Financial analysts guide businesses and people who make investment decisions. They assess the performance of stocks, bonds, and other types of investments.
In order to become a financial analyst you need to have a bachelor’s degree, preferrably in business, accounting economics, finance, statistics or math.
You’ll also need to have:
- Proficiency in spreadsheets, databases, MS Office and financial software applications
- Hands-on experience with statistical analysis and statistical packages
- Presentation, reporting and communication skills
- Knowledge of financial forecasting and diagnosis, corporate finance and information analysis
- Current knowledge of financial subjects, accounting, tax laws, money market and business environments
In 2019, financial analysts made an average salary of $94,160 a year.
Financial Analyst Job Duties
- Recommend individual investments and collections of investments, which are known as portfolios
- Evaluate current and historical financial data
- Study economic and business trends
- Examine a company’s financial statements to determine its value
- Meet with company officials to gain better insight into the company’s prospects
- Assess the strength of the management team
- Prepare written reports
Financial analysts evaluate investment opportunities.
They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. Financial analysts are also called securities analysts and investment analysts.
There are two categories of analysts, the buy-side and sell-side.
Buy-side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include:
- hedge funds
- insurance companies
- independent money managers
- nonprofit organizations with large endowments
Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.
Some analysts work for the business media or other research houses, which are independent from the buy and sell side.
Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product.
For example, an analyst may focus on a subject area such as the energy industry, a world region such as Eastern Europe, or the foreign exchange market.
They must understand how new regulations, policies, political situations, and economic trends may affect investments.
Investing is becoming more global, and some financial analysts specialize in a particular country or region.
Companies want those financial analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover.
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Types of Financial Analysts
They select the mix of products, industries, and regions for their company’s investment portfolio. These managers are responsible for the overall performance of the portfolio.
They are also expected to explain investment decisions and strategies in meetings with stakeholders.
They work exclusively with hedge funds or mutual funds. Both fund and portfolio managers frequently make buy or sell decisions in reaction to quickly changing market conditions.
These professionals evaluate the ability of companies or governments to pay their debts, including bonds.
On the basis of their evaluation, a management team rates the risk of a company or government not being able to repay its bonds.
They evaluate the risk in investment decisions and determine how to manage unpredictability and limit potential losses.
This job is carried out by making investment decisions such as selecting dissimilar stocks or having a combination of stocks, bonds, and mutual funds in a portfolio.
Where Do Financial Analysts Work?
Financial and Investment Analysts, Financial Risk Specialists, and Financial Specialists, held 458,510 jobs in 2019 according to BLS.gov.
These industries were the top employers of financial analysts as of May 2019.
|Industry||# Employed 2019|
|Securities, Commodity Contracts, and|
Other Financial Investments
|Management of Companies|
|Credit Intermediation and|
|Federal Executive Branch||22,930|
|Nondepository Credit Intermediation||18,770|
Financial analysts work in offices but travel a lot to visit companies or clients.
Many financial analysts work at large financial institutions based in New York City or other major financial centers.
Most financial analysts work full time and some work more than 40 hours per week.
Much of their research must be done after office hours because their days are filled with telephone calls and meetings.
How to Be a Financial Analyst
As we mentioned earlier, you have to have a bachelor’s degree in finance or a related field.
Licenses, Certifications, and Registrations
The Financial Industry Regulatory Authority is the main licensing organization for the securities industry.
A license is generally required to sell financial products, which may apply to some financial analyst positions.
Because most of the licenses require sponsorship by an employer, companies do not expect individuals to have these licenses before starting a job.
Employers often recommend certification, which can improve the chances for advancement.
An example is the Chartered Financial Analyst certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor’s degree, 4 years of qualified work experience, and pass three exams.
Financial analysts can also become certified in their field of specialty.
Financial analysts typically start by specializing in a specific investment field. As they gain experience, they can become portfolio managers and select the mix of investments for a company’s portfolio.
They can also become fund managers and manage large investment portfolios for individual investors. A master’s degree in finance or business administration can improve an analyst’s chances of advancing to one of these positions.
How Much a Financial Analyst Makes
In May 2019, the average salary for a financial and investment analyst was $94,160.
Half of all financial and investment analysts, financial risk specialists, and financial specialists made more than $81,590 a year, with the highest 10% percent of earners making $109,330.
The top-paying industries were:
|Industry||Median Salary 2019|
|Securities, Commodity Contracts and Other Financial Investments||$124,810|
|Automotive Parts, Accessories, and Tire Stores||$123,280|
|Support Activities for Mining||$117,990|
|Lessors of Nonfinancial Intangible Assets||$115,520|
These are the median salaries for the industries that employ the most financial and investment analysts, financial risk specialists, and financial specialists.
|Industry||Median Salary 2019|
|Securities, Commodity Contracts, and Other Financial Investments||$124,810|
|Management of Companies and Enterprises||$90,780|
|Credit Intermediation and Related Activities||$89,190|
|Federal Executive Branch||$85,970|
|Nondepository Credit Intermediation||$86,360|
Financial Analyst Job Search Tools
If you are searching for a job as a financial analyst, you may want to check out job titles such as:
- Credit Products Officer
- Equity Research Analyst
- Financial Analyst
- Investment Analyst
- Planning Analyst
- Portfolio Manager
- Real Estate Analyst
- Securities Analyst
- Trust Officer
Getting Started in the Financial Securities Industry
If you are considering a career in the securities industry, taking the Securities Industry Essentials exam is a first step.
This introductory-level exam assesses your knowledge of basic securities industry information including concepts fundamental to working in the industry.
When you pass the SIE exam, you must take a few more steps before you can register with FINRA or engage in securities business.
First, you must be associated with a broker-dealer, which sponsors you to take an exam, such as the General Securities Representative (Series 7) exam.
In addition to passing exams, you must satisfy other requirements, such as getting fingerprinted and completing registration forms, before you can engage in securities business.
Here’s an in-depth video about what the SIE is like and how to prepare for it. You can also invest in a test prep course through Kaplan Test Prep.
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Video: Financial Analyst Interview Questions
Indeed also has 7 of the most commonly asked interview questions and answers for financial analysts. Don’t know what Indeed.com is? Read this article about how to use it in your job search.
Employment of financial analysts is projected to grow 6% from 2018 to 2028, about average for all occupations.
A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth.
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Financial Analyst Personality Type
A financial analyst is a good job fit if you are an INTP personality.
INTPs are highly rational and like to work with information. They have analytical minds and are also called the architect.
Don’t let their cool nature fool you, INTPs are creative and innovative problem solvers.
They prefer to work with thoughts, data and ideas, rather than with people.
Read more about INTP personalities and see other career options.
Financial Analyst O*NET Career Test Results
These jobs involve following set procedures and routines. They include working with data and details more than with ideas. Usually there is a clear line of authority to follow.
These jobs involve working with ideas, and require an extensive amount of thinking. As a financial analyst, you’ll search for facts and solve problems mentally.
These jobs involve starting up and carrying out projects. This can involve leading people and making decisions. Sometimes they require risk taking and often deal with business.
The O*NET Interest Profiler puts occupations into a combination of 6 interests based on the type of work you would be doing.
These interests are what you most want from your work. They are:
Work Values Fulfilled as a Financial Analyst
This job is results-oriented and allows you to use your strongest abilities, which gives you feeling of accomplishment.
Being a financial analyst is a career where you can advance. there is potential for leadership, and this job is considered prestigious.
Financial analysts often get to work on your own and make decisions.
Salary and job information is from the Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Financial Analysts.