New investment opportunities are emerging in the financial field and financial reform is becoming a major priority for many organizations. This change is posing new challenges and opportunities for the financial industry.
Businesses need trusted guidance that can help them make well informed financial decisions, which is why the financial analyst role is one of the fastest growing and most in-demand positions in finance.
According to the Bureau of Labor Statistics, employment of financial analysts is expected to grow 11 percent through 2024. This translates to approximately 32,300 new financial analyst jobs being added over the next decade. Considering such high demand, a large number of finance professionals are looking for advancement opportunities that can prepare them to fill the growing number of financial analyst positions.
Three major factors are driving the demand for financial analysts: the growing global economy, a focus on improving returns, and compliance and risk management concerns.
The Growing Global Economy
In its annual Budget and Economic Outlook report, the Congressional Budget Office (CBO) stated that it expects the economy to grow greatly in 2018. The real GDP in America should grow by 3.3 percent in 2018 and then by 2.4 percent in 2019.
The CBO cites increases in consumer spending, business investments, and serious federal spending as key influences in this growth.
Financial analysts help businesses make smart investment decisions, so an increase in total business investment activities means more opportunities—and more demand—for finance professionals with the requisite training, skills, and experience.
The global economic outlook is just as bright. In the latest version of its World Economic Situation and Prospects (WESP) report, the United Nations estimates that the world economy is estimated to have reached a three percent economic growth rate in 2017. That growth rate is expected to stay steady in 2018. Citing the currently less restrictive budgetary stances worldwide, the UN expects businesses and money management firms to front-load investments in the coming years before normalization leads to higher borrowing costs and interest rates.
Again, financial analysts will be called on to help businesses in the U.S. and abroad take advantage of international investment opportunities resulting from the growing global economy.
Focus on Improving Returns
Assuming current investment banking income remain fixed, Accenture Consulting reports that the largest investment banks will collectively need to reduce costs by as much as $20 billion to realize higher average returns on equity stakes and investments. They base this report on the fact that investment banks have experienced only modest improvements in their cost-to-income ratios despite significant transformation efforts over the past decade.
Financial analysts play a major role in both sides of the cost-to-income equation, which also helps explain the rising demand for jobs by investment banks and money management firms. These organizations are seeking to drive income, reduce costs, and improve the average returns.
Global management and consulting firm McKinsey & Company has identified the following planned strategies and responses firms have taken to remain profitable:
- Portfolio optimization and restructuring
- Balance sheet optimization
- Risk and capital model improvements
- Data quality enhancements
- Excess capital management
Financial analysts have a unique set of skills that can help firms in each of these areas, especially with financial data gathering and analysis.
Compliance and Risk Management Concerns
The rise in demand for financial analysts has also been driven by the introduction of stricter consent measures and legislation aimed at increasing financial market stability, and not just here in the U.S.
According to data from lobby group TheCityUK, investment banking jobs in London reached an all-time high of 729,600 in 2015, with a significant portion of the growth attributed to positions in financial consent and risk management. Interestingly, these are also areas where employers are noticing a shortage and where demand is increasing as a result. Nearly 60% of London-based investment firms that responded to the most recent 2015 London Employment Survey indicated that they are experiencing a shortage of skilled staff in consent and risk management—two areas financial analysts are trained to excel in.
Meeting the Demand for Financial Analysts
With businesses focusing on the growing global economy, focus on improving returns, and compliance as well as risk management concerns, financial analysts are increasingly in demand. Their skills in portfolio management, risk management, and financial data analysis are key to helping companies address these three factors in the financial industry.
Creighton University’s Master of Investment Management and Financial Analysis (MIMFA) can prepare you to excel as a financial analyst. The program’s curriculum is designed around the Chartered Financial AnalystÒ (CFAÒ) designation—a widely regarded investment management credential. Creighton’s MIMFA program can position you for a successful career in the highly competitive field of investments, security analysis, and portfolio management. As an added benefit, the program will help you prepare for the CFA exams should you desire to take them.
Learn more about Creighton University’s MIMFA program by visiting our website.