What is the Difference Between Financial Advisor and Financial Analyst?

Financial analysts work in insurance agencies, pension funds, and financial institutions. These analysts use data-driven methods to assist their clients financially, thus, have the following responsibilities:

• Examines economic stats to assist clients, including individuals, organisations, and businesses, in making informed investment-related decisions.
• Analyses and develops financial strategies to maximise the profitability of investments such as real estate, bonds, stocks, etc.
• Studies macro and micro-economic parameters such as business and economic trends, financial statements, past economic data, etc.

Financial analysts can be divided into two types based on whether they are aiding their clients in selling or buying:

1. Sell-side Analyst

Helps clients assess and sell investment products

1. Buy-side Analyst

Plans investment tactics for organisational investors

source: indiatimes

Financial advisors typically work with families, institutions or wealthy individuals. Private bank officials are also financial advisors who work with accountants and analysts to manage and maximise the investments and assets of blue-collar individuals. Financial advisors have the following responsibilities:

• Researches insurance and investment opportunities for clients.
• Oversees clients’ accounts and performs security-related trades on their behalf.
• Discusses financial objectives with clients and devises money-building strategies.
• Re-evaluates financial strategies to minimise loss and achieve financial goals.
• Explains various financial jargon, concepts, options and services to clients.
• Educates clients on economic risks and tax and insurance-related issues.
• Creates investment reports as well as gives updates to clients on economic developments.

Financial advice is often complex. Thus, financial advisors must effectively communicate such information so that clients have a complete and clear understanding.

Every newly established business needs to undergo a proper monetary analysis in order to ensure its seamless functioning. The principles of financial analysis for a startup business are as follows:

• Form a tactical and scheduled long-term plan and determine the initiatives and plans to implement it.
• Know how operational plans will determine financial results and cause an enhancement of the financial development.
• Find resources to execute your plans and include them within the budget.
• Understand the business and make necessary adjustments on operational or financial goals.
• Quickly figure out the crucial business reasons behind plan-to-actual financial changes.
• Keep a track of both financial and non-financial operational targets in due course to determine more specific targets.
• Create short-term and long-term goals for KPIs.
• Develop structured and strategic operational projects in order to achieve KPI targets.
• Monitor the KPIs outcome periodically.

Since both designations have some responsibilities and functions in common, ergo have some similarities:

• Convey complex concepts, strategies, offers, products, etc., to clients.
• Develop strategies to help their clients meet financial goals.
• Require an economic or accountancy-related bachelor’s degree.

Both financial analysts and advisors are prospective career options for aspiring people wanting to be employed in the finance sector. A degree program like MBA offers individuals the technical and educational foundation for various economic aspects. Thus, graduates should enrol in such a degree program and leverage the gained knowledge and advanced skills to set themselves apart. An MBA or CFA certification also aids individuals in making educated choices on which one will better suit their needs and requirements.

Now that financial analyst vs financial advisor is discussed, individuals are aware of what each means and their similarities and differences. Hence, people can now better choose which one would be better suited for them.