Security Analyst also unknown as Financial security analyst are the professionals, who study and run a deep research over various corporates, evaluate the risk and return rate of the debt, equity and derivative securities and pass suggestions to the individual and institutional investors over security hold, purchase or sell.
Security Analyst details
The Security Analyst make regular Reports over the financial health of various corporates. They do that by analyzing the respective Financial Statements and data that is attainable through several primary and secondary sources. This process is literally referred as fundamental analysis, technical analysis and quantitative analysis. The Primary data source is inclusive of Information shared by different financial analyst, managers and other corporate insiders. Whereas the secondary data source includes Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), Publications, Online database I.e., Legitimate Financial statistics website, Research Journals and Articles etc.
The Financial statements provide enough data over a corporate’s profits, assets and liabilities value that could help the security analyst make a prediction. Additionally, the security analysts are also in contact with corporate insiders/ managers who handover the necessary data of a corporate to them.
They, with the help of collected information, make financial models and summarize them into important reports. The financial models are principally based on quantitative and qualitative data that present financial forecasting such as market value of the firm and Price trends of the securities. The reports made by security analysts are accessible to the investors only if they pay for them.
The investors relay upon the information provided by these analysts and purchase the recommended securities, if they are profitable; sell the held securities, if they are risky; and hold them off, if they could increase value within a specific period.
| Important KeyPoint’s- |
A Security Analyst work as an information bridge between investor and a potential client that is mostly a company.
A Security analyst analyzes financial reports and the essential data of a company, both collected through primary and secondary sources.
A Security Analyst make financial models with the help of fundamental, technical and quantitative analysis and encapsulate the information into factual reports.
The Security analysts make regular reports over the financial fluctuations (Risk and Return) of a pool of companies and the investors have to pay a specific amount of money to access them.
The Investors entrusting the reports buy, sell or hold Investment securities such as Debt Securities, Equity Securities and Derivatives.
What’s the purpose of security analysis?
Security analysis is a tool that works on behalf of investors to make optimal investment decisions. The analysis is carried out for financial prediction that whether investing in a particular corporate would be risky or profitable.
There are basically three types of security analysis that are run over by security analyst through which they collect the accurate data. Additionally, the collected information aid to prepare financial models and envelop them into special reports; which are than accessible with money exchange. Following is the analysis detail.
1. Fundamental Analysis
After looking into these factors the security analyst make a forecast about a corporate financial performance in a report form. The financial prediction compel the investors to invest in a company, sell out the stock and securities or withheld them till they attract a better return.
2. Technical Analysis
The Security analysts run Technical Analysis by estimating price trends of different securities that are issued by various corporates. The price trends are evaluated by investigating previous pricing and market data. It help the investors foresee the future sustainable price of securities.
The foregoing scenario assist to comprehend which corporate is likely to serve higher revenue on security and which are giving lower return. The institutional and retail investors make their investment decisions based on the reports that summarize the above-mentioned details.
It’s the type of data estimate that run trend analysis of markets and security prices.
3. Quantitative Analysis
Quantitative Analysis is the type of security analysis that generates ideal investment portfolio with the help of quantitative data. The data is the result of all the mixed financial factors that influence an individual or corporate investor to take an action.
Such as, Financial statements, i.e., balance sheet, profit or loss statement, income statement, cash flow statement; Return on securities; Financial market trends; Competition level of a corporate product; Pricing details, Pricing trends, and market data.
Qualification and Job details of a Security Analyst
Security Analyst deal with financial forecasting of a company through analyzing various monetary aspects of it. As they mainly handle valuation of debt, equity, and derivatives securities thus, having a financial educational background is necessary.
A bachelor degree in finance or business administration is required for getting an entry-level job as security analyst. However a better approach will always be to avail an internship opportunity while continuing your studies.
Almost all the companies recruit a financial analyst, security analyst however, work under them as their job duties are limited and confined in that broader field. There are many corporates, brokerage houses, equity capital corporations who offer internship programs.
A masters degree in accounting, finance, economics or business administration is required for getting higher roles. Additionally, Security analyst job is closely related with financial analyst therefore , many professionals advice the new aspirants to must get a Chartered Financial Analyst (CFA) certificate.
The CFA certification enable one to get senior-level roles in the financial and security analyst field however it’s not compulsory.
A security analyst can be promoted to a financial analyst while financial analysts, inclusive of it, are expert in various other fields.
Skills of a Security Analyst
The Security Analysts work for various corporates. Their primary services include data analysis over securities and company’s financial statements. They consult mergers and acquisition firms, help resolve bankruptcy, consolidate investments decisions of both retail and institutional investors.
Therefore, they need strong analytic, financial and accounting skills. The Security analyst make financial models, hence, they are recommended to get financial modeling certifications too. The certificates can help them make accurate estimates. These analysts present data verbally and physically over spreadsheets thus, strong command over Microsoft excel and PowerPoint is needed.
Salary of a Security Analyst
The Salary of a Security Analyst is $121,707 avg. in the United States. Despite that, according to the recent data, a Security Analyst earn between $112,988 to $165,890 annually. The foregoing figures have been surveyed out by this authentic website ‘salary.com’ as of december, 28, 2021.
It’s been observed that there’s a different pay-scale for each individual applying for security analyst job, because it varies from person to person’s credentials and aptitudes. The education, skills set, additional certification and experience have a great influence over the payment scale. If you get adequate degrees, certificates, skillets and experience there are chances for you to become highly paid employees.
The Security Analysts are one of the most important people of an organization, and financial market in the investment point of view. They make financial reports that are inclusive of a steam of company’s financial data; relaying on what the clients make investment in certain securities, sell out other and hold a few.
Their estimates have the capacity to increase a firm’s revenue through excessive security purchases while the wrong suggestions can easily deteriorate the financial state of both, corporates and investors.
Frequently asked questions (FAQ)
Below are the most asked questions about the Financial Security Analyst.
1. What security analyst do?
The Security analysts conduct a research over an organization’s financial condition and recommend an investment strategy. They make reports that are either sent to department’s head, if they work in a corporation or make retrieved by receiving money. They work with mergers and acquisitions companies, competitive firms, investment banks, private equity firms, research companies, venture capital firms and hedge funds.
2. How to become a Security Analyst?
There are two best approaches for becoming a Security Analyst.
- The first approach refers to starting a bachelor’s program in finance and getting into an internship by the end of it. After completing graduation apply for an entry or junior-level security analyst job. The pay is always lesser in the starting point of the career.
- The second approach however is more closer to reality, generally security analyst job require 4 – 7 solid years of past experience in the field. For that, while in the bachelor’s one could participate in similar volunteering projects and contribute in the collaborative ventures. With that said, apply for as many opportunities as you see after graduating, get enrolled into master’s and other professionals programs (i.e., CFA). Applying for paid internships or training programs would also be an excellent pathway.
3. What Skills do you need to become a Security Analyst?
Analytic skills: Logical reasoning, Researching
Finance skills: Analyzing Financial Statements
Accounting skills: Critically examining transactions.
Economic skills: Market data analysis
Presentation skills: Communication
Financial Modeling skills: Financial Forecasting
Technical Skills: Microsoft Excel, Microsoft PowerPoint
4. Are security analyst and financial analyst the same?
Security Analysts examine the variations in capital and derivatives securities while financial analysts have a bigger role than that. They work as research analyst, equity analyst, Investment analyst, rating analyst and security analyst altogether under a single role.
We can say that security analysis is only a single duty of a financial analyst while it itself is a major duty as security analyst.
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