Financial Analyst
Financial Analyst
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What Financial Analysts Do
Financial analysts guide businesses and individuals in decisions about expending money to attain profit. They assess the performance of stocks, bonds, and other types of investments.
Duties
Financial analysts typically do the following:
- Recommend individual investments and collections of investments, known as portfolios
- Evaluate current and historical financial data
- Study economic and business trends
- Examine a company’s financial statements to determine its value
- Meet with company officials to gain better insight into the company’s prospects
- Assess the strength of the management team
- Prepare written reports
Financial analysts evaluate opportunities to commit money for the purpose of generating profit.
Financial analysts can be divided into two categories: buy-side analysts and sell-side analysts.
- Buy-side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include hedge funds, insurance companies, independent money managers, nonprofit organizations with large endowments, private equity firms, and pension funds.
- Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.
Analysts may work for the business media or other research houses, which are independent from the buy and sell side.
Financial analysts generally focus on trends affecting a specific geographical region, industry, or type of product. For example, they may focus on a subject area or a foreign exchange market. They must understand how economic trends, new regulations, policies, and political situations may affect investments.
Investing has become more global, and some specialize in a particular country or world region. Companies want these specialists to understand the business environment, culture, language, and political conditions in the country or region that they cover.
The following are examples of types of financial analysts:
Financial risk specialists, also called financial risk analysts, evaluate threats to investment decisions and determine how to manage unpredictability and limit potential losses. They make investment decisions such as selecting dissimilar stocks or having a combination of stocks, bonds, and mutual funds in a portfolio. They also make recommendations to limit risk.
Fund managers work exclusively with hedge funds or mutual funds. Both fund managers and portfolio managers frequently make buy or sell decisions in reaction to quickly changing market conditions.
Investment analysts assess information involving investment programs or financial data of institutions, such as business valuation. They also respond to queries from clients and client advisors regarding asset allocation and alternative investment topics including hedge funds, real property, and venture capital.
Portfolio managers select the mix of products, industries, and regions for their company’s investment portfolio. These managers are responsible for the overall performance of the portfolio. They are also expected to explain investment decisions and strategies in meetings with stakeholders.
Ratings analysts evaluate the ability of companies or governments to pay their debts, including bonds. Based on these evaluations, a management team rates the risk of a company or government not being able to repay its bonds.
Securities analysts evaluate securities markets and trends to identify high-yield assets for clients and companies. They may use resources such as bond performance reports, daily stock quotes, market and economic forecasts, and other financial statements and publications.
Work Environment
Financial and investment analysts held about 317,200 jobs in 2022. The largest employers of financial and investment analysts were as follows:
| Securities, commodity contracts, and other financial investments and related activities | 24% |
| Professional, scientific, and technical services | 13 |
| Management of companies and enterprises | 11 |
| Credit intermediation and related activities | 11 |
| Insurance carriers and related activities | 7 |
Financial risk specialists held about 58,900 jobs in 2022. The largest employers of financial risk specialists were as follows:
| Credit intermediation and related activities | 31% |
| Securities, commodity contracts, and other financial investments and related activities | 15 |
| Insurance carriers and related activities | 15 |
| Management of companies and enterprises | 13 |
| Professional, scientific, and technical services | 8 |
Financial analysts work primarily in offices but may travel to visit companies or clients.
Work Schedules
Most financial analysts work full time and some work more than 40 hours per week.
Getting Started
How to Become a Financial Analyst
Financial analysts typically need a bachelor’s degree to enter the occupation.
Education
Most entry-level positions for financial analysts require a bachelor’s degree; a common field of degree is business. Some employers prefer to hire job candidates who have a master’s degree.
Licenses, Certifications, and Registrations
The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. A license is generally required to sell financial products, which may apply to some positions. Because most of the licenses require sponsorship by an employer, companies do not expect individuals to have these licenses before starting a job.
Employers often recommend certification, which may improve the chances for advancement. An example is the Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor’s degree and several years of work experience and pass multiple exams. They also may choose to become certified in their field of specialty.
Advancement
Financial analysts typically start by specializing in an investment field. As they gain experience, they may become portfolio managers and select the mix of investments for a company’s portfolio. They also may become fund managers of large investment portfolios for individual investors. Having a master’s degree in finance or business administration may improve an analyst’s chances of advancing to one of these positions.
Job Outlook
Overall employment of financial analysts is projected to grow 8 percent from 2022 to 2032, faster than the average for all occupations.
About 27,400 openings for financial analysts are projected each year, on average, over the decade. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.
Employment
Demand for financial analysts generally increases with overall economic activity. These workers will be needed to evaluate investment opportunities when new businesses are established or as existing businesses expand. In addition, emerging markets throughout the world are providing new investment opportunities, requiring expertise in geographic regions where those markets are located.
Demand also is projected to increase as big data and technological improvements allow financial analysts to conduct high-quality analysis. This analysis will help businesses manage their finances, identify investment trends, and deliver new products or services to clients.
Contacts for More Information
For more information about licensure for financial analysts, visit
Financial Industry Regulatory Authority (FINRA)
For more information about training and certification, visit
For more information about certifications in financial analysis, visit
Global Academy of Finance and Management
Similar Occupations
This table shows a list of occupations with job duties that are similar to those of financial analysts.
| Occupation | Job Duties | Entry-Level Education | Median Annual Pay, May 2022 | |
|---|---|---|---|---|
|
Budget Analysts |
Budget analysts help public and private organizations plan their finances. |
Bachelor's degree | $82,260 |
|
Data Scientists |
Data scientists use analytical tools and techniques to extract meaningful insights from data. |
Bachelor's degree | $103,500 |
|
Financial Managers |
Financial managers create financial reports, direct investment activities, and develop plans for the long-term financial goals of their organization. |
Bachelor's degree | $139,790 |
|
Insurance Underwriters |
Insurance underwriters evaluate insurance applications and decide whether to approve them. |
Bachelor's degree | $76,230 |
|
Personal Financial Advisors |
Personal financial advisors provide advice to help individuals manage their money and plan for their financial future. |
Bachelor's degree | $95,390 |
|
Securities, Commodities, and Financial Services Sales Agents |
Securities, commodities, and financial services sales agents connect buyers and sellers in financial markets. |
Bachelor's degree | $67,480 |