A financial analyst provides informed guidance to companies or individuals on business investment decisions by analyzing economic trends, current business news, and the company’s overall business strategy.
A financial analyst helps make business or investment decisions for companies based on their knowledge of the industry and assessments of market trends, business news, and the company’s financial position.
Financial analysts can work for financial companies like banks or investment companies, or within businesses. Financial analysts commonly have academic backgrounds in finance, economics, accounting, or statistics.
Broadly speaking, a financial analyst works with financial data to help organizations make business decisions. Though the specifics of what a financial analyst does can vary, a financial analyst is often expected to perform the following tasks:
Build financial models to perform financial forecasts, predict business scenarios, and provide other data analysis to help make business decisions
Study economic and business trends to provide context around business decisions
Support budgeting efforts at organizations
Compile written reports on financial statuses and recommendations
According to the US Bureau of Labor Statistics (BLS), the average salary for a financial analyst is $83,660 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 6 percent from 2020 to 2030.
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.
In order to become a financial analyst, you’ll need to make sure you have some basic qualifications. These can include both education and certifications.
Education: An entry-level financial analyst typically holds a bachelor's degree, according to the BLS. 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.
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 to ensure they are adequately equipped for any available position.
Financial analysts generally have the following skills to perform well in their tasks:
Corporate finance knowledge
Financial software knowledge
Budget management training
Financial reporting skills
Becoming a financial analyst starts with the right education, certification, and experience. Consider these tips to start toward your first job as a financial analyst:
1. Take a course. Bolster your knowledge of a particular skill by taking a course. Consider the IBM Data Analyst Professional Certificate to sharpen your data analysis skills or Yale University’s Financial Markets course to brush up on your understanding of finance.
2. Intern. 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. Look for internship opportunities on job sites like LinkedIn or Indeed.
3. Look for entry-level positions. Entry-level positions are geared toward analysts who are starting out in their careers. 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 interviews. Be prepared for interviews by anticipating questions and having answers ready. Potential 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.
These careers can be viable options for people who have skills similar to those needed for financial analysts:
Portfolio managers study the current state of the market and work with other financial professionals to determine the best investment opportunities and decisions for a company’s business portfolio. They also have a deep and active 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 managers work 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 analysts evaluate 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 analysts use 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.
Financial analysts may go on to work in the following senior positions:
Senior financial analysts may manage a group of analysts and oversee larger financial analysis projects to assist a company’s executive-level team.
Finance managers are responsible for the financial health of a business. They develop plans for the long-term financial goals of their organization.
Significant experience in finance and management is usually necessary for people to advance to executive-level positions like a director or chief financial officer.
A finance director uses the experience they have gained in their financial analysis career to help oversee all financial activities of a company.
Chief financial officer is the highest executive financial role and oversees the company’s business strategy, direction, and financial activities.
Take the next step toward a career in finance with a course like Financial Accounting Fundamentals from the University of Virginia or the multi-course Fundamentals of Accounting Specialization from the University of Illinois. Get unlimited access to these and more than 7,000 other courses, Guided Projects, and Professional Certificates with a subscription to Coursera Plus.
1. US Bureau of Labor Statistics. "Financial Analysts, https://www.bls.gov/ooh/business-and-financial/financial-analysts.htm." Accessed December 23, 2021.
This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.