A financial analyst is an individual who makes financial recommendations for businesses based on certain factors. Financial analysts generally have some education in business, accounting or finance. These professionals can work in a wide variety of industries and have the potential for high earning potential. These may be two reasons why working as a financial analyst is one of the most popular careers in the finance industry.
What a Financial Analyst Does
A financial analyst watches and studies how bonds, stocks and similar market investments are performing and makes investment recommendations to businesses or individuals based on those assessments. They typically work in banks, securities funds, pension funds, insurance companies and mutual funds. Financial analysts provide their insight to companies and individuals making investment decisions. Financial analyst make their decisions and recommendations based on trends that affect products, industries and geographic locations.
Financial analysts may be one of two kinds: buy-side analysts or sell-side analysts. A buy-side financial analyst works for a company that makes large investments and advises them accordingly. A sell-side financial analyst advises financial services who sell investments. Other duties of a financial advisor include:
- Evaluating past and present financial data
- Assess a company’s financial statement to determine its worth
- Prepare written financial reports and present them to business officials
- Study business and economic trends
- Evaluate the strength of the business’s management team
To become a financial analyst, an individual must possess at least a bachelor’s degree, which usually takes four years to complete. Candidates can choose majors in accounting, statistics, finance, economics or mathematics. Their coursework may be determined by the specific area of specialization they may choose such as fund manager, risk analysts, ratings analysts or portfolio managers. Some financial analysts find it easier to obtain advanced positions by earning a master’s degree in business administration or finance.
What About Certification
A financial analyst usually needs to be licensed because they sell financial products and the Financial Industry Regulatory Authority, which is a licensing organization for the securities industries, requires that a company or individual who sells financial products be licensed. Financial analysts are not required to be certified, but potential employers may prefer the financial analyst be certified.
The financial analyst can earn the Chartered Financial Analyst certification, which is through the CFA Institute. To be eligible for the CFA certification, the candidate must have a bachelor’s degree, at least four years of experience working in this field and must pass three exams. There are also certifications available for different specialization areas of financial analyzing.
Career Outlook for Financial Analyst
U.S. News & World Report gives financial analysts the following rankings.
- Number 15 in best business jobs
- Number 16 in best STEM jobs
- Number 74 in 100 best jobs
Financial analysts should experience a good career outlook. With the economy jumping up and down as it has recently, financial analysts are more in demand. The decade of 2016-2026 is expected to bring a job growth of 11 percent according to the U.S. Bureau of Labor Statistics (BLS).
As of May 2017, financial analysts earned an average annual wage of $99,430 nationwide with wages ranging from $51,780 at the lowest ten percent and $165,580 at the top 90 percent. The top paying states for financial analysts, according to the BLS, are New York, Wyoming, Colorado, California and Alaska.
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Everyone enjoys being around and working with money, but not everyone is good with money. Financial analysts seem to have a knack for making financially lucrative deals, which is one reason why being a financial analyst can be such a rewarding and exhilarating career.