Financial Analyst

See: Sellside Analyst. See: Buyside Analyst.

Like ice cream, financial analysts come in many flavors, but all do the same thing: They analyze money. (Okay, so ice cream doesn't do that.) Is so-and-so a good credit risk? Is this company worthy of a B rating in its bonds? Is this stock a buy, a sell, or a hold? Does my own mother understand what I do?

The lion's share of financial analysts work on Wall Street for "buy" or "sell" side firms. A buy side firm is a mutual fund, hedge fund, or other investment entity charged with managing money for an individual. The sell firms are the stock brokers who sell money for a living. And you have to understand this maybe subtle but very key difference to be able to understand what financial analysts do—or rather, the perspective they have when they're doing their jobs.

Financial analysts on the buy side are trying to find a rationale to buy something—to figure out if or how a given investment opportunity is cheap. Is the world just panicked for no good reason? Is there something fundamentally wrong with this company? Is it actually just fairly priced for all the risks involved?

Financial analysts on the sell side get paid in large part based on the volume of commission dollars flowing through the desk that they cover. So if you follow the media industry for a large investment bank, much of your power and pay will derive from the buy side firms simply liking the work you do. You might even get a "Good Job!" sticker.

The buy side firms pay the investment bank by trading through it. They could buy or sell Disney shares from a hundred different players, but they chose your bank because they like the financial analysis you did on the new Nairobi theme parks and ESPN 37.

There's a subtle but important difference here in the impetus behind the reports financial analysts create. One is about stock ownership; the other is about transacting. The day is spent largely making models based on meetings with management, pasted over a "macro" picture for how the world is doing.

Financial analysts want to run money—that is, they want to become portfolio managers. (See: Mutual Fund Manager and Hedge Fund Managers for details.) Ultimately, they want to make money run right into their wallets.

You could try to argue that people get into this biz because of the love of fierce competition, or because they like the challenge of predicting in what directions the financial world is going to turn, but really, they just want to make money.

And there's no shame in that. Money takes care of your family. Money keeps you out of debt and relieves the stress of worrying how you're going to pay your mortgage or other bills. Money buys fancy Italian cars. Okay, so maybe that last example wasn't quite as noble as the others, but you get the idea.

Because money is the be-all-end-all, practically every moment of a financial analyst's waking life—or of their working life, anyway—is spent with that goal in mind. This means that you won't be strolling into the office at 9:30 am and skipping out at 4:00 pm when you think the boss isn't looking. The more hours you put in, the more money you make, so you're going to put in a lot of overtime.

Don't expect to see your spouse and kids much. It's going to take a Herculean effort on your part to make yourself a major part of their lives so they don't grow up resenting you. (Little known "fact": Hercules was both a tremendous father as well as a financial analyst. He's more famous for his physical exploits, however.)

There is the chance to make some major moolah in this gig...and that's really all it comes down to. If you struggle (at least relative to others in your profession) and can't seem to get ahead, you're a failure. If you have more money than you know what to do with, you're a success. It's as simple as that.

There's no Financial Analyst of the Year Award; no monument will be constructed to memorialize your achievements. You work for the allure of the dollar alone. Actually, the allure of many, many dollars. Analyze that.