If the idea of analyzing “big picture” trends sounds like something you’re interested in, then a job as a financial analyst may be just what you’re looking for. It’s a role that’s great for people who like to take a whole bunch of data, figure out the story it’s telling, and then make decisions that will help their company get the most bang for their investment buck.
What does a financial analyst do?
The job of a financial analyst covers a lot of responsibilities. At the end of the day, though, the main goal of someone in this role is to help their organization make a profit by investing in stocks, bonds, and other financial products. In their job, these professionals keep a close eye on many sources of information and try to figure out which investments will perform the best and be the most profitable for their organization.
Giving advice about investments also requires keeping a careful watch on global, national, and regional economic trends. That’s where the “big picture” perspective comes in. Anyone who succeeds in this role should have a good grasp of current events and macroeconomics. They should understand how fiscal, monetary, and even political trends affect the financial markets and even individual companies. Only with this kind of bird’s-eye view can a financial analyst make smart investment decisions for their organization.
What’s a typical day like?
A typical day might include studying economic and business trends, analyzing daily stock quotes, reviewing performance reports, and creating financial models. It might also include reading the financial statements of companies to determine their value and whether they would make good investments. Sometimes this research might even include meeting with a company’s management team to find out more about a company.
An important part of the job also includes preparing written reports, like financial plans and forecasts, and making recommendations to senior management.
Where do they work?
These professionals can work in many different business environments. Some work inside smaller or midsize organizations, helping with financial modeling, preparing financial documents, and performing variance analyses. Because of their expertise with the financial markets and investments, they also can be called in to help with special projects. Other professionals work for huge organizations with lots of money to invest or for financial services companies like banks or investment companies.
In the exciting world of finance, there are actually two types of financial analysts. Each has a unique focus:
Buy-side analysts work at organizations that are also known as institutional investors. These include mutual funds, hedge funds, insurance companies, investment banks, nonprofits with large endowments, and pension funds. These are entities with lots of money in their coffers, and they need advice on the best place to get the most return for their investment. So, they rely on their financial analysts to help make those decisions.
Sell-side analysts act as advisors to the organizations that actually sell stocks, bonds, and other investments.
Although many more people in this field work as buy-side analysts, the role of sell-side analyst has its advantages, too. In fact, the most prestigious and highly paid financial analyst salary is usually earned by sell-side analysts for big investment banks. These well-paid professionals help banks set prices for their own investment products. They also help the banks figure out the best way to sell these products in the market.
What kind of education and training does the role require?
If you aspire to this role, you definitely need a bachelor’s degree, typically with a major in economics, finance, accounting, or statistics. Some employers also prefer job candidates who have earned a master’s degree, like an MBA, but that isn’t always necessary.
Having a professional certification will also make you more attractive to employers. One of the best certifications to pursue if you’re seeking a role like this is the Chartered Financial Analyst (CFA), which is offered by the CFA Institute. To earn this certification, you typically must hold a bachelor’s degree, have gained several years of work experience, and pass a series of exams. Having this prestigious certification shows employers that you’re committed to your career and have made an investment in your professional future. It also shows that you have the technical skills needed to perform the job well. Having these advantages can definitely go a long way in helping you earn a higher financial analyst salary.
What kind of personality type enjoys this role?
To be a good financial analyst, you should have strong math skills, enjoy solving complex problems, and like making important decisions. You also need to know how to analyze large amounts of data and be very detailed oriented. That’s because a big part of the job requires you to review and evaluate information about lots of investments and you’ll need to keep track of all of them.
Someone who wants to be successful in this role should also be an excellent communicator. You should be comfortable talking with senior management about your recommendations and be able to explain your rationale for them.
Solid computer skills are also a must. You should know how to work with computer software programs that allow you to analyze financial data and trends, create portfolios, and make forecasts.
What kind of job experience is needed for this role?
If you want to start out in this role, a good place to do it is by joining the finance team. There, you can assist members of the department and learn the tools of the trade. Some professionals in this role also start out by reporting to the manager of another accounting or finance department. This could be someone on the treasury, accounting, or financial planning & analysis (FP&A) team.
After a few years, once you’ve proven your ability to help make smart investment decisions, you can be promoted to senior financial analyst. For this senior role, it’s often best to have an MBA, and you definitely want to have a certification like the CFA as well.
Where can I find a job in this field?
When looking for financial analyst jobs, it’s important to know that there are many different types of financial analysts and the daily responsibilities of the role can vary quite a bit. The following is a list of some examples of different names that the job may be known by:
Financial data analysts analyze internal financial data, make projections, and provide recommendations that inform the budget and investment decisions of an organization. They can work at companies, nonprofits, or in government.
Fund managers work exclusively with hedge funds or mutual funds.
Portfolio managers select a mix of products for their organization’s investment portfolio. And they are then responsible for the overall performance of the investments they select.
Ratings analysts assess the ability of companies or governments to pay their debts.
Securities analysts evaluate the securities markets to identify which investments will yield the best returns.
What are the advantages of becoming a financial analyst?
This is a well-paying job with plenty of opportunities for professional growth. According to the U.S. Bureau of Labor Statistics, the average base pay for this position in the United States in 2022 was $96,220.
The job outlook for this role looks very positive, according to data from the U.S. Bureau of Labor Statistics. Employment for this job is expected to grow by about 8% from 2022 through 2032, which is faster than the average for all occupations. In terms of sheer numbers, about 27,000 job openings for financial analysts are expected per year over the next decade, which means that there will be many opportunities to pursue this sought-after role. Some of these jobs will become available because companies need to replace workers who are retiring or moving into different occupations.