Becoming a Financial Analyst | Career Guide - OnlineMBA.com (2024)

The role of a financial analyst sounds complicated, but it's pretty simple. There are basically two job requirements: to report on what has happened and to predict what will happen next.

If you were the financial analyst for a donut shop, for example, you would be responsible for tracking and reporting how many donuts were sold in the last quarter, the cost of producing those donuts, and the profits made. Then you would estimate how many donuts the shop is likely to sell in the coming quarter and what it will cost to produce those donuts in order to help build an accurate budget.

Most entry-level financial analysts hold at least a bachelor's degree in economics, business, or accounting. Mid and senior-level analysts are often required to have a master's degree or an MBA. Non-degree certifications can also help financial analysts gain access to better opportunities and better pay. The BLS reports job growth projections for financial analyst careers outpace the average growth of all occupations.

Keep reading to learn more about what a financial analyst does and how to break into this lucrative field.

What Is a Financial Analyst?

Of course, there's more to financial analysis than just donuts. Wealthy investors and companies often need financial analysts to make data-driven decisions to grow capital. Typical job duties include staying up to date on economic trends and reaching out to clients. Financial analysts also provide executives with actionable insights on liquidity, solvency, and profitability.

Financial analysts often assume responsibilities associated with accounting, marketing, and psychology. For instance, a financial analyst may need to submit financial reports to regulatory bodies. They may also engage stakeholders and manage client expectations.

A Day in the Life of a Financial Analyst

Financial analysts' responsibilities depend on their roles and the time of year. For instance, financial analysts who work for publicly traded companies may submit 10-Qs to the Securities and Exchange Commission (SEC). They may also prepare quarterly earnings reports and attend shareholder meetings.

Financial analysts should stay current on market news. They often perform technical analysis, assess uncertainty in investment decisions, and provide actionable information to executives. They may also spend parts of the year completing continuing education requirements to renew licensure or certifications.

Financial Analyst Salary and Career Path

Financial analyst credentials can pave the way for a rewarding and profitable career. According to the Bureau of Labor Statistics (BLS), the median annual income reached $96,220 for financial analysts as of 2022.

Factors influencing salary include education, industry, experience, and location. Financial analysts working in securities, commodity contracts, and other financial investments and related activities earned a median annual salary of $106,390 as of 2022. Those working in credit mediation and related activities, by contrast, earned a median annual salary of $88,100 during the same year.

Where Can I Work as a Financial Analyst?

Financial analysts can secure employment across a variety of industries, including financial investment (e.g., stocks), financial vehicles (e.g., mutual funds), business management, and central banks.

Job opportunities and earning potential vary by industry. For instance, 77,860 financial analysts worked in the investment sector as of 2022, while central banks employed only 740, according to the BLS. Annual salaries averaged $148,040 in the information services sector but only $99,640 in enterprise management.

Location also impacts job outlook and salaries. The BLS notes that 46,720 financial analysts worked in New York as of 2022, while North Dakota employed only 240. Annual earnings averaged $140,880 and $78,290 in the two states, respectively.

Top Locations for Financial Analysts

As of 2022, the top-paying states for financial analysts were New York, Wyoming, New Jersey, Alaska, and California, according to the BLS. Factors like job demand and cost of living can influence earning potential.

The top-employing states for financial analysts in 2022 were New York, California, Texas, Florida, and Illinois.

Common Questions about Financial Analysts

Can I be a financial analyst without a degree?

The days of becoming a financial analyst without a degree are largely gone — most employers want candidates to have at least a bachelor's degree in a relevant field.

But that doesn't mean it's impossible, either — in some cases, with the right work experience and certifications, you may still be able to pursue a career as a financial analyst. The key will be being able to demonstrate a deep understanding of financial principles as well as the skills required to be successful.

Do financial analysts work with people?

Yes! While financial analysts are primarily tasked with research and analysis, the job requires a good amount of collaboration and communication with other people across an organization.

Analysts must work closely with management, communicate with investors, coordinate with teammates, report to stakeholders, and present their findings to various audiences.

What does a financial analyst need to know?

A financial analyst needs to know their way around financial statements, data analysis, financial modeling, and financial analysis tools. They also need to have a good grasp of financial principles, investment evaluation, and risk assessment.

What is the hardest part of being a financial analyst?

Being a financial analyst can be a tough gig because it requires a lot of complex thinking, preparation, and hard work. Many analysts report that the hardest part of their job is communicating sophisticated analysis and insights to decision-makers in a way that is both comprehensible and actionable.