Pros and Cons of a Career in Technical Analysis
Technical analysts work to save clients money by investing in the stock market, which can be volatile, by studying trends. Learn more about the pros and cons of this career to see if it's a good fit for you.
|Pros of a Technical Analysis Career|
|High average salary (approximately $92,250 for financial analysts as of May 2014)*|
|Faster-than-average expected job growth (12% for financial analysts between 2014 and 2023)*|
|Intellectually stimulating job*|
|Comfortable office work environment*|
|Cons of a Technical Analysis Career|
|Potential for high stress environment; deadline-driven job*|
|Long hours (almost one-third of financial analysts worked more than 40 hours per week in 2012)*|
|Highly competitive job market*|
|Limited geographic locations for employment (the U.S. finance industry is centered in New York City)*|
Source: *U.S. Bureau of Labor Statistics.
Essential Career Info
Job Description and Duties
Technical analysis is a specialty within finance that involves performing careful analysis of past and current market trends and activity to help clients decide where to invest their funds. The data obtained through analysis is also used to determine when to execute trades. Some traders and financial analysts perform a certain amount of technical analysis as part of their broader jobs.
The financial sector, and analysis jobs specifically, usually require long hours at the office as well as some travel. A lot of the necessary research must be done in the evening or early morning because the work hours are often spent answering telephone calls and emails and attending meetings with clients. Day-to-day activities might include creating Excel spreadsheets, reviewing client portfolios, monitoring the markets and interacting with clients.
Salary Info and Job Outlook
According to a May 2014 report from the BLS, financial analysts earned a mean annual wage of about $92,250. During the same reporting period, the BLS indicated that securities, commodities and financial services sales agents earned a mean income of around $103,260. The BLS predicted that jobs for financial analysts would increase 12% from 2014-2024, which was faster than the average for all occupations. However, a high level of competition was still expected for these positions because many qualified individuals are interested in the high pay.
Education and Training Requirements
To become a financial analyst, you need a minimum of a bachelor's degree in business, finance or a related field. Many financial analysts also hold a master's degree, such as a Master of Business Administration (MBA) or a master's in finance. Jobs may not require an MBA, but candidates who have one may be more competitive, according to the BLS. Some MBA programs offer a graduate certificate in technical analysis for students interested in pursuing that specialization.
Essential Career Skills
To succeed as a technical analyst, you must have excellent math and technical skills to be able to analyze data using various computer programs. It is also important to have strong communication skills, both to be able to deal well with clients who are putting their finances in your hands and to rise in the ranks within a company. You must also be detail-oriented and posses formidable analytical skills to perform technical analysis.
What Employers Are Looking for
Employers are generally looking to hire applicants with several years of experience, combined with a solid education culminating in at least a bachelor's degree. Although they can't paint a complete picture of the job market, the following job postings obtained in July 2012 can provide an idea of the skills and qualifications employers seek when hiring for positions that involve financial analysis.
- A large telecommunications company with offices in Kansas was seeking a capital markets manager to perform technical analysis in a variety of areas, from recommending investments to senior executives to analyzing the budget. Candidates needed to be able to work well under the pressure of tight deadlines. Applicants needed at least a bachelor's degree and a minimum of 10 years of experience.
- A university in Georgia was seeking a financial analyst to examine investment risk. The job required performing analytics on past investments, current portfolios and forecasted market activity. Candidates needed to be proficient with Microsoft Excel and be able to engage in computer programming. A minimum of a bachelor's degree and 1-4 years of experience were required, but a master's degree was preferred.
- An equipment manufacturer in Indiana was looking for a technical financial analyst to join its team. Job duties included preparing reports for managers across company departments, supporting the yearly budget process and creating forecasts for future expenditures. Candidates needed a bachelor's degree in a related field and at least two years of professional experience.
How to Make Your Skills Stand Out
Several professional certifications are offered by leading organizations in this field, such as the International Federation of Technical Analysts' Certified Financial Technician certification. To earn this designation, an exam is generally required, unless you hold certain other industry certifications. The Market Technicians Association (MTA) also offers the Chartered Market Technician (CMT) designation to qualified financial analysts. To earn this certification, you need to pass three exams and have three years of professional work experience.
The more professional qualifications you have in this demanding and competitive field, the better your job prospects, according to the BLS. It would also help to stay abreast of the latest market trends and financial strategies, so that you maintain current knowledge of the field as it evolves and have awareness of approaches other analysts are taking at any given time.
Alternative Career Paths
If you enjoy analyzing data, but would prefer to work outside of the finance and investment arena, you might consider becoming an insurance underwriter. Insurance underwriters work for insurance companies to help screen potential clients and determine the potential risks and benefits of insuring them. They also decide on appropriate premiums for given clients and write insurance policies. According to a May 2011 report, the BLS listed insurance underwriters as having earned a mean annual wage of approximately $68,000. To enter this field, you usually need a bachelor's degree, although work experience coupled with strong computer skills can replace this requirement in some cases. The BLS predicted that insurance underwriters would face lower-than-average job growth, at six percent between 2010 and 2020.
Individuals interested in high paying careers monitoring and maintaining a company's financial goals and direction may want to look into becoming financial managers. This career involves analyzing each aspect of a company's financial picture, from inventory expenditures to market investments to salaries. To become a financial manager, you need several years of related work experience and at least a 4-year degree in finance, economics or a related field. According to a BLS May 2011 report, financial managers earned a mean annual wage of about $120,000.