Financial Analyst
A financial analyst is a professional responsible for assessing the financial health and investment opportunities of businesses, corporations, nonprofit organizations, and government entities. They play a vital role in evaluating financial statements and advising on investment options such as stocks, bonds, and commodities. Typically, financial analysts work closely with management and accounting teams, and their roles can vary significantly depending on their specialization, which might include buy-side analysts, sell-side analysts, risk analysts, portfolio managers, fund managers, and ratings analysts.
The work environment for financial analysts is primarily office-based, although they may also telecommute or travel for meetings. Essential skills for this role include a strong foundation in finance and mathematics, attention to detail, and effective time management. Education typically involves a bachelor's degree in related fields such as economics, finance, or accounting, with practical experience highly valued. Financial analysts must stay informed about regulatory changes and financial trends to provide accurate investment advice and help manage risk effectively. Overall, this profession attracts individuals who are organized, decisive, and enjoy analyzing financial data to support strategic decision-making.
Financial Analyst
Snapshot
Career Cluster(s): Business, Management & Administration, Finance
Interests: Mathematics, risk assessment, financial trends, data analysis
Earnings (Yearly Median): $96,220 per year $46.26 per hour
Employment & Outlook: 8% (Faster than average)
Entry-Level Education Bachelor's degree
Related Work Experience None
On-the-job-Training None
Overview
Sphere of Work. Financial analysts, also referred to as investment analysts, financial planners, financial officers, and financial managers, are responsible for the financial investments of businesses, corporations, nonprofit organizations, and government entities. Financial analysts provide diverse financial analysis services, which may include reviewing financial statements and advising organizations about the best investment options, such as stocks, bonds, or commodities. Financial analysts generally work within or alongside management and accounting departments. While most businesses employ a single financial analyst to oversee investments, financial institutions such as commercial banks, insurance companies, securities firms, mortgage companies, pension funds, and savings and loan associations employ multiple financial analysts to direct their internal investments and those of clients, investors, and customers.
Work Environment. Financial analysts work in offices and are often required to travel to attend annual meetings and stockholder meetings. Depending on the employer and particular job description, a financial analyst may telecommute from a home office, visit client offices, or work on a full-time basis in an employer’s office. A financial analyst may work as a full-time member of a finance team or as a term-of-project consultant. A financial analyst’s work environment is filled with technology, including computers and accounting software programs.
Occupation Interest. Individuals attracted to the financial analysis profession tend to be ambitious, organized, persuasive, decisive, and detail-oriented people who find satisfaction in tracking financial trends and assessing risks. Those individuals who excel as financial analysts possess financial and mathematical acumen, intense focus, responsibility and ethics, and effective time management. Financial analysts should enjoy finance and informed risk-taking and have a background in risk assessment.
A Day in the Life—Duties and Responsibilities. The daily duties and responsibilities of financial analysts vary by job specialty and employer. Areas of financial analysis job specialization include buy-side financial analysts, sell-side financial analysts, risk analysts, portfolio managers, fund managers, and ratings analysts. Buy-side analysts assist mutual funds, hedge funds, insurance companies, and endowed organizations with developing investment strategies and implementing investment decisions. Sell-side financial analysts assist banks and securities dealers with promoting and selling stocks, bonds, and other investment vehicles. Risk analysts assess the risks associated with investment decisions and work to reduce losses by diversifying the portfolio and selling stocks and bonds as needed. Portfolio managers oversee financial teams and the health of financial investments. Fund managers oversee hedge funds and mutual funds and communicate investment decisions and strategies to investors. Ratings analysts assess the likelihood that businesses will pay their debts. Based on these assessments, ratings analysts forecast the default risk. In addition to job specialization, all financial analysts specialize in particular geographic regions or industries.
Regardless of geography or industry specialization, financial analysts use spreadsheets to track financial data, analyze financial data to make investment decisions, and track trends in technology and politics that may affect the finance industry. They recommend investment options, create investment portfolios for individuals and businesses, set securities prices, prepare investment reports for business owners and investors, and advise clients or employers about when to best hold, sell, or trade securities.
In addition to the tasks described above, organizations may also require financial analysts to select, implement, and troubleshoot financial software systems. They must stay up to date with regulatory and ethical issues and news in finance by reading finance industry journals and participating in industry associations. Financial analysts employed by learning organizations also participate in ongoing discussions of work teams, workflows, dynamics, and best practices.
Fund Managers. Fund Managers manage mutual funds or hedge funds for their clients.
Risk Managers. Risk Managers analyze the investment decisions of their clients and determine how to grow profits through diversifying and hedging.
Ratings Analysts. Ratings Analysts determine the ability of companies that issue bonds to repay their debts.
Work Environment
Immediate Physical Environment. Financial analysts generally work in office environments. The work of a financial analyst requires sitting at a desk and using computers and phones for long periods each day.
Human Environment. Financial analysts interact with financial teams, business owners, employees, clients, and stockholders. Financial analysts should be comfortable attending meetings, giving frequent speeches, persuading clients, listening to client concerns and opinions, and supervising and directing employees.
Technological Environment. Financial analysts communicate by telephone and Internet. They use computers, financial analysis software, and spreadsheets to research, monitor, analyze, and present financial data.
Education, Training, and Advancement
High School/Secondary. High school students interested in pursuing a career as a financial analyst should prepare themselves by building good study habits as well as ease with numbers and mathematical functions. High school-level study of bookkeeping and mathematics will provide a strong foundation for college-level study of finance. Due to the diversity of financial analyst responsibilities and given that employers in this field tend to value practical experience, high school students interested in this career path may benefit from seeking internships or part-time work with financial organizations.
Postsecondary. Postsecondary students interested in becoming financial analysts should complete a bachelor’s degree in economics, finance, statistics, mathematics, or accounting. Courses in computer science, political science, psychology, and ethics may also prove useful in their future work. Postsecondary students can gain work experience and potential advantage in their future job searches by securing internships or part-time employment with local businesses or financial organizations.
Related Occupations
− Actuary
− Auditor
− Economist
Bibliography
"Financial Analysts." Occupational Outlook Handbook. Bureau of Labor Statistics, US Department of Labor, 6 Sept. 2023, www.bls.gov/ooh/business-and-financial/financial-analysts.htm. Accessed 7 Sept. 2023.