an Investment Banker on the sell side.
Here are the top five career paths for a financial analyst.
Private Equity Analyst
A private equity analyst works on the buy side and for a private equity fund like Chrys Capital or Warburg Pincus. Their job involves analysing the financials of private companies, creating financial models and forecasts of their operations including industry, macroeconomic and microeconomic and preparing a case for or against investment in the company. He/she liaisons with key senior representatives of the company, often including the MD, investment bankers and the Investment Committee of the fund.
Investment Banking Analyst
An investment banking analyst works for the sell-side, investment banking, and is in charge of analysing both companies and sectors and preparing pitch presentations, financial models, forecasts, financial analysis of companies for valuation and of course information memorandums which are part of the collateral used in deals. The analyst often liaisons with clients, companies, senior management, private equity analysts and many others in the financial services landscape.
Equity Research Analyst
This is a financial analyst that can either work for an investment bank, (sell side) or for a mutual fund. The equity research analyst usually covers five to six companies in a sector and analyses these companies in the great amount of detail. They are experts in the industry they cover and give recommendations like buy, sell and hold in written reports. Primarily liaisons with senior representatives of the company, including the CEO and CFO, as well as investors who read the reports.
Often works in a company and reports to the CFO of the firm. His responsibilities involve ensuring the finances of the company are sound, analysing the performance of the company and making sure budgets are in place and are adhered to. He ensures funding requirements of the company, both working capital and long-term financial, are made available in a timely manner. He engages with both commercial and corporate banks for treasury requirements and needs to have a broad knowledge of all financial products including derivatives like options and futures to hedge foreign exchange risk and make effective investments, capital markets, mutual funds, and the commodity market. In many ways being a financial controller or treasurer is an excellent way to begin a career in the financial analysis since it allows a person to have a bird’s eye view of the financial services products while engaging in M&A on behalf of the company, as well as getting much-required exposure to how companies actually work. from the inside. This is often touted as the biggest disadvantage investment bankers and private equity analysts have because they often join these firms as freshers and have little idea of how companies actually make money.
Working as a corporate banker is a role that is often a role completely ignored because it is considered unglamorous but in many ways, it is the most obvious path to becoming the next Chandha Kochar or KV Kamath. Corporate bankers often walk the fine line between investment and commercial banks and because of that get access to many areas of banking that are often closed to Investment Bankers and Private equity analysts. They are comfortable with Asset Management and Treasury, have keen insight into the ways companies work and often find their way into project finance which is easily one of the most exciting places to work in a bank because they lend to high profile infrastructure projects that require intense financial analysis.