The Difference Between Financial Advisors and Financial Analysts
A financial analyst will generally be employed by a bank, an investment firm, or an insurance company. Their main objective is to follow and analyze an assigned company's financial workings - going over financial statements, expenses, tax rates, and the like - in order to develop an understanding of where the company makes and where the company loses money.
an investment in the company being followed by the analyst or issue reports and ratings on the company to be used by the general investing public. The training of a financial analyst - especially one who deals with exceedingly large corporations - is necessarily strict and time consuming due to the impact that their research reports can have.
A financial advisor, on the other hand, is usually the term used for a personal consultant. Individuals seeking financial advice about what to do when they get married, or how to plan for when they retire, or what to do if they want to start up a college fund for their children, will go to a financial advisor in order to get his/her assessment of their current financial position and recommendations for the best possible way to plan for the future. Perhaps the most important thing a financial advisor can do - the thing that is hardest for an advisor to learn in any school - is condense and communicate their vast knowledge of finance and investment planning into layman's terms for the everyday fellow with a wife and kids. Since they do not work as often with cutthroat business types, it is important for financial advisors to be charming and eloquent so that
everyday individuals trust them with their money. After all, many financial advisors are self-employed and make their connections by good word of mouth, so being well liked and well spoken is a must.
The differences between financial advisors and financial analysts might not seem that big, but the next time you need some advice about how much money to put into your IRA, you'll understand the distinction.
By InvestorGuide Staff