Investment analyst

Competition for investment analyst graduate schemes is fierce so apply early and build up some relevant financial work experience

As an investment analyst, you'll provide research and information to help traders, fund managers and stockbrokers make decisions about investments. The information you provide ensures investment portfolios are well managed and that potential investment opportunities are highlighted.

You could work for an investment management company, providing information to in-house fund managers or for stockbrokers and investment banks, where your research is needed by portfolio managers or by clients who make their own investment decisions. Whichever setting you're in it's likely you'll be researching investments globally.

Principal types of investor who may use analysts 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.

You'll work with financial statements, company accounts and sector data. You will also need to understand wider business information such as relevant economic data and political events to provide an insight into financial trends.

You may research companies within a specific industrial sector, such as retail, pharmaceuticals or utilities, or in a specific geographical area like Europe or East Asia.

Responsibilities

You may be involved in a range of activities and disciplines, which vary according to the nature of your employer. However, in general you'll need to:

• conduct due diligence on companies and industries by researching and reading financial statements and market data
• analyse 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
• keep 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
• consider how the economic implications of factors such as natural disasters, weather and wars might affect the performance of companies and funds
• monitor the financial news using specialist media sources
• carry out financial modelling and projection
• draft and write research reports for fund manager or client use
• meet with and provide 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
• make recommendations to fund managers, being able to position ideas and articulate to the fund manager about the risk or payoff for each recommendation
• ensure that all compliance regulations are met.

Salary

• Typical starting salaries for entry-level graduates range from £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 of around £22,000.
• After five to eight years, salaries rise to between £65,000 and £100,000, with bonuses of up to 40% and 150%.
• Typical salaries at senior level 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.

Income figures are intended as a guide only.

Working hours

Full time hours may sometimes include long days, perhaps 10 or 11 hours. You'll typically have some early starts as you need to update other departments before the average working day begins. 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'll cover companies yourself.
• Most 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.
• Initiatives are in place to help with equality and diversity within the financial sector. For example, there is Women in Banking and Finance, which is a membership network that supports women working in financial services.

Qualifications

Although this area of work is open to all graduates, for some organisations a degree in one of the following subjects is preferable:

• accounting or finance
• economics
• mathematics
• statistics
• business studies.

Knowledge of other degree subjects may also be relevant, depending on the area you'll work within. For example, life sciences will be relevant to work in pharmaceuticals.

Most employers seek a 2:1 or a first, as well as strong A-levels, but investment banks may actually be more flexible about degree discipline than some investment management companies. Some employers are specifying that applicants should have a grade A or B in A-level mathematics. Check individual companies or job adverts for details.

Postgraduate qualifications aren't essential, although a relevant Masters can help. Humanities students in particular may well find that a relevant Masters degree, such as a Master of Business Administration (MBA) is helpful for some roles.

It's also possible to become an investment analyst with a senior investment and commercial banking professional degree apprenticeship. Courses typically last for 18 months with professional exams at the end. Use the Find Apprenticeship Training service to identify relevant opportunities.

Search postgraduate courses in finance and banking.

Skills

At graduate level, employers often make their selection based on a candidate's competencies rather than their specific experience.

You'll 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
• language skills and a global mindset - for international organisations.

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.

You'll also be expected to use Bloomberg, Reuters and other financial information platforms.

Work experience

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 financial work experience will be extremely useful for the application process.

If you have experience within a specific industry, such as pharmaceuticals or engineering, this could also be useful if you’re able to find a position where your research would focus on that sector.

Graduate schemes

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. You should check with each employer individually for exact details.

Entry on to 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're required.

Employers

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 you undertake. In larger firms, investment analysts may work as part of a team producing a summary of research. In smaller firms, you may produce reports on your 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.

Look for job vacancies at:

• City Jobs
• eFinancialCareers
• exec-appointments.com
• Michael Page

Speculative applications 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) (incorporating LIBA, the London Investment Banking Association)
• Scottish Investment Operations (SIO)
• Personal Investment Management and Financial Advice Association (PIMFA)

Professional development

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. This may include two to three weeks of induction training, which can involve basic finance knowledge, along with softer skills such as presentation and conflict management techniques.

On-the-job training will be a significant feature. You'll usually be assigned to a specific team or to an individual within the team, e.g. a senior analyst.

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. If you’re a graduate joining an investment management company you are, therefore, likely to take the certificate during your training.

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's also in the employer's interest to encourage staff to develop their skills and knowledge.

Most of the investment banks now require their analysts to take the Chartered Financial Analyst (CFA) programme, which leads to a CFA charter. Completing the programme generally takes three to four years, and it's administered by the CFA Institute.

Career prospects

Within the investment banking sector it's typical for you as a new graduate to spend your first three years as an analyst, after which the bank considers you 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, such as 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. You may therefore 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's often not possible to transfer between departments, so it's likely you would progress within your current or similar roles rather than transfer. Often, if you have become an expert in your particular investment area or sector, you may be headhunted by competitor organisations and choose to continue your career elsewhere.