If you are a student or young professional who is great with numbers, analytical and an expert problem-solver, consider a career as either a financial analyst or a data analyst. Financial analysts use financial data to spot trends and extrapolate into the future, helping their employers and clients make the best investing decisions. Businesses rely on financial analysts to determine when it is an auspicious time to buy or sell specific securities and, in some cases, companies use reports put together by financial analysts to determine if the entire business should be sold.
Data analysts perform a similar role, the primary distinction being that these professionals analyze data that may or may not relate to investing decisions. For example, a data analyst might study figures related to sales numbers, advertising efficacy, transportation costs or wages versus productivity.
Ultimately, any piece of numerical data that could be used to make a business decision is potentially within the purview of a data analyst's job. While they are not as laser-focused on the financial markets as their counterparts in the financial analyst world, data analysts are still expected to maintain up-to-date knowledge on investing practices. Often, accessing and organizing necessary data in this role requires high-level computer skills, making an information technology background, or at least a working knowledge of the field, a definite plus for an aspiring data analyst.
Because the required education and skills, income potential, work/life balance and competitiveness of the job market is similar between the two fields, subtle differences in personality type and skill set determine whether you are better suited for a career as a financial analyst or data analyst.
Neither career imposes across-the-board, hard-and-fast educational requirements. This means there is no exam you have to pass, such as the bar exam or medical boards, before you can even legally practice the profession. Individual employers set their own requirements for new hires. Generally, the more competitive the job market for financial analysts and data analysts in your local area, the more rigid the standards.
In either profession, most new hires have obtained at least a bachelor's degree, with a master's degree becoming more standard with each passing year. The best college majors for a financial analyst are economics, finance and statistics. Most large firms that hire financial analysts look for one of these three, and as an added bonus, these majors look great when applying for an MBA program, especially when combined with a competitive GPA and work experience.
For aspiring data analysts, a degree in statistics is a great place to start; even better, double up on your major and add information technology, computer information systems or another up-to-date technology major offered by your school. When hiring a data analyst, employers want to see a healthy mix of quantitative acumen and computer literacy that goes beyond knowing how to input numbers into Excel. A bachelor's degree is not an official, but a de facto requirement, for data analysts, and a master's degree makes you much more competitive in the job market.
Financial analysts and data analysts should be great problem-solvers, excel at the use of logic and possess strong skills in quantitative analysis. In addition, successful financial analysts have an in-depth understanding of various financial markets and investment products. For data analysts, it is helpful to maintain up-to-date computer skills and have at least a cursory understanding of some of the more common programming languages.
Strong people skills, leadership ability and teamwork are beneficial for either career. A lot of financial and data analysis is done in teams, and analysts are expected to report their findings to various departments within the company in a clear, concise and persuasive manner.
Entry-level financial analysts and data analysts make similar salaries, which are well above the median individual income in the United States, but they fall short of the salaries earned at big investment banks and corporate law firms.
According to the 2017 Robert Half Salary Guide, annual income for an entry-level financial analyst ranged from $47,500 to $66,000, depending on the size of the company. Most financial analysts earn their incomes as straight salaries, with bonuses sometimes added, based on the profitability of the company. It is not like a sales job, where income is numerically tied to individual performance.
An entry-level data analyst could earn between $52,000 and $66,000, according to Robert Half, so as you can see, no material difference exists between what a person can make as a financial analyst or as a data analyst.
The U.S. Bureau of Labor Statistics (BLS) reports an optimistic outlook for financial analyst jobs between 2016 and 2026, with job growth projected at 11%. However the BLS cautions: "Despite employment growth, competition is expected for financial analyst positions. Growth in financial services is projected to create new positions, but there are still far more people who would like to enter the occupation than there are jobs in the occupation. Having certifications and a graduate degree can significantly improve an applicant’s prospects."
The BLS did not break out the data analyst position in its latest forecasts, but the broader "financial specialist" job market is expected to experience 10% growth between 2016 and 2026, which is faster than the 7% growth expected across all occupations in the United States. In the near future at least, strong demand should exist for quantitatively inclined professionals who can cull pertinent information from large pools of data, and use it to draw inferences and make forecasts.
Which One to Choose
These are both fine careers: Income potential is strong, the work hours, at an average of 40 to 45 per week, are not oppressive, and the job market is primed for growth. Distinctions between the two jobs are mostly nebulous, but the biggest difference is a financial analyst's daily duties have much more of a bent toward the investment markets.
If you have a keen interest in investing and keeping up with Wall Street but want to steer clear of the powder keg environment of investment banking and trading, financial analysis is a career to consider. If, on the other hand, you like working with numbers but also enjoy computers and technology, you likely possess the skill set and interests needed to become a good data analyst.