Analysts are a crucial part of all organizations. They help identify permanent problems, enhance decision-making, and offer viable solutions. They help companies reduce business risk, lower costs, and increase business values.
There are several different kinds of analysts, each with varying roles and responsibilities. There are data analysts, vendor analysts, project analysts, tax analysts, and many more. However, one thing people confuse the most is the difference between research and financial analysts. Even though some duties of each might overlap, their roles differ significantly.
Let’s first talk about research analysts.
What is a research analyst?
Research analysts are also often known as data crunchers. Their primary responsibilities include analyzing, interpreting, and presenting data related to various markets and fields. Research analysts study data from different sources and make relevant assumptions.
Different types of research analysts
There are research analysts present in almost every other industry. But each role differs to a certain extent. Some types of research analysts you can typically find in a company include:
- Operation research analyst
- Market research analyst
- Equity research analyst
- Economic research analyst
Role of a research analyst
The most common type of research analyst found in most companies is a market research analyst. Now the question that pops up is: what do market research analysts do, and why are they crucial? Market research analysts are responsible for gathering and analyzing data on customers and competitors. They study consumer behavior and depict patterns within statistics. They can work under pressure and carry the ability to cope with fast-paced work. They have excellent organizational skills, remarkable communication skills, and a strong analytical mind.
On the other hand, operations research analysts advise managers and company heads regarding the best course of action. They assist an organization with developing better procedures and systems. They use mathematical models such as quantitative reasoning, computer software, and other analytical approaches to think critically and solve problems.
Equity research analysts are responsible for providing detailed and comprehensive research reports regarding a company’s equity and the stock market industry. To become a good equity research analyst, you must have excellent writing, accounting, and excel skills. Knowledge about valuations and financial modeling is also crucial.
An economic research analyst conducts research and formulates reports that help overcome financial crises affecting production and distribution.
Education requirements of a research analyst
There are no specific educational requirements from a research analyst. Since they can are available in nearly any sector, any relevant academic background would suffice. However, one must note that since competition in the field is spiking high, the higher your qualifications, the more your chances of getting selected.
An average research analyst can earn between $50,000 and $60,000 annually. However, the pay significantly depends on an individual’s roles, responsibilities, the sector they are working in, and the companies. A market research analyst earns about $55,000 on average, while an equity research analyst’s pay goes up to $100,000.
Now let’s move on to financial analysts.
What is a financial analyst?
Unlike research analysts, the role of financial analysts is more specific. They assess, track, and plan a company’s economic performance. They are also responsible for predicting future revenues, potential losses, and other financial streams. Financial analysts also play an integral role in the decision-making of companies and corporations.
Financial analysts are responsible for analyzing current and past data, creating accurate reports and projections, and evaluating current capital expenditures. They also assess and establish profit plans, provide financial models, and identify trends in economic performance. They work closely with the accounting team to ensure accurate and timely forecasting.
Different types of financial analysts
The term financial analyst is a summarized version of a massive haul of roles and responsibilities. There are several different types of financial analysts, each with a unique and differing responsibility, including:
- Investment banking analyst
- Treasury analyst
- Financial planning and analysis analyst
- Corporate development analyst
Role of a financial analyst
The most common type of financial analyst is an investment analyst. As is evident by its title, an investment analyst provides information and research regarding its investments. They help managers, stockholders, and traders make informed decisions. Their primary responsibilities include conducting research, interpreting data, and providing valuable recommendations to boost the value of specific stocks. Determination, confidence, self-motivation, and sharp-mindedness are just a few traits essential to becoming an efficient investment analyst.
A treasury analyst oversees and manages an organization’s records of every transaction, payment, debt, loan, assets, and liabilities. Treasury analysts are an integral part of companies that experience extensive cash flows daily. A treasury analyst must be good with numbers, open to challenges, willing to learn, and technically capable.
A financial planning and analysis analyst performs four primary activities. These include planning and budgeting, integrated financial planning, management and performance reporting, and forecasting and modeling.
On the other hand, a corporate development analyst researches business decisions to land information to assist with corporate development. A corporate development analyst is a promising career but keep in mind that the role sounds more straightforward than in reality.
Education requirements of a financial analyst
Since financial analysts are a crucial part of most businesses, the academic requirements are stricter than that of a research analyst. At a minimum, a financial analyst must hold a Bachelor’s degree in finance, accounting, Economics, or any other relevant field.
Financial analysts can easily make big bucks in a short period. Studies showed that, on average, a financial analyst earns about $85,000 annually.
At this point, it must be evident that financial analysts differ significantly from research analysts. To summarize, financial analysts are more concerned with a company’s economic activities. At the same time, research analysts’ job is to acquire data and make informed decisions.
If you want to become an analyst, it is crucial to understand such differences in roles and tasks. Often people mistake one position for another and get stuck with the wrong job.