THERE are specific career tracks in the financial sector to suit individuals' inclinations. If dealing with clients and selling and buying securities in the capital markets - which is the role of high-rolling investment bankers - is not your cup of tea, then maybe your calling is to be a securities analyst. It involves financial analysis of a range of asset classes, such as stocks, hedge funds and commodities - depending on what types of securities you specialise in.
The work is more of a behind-the-scenes kind of nature, and requires critical dissection of data aided by a capable mind with a key awareness.
What is a typical working day for someone in this profession? 'Work starts punctually at seven plus in the morning daily with a scan of the world's major indices as well as news which may have an impact on the Singapore market,' says Kelly Chia, a senior investment analyst at OCBC Investment Research.
'I also track and comment on companies which are under my sectorial coverage when significant news flows which were not being made available the previous evening are released in the morning instead,' he adds. 'Throughout the day, I continue tracking the stock market and take note of any outlying share price movements. Upon finding these, I take on the role of corporate sleuth to find out why. Then, I comment on it.'
Generally, securities analysts exist to help clients make better investment decisions. Usually by applying the principles of fundamental analysis, they derive investment recommendations from a keen study of companies and a glut of industry, economic and business trend information. These reports and recommendations assist banks, brokerages, advisors or mutual funds to handle their investments and securities options.
While some analysts work independently - they sell the aforementioned research to financial banks, insurance institutions and private investors on an ad-hoc or project basis - many are employed by big financial management firms such as mutual funds, hedge funds or investment advisers.
Their opinions are conveyed through detailed reports on the companies they cover, with their expert opinion encapsulated in the final decision recommended - 'buy', 'sell', 'market perform', 'overweight', 'hold' and so on. These bottom-line recommendations are based on the particular company's investment potential.
Analysts also obtain information by studying public records of companies and participating in public conference calls, during which they fire questions directly to the management.
Analysts' reports are often made use of in the decision-making of portfolio managers, traders, investors and mutual fund managers - and they can clearly influence the price of a company's stock.
It is thus hardly surprising that there has been increased concern about the changing role of analysts in recent years, as pointed out on the United States' Securities and Exchange Commission official website. Some sell-side analysts have become more involved in marketing investment banking services, raising questions about the objectivity of their corporate prospects forecasting and professional opinions.
Necessary skills
Bearing these potential conflicts of interests in mind, what kind of skills are necessary to cut it in this career?
'There are many challenges. Nonetheless, obtaining a keener and deeper understanding of the industry through secondary and tertiary sources, such as suppliers, is important. Good discernment of a company's management helps too,' says Mr Chia, who also counts among his primary responsibilities the ability to churn out 'concise, timely and accurate reports'.
The technical aspects of the job must also be balanced with effective communication skills, essential in bringing clients and management alike up to speed with the more complicated ideas.
'I'm expected to keep my eyes peeled for corporate finance opportunities as I develop relationships with the companies,' Mr Chia says.
These are constituent pieces of the overall skill-set required for a securities analyst. While there are no specific qualifications required, one would be hard-pressed to find an analyst not in possession of sound analytical and numerical skills. It is not uncommon to find analysts with graduate level training in finance such as MBA or MSF degrees. Some also have bachelor degrees in the sciences and engineering.
Regardless of paper qualifications, industry experience is often a pre-requisite. Analysts possess a very wide range of qualifications as a good number enter the profession with previous experience in the fields of accountancy or consultancy.
Mr Chia, who has a mechanical engineering degree with a major in biomedical engineering, is no exception. His current position at OCBC is his third job, and he feels that industry experience and interest dovetail as important ingredients to achieve success in the industry.
'Down the line, I worked with a company that allowed me to experience investing into start-ups. Typically, most analysts have a finance related degree but technically trained ones are now more of a common sight. I took an interest in the world of investing when I was in my late 20s and never looked back.'
Prospects abound for specialisation, so there are multiple paths open for further career progression.
'Career opportunities within and without the organisation are plentiful,' he says. 'Within the organisation, areas for diversification can be in corporate finance and trading. Sell-side analysts can also move on to investor relations roles in companies and buy-side analyst positions in funds.'
Ultimately, in Mr Chia's book, it is essential to be well-informed and enthusiastic to get the most out of the job, 'which really opens one's mindset to the world in regard to understanding correlations between countries, commodities, companies and finally their impact on an individual'.
'Try to get into this job early on your career as it requires relatively more energy than the typical job,' he advises. 'Demonstrate some understanding of the markets and not come in blind and naive. For example, one can start subscribing to RSS feeds from online resources such as Yahoo Finance or Google Finance.'
This article was first published in The Business Times on July 21, 2008.
