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Financial analysts provide informed guidance to companies or individual investors on important business investment decisions. Learn what a financial analyst does and how to get started in this career.
What is a financial analyst?
Financial analysts provide informed guidance to companies or individual investors on important business investment decisions by analyzing economic trends and current market conditions. They conduct research to inform strategy for their clients. To become a financial analyst, you must be comfortable working with data and using math to analyze it all.
Financial analysts can work for financial companies like banks or investment companies, or within businesses. They commonly have academic backgrounds in finance, economics, accounting, or statistics.It can be a fascinating and well-paid career if your skills align with a desire to pursue this field.
What does a financial analyst do?
Financial analysts work with data to help organizations make business decisions. The specifics can vary, but typically a financial analyst is expected to perform the following tasks:
Build financial models to forecast trends and predict business scenarios and other data analysis to help make business decisions
Study economic and business trends, including stock and bond performance, to provide context around business decisions
Support budgeting efforts at organizations
Compile written reports on financial statuses and recommendations
Financial analyst salary and job outlook
According to the US Bureau of Labor Statistics (BLS), the average salary for a financial analyst is $95,570 a year . This amount can vary based on your location, education, and experience.
Financial analysts are expected to be in demand in the years to come. The BLS estimates that the position will grow 9 percent from 2021 to 2031.
Types of financial analysts
Financial analysts are sometimes classified into two categories: buy-side analysts and sell-side analysts.
Buy-side analysts create investment strategies for companies that purchase securities and other assets for money management. These companies, commonly called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations.
Sell-side analysts assist and provide guidance to financial services sales agents who sell stocks, bonds, and other investments.
Financial analyst skills
Financial analysts generally need to have the following skills to be successful:
Corporate finance knowledge
Financial software knowledge
Budget management training
Financial reporting skills
Financial analysis skills
Negotiation and influencing
How to become a financial analyst
You’ll need to have the basic qualifications, such as experience, skills, and knowledge to succeed as a financial analyst. Here is a guide to embarking on this career path.
1. Earn a degree.
An entry-level financial analyst typically has a degree, with 76 percent of professionals holding a bachelor's degree, and 16 percent holding a master's degree . Acquiring a degree in finance, accounting, economics, or a related field can set you up for a career as a financial analyst. If you are looking for a wider scope of opportunity or a higher salary, getting your master's degree in finance or a master of business administration (MBA) may be helpful.
2. Boost your skills with an online class.
Bolster your knowledge of a skill by taking a course.
Consider the IBM Data Analyst Professional Certificate to sharpen your data analysis skills
Take a specialization in Financial Skills from the University of Illinois
Learn how to create Financial and Quantitative Models, a specialization designed for analysts, from UPenn Wharton
Enroll in Yale University’s Financial Markets course to brush up on your understanding of finance. Explore ideas and methods that enable our society to manage risks and start up enterprise, and how these influence financial markets at large—for a better society.
3. Get a certification.
Some companies prefer to hire financial analysts who have certifications from the Chartered Financial Analyst Institute. Analysts who want to work specifically in securities can also take its Series 7 and Series 63 exams from FINRA so you can be ready for any available roles.
4. Gain work experience.
Apply for an internship with a company that matches your industry interest. Interning can give you experience, knowledge, and networking opportunities within the financial field to help you land a job afterward—sometimes at the same company.
Entry-level positions tend to be for analysts who are starting out or switching in their careers. If you're already in the job force, it may be tempting to move laterally, but it may be harder to land a job without the appropriate experience. Look for the following titles in your job search that generally indicate an entry-level position:
Junior financial analyst
Associate financial analyst
4. Prepare for your job search.
Search for open positions on job sites like LinkedIn and Indeed. Be prepared for interviews by anticipating questions and having potential answers prepared. Interview questions might include:
What is your experience with data analysis?
What do you do to stay informed about this industry?
How would you create a quarterly sales report?
What would you do if you found an inconsistency in a financial report?
What is EBITDA?
Describe a time you accomplished something as a team.
Financial analyst career paths
These careers can be viable options for people who have skills similar to financial analysts:
Portfolio managersstudy the market and work with other financial professionals to determine the best investment opportunities and decisions for a company’s business portfolio. They have a deep understanding of current business trends, allowing them to better predict the future of the market. Portfolio managers use this knowledge to guide businesses and individuals in their investment decisions.
Fund managerswork primarily with hedge funds or mutual funds. They stay informed on the overall goals of the fund as well as market trends to help make sound decisions.
Ratings analystsevaluate and assess the market and a company’s financial abilities and strategies in order to make educated recommendations on how a company should proceed.
Risk analystsuse a combination of both business and financial knowledge to assist companies in determining the amount of risk in possible investment decisions. They make recommendations based on their analysis findings and help track and minimize a company’s financial loss. Risk analysts are often responsible for assessing and reporting asset losses, staying current on investment trends, and collecting and analyzing data.
The jobs above tend to be entry- or mid-senior level roles. As a financial analyst, you may advance to being a senior financial analyst if you manage analysts or interns and oversee larger projects. Then, you might rise to become a manager, director, and potentially, a Chief Financial Officer (CFO).
Get started today
Take the next step toward a career in finance with a course like Financial Accounting Fundamentals from the University of Virginia or the popular IBM Data Analyst professional certificate. Get unlimited access to these and more than 7,000 other courses, Guided Projects, and Professional Certificates with a subscription to Coursera Plus.
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As an expert in the field of financial analysis, I can provide you with information related to the concepts mentioned in the article "What Is a Financial Analyst? (+ How to Become One)".
Financial analysts are professionals who provide informed guidance to companies or individual investors on important business investment decisions. They analyze economic trends and current market conditions to help their clients make informed investment strategies []. Financial analysts can work for financial companies like banks or investment companies, or within businesses. They commonly have academic backgrounds in finance, economics, accounting, or statistics [].
Responsibilities of Financial Analysts:
Financial analysts work with data to help organizations make business decisions. Some of their key responsibilities include:
- Building financial models to forecast trends and predict business scenarios
- Studying economic and business trends, including stock and bond performance, to provide context around business decisions
- Supporting budgeting efforts at organizations
- Compiling written reports on financial statuses and recommendations [].
Salary and Job Outlook:
According to the US Bureau of Labor Statistics (BLS), the average salary for a financial analyst is $95,570 a year. However, this amount can vary based on factors such as location, education, and experience []. The BLS also estimates that the demand for financial analysts will grow by 9 percent from 2021 to 2031 [].
Types of Financial Analysts:
Financial analysts can be classified into two categories:
- Buy-side analysts: They create investment strategies for companies that purchase securities and other assets for money management. These companies include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations.
- Sell-side analysts: They assist and provide guidance to financial services sales agents who sell stocks, bonds, and other investments [].
Skills Required for Financial Analysts:
To be successful as a financial analyst, you generally need to have the following skills:
- Technical skills
- Accounting knowledge
- Analytical skills
- Financial literacy
- Data analysis
- Corporate finance knowledge
- Financial software knowledge
- Budget management training
- Financial reporting skills
- Research skills
- Workplace skills such as communication, negotiation, critical thinking, flexibility, resilience, collaboration, and problem-solving [].
How to Become a Financial Analyst:
If you are interested in becoming a financial analyst, here is a general guide to help you embark on this career path:
- Earn a degree: Most entry-level financial analysts hold a bachelor's degree in finance, accounting, economics, or a related field. Consider pursuing a master's degree in finance or a Master of Business Administration (MBA) for wider opportunities and higher salaries [].
- Boost your skills with online classes: Take courses or specializations to enhance your knowledge and skills in areas such as data analysis, financial modeling, and finance.
- Get certified: Consider obtaining certifications from professional organizations like the Chartered Financial Analyst (CFA) Institute or taking exams like the Series 7 and Series 63 from FINRA if you want to work specifically in securities.
- Gain work experience: Apply for internships or entry-level positions in the financial industry to gain practical experience and build your network.
- Prepare for your job search: Search for open positions on job sites, anticipate interview questions, and be prepared to showcase your skills and knowledge during interviews.
Financial Analyst Career Paths:
As a financial analyst, there are various career paths you can explore based on your skills and interests. Some potential options include:
- Portfolio managers: They study the market and work with other financial professionals to determine the best investment opportunities and decisions for a company's business portfolio.
- Fund managers: They work primarily with hedge funds or mutual funds, staying informed on the overall goals of the fund and market trends to make sound investment decisions.
- Ratings analysts: They evaluate and assess the market and a company's financial abilities and strategies to make educated recommendations on how a company should proceed.
- Risk analysts: They use a combination of business and financial knowledge to assist companies in determining the amount of risk in possible investment decisions and make recommendations based on their analysis findings.
Remember, this is just a general overview of the concepts mentioned in the article. If you have any specific questions or need further information, feel free to ask!