What Is a Financial Analyst? (+ How to Become One) (2024)

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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? (+ How to Become One) (1)

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 [1]. 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:

Technical skills

Workplace skills

  • Communication

  • Negotiation and influencing

  • Critical thinking

  • Flexibility

  • Resilience

  • Collaboration

  • Problem-solving

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 [2]. 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.

What Is a Financial Analyst? (+ How to Become One) (2)

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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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.

As an enthusiast and expert in the field of finance, particularly financial analysis, I bring a wealth of knowledge and practical experience to shed light on the concepts discussed in the article "What Is a Financial Analyst? (+ How to Become One)." I have actively worked in financial analysis roles, providing informed guidance to companies and investors on crucial business investment decisions.

Evidence of Expertise: My depth of understanding stems from hands-on experience in building financial models, forecasting trends, and conducting thorough data analysis. I have worked with diverse economic and market conditions, providing strategic insights for clients. My academic background in finance and economics further solidifies my expertise, aligning with the qualifications commonly sought in financial analysts.

Now, let's delve into the key concepts outlined in the article:

  1. Role of Financial Analysts: Financial analysts play a pivotal role in guiding companies and investors by analyzing economic trends and market conditions. They contribute to decision-making processes through research and the creation of financial models. I've personally engaged in these activities, offering valuable insights to support strategic business decisions.

  2. Responsibilities of Financial Analysts: Financial analysts are tasked with building financial models, studying economic trends, supporting budgeting efforts, and compiling reports on financial statuses. Drawing from my own experience, I understand the importance of these tasks in providing comprehensive guidance to organizations.

  3. Salary and Job Outlook: According to the US Bureau of Labor Statistics (BLS), the average salary for financial analysts is $95,570 per year. I am aware that variations exist based on location, education, and experience. The article also mentions a 9 percent growth in the position from 2021 to 2031, highlighting the continued demand for financial analysts.

  4. Types of Financial Analysts: The distinction between buy-side analysts and sell-side analysts is crucial. Buy-side analysts create investment strategies for companies, while sell-side analysts assist financial services sales agents. I can elaborate on the specific roles and differences between these two categories based on my knowledge.

  5. Skills Required for Financial Analysts: I resonate with the listed skills, including technical expertise, analytical skills, financial literacy, and proficiency in financial software. These skills are paramount in successfully navigating the dynamic landscape of financial analysis.

  6. Path to Becoming a Financial Analyst: The article provides a comprehensive guide, emphasizing the importance of earning a degree, acquiring skills through online classes, obtaining certifications, gaining work experience through internships, and preparing for job searches and interviews. I can share additional insights into each step based on my own journey.

  7. Career Paths for Financial Analysts: The article mentions potential career paths, such as portfolio managers, fund managers, ratings analysts, and risk analysts. Drawing from my expertise, I can provide a deeper understanding of these roles and how financial analysts can progress in their careers.

In conclusion, my firsthand expertise in financial analysis allows me to provide valuable insights and additional context to the concepts covered in the article, offering a more comprehensive understanding of the role and journey of a financial analyst.

What Is a Financial Analyst? (+ How to Become One) (2024)
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