Financial analyst vs. Careers as a financial advisor

Financial analysts vs financial consultants: an overview

At first glance, financial analysts and financial consultants perform very similar tasks. Both act as financial, economic, and investment experts, and both help other professionals make more informed financial decisions. Dig a little deeper, though, and you’ll find that analysts and consultants focus on different things and enjoy very different work schedules.

Key points to remember

  • Financial analysts research the financial statements, market trends, tax returns, and investments of other companies.
  • Financial consultants are external entrepreneurs who work to provide advice and improve the financial situation of a sole proprietorship.
  • While financial consultants have potentially higher incomes, financial analysts can enjoy a better work-life balance.

Financial Analyst

A financial analyst often works for an investment bank or an asset manager. They examine financial and non-financial information, micro and macroeconomic data, and other variables to assess the financial health of a business. They frequently use this analysis to make a recommendation about the company they are analyzing, for example to buy or sell a stock.

Analysts should be comfortable working in a team-oriented environment. Most start at a junior level and help a senior member of the team while gaining work experience.

Financial Advisor

While financial analysts focus on evaluating external companies, financial consultants provide internal focused financial advice to companies. A financial consultant helps a business increase shareholder value and improve capital efficiency. Their job may be to help put together a merger and acquisition (M&A) package or to design a compensation strategy for the company’s executives. Many consultants work in the corporate finance division of a company. Others may work independently or within third-party consulting firms.

It is also important to note that many personal financial advisers refer to themselves as “financial advisers”. These consultants focus on individuals, not businesses, and are not the types of consultants discussed here.

What kind of education and skills are needed?

Many analysts and consultants study economics or finance at the undergraduate level, and many earn an MBA. Many started their careers in banking or working with financial consulting firms.

Consultants come from a variety of career paths, but there are two main types of consultant journeys. An entrepreneur typically works independently and on short-term projects for a large part of their working life. Other consultants have joined a consulting firm; this type tends to be older and is able to build on a network of previous professional relationships.

Every career path lends itself well to a reputable financial certification. After a consultant has three years of full-time business experience, plus at least a bachelor’s degree, he may be eligible to enroll in a course for the Chartered Financial Consultant (ChFC) designation, which requires nine college courses or 27 hours. college credit in the field.

Likewise, investment analysts frequently pursue a Chartered Financial Analyst (CFA) designation. To become a CFA candidate and register for the first of three exams, applicants must have a bachelor’s degree or be in the final year of a bachelor’s program. Alternatively, applicants may have four years of applicable work experience or a combination of work experience and education. In order to receive the CFA designation, the candidate must pass all three levels of the exam and have at least four years of applicable work experience.

What types of jobs are available?

Analysts are often divided into buy-side or sell-side positions, or they work for large banks. A buy-side analyst seeks investments for his company, often for an internal fund. A sell-side analyst provides research and makes recommendations (often to buy-side companies) or works to help promote certain investments.

An investment banking analyst is a whole different job. These analysts use models and predictive forecasts to support key partners in venture capital transactions, stock valuations, or other institutional decisions. Some even act as financial consultants and make recommendations for initial public offerings (IPOs) or M&A deals.

Independent consultants tend to have variable income. However, the most lucrative independent consultants are usually former senior finance professionals who, late in their careers, have decided to advise other companies in their field.

United States Bureau of Labor Statistics (BLS) periodically publishes a report on jobs called the Occupational Outlook Handbook. In this report, the BLS describes the average salary, experience required, and expected future demand for a number of common jobs in the United States.

According to the BLS handbook, there were 329,500 financial analysts in the United States in 2018, and the industry is expected to add an additional 20,300 by 2028. This is an expected growth rate of 6%. From this BLS report, the average salary is $ 85,660 per year.

The BLS has not released specific figures for financial consultants, likely due to the vague and generic nature of the job title. However, the BLS notes that the business and financial professions are expected to grow faster than average.

Compare work / life balance

With the exception of the highest levels, financial analysts tend to work standard 40- to 50-hour weeks, with weekend time off and regular vacation packages. Work hours tend to be very busy and even intense, but there is still plenty of time during the week for family, friends and leisure time.

This is rarely the case with financial consultants, especially those who work for large firms as partners. Many junior-level consultants report working 65 hours per week or more, which means more than 11 hours per day and a six-day work week. Consultants also tend to travel a lot and spend extended periods away from home. It’s not uncommon for young consultants to make six figures but actually earn less than $ 30 an hour.

Overall, the financial industry is well known (if not infamous) for its long working hours and rigorous professional demands. There is some evidence that large financial institutions are trying to reduce the workload and burnout of their employees, but most future finance professionals should be prepared to spend significant hours of overtime at their desktops.

Choose between careers

An aspiring finance professional who is torn between a career as a financial analyst and a career as a financial consultant should focus on the two areas where those careers are most distinct.

1. Work / life balance and compensation: Generally speaking, financial consultants have greater earning potential, but they also tend to work longer and spend more time traveling on business. Financial analysts tend to have more stable jobs and less stressful careers.

2. The type of investment analysis that each job does: Large-scale thinkers who wish to do research at a macro level find it more appropriate to work as analysts. On the other hand, those who enjoy business fundamentals and capital management are likely to feel more comfortable in advisory roles.

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