Career Development

What Does a Financial Analyst Do?

Find out what a financial analyst does, how to get this job, and what it takes to succeed as a financial analyst.

Financial analysts are responsible for analyzing and interpreting financial data. They look at the numbers behind companies, industries, or even entire economies to determine how they’re performing financially. This information is used by financial analysts to make recommendations about what investments to make, which businesses to support, etc.

Financial analysts may work in a variety of different industries, but they all have one thing in common: they must be able to read between the lines when it comes to financial statements.

Financial Analyst Job Duties

Financial analysts have a wide range of responsibilities, which can include:

  • Monitoring market trends to identify emerging opportunities or risks in business environments
  • Conducting financial analysis on companies, industries, markets, or products to identify potential profit opportunities or risks
  • Recommending changes to organizational structure, leadership, staffing, or business practices to enhance performance or solve problems
  • Analyzing financial data to identify trends, opportunities, and risks in support of strategic business decisions
  • Developing and presenting financial plans, forecasts, and reports to senior management using computer modeling tools such as spreadsheets or specialized software programs
  • Developing new financial products and services, including insurance policies or mutual funds, based on customer needs and desires
  • Preparing reports on financial performance, forecasts, risk exposure, or other information for internal or external audiences
  • Conducting market research to identify potential clients or new opportunities for existing clients
  • Identifying opportunities for improving efficiency or reducing costs by recommending process improvements

Financial Analyst Salary & Outlook

The salary of a financial analyst can vary depending on their level of education, years of experience, and the size and industry of the company. Financial analysts may also earn additional compensation in the form of bonuses.

  • Median Annual Salary: $70,500 ($33.89/hour)
  • Top 10% Annual Salary: $122,000 ($58.65/hour)

The employment of financial analysts is expected to grow at an average rate over the next decade.

Demand for financial analysts will stem from the need to evaluate investments and make informed business decisions. As companies seek to expand globally, they will need to understand the risks and rewards associated with entering new markets.

Financial Analyst Job Requirements

A financial analyst typically needs to have the following qualifications:

Education: Most employers require financial analysts to have a bachelor’s degree in finance, accounting or economics. Some employers prefer candidates who have a master’s degree in business administration (MBA).

Many financial analysts choose to earn an MBA to increase their earning potential and qualify for senior financial analyst positions. An MBA program typically takes two years to complete and includes coursework in finance, accounting, economics, business law and business communication.

Training & Experience: Much of the training for this role happens through formal education and on-the-job. Aspiring financial analysts can gain valuable experience working in entry-level financial positions. They can also gain experience by working in other industries, such as accounting or banking.

Certifications & Licenses: Certifications are not usually a requirement as a financial analyst, but they can help you become a more competitive candidate when applying for jobs. Certifications can demonstrate your skills and dedication to the industry and provide you with a foundation of knowledge to perform the duties of a financial analyst.

Financial Analyst Skills

Financial analysts need the following skills in order to be successful:

Accounting skills: Accounting skills are a necessary skill for financial analysts. Accounting skills allow you to understand financial statements and other financial documents. Accounting skills also allow you to calculate financial ratios and other financial calculations.

Communication skills: Financial analysts often communicate with a variety of people, including other financial analysts, managers, clients and other stakeholders. Effective communication skills can help you convey information clearly and answer questions. You may also need to communicate complex financial information in a way that is easy to understand.

Data analysis skills: Data analysis is the ability to interpret data and information. Financial analysts use data analysis skills to interpret financial data and information. They use data analysis to create financial models, forecast financial data and interpret data to make financial decisions.

Problem-solving skills: Financial analysts solve problems every day. They solve problems by finding solutions to financial issues, analyzing data and finding ways to improve the company’s financial status.

Business knowledge: Financial analysts need to have a basic understanding of business operations. They need to know how businesses make money, how they spend money and how they can save money. This knowledge can help them make better financial decisions for their companies.

Financial Analyst Work Environment

Financial analysts usually work in clean, well-lit offices. They may work for banks, insurance companies, investment firms, or accounting firms. Many financial analysts work more than 40 hours per week, and some work 50 or more hours per week. They may work evenings and weekends to meet deadlines or to take advantage of business opportunities that arise outside of normal business hours. Financial analysts who work for large firms may travel to meet with clients or to attend conferences.

Financial Analyst Trends

Here are three trends influencing how financial analysts work. Financial analysts will need to stay up-to-date on these developments to keep their skills relevant and maintain a competitive advantage in the workplace.

The Need for More Technical Talent

The financial industry is in need of more technical talent, as businesses are increasingly relying on technology to run their operations. This has led to an increased demand for financial analysts who have the skills to understand and use data to make decisions.

Financial analysts can capitalize on this trend by becoming more familiar with technology-based tools and by developing their analytical skills. This will allow them to be more effective in using data to make decisions and to help businesses run more efficiently.

More Focus on Cybersecurity

As cybersecurity becomes a more important issue for businesses, financial analysts will need to focus more on this area.

Financial analysts play a key role in helping businesses protect themselves from cyberattacks by identifying potential vulnerabilities and recommending ways to mitigate them. In order to be successful in this field, financial analysts will need to be well-versed in cybersecurity technologies and trends.

Greater Use of Data Analytics

Data analytics is becoming an increasingly important tool for financial analysts as they look for new ways to make better decisions. By analyzing data, financial analysts can get a better understanding of what is happening in the market and how it may affect their company.

In order to take advantage of data analytics, financial analysts will need to learn how to use data analysis software and how to interpret the results. This will allow them to make better decisions about where to invest their company’s money and how to best position it for success.

How to Become a Financial Analyst

A career as a financial analyst can be very rewarding. It offers the opportunity to work in a variety of industries, with different types of companies and with different levels of responsibility. As a financial analyst, you’ll have the chance to make a real difference in the lives of people who use the products or services that your company provides.

To be successful in this role, it’s important to have a strong understanding of finance and accounting principles. You should also be able to apply these principles to real-world situations. Additionally, it’s important to be able to communicate effectively both verbally and in writing.

Related: How to Write a Financial Analyst Resume

Advancement Prospects

There are many ways to advance your career as a financial analyst. One way is to specialize in a particular area of finance, such as investment banking, corporate finance, or risk management. Another way to advance is to get an advanced degree, such as an MBA or a master’s in finance. Financial analysts with strong computer skills can also move into other computer-related positions with additional education.

Some financial analysts may become interested in financial planning and move into positions as financial planners. Financial planners help individuals and families plan for their financial future by setting up investment portfolios and retirement plans. They may also provide tax planning advice and help clients with estate planning.

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