Financial Analysts Overview
While most financial analyst positions require a bachelor’s or master’s degree, some require a professional license or certification. Most financial analysts earn high wages so a lot of competition is expected for positions.
Nature of the Work for Financial Analysts
The work of a financial analyst involves providing guidance to both businesses and individuals when they are marking investment decisions. Also know as a securities analyst or investment analyst, the job of a financial analyst involves assessing the performances of bonds, stocks, commodities and other forms of investments.
Financial analysts can work for insurance companies, banks, mutual and pension funds, the business media, securities firms or any other business that may require investment recommendations and decisions. It is a financial analyst’s job to analyze and study a business’s financial statements and commodity prices, sales, expenses, tax rates, and costs to project the future earnings of the company to determine its value. Some financial analysts will meet with company officials to get a better idea of the prospects and management of the firm.
Buy side analysts are analysts who work for companies with a lot of money to invest. Companies like mutual funds, hedge funds, insurance companies, nonprofit organizations and independent money managers are examples of companies that would require the work of a buy side analyst who could devise investment strategies for that company.
Sell side analysts work with banks and other firms, also known as securities dealers, to sell bonds, stocks, and other types of investments.
Risk analysts will assess risks that can occur in project potential losses and portfolio decisions. Rating analysts will evaluate how governments and companies can pay bonds and other debts.
Financial analysts will concentrate on trends that impact a specific region, industry or type of product. Financial analysts must take into account any new policies, regulations or political and economic trends that may impact a particular investment.
Spreadsheets and statistical software packages are used by financial analysts to analyze financial data and trends as well as create portfolios and develop forecasts.
Financial analysts usually work in offices while occasionally working long hours and traveling frequently to visit investors and companies. Since most of a financial analyst’s day is spent in meetings and on the phone, most are required to do their research after office hours.
Training, Other Qualifications and Advancement for Financial Analysts
While a bachelor’s degree is a must for financial analysts, some positions require a master’s degree in finance or a master of business administration (MBA). Some positions may even require financial analysts to have a certificate or professional license, even though they are generally earned once hired.
Many companies require financial analysts to have a bachelor’s degree in finance, accounting, statistics, business or economics. Financial analysts should also have a thorough understanding of accounting policies and procedures, financial analysis methods, and corporate budgeting. Courses and knowledge of bond valuation, risk management and options pricing are also important for financial analysts.
The type of license required for a financial analyst depends on the specific work of that individual. The main licensing organization for the securities industry is The Financial Industry Regulatory Authority (FINRA). Financial analysts are usually not expected to obtain a license before employment since many licenses require sponsorship from an employer.
Important qualifications for financial analysts are good communication skills, self-confidence, maturity, and the ability to work independently. Financial analysts must also have strong skills in math, problem solving and analytics. Being motivated and detail-oriented are also important financial analysts. They must also be familiar with the economy, money markets and tax law as well as statistical packages and spreadsheets.
Many companies are assigning financial analysts to foreign markets due to the increasing global diversification of investments. Companies such as these prefer their financial analysts to have international experience such as understanding the language, environment and culture of the country.
Many employers recommend financial analysts to receive a certificate known as the Chartered Financial Analysts (CFA) designation. This designation is funded by the CFA Institute. Requirements for this designation include a bachelor’s degree, 4 years of work experience related to the field and passing three exams which can require several hundred hours of studying. Subjects covered on the tests can include economics, accounting, financial markets, corporate finance, asset valuation, and portfolio management.
Advancement for financial analysts involves moving to positions where they are responsible for more important or larger products. Other forms of advancement can include supervising teams of financial analyst, becoming portfolio managers, fund managers, or directing investment portfolios for different funds and companies.
Top 10 Most Popular Finance Schools
1. University of Pennsylvania (Philadelphia, Pennsylvania)
2. University of Illinois, Urbana, Champaign (Champaign, Illinois)
3. DePaul University (Chicago, Illinois)
4. Florida International University (Miami, Florida)
5. University of Florida (Gainesville, Florida)
6. University of Central Florida (Orlando, Florida)
7. New York University (New York, New York)
8. Tulane University (New Orleans, Louisiana)
9. Texas A & M University (College Station, Texas)
10. Pace University, New York (New York, New York)
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Top 10 Most Popular Online Finance Schools
1. University of Phoenix - Online School
2. Purdue University Global
3. Ashworth College - Online School
4. DeVry University - Online School
5. University of Arizona Global Campus
6. South University’s Online programs
7. American InterContinental University - Online School
8. Saint Leo University Online
9. Colorado Technical University - Online School
10. ITT Technical Institute Online
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Employment and Job Outlook for Financial Analysts
Number of People in Profession
Changing Employment (2008-2018)
Employment is projected to grow much faster than average (increase 20% or more).
Many financial analysts work in New York City as well as other financial centers. Nearly half of financial analysts work in insurance and finance industries such as securities or commodity brokers.
Employment for financial analysts will increase due to the level of investment increases. The global diversification of investments as well as the increasing complexity of investments will contribute to this job increase. This increase will require companies to hire financial analysts to recommend as well as research investments. Financial analysts will also be needed to cover the global range of investment options as international investments increase.
High-paying financial analyst jobs will create a lot of competition. New positions will be created for financial analysts as financial services grow. Those interested in becoming financial analysts should have a strong academic background with courses such as accounting, economics, and finance. Financial analysts with graduate degrees or certifications will have better job prospects available to them.
Earnings and Salary for Financial Analysts
Median annual wages, excluding bonuses, of wage and salary financial analysts are $73,670. The middle 50 percent earn between $55,640 and $98,920. The lowest 10 percent earn less than $44,080, and the highest 10 percent earn more than $139,350.
Annual performance bonuses for financial analysts can be common and can be considered a significant part of their earnings.
Annual Salary for Financial Analysts
On average, Financial Analysts earn $73,670 per year.
Hourly Wage for Financial Analysts
On average, Financial Analysts earn $35.42 per hour.
Source: Bureau of Labor Statistics Occupational Outlook Handbook