Some may consider a financial analyst a special type of financial genius because they can make investment recommendations and predictions based on the studies of the market and business trends. A financial analyst is someone who works in the area of finance and helps individuals and businesses make sound financial decisions. Here is an overview of financial analysts, including what they do, how to become one and their career outlook.
What is a Financial Analyst?
Besides being one of the most popular employees in the finance industry, financial analysts are people who make business suggestions and recommendations to businesses based on their analyses of the company’s financial status and the market trends. Financial analysts usually have backgrounds in finance, accounting or business. They are usually very comfortable interpreting and working with data and generally enjoy working with numbers.
What They Do
Financial analysts evaluate current and past financial data, study business and economic trends, evaluate investment options and make appropriate recommendations to companies. They also assess the performance of market investments like stocks and bond. Financial analysts assess and evaluate the strength of a company by researching past history examining the company’s financial statements.
They also prepare written financial reports and present them to the company’s officials. Financial analysts typically work in banks, securities firms, pension funds, insurance companies and similar companies. Financial analysts may work as portfolio managers, rating analysts, fund managers and risk analysts.
When financial analysts begin their careers, they generally focus on one specific investment field. As they become more knowledgeable and experienced, they work as portfolio managers and handle several types of investments. Earning a master’s degree can also help advance their career.
How to Become a Financial Analyst
To become a financial analyst, the individual must have a bachelor’s degree in finance, economics, accounting, mathematics or statistics. These are four-year programs offered at colleges and universities. Students in the program complete major-related courses and complete internships at financial institutions to obtain hands-on training working under supervision.
Although financial analysts are not required to be certified, employers often prefer hiring financial analysts who have certification. Certification is also a way for the analyst to demonstrate expertise, commitment and knowledge in this area. The CFA Institute offers the Chartered Financial Analyst certification to financial analysts who have at least four years work experience and a bachelor’s degree.
Wage Potential and Career Outlook
Financial analysts make very good salaries, although wages can vary by work experience, employer and location. Below are the five top-paying states for financial analysts and the wages they earned in 2017.
- New York – $134,560
- Wyoming – $111,210
- Colorado – $110,290
- California – $109,580
- Alaska – $109,330
As 2021, financial analysts earned an average annual wage of $95,570, according to the U.S. Bureau of Labor Statistics (BLS). The BLS also predicted that financial analysts could see an employment growth of 9 percent through 2031. As the economy continues to grow, so will the need for financial analysts.
Working as a financial analyst can be exciting, rewarding and very challenging. Who can really say they wouldn’t enjoy working with money and knowing they’re helping others make money? This is just some of the excitement an individual can expect when working as a financial analyst.