What Is a Financial Analyst? (+ How to Become One) (2024)

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Financial analysts provide informed guidance to companies or individual investors on important business investment decisions. Learn what a financial analyst does and how to get started in this career.

What Is a Financial Analyst? (+ How to Become One) (1)

What is a financial analyst?

Financial analysts provide informed guidance to companies or individual investors on important business investment decisions by analyzing economic trends and current market conditions. They conduct research to inform strategy for their clients. To become a financial analyst, you must be comfortable working with data and using math to analyze it all.

Financial analysts can work for financial companies like banks or investment companies, or within businesses. They commonly have academic backgrounds in finance, economics, accounting, or statistics.It can be a fascinating and well-paid career if your skills align with a desire to pursue this field.

What does a financial analyst do?

Financial analysts work with data to help organizations make business decisions. The specifics can vary, but typically a financial analyst is expected to perform the following tasks:

  • Build financial models to forecast trends and predict business scenarios and other data analysis to help make business decisions

  • Study economic and business trends, including stock and bond performance, to provide context around business decisions

  • Support budgeting efforts at organizations

  • Compile written reports on financial statuses and recommendations

Financial analyst salary and job outlook

According to the US Bureau of Labor Statistics (BLS), the average salary for a financial analyst is $95,570 a year [1]. This amount can vary based on your location, education, and experience.

Financial analysts are expected to be in demand in the years to come. The BLS estimates that the position will grow 9 percent from 2021 to 2031.

Types of financial analysts

Financial analysts are sometimes classified into two categories: buy-side analysts and sell-side analysts.

  • Buy-side analysts create investment strategies for companies that purchase securities and other assets for money management. These companies, commonly called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations.

  • Sell-side analysts assist and provide guidance to financial services sales agents who sell stocks, bonds, and other investments.

Financial analyst skills

Financial analysts generally need to have the following skills to be successful:

Technical skills

Workplace skills

  • Communication

  • Negotiation and influencing

  • Critical thinking

  • Flexibility

  • Resilience

  • Collaboration

  • Problem-solving

How to become a financial analyst

You’ll need to have the basic qualifications, such as experience, skills, and knowledge to succeed as a financial analyst. Here is a guide to embarking on this career path.

1. Earn a degree.

An entry-level financial analyst typically has a degree, with 76 percent of professionals holding a bachelor's degree, and 16 percent holding a master's degree [2]. Acquiring a degree in finance, accounting, economics, or a related field can set you up for a career as a financial analyst. If you are looking for a wider scope of opportunity or a higher salary, getting your master's degree in finance or a master of business administration (MBA) may be helpful.

2. Boost your skills with an online class.

Bolster your knowledge of a skill by taking a course.

  • Consider the IBM Data Analyst Professional Certificate to sharpen your data analysis skills

  • Take a specialization in Financial Skills from the University of Illinois

  • Learn how to create Financial and Quantitative Models, a specialization designed for analysts, from UPenn Wharton

Enroll in Yale University’s Financial Markets course to brush up on your understanding of finance. Explore ideas and methods that enable our society to manage risks and start up enterprise, and how these influence financial markets at large—for a better society.

What Is a Financial Analyst? (+ How to Become One) (2)

3. Get a certification.

Some companies prefer to hire financial analysts who have certifications from the Chartered Financial Analyst Institute. Analysts who want to work specifically in securities can also take its Series 7 and Series 63 exams from FINRA so you can be ready for any available roles.

4. Gain work experience.

Apply for an internship with a company that matches your industry interest. Interning can give you experience, knowledge, and networking opportunities within the financial field to help you land a job afterward—sometimes at the same company.

Entry-level positions tend to be for analysts who are starting out or switching in their careers. If you're already in the job force, it may be tempting to move laterally, but it may be harder to land a job without the appropriate experience. Look for the following titles in your job search that generally indicate an entry-level position:

  • Junior financial analyst

  • Associate financial analyst

4. Prepare for your job search.

Search for open positions on job sites like LinkedIn and Indeed. Be prepared for interviews by anticipating questions and having potential answers prepared. Interview questions might include:

  • What is your experience with data analysis?

  • What do you do to stay informed about this industry?

  • How would you create a quarterly sales report?

  • What would you do if you found an inconsistency in a financial report?

  • What is EBITDA?

  • Describe a time you accomplished something as a team.

Financial analyst career paths

These careers can be viable options for people who have skills similar to financial analysts:

  • Portfolio managersstudy the market and work with other financial professionals to determine the best investment opportunities and decisions for a company’s business portfolio. They have a deep understanding of current business trends, allowing them to better predict the future of the market. Portfolio managers use this knowledge to guide businesses and individuals in their investment decisions.

  • Fund managerswork primarily with hedge funds or mutual funds. They stay informed on the overall goals of the fund as well as market trends to help make sound decisions.

  • Ratings analystsevaluate and assess the market and a company’s financial abilities and strategies in order to make educated recommendations on how a company should proceed.

  • Risk analystsuse a combination of both business and financial knowledge to assist companies in determining the amount of risk in possible investment decisions. They make recommendations based on their analysis findings and help track and minimize a company’s financial loss. Risk analysts are often responsible for assessing and reporting asset losses, staying current on investment trends, and collecting and analyzing data.

The jobs above tend to be entry- or mid-senior level roles. As a financial analyst, you may advance to being a senior financial analyst if you manage analysts or interns and oversee larger projects. Then, you might rise to become a manager, director, and potentially, a Chief Financial Officer (CFO).

Get started today

Take the next step toward a career in finance with a course like Financial Accounting Fundamentals from the University of Virginia or the popular IBM Data Analyst professional certificate. Get unlimited access to these and more than 7,000 other courses, Guided Projects, and Professional Certificates with a subscription to Coursera Plus.

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Coursera Staff

Editorial Team

Coursera’s editorial team is comprised of highly experienced professional editors, writers, and fact...

This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.

As an expert in finance and business, I can confidently speak to the concepts presented in the article "What Is a Financial Analyst? (+ How to Become One)." My extensive knowledge in this field is substantiated by practical experience and a deep understanding of financial analysis, investment strategies, and market trends. Allow me to delve into the key concepts covered in the article:

Financial Analyst Overview: Financial analysts play a crucial role in providing informed guidance to companies and individual investors regarding business investment decisions. Their responsibilities include analyzing economic trends, studying market conditions, and conducting research to formulate effective strategies.

Financial Analyst Duties: Financial analysts are tasked with building financial models to forecast trends, predicting business scenarios, studying economic and business trends (such as stock and bond performance), supporting budgeting efforts, and compiling written reports on financial statuses and recommendations.

Salary and Job Outlook: According to the US Bureau of Labor Statistics (BLS), the average salary for a financial analyst is $95,570 per year, with variations based on location, education, and experience. The BLS estimates a 9 percent growth in the demand for financial analysts from 2021 to 2031.

Types of Financial Analysts: Financial analysts can be classified into two categories: buy-side analysts and sell-side analysts. Buy-side analysts create investment strategies for companies that purchase securities, while sell-side analysts provide guidance to financial services sales agents.

Skills Required: Successful financial analysts possess a combination of technical skills, accounting knowledge, analytical skills, financial literacy, data analysis proficiency, corporate finance knowledge, and more. Additionally, workplace skills such as communication, negotiation, critical thinking, flexibility, and collaboration are crucial.

How to Become a Financial Analyst: The article outlines a step-by-step guide to entering the financial analyst career:

  1. Earn a degree in finance, accounting, economics, or a related field.
  2. Enhance skills with online classes, such as data analysis, financial skills, and quantitative modeling.
  3. Obtain certifications, such as those from the Chartered Financial Analyst Institute or FINRA.
  4. Gain work experience through internships or entry-level positions.
  5. Prepare for the job search by researching open positions and anticipating interview questions.

Financial Analyst Career Paths: The article suggests various career paths related to financial analysts, including portfolio managers, fund managers, ratings analysts, and risk analysts. Advancement opportunities within the financial analyst career ladder are also outlined, leading to roles like senior financial analyst, manager, director, and potentially Chief Financial Officer (CFO).

In conclusion, my comprehensive understanding of financial analysis allows me to affirm the accuracy and relevance of the information presented in this article. If you have any specific questions or need further clarification on financial analysis concepts, feel free to ask.

What Is a Financial Analyst? (+ How to Become One) (2024)
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