Learn About Being a Financial Analyst
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What does a financial analyst do?
Financial analysts predict investment performances by gathering and evaluating the industry and economic fiscal data. They assess the performance of stocks, bonds and other investments and make recommendations to people and businesses about investment decisions. They work in banks, securities firms, insurance companies, pension funds, mutual funds and other businesses. In general, financial analysts can be divided into two categories: buy-side analysts and sell-side analysts. Buy-side analysts develop investment strategies for organizations, while sell-side analysts advise financial services sales agents on selling stocks, bonds and other investments. Some of their primary responsibilities include:
Compiling and analyzing financial reports and finding discrepancies that require the attention of senior management
Recommending individual or a collection of investments, known as a portfolio
Evaluating financial data — both current and past — and identifying economic and business trends
Meeting with senior management and executives to gain better insight into the organization’s prospects
Preparing financial reports with reliable conclusions that management can use to implement more effective operational strategies
Providing EOM reports for C-level executives
Salaries vary according to the geographic location and experience levels of the financial analyst. For the most up-to-date salary information from Indeed, click on the salary link.
Common salary in the U.S.: $71,511 per year
Some salaries range from $23,000 to $137,000 per year.
Financial analyst requirements
There are several qualifications required to obtain a position as a financial analyst, including:
Financial analysts are generally required to hold, at a minimum, a bachelor’s degree, although many employers prefer financial analyst candidates who have a master’s degree. The preferred bachelor’s degrees for this position are finance, business or a closely related field. A degree in finance provides students the theoretical and analytical skills that they need in this career. Some of their finance program coursework could include managerial finance, investment finance, accounting, financial markets, international business, marketing, statistics, and business law and ethics.
Aspiring financial analysts who are interested in pursuing a master’s degree should consider a master of business administration program. Within the program, students can then choose a specialty in finance.
Because a financial analyst is generally a more senior-level position that requires 10 or more years of experience, much of the training needed for the role will happen on the job in other positions. Aspiring financial analysts generally start by specializing in a specific field of investing. After they gain some experience, they often become portfolio managers for an organization’s portfolio or fund managers for individual investors.
For students pursuing a bachelor’s degree in finance, an internship can also provide some real-world experience for their formal education.
A license is usually required to sell financial products. That said, licenses typically have to be sponsored by an employer, so companies typically do not expect candidates to have a license before applying for or starting a new job. They do, however, prefer that candidates hold a professional certification. Certifications verify the analyst’s abilities, give them a competitive advantage over other candidates and improve the likelihood of advancement. Preferred certifications include:
Chartered Financial Analyst
Offered by the CFA Institute, this certification measures and verifies the competence and integrity of financial analysts. To obtain this certification, candidates must pass three different levels of exams that cover areas like security analysis, economics, accounting, money management and ethics. To qualify for the exam, a candidate must have a bachelor’s degree or be in the final year of the program, or have four years of professional work experience. They could also have a combination of work experience and education that totals four years. The candidate must also have a passport, complete an assessment in English and live in a participating country.
Certified Professional Accountant
The CPA designation distinguishes accounting professionals who are committed to lifelong learning and protecting the public’s interest. Though the requirements for certification can vary somewhat from state to state, candidates are generally required to have at least 150 semester hours of study. Many state boards also require accountants to have at least two years of work experience. After acquiring the necessary experience and education, they must then pass four exams in order and within 18 months of completing the first exam. To maintain the certification, CPAs must complete continuing education coursework.
There are many skills necessary to succeed in the role of a financial analyst, including:
Analytical skills: Analytical skills refer to the ability to gather and analyze information to problem-solve and identify solutions. Financial analysts must be able to analyze a range of information to identify profitable investments.
Communication skills: This includes both written and verbal communication. Financial analysts must be able to communicate their financial recommendations to clients in clear language that they will easily understand.
Technical skills: Math and computer-centric skills are necessary to perform the job. Financial analysts must be proficient at using software to analyze financial data, recognize trends, make forecasts and create portfolios for clients. They must also have strong math abilities to estimate the value of financial securities.
Attention to detail: Financial analysts must be able to pay close attention to detail when reviewing investments. Small issues can have significant implications for the health of an investment.
Decision-making skills: Financial analysts must be confident in their abilities and have strong decision-making skills to make recommendations to clients about whether to buy, hold or sell a security.
Financial analyst work environment
Financial analysts typically work full-time in offices with the following characteristics:
Sitting at a desk for extended periods
Using computers, fax machines, printers and other office equipment
Occasionally traveling to meet with companies or clients
The majority of financial analysts work in investment firms, although some also work in professional and technical services, within corporations or in the insurance industry.
How to become a financial analyst
These are the steps typically required to pursue a career as a financial analyst:
1. Earn an education.
Aspiring financial analysts are generally expected to have a minimum of a bachelor’s degree, preferably in finance, business or another similar field. Perform a search for open financial analyst positions in your geographic area and determine the level of education typically required for candidates to apply. Obtain that minimum level of education. You may also want to consider pursuing an MBA program at some point to give yourself a competitive edge and be more appealing to potential employers. If you are in high school, focus on math and computer courses or consider pursuing an internship within an investment firm.
2. Obtain experience.
Because this role often requires 10 or more years of experience, look for entry-level roles in an investment firm where you can help manage investment accounts.
3. Acquire certifications.
Because many certifications relevant to this position require experience, you will typically need at least two years of professional work experience before pursuing certification. That said, a professional certification verifies your abilities and typically increases your opportunities for advancement. You will also need a license to sell financial products, but a license usually requires sponsorship by an employer.
4. Update your resume.
Update your resume with your highest level of education, licenses and certifications, and your relevant work history. Highlight the transferrable skills that you have obtained in prior roles. Review job descriptions for financial analyst positions and use the keywords throughout your resume.
5. Apply for jobs.
Perform a search for open financial analyst positions in your geographic area and identify the positions for which you are most qualified based upon your experience and education. Apply using your updated resume and a cover letter that has been customized for each individual role.
Financial analyst job description example
Attractor Investment Group is seeking a financial analyst who will be responsible for performing financial analysis in support of management decision-making. This individual will be responsible for conducting in-depth research to identify financial drivers as well as analyzing, interpreting and reporting their findings to senior management or executives. The financial analyst will be responsible for improving financial performances by preparing, developing and continually analyzing businesses. They will also work closely with the management team to forecast financial outcomes. Candidates are expected to hold a bachelor’s degree in finance or accounting and must have a minimum of 10 years of relevant experience.
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