An investment analyst provides research and information to help traders, fund managers and stock brokers make decisions about investments. The information they provide ensures investment portfolios are well managed and that potential investment opportunities are highlighted.
Some analysts work for investment management companies, providing information to in-house fund managers; others work for stockbrokers and investment banks, where their research is needed by portfolio managers or by clients who make their own investment decisions.
Analysts and fund managers working in the UK are likely to research investments globally. Principal types of investor in the UK include:
- banks and large corporations;
- charitable organisations;
- companies or individuals seeking alternative investments such as real estate and hedge funds;
- life assurance companies;
- pension funds;
- wealthy individuals.
Investment analysts may be involved in a broad range of activities and disciplines, which vary according to the nature of the employer. Essentially, they provide an insight on economic trends and evaluate investment potential.
They need to develop an understanding of financial information, such as financial statements, company accounts and sector data. They will also need to access and understand wider business information such as relevant economic data and political events.
Investment analysts are skilled at examining and interpreting data from different sources and understanding the impact this will have for investment decision making.
An analyst will need to research a set of companies in depth in order to make informed recommendations to fund managers. These are usually companies in a specific industrial sector, such as retail, pharmaceuticals or utilities, or in a specific geographical area, such as Europe or East Asia.
Work activities usually include:
- conducting due diligence on companies and industries by researching, reading financial statements and market data;
- analysing financial information relating to specific companies, e.g. company results, profit and loss, balance sheet and cash flow statements to determine how an organisation is positioned to deliver for investors;
- keeping up to date with market developments, new investment products and all other areas that can affect the markets, e.g. movements in the economies of relevant countries;
- considering how the economic implications of factors such as natural disasters, weather, wars, etc. might affect the performance of companies and funds;
- monitoring the financial news using specialist media sources;
- financial modelling and projection;
- drafting and writing research reports for fund manager or client use;
- meeting with and providing information to fund managers; this might include, summaries of research, investment ideas, key events from the proceeding day as well as key drivers for the day ahead;
- making recommendations to fund managers, being able to position ideas and articulate to the fund manager about the risk or payoff for each recommendation;
- ensuring that all compliance regulations are met.
- The typical starting salary for entry-level graduate positions is £28,000 to £40,000 in London, with possible bonuses of 10% to 100% in the first three years. Salaries tend to be lower elsewhere in the UK (and outside of the larger investment banks). Organisations outside of London may recruit at an entry level from £18,000 to £20,000.
- After five to eight years, salaries rise to £65,000 to £100,000, with bonuses of up to 40% an 150%. Typical salaries at senior levels can be £110,000+, with bonuses of up to 200% of salary.
Salaries vary significantly according to the nature and size of the company and the geographical location. Salaries (and certainly bonuses) are likely to be higher in investment banks, which are predominantly located in London.
Starting packages with the bigger companies may include annual bonuses, gym membership, life assurance, a pension scheme and private health care. Most organisations provide study support and many now offer flexible benefits packages.
Figures are intended as a guide only.
Working hours can be long, e.g. ten or 11 hour days and the day tends to start early, as analysts have to update other departments before the day starts. Some weekend working may be necessary from time-to-time.
What to expect
- The work is primarily office based, with some visits to companies to meet with management.
- Working within a team of analysts is common. Initially, you will support the lead analyst and it may take several years before you cover companies yourself.
- The majority of openings are in London, especially for roles based within an investment bank. Investment management companies and stockbrokers are based in other UK cities as well as London. Few jobs are found outside major cities.
- Business dress is usual particularly in investment banks. Some firms have adopted a more smart casual dress code.
- Meeting deadlines and long working hours may be stressful. There is often a need to work to very tight deadlines, any trading issues need to be resolved extremely quickly and this may lead to pressured working environments.
- Travel is sometimes required to visit company management teams, which are usually UK-based, but overseas travel is also a possibility. Larger, global firms offer opportunities to work abroad.
Although this area of work is open to all graduates, for some organisations a degree in one of the following subjects is a strong preference:
Knowledge of other degree subjects may also be relevant, depending on your area of research; for example, life sciences will be relevant to work in pharmaceuticals.
Most employers seek a 2:1 or a first but investment banks may actually be more flexible about degree discipline than some investment management companies. Most will also require a minimum of 300 UCAS points at A-level (or equivalent). Some employers are specifying that applicants should have a grade A or B at A level mathematics.
Postgraduate qualifications are not essential, although a relevant Masters can help. Humanities students in particular may well find that a relevant Masters degree is helpful for some roles.
Search for postgraduate courses in finance and banking.
At a graduate level, employers will often make selection based on competencies rather than look for specific experience.
You will need to show:
- the ability to research, analyse and evaluate;
- excellent communication skills;
- the ability to work under pressure, meet deadlines and multi-task in a fast paced environment;
- strong numerical ability and quantitative skills;
- self-confidence, drive and tenacity;
- the ability to work effectively in a team;
- initiative, flexibility and innovation;
- an interest in current affairs and an appreciation of their impact on the market;
- in depth investment knowledge; this may come from an interest in the markets, participation in relevant student societies or running a shadow portfolio;
- commitment to further study and qualifications;
- global mind-set.
Computer literacy is essential although some IT skills can be acquired during training. Excel is particularly important as roles often involve financial modelling and projection work.
Investment analysts will be expected to use Bloomberg, Reuters and other financial information platforms. Language skills may be an advantage and for global organisations applicants should be able to demonstrate a global mind-set.
Pre-entry experience, such as work experience or an internship in a financial institution or a finance specific industry, is highly beneficial. Most financial companies use summer internships to pre-select graduate recruits. Competition for these is often more intense than for graduate vacancies, as there are fewer placements. London-based companies recruit across Europe and competition is high. Any financially based work experience will be extremely useful for the application process.
Closing dates for entry to graduate schemes at investment banks, stockbrokers and investment management companies may be as early as the October of your final year and rarely later than the following January. Applicants should check with each employer website individually.
Entry to the graduate schemes is highly competitive. Some companies, particularly the big investment banks, run structured graduate training programmes and recruit annually. Others may offer trainee positions as and when they are required.
Typical employers of investment analysts include:
- investment management companies, where analysts provide information to in-house fund managers;
- stockbrokers and investment banks, where the analysts' research assists clients of their company, usually fund managers but sometimes also company executives and directors;
- wealth management divisions of investment banks;
- institutional investors, such as large charities, pension funds and life assurance companies;
- hedge funds.
The nature of the employer will determine the range of activities an analyst's undertakes. In larger firms, investment analysts may work as part of a team producing a summary of research. In smaller firms, individual analysts may produce reports on their own.
Investment roles may offer graduates the opportunity to spend some time abroad, whether through secondments, rotations or assignments. These opportunities are more likely with larger, global firms, such as the big investment banks.
Emerging markets are becoming of particular importance and smaller offices are opening in Europe, the Middle East and Africa. Language skills are important in a number of locations.
Look for job vacancies at:
- Banking Jobs UK
- Exec-appointments - the Financial Times job search facility.
- Inside Careers: Banking, Securities & Investments
- Michael Page
Specialist recruitment agencies can be helpful and eFinancialCareers is particularly useful.
Direct approaches to companies may also be worth a try. A list of member companies can be found on the following websites:
- Association for Financial Markets in Europe (AFME) (now incorporating LIBA, the London Investment Banking Association)
- Scottish Investment Operations (SIO)
- Wealth Management Association (WMA)
Training varies according to the nature and the size of the company. Larger companies are likely to offer a structured-training programme for graduate trainees. On-the-job training will be a significant feature. A trainee will usually be assigned to a specific team or to an individual within the team, e.g. a senior analyst.
Often larger investment organisations may commence a graduate programme with two to three weeks of induction training. This often involves basic finance knowledge, along with softer skills such as presentation and conflict management techniques.
A minimum requirement for those working in the investment management field is the Investment Management Certificate (IMC) of the Chartered Financial Analyst (CFA) Society of the UK (CFA UK), which covers the regulations that investment companies and their staff must adhere to in the UK. Graduates joining investment management companies are, therefore, likely to take the certificate during their training.
Most of the investment banks now require their analysts to take the Chartered Financial Analyst (CFA) programme, which leads to a CFA charter. The CFA programme originated in the USA and has growing recognition globally. This qualification has been benchmarked by NARIC (National Academic Recognition Information Centre) as comparable to a Masters degree. Completing the programme generally takes four years and it is administered by the CFA Institute.
Employers in investment management often assist employees with their studies, offering financial support and time off for study and examinations. The IMC is a requirement of the Financial Conduct Authority (FCA) but it is also in the employer's interest to encourage staff to develop their skills and knowledge.
Within the investment banking sector new graduates tend to spend their first three years as analysts, after which the bank considers them for promotion to associate level.
General career development routes include:
- continuing your career as an investment analyst with the aim of becoming a lead analyst in a particular sector, perhaps starting with some of the smaller listed companies;
- progressing into management, supervising others and taking on responsibility for an investment area or type of fund;
- continuing to develop expertise in a chosen field and becoming recognised for specialist knowledge, expertise and results;
- becoming a manager in charge of investment in a specific organisation, e.g. an insurance company or in-house pension fund;
- moving into investor relations.
Progression within a company will depend upon its size. In small investment firms, sometimes known as boutiques, opportunities to develop may not always arise. An analyst may choose to apply to other firms to progress or develop new skills.
Relocation to another country, or to another major UK city, may be required to progress within a company or to secure a different role with a new employer.
Within the investment banking sector it is often not possible to transfer between departments, so graduates would be likely to progress within their current or similar roles rather than transfer. Often, if an individual has become an expert in their particular investment area or sector, they may be headhunted by competitor organisations and choose to continue their career elsewhere.