Financial Analysts

Financial analysts, also called security or investment analysts, work in banks and financial advising firms, reviewing a variety of fiscal statements and analyzing industry trends in order to advise businesses and individuals on sound investments. Financial analysts typically focus on an area of expertise, like an industry, region, or product, and have different job titles, dictated by the focus of their skills.

Buy-side analysts develop investment strategies for large-scale investors, like mutual and hedge funds, insurance companies, nonprofit organizations, and money management firms. On the other hand, sell-side analysts work with banks and securities dealers to sell stocks and bonds. Additionally, some analysts work in positions that combine these roles. Other types of analysts manage portfolios and funds, responding to market changes and advising investors on the specific combination of investments that will maximize profit and minimize risk of capital loss. Ratings analysts estimate the risks of governments or businesses defaulting on paying their debts, while other financial analysts focus on credit, budget, or cost analysis.

Financial analysis requires strong mathematical, analytical, and organizational skills; attention to detail; and fluency with sophisticated software programs that compile and review financial information.

Most financial analysts work long hours in an office setting, traveling often for meetings with clients and investors. Additional hours may be necessary for research and responding to sudden market changes.

Education, Training, and Essential Skills

A bachelor’s degree in business, statistics, finance, economics, or a related discipline is required for work in financial analysis, and many employers prefer a master’s degree in business administration (MBA).

In addition to formal education, financial analysts should be trained in risk management, corporate budgeting, options pricing, financial analysis, accounting policies and procedures, and options pricing.

Some positions require licenses or additional certification by the Financial Industry Regulatory Authority. Most licenses require sponsorship by an employer, so new hires will typically apply for licenses after securing a position and must re-apply when they change employers.

All financial analysts require a set of skills to be successful, including familiarity with field-related software; computer fluency; research skills; the ability to work under pressure; and strong analytical, economic, and mathematical skills. Communication and interpersonal skills are of particular importance, as financial analysts must make a case for their recommendations with investors, justify their advice to employers, and explain complex financial variables to others in both a clear and influential manner. Financial analysts must also be familiar with extensive financial laws and regulations, as well as keeping abreast of constantly fluctuating trends in both domestic and global markets.

Advancement and Professional Development Opportunities

Financial analysts can advance by taking positions with increased responsibility, by taking supervisory positions, and by becoming portfolio or fund managers.

Additional certification and professional development, available through the Chartered Financial Analyst Institute, can increase a financial analyst’s competitive edge for higher pay or positions. Certification is a rigorous process, and it involves a combination of formal education, work experience, exams, and hundreds of hours of study. Multilingual and international investment knowledge and experience are also skills increasingly in demand.

Outlook and Income

Overall, the employment rate for financial analysts is expected to grow by 20% over the next decade, driven by an increase in international investing and a proliferation of investment options. Demand will be highest for financial analysts with advanced degrees, knowledge of global investments, and additional certifications.

Most financial analysts are employed by banks, business media, insurance agencies, securities firms, and mutual or pension funds. Annual median salaries for financial analysts are about $73,000, with the highest median above $141,000 and the lowest below $43,000. Many financial analysts earn annual performance bonuses in addition to regular salaries.