Financial analysts produce financial plans, projections and analytical reports for use in investment decisions by companies, public and private organizations, and individuals. Depending on the type of analyst job, the duties can vary quite a bit.
Some financial analysts work in the securities industry analyzing stocks, bonds and other securities for banks, brokerages, money management firms and other organizations. These financial analysts typically develop expertise in a narrow category of stocks or bonds, such as Canadian corporate bonds or technology stocks, for example. Other financial analysts work for large corporations, analyzing internal financial data and producing financial plans, revenue and expense projections, and recommendations to inform budget and investment decisions by company executives. Nonprofit organizations and government bodies also employ financial analysts in this type of work.
A recent bachelor's degree graduate seeking to become a financial analyst can expect to begin in a junior position under the guidance of a senior analyst. After several years of experience, many junior financial analysts consider returning to graduate school for advanced degrees. While junior analysts are not barred from advancement, continuing progression to positions with greater responsibility usually necessitates returning to school. A graduate with a master's degree can expect to begin work as a senior financial analyst or rise to the position very quickly.
With greater experience and expertise, a senior financial analyst can continue into a supervisory position. A senior analyst in the securities industry often moves up to become a portfolio manager or a fund manager overseeing a team of senior analysts. There may also be an opportunity to enter a senior management role. In the corporate world, senior analysts can become treasury managers supervising working groups within their departments. A standout performer may rise through the ranks to become a chief financial officer (CFO) responsible for all of the company's financial activities.
While a bachelor's degree is the minimum requirement for an entry-level financial analyst position, data collected by the U.S. Bureau of Labor Statistics (BLS) shows that a master's degree is generally required for permanent and advanced positions in the field. A variety of undergraduate subjects are generally accepted by employers, including business fields such as finance, accounting and economics. Due to the importance of advanced quantitative skills in this field, bachelor's degrees in statistics, mathematics, engineering and physics are not uncommon among financial analysts. However, applicants with these degrees can benefit from business coursework, especially in accounting and finance. An advanced financial analyst position generally requires an MBA degree with an appropriate subject focus or a master's degree in finance.
Rise of the Robo Advisors
Other Qualifications and Skills
Some financial analysts must obtain an appropriate license from the Financial Industry Regulatory Authority (FINRA), which is responsible for writing and enforcing rules for securities firms and brokers operating in the United States. Licensure generally requires sponsorship from the employing firm, so most financial analysts only obtain a license after starting a job. However, long-term employment may be contingent on successful licensure.
Many employers expect financial analysts to pursue certification in the field. The preeminent certification in the field is the Chartered Financial Analyst (CFA) designation awarded by the CFA Institute. It is available to financial analysts with at least four full years of qualifying work experience. Thus, it is generally considered a qualification for advancement to more senior financial analyst positions. Qualifying for the designation also requires a bachelor's degree and a passing score on a series of three exams administered by the CFA Institute.
Financial analysts are often expected to present and explain their work to clients and superiors, so strong communication and presentation skills are crucial. Analytical and critical thinking skills are essential in evaluating alternatives and settling on a final recommendation. In addition to knowledge of statistics, mathematics and finance, experience using software tools associated with these disciplines is valuable. While it's not uncommon for employers to use highly specialized technology and proprietary tools that aren't available outside the firm, learning and relying on complicated quantitative software provides skills that translate well to other systems.