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What is a Financial Analyst?

male financial analyst presenting report to men at conference room table
male financial analyst presenting report to men at conference room table

A financial analyst is a data scientist who works to achieve the most financial reward while taking on the least risk for their firms, companies, corporations, organizations, or clients. They scrutinize and interpret complex financial reports, research and monitor global trends, and create financial models that managers and stakeholders will understand.

In this Article

The title of financial analyst includes many specialties and areas of expertise, including investment analysts, who focus on finding investments, and equity analysts, who deal mainly with buying and selling stocks. Corporations also employ financial analysts to track the efficiency of their marketing efforts for various targeted audiences.

Steps to Become A Financial Analyst

Consider the following steps as you explore a potential career as a financial analyst.

Choose a program and earn your degree.

woman intently looking at computer screen of data

While technically not required, it's very difficult to become a financial analyst without at least having a bachelor's degree. Either a Bachelor of Science (BS) or a Bachelor of Arts (BA) is acceptable, depending on your area of concentration. Majors and concentrations that could be helpful include:

Finance
Accounting
• Economics
Business

Other relevant degrees or concentrations that may help, especially if you want to specialize as a financial analyst working in specific areas, are:

• Statistics
• Math
• Engineering
• Computer Science
• Information Technology
• Communications
• Psychology

It usually takes four years to earn a bachelor's degree, however, it's possible to extend this time frame if you work and want to attend school part-time. Conversely, you can accelerate the length of time you spend pursuing your degree by taking additional courses each semester.

Consider certifications and licenses.

closeup of person's hands taking notes and calculating data

Depending on the type of work you do, you may be required to obtain certifications or licenses. By law, financial analysts selling financial products must be licensed by the Financial Industry Regulatory Authority. Certain employers may require their financial analysts obtain specific certifications.

Preparing for credentialing exams varies from exam to exam and depends on the amount of experience you have. Expect to invest between 80 and 300 hours of study and preparation time for many exams, although some credentials require a year or more to complete a program.

Look into an internship.

male financial analyst describing data to female intern

If you want to be a financial analyst, find an internship where you can spend real time doing real work, suggests Carlos Barrozzi, CFA, a chartered financial analyst who has spent 15 years at marquee global financial firms. "If in the end you enjoyed it, then that's a great sign you should stay on the FA path," he says.

An internship is arguably the most valuable step to becoming a financial analyst. Many larger firms offer internship programs that allow candidates to work in various departments, enabling them to discover their talents and skills and make informed decisions about their career goals.

There is a lot of competition for these positions, so having more to offer in terms of education and credentials could help. On the other hand, smaller firms and those that specialize in a certain field are more likely to work with candidates who don't have as many educational credentials.

Find a job.

two financial analysts discussing data on projector

There are many different types of financial analysts and many areas of specialization. Financial analysts can find jobs with:

• Large firms
• Corporations
• Smaller private companies
• Brokerages
• Banks
• Insurance companies
• Ratings agencies
• Investment banks
• Pension management companies

According to the U.S. Bureau of Labor and Statistics (BLS), most financial analysts work in the areas of:

• Securities, commodity contracts, and other financial investments and related activities
• Credit intermediation and related activities
• Professional, scientific, and technical services
• Management of companies and enterprises
• Insurance carriers and related activities

Pursue a master's degree.

rolled paper diploma with red ribbon

An MBA can help advance the career of those already in the financial industry. For those looking to get into the industry, an MBA can allow you to jump ahead a couple years, skipping the most junior positions.

A full-time MBA requires two years of study after completing your bachelor's degree. Many universities offer options that enable students to study part-time, full-time, in person, and online.

You might also consider an MBA in Finance, which will dive more deeply into finance than a non-focused MBA program.

Educational Requirements

There is no specific degree required for a career as a financial analyst, but finding a job will probably be easier if you have a bachelor's degree, and most companies require it. Nearly all financial analysts start with an internship or entry-level position. These positions will make you eligible for training, credentials, and educational opportunities only available to those already employed in the field.

Employers will have their own requirements for their new hires, such as internship experience or pre-graduation certifications, so candidates might have to fill in some gaps in education before applying. If you're still in college, your institution's career services office should be able to help you with this.

For those seeking a career change or who may have just graduated but don't meet the requirements necessary to find a job with a larger company, smaller companies may provide a better opportunity to get a foot in the door. However, these positions are often harder to find, so you should prepare to do some research and possibly contact recruiters.

Pursuing Your Master's: Things to Consider Before Choosing a School

Before you decide on a school for your master's program, consider the following:

  • The length of time you want to study. Most master's degrees take two years to complete, but there are plenty of accelerated options, and it's possible to extend this time if you want to study part-time.
  • Whether you want to attend classes in person or study remotely or online. Many educational institutions offer both or a combination of both.
  • The prestige of the school and the practicality of the program for your needs. Check out professional networking sites and search people with the title of financial analyst. Most users list the schools and training they've taken. Contact potential schools and ask for more information about opportunities after graduation. Schools usually keep statistics on the number of students employed in their fields of study. You will want to study at a premier school for certain corporations and nearly all investment banks.
  • Where you live. Do you want to study while you live at home, or do you wish to live on or off-campus in another city or state? Where do you want to live after graduation? Most schools have better connections to the industry in their region.
  • Cost. It can be challenging to maintain employment while studying for a master's degree, but it's not impossible. Student loans are an option, and some schools have private lending opportunities. There are also scholarships that could help if you qualify.

What Classes Will I Take? 

While the classes you take will depend on the exact degree you are pursuing, most students in the financial field will take classes such as:

  • Analytics
  • Finance
  • Economics
  • Business
  • Accounting
  • World Commerce
  • Currencies
  • Financial Law

Beyond mathematics and science, being able to communicate well and having strong presentation and sales skills are huge assets. Financial analysts also need to be creative, says Barrozzi. "It's more than number crunching," he says. "What is driving these financial results? Thinking outside the box can be very helpful."

Classes that will augment a financial analyst's educational program include:

  • Communications
  • Data design
  • Adult education
  • Corporate trainer training

Buy-Side vs Sell-Side: What's the Difference?

Financial analysts employed at a financial institution will usually work in one of two main areas of the industry: the buy side or the sell side. The difference is the type of services they offer.

The Buy SideThe Sell Side
Typically employed by firms dealing with mutual funds, trusts, hedge funds, pension funds, investment managers (who work with business investors with portfolios of all sizes), and asset managers (who work with organizations and people with large portfolios)Often work for investment bankers or brokerage firms promoting and selling stocks, bonds, and other securities
Involved in daily tasks of managing clients' moneyAdvises corporate clients on major transactions
Reads reports and researches investment opportunitiesConducts equity research of companies on the stock exchange
Advises money managers whether to buy, sell or hold investmentsNeeds strong marketing skills and sells securities to the buy side
Works with the purchase of stocks, bonds, and other securities from the sell sideAssists in raising capital
Seeks the highest return for investors while minimizing riskAssists in buying and selling investment assets and creates liquidity for assets (liquidity is the ability to convert an asset into cash without having a negative impact on its market price)
Builds financial modelsBuilds financial models and creates marketing materials to present to buy side investors
Finds new investors to increase assets under management (AUM)Brings in new business by building relationships and networking to keep abreast of new opportunities

Financial Analyst Certifications and Designations

Most states do not require special licenses or certifications to work as a financial analyst; however, many specialty areas require certifications or registrations. Not having these credentials could impede your ability to work or advance within your career. For instance, you cannot buy or sell stocks for anyone besides yourself without a credential from FINRA.

Many employers require financial analysts to be registered in a particular area or to have specific professional registrations, certifications, and licenses before hiring or promoting.

Here are some common certifications and designations for financial analysts:

Chartered Financial Analyst (CFA)

Required or optional: Not required, but common. Some firms require CFA to advance.

Who it's for: Anyone. You do not have to be working in the profession to begin the process of obtaining your CFA. In fact, the first exam can be written before completing your bachelor's degree. It could give entry-level candidates an advantage over other job applicants if they have already started the process, as it would demonstrate both interest and commitment to the profession.

Prerequisites:

  • A bachelor's degree or the equivalent from a college or university; or
    • be less than 11 months from obtaining your bachelor's degree (only applicable for Level 1 exams); or
    • have a combination of 4,000 hours of work experience and/or higher education acquired over at least 36 months and completed by the date of registering for the Level 1 exam.
  • Be a regular member of the CFA Institute
  • Have a valid international passport.
  • Fluency in reading English. Exams are only offered in English
  • Completion of a Professional Conduct Statement
  • Live in a participating country. CFA courses are not available to people living in all countries

About the exam: There are three levels of exams. Level 1 requires only that you meet the prerequisites. Levels 2 and 3 require candidates to pass the previous exam level. Exams are taken remotely and are computer-based.

Regulating body or granting institute: CFA Institute

Securities Industry Essentials (SIE) Exam

Required or optional: Likely required at some point. An SIE credential is required in combination with other exams to work in many areas of the profession.

Who it's for: Anyone seeking an internship or an entry-level position as a financial analyst. Passing the SIE exam could increase your marketability by showing prospective employers that you have basic knowledge of the industry.

Prerequisites:

  • 18 or older  

About the exam:

You do not have to be a student or working in the financial field to take the SIE, and candidates do not have to be associated with a firm to take the SIE exam. Some details about the exam:

  • 75 multiple-choice questions to be taken within 105 minutes
  • Can be taken in person or online
  • Pass mark is 53/75
  • Administered by FINRA

Regulating body or granting institute: FINRA

Series 6 Exam: Investment Company Representative (IR)

Required or optional: You must pass both the SIE Exam and the Series 6 exam to be eligible for Investment Company and Variable Contracts Products registration.

Who it's for: Financial analysts. Once you have passed the Series 6 exam, you can solicit, purchase and sell unit investment trusts, mutual funds (limited), variable annuities, variable life insurance, and municipal fund securities.

Prerequisites: Candidates must be associated with and sponsored by a FINRA member firm or other applicable self-regulatory organization (SRO) member firm to be eligible to take FINRA representative-level qualification exams.

About the exam:

  • 50 multiple-choice questions
  • 90 minutes long
  • Grades are scaled
  • Exam can be taken in person or online

Regulating body or granting institute: FINRA

Series 7 Exam: General Securities Representative (GS)

Required or optional: Required to work as a municipal securities representative.

Who it's for: Those working as a securities representatives buying and selling stocks, bonds, and a variety of financial products.

Prerequisites: Candidates must be associated with and sponsored by a FINRA member firm or a self-regulatory organization (SRO) member firm.

About the exam:

  • 125 multiple-choice questions
  • 3 hours and 45 minutes long
  • Grades are scaled
  • Can be taken in person or online

Regulating body or granting institute: FINRA

Series 63 Exam: Uniform Securities Agent State Law Exam

Required or optional: Required in conjunction with a Series 6 or Series 7 exam (or both), to sell securities in all areas except: Colorado, Florida, District of Columbia, Louisiana, Maryland, Ohio, and Puerto Rico.

Who it's for: Those interested in selling securities must pass a Series 6 or Series 7 exam (or both) and the Series 63 exam. With a Series 63 and Series 6, you can sell mutual funds for a brokerage firm, investment bank, or insurance company.

Prerequisites: None.

About the exam:

  • 60 questions
  • 75 minutes long
  • Pass mark is 43/60
  • The Series 63 exam is an NASAA exam administered by FINRA
  • Available online only if you require it as an accommodation

Regulating body or granting institute: Municipal Securities Rulemaking Board (MSRB), administered by FINRA

Series 52 Exam: Municipal Securities Representative

Required or optional: Required for municipal securities representatives and anyone who engages in fundamental municipal securities activities such as underwriting and trading.

Who it's for: Municipal securities representatives

Prerequisites: Must be sponsored by a FINRA member firm.

About the exam:

  • Pass mark: 70%
  • Exam fee: $260

Regulating body or granting institute: MMSRB, administered by FINRA

Series 86 and 87: Research Analyst (RS)

Required or optional: Candidates must pass both the Series 86 and 87 exams and the SIE exam to qualify for Research Analyst registration.

Who it's for: Research analysts

Prerequisites: Candidates must be sponsored by a FINRA member firm or an applicable self-regulatory organization (SRO) member firm.

About the exam:

Series 86

  • Consists of 100 multiple-choice questions
  • 4 hours and 30 minutes long
  • Grades are scaled

Series 87

  • Consists of 50 multiple-choice items
  • 1 hour and 45 minutes long
  • Grades are scaled

Regulating body or granting institute: FINRA

Financial Analyst Jobs

Some of the most common types of financial analyst job titles include:

Financial Risk Analyst
A financial risk analyst evaluates threats and potential threats. They advise on the best way to manage investments by calculating various scenarios or "what ifs" and limiting potential losses. Diversification is usually a risk analyst's best friend.

Fund Manager
A fund manager must be quick thinking and constantly watching the markets to be armed with the latest data and information. Fund managers make buy or sell decisions based on changes in market conditions, which can happen in an instant.

Investment Analyst
Typically, an investment analyst would work directly with clients, advising them on where to allocate assets and keeping them informed about alternative investments. Investment analysts often work with venture capital, hedge funds, and investment managers.

Portfolio Manager
A portfolio manager will choose the focus of products, industries, and regions for their employer. A large part of their job is creating reports and facilitating presentations for stakeholders and managers.

Ratings Analyst
A ratings analyst evaluates companies or governments to determine their ability to pay their debts. This data will enable a management team to rate the financial risk of each company or government accordingly.

Securities Analyst
A securities analyst will carefully collect data, such as bond performance, stock quotes, and market forecasts from various sources. They analyze the data they've collected and make buy, sell, or hold recommendations to internal and/or external clients.

Investment Banking Analyst
Investment bankers usually specialize in particular areas such as healthcare or manufacturing. They meet with stakeholders and company executives to determine strategic opportunities for their clients, such as raising money through capital markets, acquisitions, and divestitures. They gather and analyze data, follow trends, perform extensive research, and then build models that will form the basis of their presentations.

Financial Planning and Analysis (FP&A) Professional
A financial planning and analysis professional works as part of a team analyzing the organization's capital, return on investment (ROI), and cash flow. They evaluate the costs of each department, prepare budgets and internal reports, create models and investment plans to help grow business.

Treasury Analysts
Treasury analysts are usually financial managers for businesses, nonprofits, or government agencies. They are involved with daily cash management, preparation of reports and presentations, and advising on financial operations and the movement of funds.

Private Equity Analyst
Private equity analysts focus on researching private companies, looking for untapped potential. Their goal is to find undervalued assets, convince investment committees to buy them, and make them more profitable. Investment banking, management consulting, or executive experience are prerequisites for a position as a private equity analyst.

Corporate Development Analyst
Corporate development analysts often work alongside investment bankers. Typically, they are involved in raising capital internally, managing mergers and acquisitions, and divestiture.

Important Skills and Traits

"Attention to details an important skill for a financial analyst," says Barrozzi, and the job is best suited for "someone who loves numbers and the story behind them."

If you have the following traits, then a career as a financial analyst might suit you well.

Analytical and math skills: The work of a financial analyst requires thorough research into financial data that includes everything from profit and loss statements to global economic trends to government regulations. A financial analyst creates financial models, forecasts business performance and earnings, and assimilates this information into compelling reports for peers, managers, and clients.

A love for raw data: A financial analyst evaluates large volumes of information to get an accurate understanding of business performance, including past and current economic trends, national business news, company financial statements, and much more. Depending on who they work for, a financial analyst would also have to be familiar with data from other countries and with money markets and currencies around the world.

Communication and presentation skills: Some financial analysts need to meet face to face with investors and company leaders to evaluate business opportunities. They are also often responsible for giving presentations in-house to boards of directors, potential clients, and investors.

Technical and design abilities: Financial modeling is a significant part of the job for most financial analysts on both the buy side and sell side. A financial analyst will be expected to design and build clear, accurate spreadsheets and graphs to create a visual analysis of their research data.

Decisiveness: Some financial analysts recommend whether to buy, sell, or hold a security. In these roles, decisions may be made under tremendous pressure, with only a few seconds to make the call. This field is no place for the faint of heart.

Keen observation skills and an ability to follow and understand world politics: Sometimes, the numbers are only good for the day they're presented. Political changes or world events can have a fast and dramatic impact on the value of a commodity or an entire industry. If trade channels close or new ones open, people can lose or gain fortunes in a few hours. Wars, natural disasters, pandemics, plane crashes, and disabled supply chains are all detrimental to some channels, but at the same time, they open doors for innovation and new processes that investors will want to know about as early as possible.

What's the Difference Between a Financial Analyst and a Financial Planner?

There is some overlap between the positions held by financial analysts and financial planners, but in general, there are significant distinctions.

Financial AnalystFinancial Planner
May advise firms on what investments to buy, sell and hold.May work with companies and corporations but often deal directly with consumers or clients who have small investment portfolios.
Not typically involved with the private portfolios of individuals.Would be in contact with individual clients and potential clients daily.
Make decisions based on extensive research and data analysis.Needs to be familiar with tax laws and penalties so they can advise clients on how to invest, move, and liquidate funds to maximize growth and limit loss.
Produces presentations for management, corporate teams, potential investors, and stakeholders.Perform research and answer direct questions from one person.

Salary and Job Outlook

According to the BLS, financial analysts earn a median salary of $95,570 per year. The agency predicts that job opportunities for financial analysts will grow 9 percent from 2021 to 2031, with about 31,900 new job openings. These jobs are expected to become available as people change jobs, retire, or leave the workforce for other reasons.

How to Advance as a Financial Analyst

You may be able to increase your chances of advancing in your career as a financial analyst by:

  • Finding a mentor that takes an active interest in your development and career
  • Not letting yourself plateau; keep learning new skills
  • Networking and keeping informed about new developments within the industry that could offer career opportunities
  • Remaining flexible in your career location and even moving to a major financial center like New York, Chicago, London, or Toronto
  • Maintaining high academic qualifications. A relevant master's degree is always beneficial. You can continue studying throughout your career.
  • Continuing to take exams that result in registrations and credentials, such as the FINRA exams

Stay Connected

Keeping abreast of the field is key. The following groups offer information about education, jobs, and certifications for aspiring and practicing financial professionals.

Chartered Financial Analyst (CFA) Institute Societies—There are more than 160 CFA societies in more than 80 countries worldwide, offering professional education, volunteer, and networking opportunities.

Kiplinger—Started in 1920, Kiplinger is one of the most prestigious financial and investor publications in the US. They also produce podcasts and a series of specialty newsletters.

The Association of Financial Professionals (AFP)The AFP hosts events, virtual roundtables, and offers online tools specifically for those in the industry.


cathi stevenson

Written and reported by:

Cathi Stevenson

Contributing Writer

With professional insights from:

Carlos Barrozzi, CFA
Chartered Financial Analyst

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