Investment analyst: what it is and how to become one

An investment analyst is a trained financial specialist who studies the market and recommends which assets to purchase, sell, or hold based on their findings. Investment counsellors, mutual fund companies, brokerage firms, and other similar businesses employ investment analysts to compile research on investments.

What is an investment analyst?

An investment analyst is a professional who uses their skills to model financial data and, based on the conclusions drawn from the data, advises portfolio managers on investment opportunities. Before making any investments, these experts thoroughly examine all relevant information, including current economic conditions and financial data. They also build financial models to forecast future trends.

Traders, fund managers, and stockbrokers rely on the research and information provided by investment analysts when making investment decisions. The data they supply allows for effective portfolio management and the identification of promising investment possibilities.

Investment analysts can find work in the investment management industry, supplying data to in-house fund managers or in the stockbroking and investment banking sectors, where their research is required by clients who handle their portfolios or make independent investment decisions.

What does an investment analyst do?

The tasks in this profession involve gathering data on different classes of assets, such as stocks, bonds, currencies, and commodities, using financial models to analyse this data, and finally, drawing conclusions. It is common practice for investment analysts to specialise in a single area of finance. For instance, some can focus on securities, while others can specialise in the financial markets.

After that, the expert's data is analysed and presented to the portfolio or investment managers. This process is usually collaborative, involving specialists from different areas who contribute their perspectives and insights. Many financial recommendations and investment decisions are ultimately shaped through this team-based approach. The key aspects of the profession include presenting data information to others and sharing knowledge and skills among colleagues.

An investment analyst's job is to constantly gather and analyse data, such as financial statements, price movements, currency changes, and yields, among other things. Macro developments are also part of the data collection process, such as tracking a nation's political tides, monitoring climate change and the effects of natural disasters, and keeping tabs on new service and industrial sectors.

Meeting with the company's management under investigation or other comparable significant actors often involves some direct involvement from the investment analyst. Additionally, they might have meetings with traders, investment managers, and stockbrokers.

Qualifications and skills

Employers frequently prioritise a candidate's competencies over their specific experience when making a graduate-level hiring decision.

As a proof, an investment analyst must provide:

• Academic credentials

A bachelor's degree in finance, economics, accounting, or a related field is typically required. Advanced certifications like the Chartered Financial Analyst (CFA) designation are highly valued.

The Chartered Financial Analyst credential is the pinnacle of achievement for an investment analyst.

You can enter the field with a bachelor's degree. Accounting, finance, and economics are all examples of quantitatively based business disciplines. Statistics, mathematics, physics, and engineering are examples of fields that teach analytical and quantitative skills.

To become a senior analyst, you do not necessarily need a master's degree, but many companies prefer to hire individuals with higher degree credentials. They believe spending more time in school would equip an individual with relevant skills. Therefore, one needs to study for a master's degree even though it is not a requirement. Moreover, if you study for an MBA in quantitative methods, you might not be considered an entry-level employee.

• Licensing (optional)

In some regions, analysts may need licenses from regulatory bodies such as FINRA, often requiring sponsorship by an employer.

Besides, to get a job as an investment analyst, you need to possess certain knowledge and skills.

• Financial literacy. It is crucial to understand and interpret financial statements, as they provide vital information about the business and the industry.
• Analytical skills. Strong analytical skills aid in detecting opportunities, monitoring investments, and resolving problems.
• Risk management skills. Investing always comes with certain risks. A good investment analyst needs to understand and anticipate these risks, especially in response to changing economic conditions. It's also important to advise clients on which risks are reasonable to take—and which ones to avoid.
• Portfolio management skills. Investment analysts should be comfortable using portfolio management systems to monitor exposures. Any discrepancies in client portfolios should be eliminated, and daily report monitoring should be part of integrated investment guidance. Effective portfolio management involves identifying growth opportunities and monitoring performance.
• Knowledge of diversification strategies. A diversified portfolio is preferable to putting all the money into a single venture. Ideally, an analyst should know how to diversify investments among assets like shares and trusts.
• Communication skills. It is also important to present complex financial information to clients and stakeholders clearly. A good specialist should tailor their approach to each client.
• Technical proficiency. An investment analyst is often expected to work with tools for analysis, including Excel, VBA, SQL, Python, R, and other financial software.
• Time management skills. The ability to prioritise tasks and meet deadlines ensures that you stay productive, especially when juggling multiple projects.
• Ethics and integrity. Every expert should remember to adhere to ethical standards when making decisions.

Salary

In the Kuala Lumpur, Malaysia area, an investment analyst can expect to earn a total of 4,333 MYR per month, with an average salary of 3,500 MYR. These figures show the median, which is the middle value between the two extremes, calculated using the salary data. A monthly stipend of 833 MYR is anticipated. Commissions, tips, profit sharing, cash bonuses, and other forms of additional compensation are possible.

Employment

Common places of employment for investment analysts include investment management firms (to supply information to in-house fund managers), stockbrokers, and investment banks (to assist clients, typically fund managers, company executives, and directors) with their research. Institutional investors, including big charities, pension funds, and life insurance corporations, invest via the wealth management arms of investment banks.

The variety of tasks an analyst is required to complete is dictated by the character of their employer. At bigger companies, they often collaborate on study summaries. Reporting may be more independent in smaller companies.

Graduates may gain experience working overseas through internships, assignments, or referrals from investment roles. Big investment banks and other multinational corporations are more likely to take advantage of these opportunities.

Final thoughts

• An investment analyst is a trained financial professional who evaluates market trends, analyses data, and recommends whether to buy, sell, or hold assets. Their work involves creating financial models, assessing economic conditions, and providing insights that aid portfolio managers in making informed investment decisions.
• Investment analysts are employed by mutual fund companies, brokerage firms, investment banks, and wealth management firms. They may work on the buy-side (advising fund managers) or sell-side (providing research for clients).
• Analysts often work as part of a team, sharing insights with colleagues such as traders, fund managers, and stockbrokers. They may interact directly with company management or key industry players to gather critical data for their analysis.
• A bachelor's degree in finance, economics, or a related field is essential, with advanced certifications like CFA being highly valued.
• Key skills include financial analysis, risk management, communication skills, technical proficiency, and ethical decision-making.