INVESTMENT ANALYSTS California Occupational Guide Number 260 INTEREST AREA 11 1995
THE JOB
INVESTMENT ANALYSTS work in the field of investment securities. Sometimes they are called Securities Analysts or Financial Analysts. Their services are required by investment brokers, banks, pension funds, investment banking firms, investment management and counseling firms, and insurance companies. The analyst's job is to make assessments of the economic performance of individual firms or whole industries and to make investment recommendations.
Investment Analysts must stay current in the fields of industrial technology, business, finance, and economic theory. They assess complex technical data and present written and oral reports. Acting in the capacity of economist, financial detective, and forecaster, analysts help direct much of the professionally managed capital of this country.
In the research department of a brokerage house, bank, or insurance company, Investment Analysts produce reports on general economic trends, individual corporations, and entire industries to advise the firm's representatives and clients in investment decisions. They present comparisons of the various securities of a given industry and develop opinions regarding their relative quality. Also, the current market price of a security is evaluated in terms of its value as an investment. Some of the factors involved are historical and subject to statistical measurement; other factors require the exercise of judgment in weighing intangibles, including the changing psychology of the investing public.
In making a detailed study of a company, analysts determine the economic position of the entire industry, how it is affected by new products, new processes, and competition. They summarize the financial position of the company, analyze past experience, review dividend records, note capital structure and comment on managerial effectiveness. Often the analysts strive to uncover hidden meanings in balance sheets and other financial reports. Finally, they develop a recommendation on the investment status of the equity.
Investment Analysts in an underwriting house must prepare a complete financial picture on companies before their firm undertakes the financing of them. After the underwriting house is convinced of a company's soundness, the analysts recommend the types of equities that will best suit the company's needs and will also be attractive to the investing public. They then determine the price at which the security should be syndicated and offered to the public.
WORKING CONDITIONS
Financial research staffs usually work in offices which are located in the larger metropolitan areas. Central to the job is the exchange of information between people, frequently under considerable pressure from time constraints. In a brokerage firm the analysts' workdays are peppered with telephone calls from sales agents and the public, and pressure mounts as the stock market activity increases. They have reference materials close at hand, but as time is of the essence, answers must be quick as well as accurate.
In order to keep well informed, Investment Analysts are obliged to visit firms, interview their management teams, and observe organizational processes and operations. Usually the analysts must relegate the endless reading of background materials that is demanded by the job to after office hours, extending the workweek considerably.
Investment Analysts are accorded professional standing and permitted identification as Chartered Financial Analysts after passing a series of examinations. They then can become members of the Association for Investment Management and Research which has affiliate societies or chapters in Los Angeles, San Francisco, Sacramento, and San Diego. The association is responsible for certifying financial analysts, providing continuing education for its members, maintaining its ethics and professional conduct program, serving as an advocate for its memberships and clients, and providing services for its members and local societies and chapters.
EMPLOYMENT OUTLOOK
The following information is from the California Projections of Employment published by the Labor Market Information Division.
Estimated number of workers in 1990 3,680 Estimated number of workers in 2005 4,420 Projected Growth Percentage 20% Estimated openings due to separations By 2005 830
(These figures do not include self-employment nor openings due to turnover.)
A projected increase of over 700 new jobs combined with the estimated 830 workers leaving the labor force will result in nearly 1,500 net job openings in California by the year 2005.
WAGES, HOURS, AND FRINGE BENEFITS
The low wage range for Investment Analysts is between $29,000 and $36,000 a year. The high annual wage range is between $50,000 and $64,000 and some of the more experienced analysts may earn an annual salary of $100,000 or more. The earnings in the higher range usually represent a combination of salary and bonuses awarded in recognition of business brought into the firm.
Investment Analysts work a regular 40 hour week, and receive the usual benefits such as vacation pay and medical insurance.
ENTRANCE REQUIREMENTS AND TRAINING
For trainee positions, employers require a Bachelor's degree in business administration, finance, or economics, and most specify that they prefer applicants with a graduate degree in business administration. The applicant will have enhanced employment opportunities if he or she is a good student and is active in a variety of extracurricular activities.
College students should prepare for this profession by taking several courses in investments, finance, economics, accounting, and banking. Experience gained from participating in an internship program with a financial institution can also provide valuable experience and exposure to the industry.
Personal characteristics which are indispensable to Investment Analysts include the ability to remember details and an intense motivation for seeking out obscure information. Analysts must be able to work independently and to make sound analyses of the general dynamics of the economy.
Analysts must be familiar with accounting methods, the operation of the money market, and tax regulations as they affect business, and security transactions. They need communications skills to make verbal as well as written presentations. The job requires initiative, resourcefulness, and tact.
ADVANCEMENT
From the time of entry on the job, the qualified analyst is progressively delegated additional responsibilities, and advances accordingly. An analyst can gain national recognition by becoming a specialist in one industry. Some become so familiar with an industry that they are offered management positions in the industry. The analyst's success is measured by the ability to evaluate stock market trends accurately.
FINDING THE JOB
Investment Analysts find jobs by directly applying to employers, contacting the placement centers maintained by colleges and universities, researching the classified section of local and financial newspapers, or by registering with the Job Service offices of the California Employment Development Department.
ADDITIONAL SOURCES OF INFORMATION
Association for Investment Management and Research P.O. Box 3668 Charlottesville, VA 22903 (804) 977-6600
RELATED OCCUPATIONAL GUIDES
Securities Brokers No. 252
OCCUPATIONAL CODE REFERENCES
DOT (Dictionary of Occupational Titles, 4th ed., Rev. 1) Investment Analyst 160.267-026
OES (Occupational Employment Statistics) System Financial Analysts, Statistical 253150
Source: State of California, Employment Development Department, Labor
Market Information Division, Information Services Group,
(916) 262-2162.
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