The decision to buy, hold, or sell securities is sometimes made through utilizing the knowledge of the individual buyer or seller, but most individuals consult their stockbroker for advice. The stockbroker, in turn, depends on the expertise of the research department of his or her firm to provide the necessary information. These experts are called market analysts or securities analysts.
In addition to being employed in brokerage houses, market analysts and securities analysts are also employed by investment banking firms, bank trust departments, insurance companies, pension and mutual funds, investment advisory firms, and institutions such as colleges that have endowment funds to manage. All these organizations expect the same thing: expert advice that will help them to invest wisely with the best return on their money.
Market analysts evaluate the market as a whole. They study information on changes in the gross national product, cost of living, personal income, rate of employment, construction starts, fiscal plans of the federal government, growth and inflation rates, balance of payments, market trends, and indexes of common stocks. They also monitor events that might produce a psychological reaction in the market: international crisis, war, political activity, or a tragedy large enough to cause the market to change direction. Market analysts also keep an eye on business and industry developments and actions of the Federal Reserve to loosen or tighten credit.
Securities analysts study and analyze individual companies or industries, relating knowledge of the current and future state of the economy to predict the future performance of the company or industry. Analysts may specialize in a specific area such as companies involved in energy production or the aircraft manufacturing industry. The analyst studies all available material on an individual company including annual reports and details of company management and sometimes travels to the company to take a closer look in person.
An investor who has an investment portfolio containing a number of different securities needs advice not only on the individual securities but also on the makeup of the entire portfolio. A portfolio analyst has the broad general knowledge to give advice on the market and its relationship to the objectives of the investor. The accumulation of a balanced portfolio can then be accomplished.
Those analysts who deal in securities actually combine elements of all of these three areas within the scope of their work. But, in organizations that employ large numbers of researchers, the jobs are often separate.
Places of Employment and Working Conditions
Analysts work in all parts of the country but are concentrated in Boston, Chicago, New York City, and San Francisco. Major brokerage houses have branch offices in about 800 cities.
Analysts find their work fascinating but time consuming. They must read constantly—newspapers, annual reports, trade publications—to be aware of developments and changes in the market. Their advancement depends on the reputation they achieve for accurate analysis and predictions. They are sometimes required to make decisions quickly on securities worth thousands, or even millions, of dollars.
Qualifications, Education, and Training
The ability to interpret and analyze large amounts of material, an inquiring mind, and facility in mathematics are absolutely necessary. Good communication skills are important.
A high school background with plenty of mathematics and preparation for college are essential. Some type of selling experience is usually necessary.
A college degree is required by just about all employers. Economics, political science, and business administration are the preferred degrees. Engineering, law, finance, and marketing, especially when combined with graduate work in business administration, are also accepted. The growing use of computers in this field requires the addition to research staffs of those trained in mathematics and statistics.
The mark of professionalism among analysts is the chartered financial analyst (CFA) degree, comparable to the CPA for an accountant. To earn this degree, an analyst must fulfill the membership requirements of one of the financial analysts' societies in the United States and complete three examination programs. Analysts must have five or more years of experience before taking the third examination.
Potential and Advancement
The Bureau of Labor Statistics estimates that the demand for analysts will increase by 12% between 2014 and 2024, providing good opportunities for people in the field. However, opportunities fluctuate along with the ups and downs in the economy.
In the securities field, research departments are considered the best springboard to advancement since analysts acquire in-depth knowledge of the economy and the market. Within research, the career path is usually junior analyst; analyst, sometimes in a specialty field; then senior analyst. Advancement to management positions in branch offices is also possible.
Income
According to the US Bureau of Labor Statistics, the median annual wage of market research analysts was $80,310 in 2015 Market research analysts normally work full time during consistent business hours. Several, however, work under pressure of deadlines and tight timetables, which may require longer hours.
Related Jobs
Related jobs include actuary, economist, insurance agent and broker, investment manager, statistician, and securities sales worker (stockbroker).
