With a love for numbers and the stock market, financial analysts determine the most effective ways to manage money. When large amounts of money are at stake, they provide business leaders and entrepreneurs with an added touch of confidence when making significant financial decisions.
Here’s an overview of what you can expect from a career as a financial analyst:
What does a financial analyst do?
These financially savvy professionals guide businesses and individuals to make the smartest investment decisions. Financial analysts study marketplace trends, demographics, stock markets and other information that affects investment programs. After careful analysis, they provide evaluations of current investment performance and recommend future financial decisions based on their interpretation of the data.
As such, companies rely on financial analysts to guide them during economic crises, heeding their advice on how to best protect the organization’s wealth. Financial analysts also advise on company expansions and other high-risk decisions. Individuals seek financial support from these analysts, employing them to create portfolios with investment recommendations.
On an average day, financial analysts often perform tasks such as:
- Evaluating financial data
- Examining financial reports to determine company value
- Studying economic, business, industry and financial trends
- Developing financial forecasts
- Assisting with budget determinations
- Preparing portfolios and written reports
- Presenting financial analysis to executive boards and decision-makers
You can often categorize financial analysts by buy-side versus sell-side professionals. The former advises large institutions and investors, such as hedge funds, insurance companies, nonprofits and universities. Sell-side analysts advise financial services sales agents, working with investments like stocks and bonds. Financial analysts can further specialize their career to focus on specific trends, regions or industries.
Added to these divisions, there are various types of financial analyst roles, such as:
- Credit Products Officer
- Equity Research Analyst
- Financial Controller
- Fund Manager
- Investment Analyst
- Planning Analyst
- Portfolio Manager
- Ratings Analyst
- Real Estate Analyst
- Risk Analyst
- Securities Analyst
- Trust Officer
After gaining years of experience, financial analysts may climb the ladder to become finance directors, vice presidents of finance and chief financial officers.
What is the typical work environment?
Financial analysts complete most of their work in an office environment, but many will travel to businesses or meet with clients at the beginning of the relationship as well as for presentations and follow-up meetings. Many financial analysts earn careers on Wall Street in New York City, where large financial institutions, such as banks, firms and insurance companies, are plentiful.
According to the U.S. Bureau of Labor Statistics, the largest employers of financial analysts is the securities, commodity contracts and financial investment industry, which employed nearly 75,000 of these specialists. Other popular industries include professional, scientific and technical services; credit intermediation organizations; company and enterprise management businesses; and insurance carriers.
What salaries are possible for financial analysts?
BLS data showed a median annual wage of $85,660 in 2018, with a range of about $52,540 to more than $167,000. The BLS further compiled average salaries by industry, which can be highly influential in determining salary potential for financial analysts. Some of those included:
- Grantmaking and giving services: $137,170
- Securities, commodity contracts and financial investment companies: $130,360
- Nondepository credit intermediation: $93,420
- Company and enterprise management: $91,860
While some financial analysts are salaried workers, the BLS noted others, particularly fund managers, receive their income via fees. This payment often relies on the value of assets these analysts oversee and what kind of returns the fund produces each year.
What is the job outlook for financial analysts?
With companies always in need of sound financial advice, there is usually a steady demand for financial analysts. In general, the need for financial analysts increases as global markets emerge and relevant economic activity arises. As such, the job outlook is promising for aspiring financial analysts, with the BLS estimating growth of 11% from 2016 to 2026. That means roughly 32,200 new financial analyst positions are projected to be added to the workforce, more than the average employment growth for most occupations.
The BLS further predicted demand for financial analysts with specialized knowledge of the regions where emerging markets offer opportunities for big businesses to invest and expand. New technological improvements will also increase demand for financial analysts with tech industry knowledge and experience.
Even with such promising employment growth, financial analysts may still experience strong competition for the positions. Certifications, advanced degrees, relevant experience and strong industry connections can make applicants stand out in the large pool of potential candidates.
How does one become an expert in finance?
Financial analysts must have relevant skills, knowledge and experience to provide credible investment advice. Employers will look for candidates who have the practical experience and positive reputations in the field, making them more likely to trust the analyst’s recommendations. With global investment on many organizations’ radars, employers will also look for financial analysts with additional knowledge about particular countries or regions, such as language, culture, political and business environments, trends and social conditions.
Most positions require at least a bachelor’s degree, often in fields such as accounting, economics, finance, statistics and mathematics. However, an advanced degree in finance or business administration is often necessary for specializing in a particular investment area or advancing to higher-level positions.
With a specialization in finance, the University of Maryland’s Robert H. Smith School of Business Online Master of Business Administration program offers the advanced learning you need to excel as a financial analyst. You’ll learn how to manage money wisely in business environments with courses that cover the complex nuances of corporate finance, financial restructuring and investing. Plus, online learning grants you the flexibility to earn your degree on your schedule.
Ready to start analyzing the numbers? Reach out to an advisor to learn more about the Online MBA program from Maryland Smith.