Financial Analysts

Career, Salary and Education Information

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What Financial Analysts Do[About this section] [To Top]

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Duties of Financial Analysts

Financial analysts typically do the following:

  • Recommend individual investments and collections of investments, which are known as portfolios
  • Evaluate current and historical financial data
  • Study economic and business trends
  • Examine a company’s financial statements to determine its value
  • Meet with company officials to gain better insight into the company’s prospects
  • Assess the strength of the management team
  • Prepare written reports

Financial analysts evaluate investment opportunities. They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. Financial analysts are also called securities analysts and investment analysts.

Financial analysts can be divided into two categories: buy-side analysts and sell-side analysts.

  • Buy-side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations with large endowments, such as some universities.
  • Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.

Some analysts work for the business media or other research houses, which are independent from the buy and sell side.

Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product. For example, an analyst may focus on a subject area such as the energy industry, a world region such as Eastern Europe, or the foreign exchange market. They must understand how new regulations, policies, and political and economic trends may affect investments.

Investing is becoming more global, and some financial analysts specialize in a particular country or region. Companies want those financial analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover.

The following are examples of types of financial analysts:

Portfolio managers select the mix of products, industries, and regions for their company’s investment portfolio. These managers are responsible for the overall performance of the portfolio. They are also expected to explain investment decisions and strategies in meetings with stakeholders.

Fund managers work exclusively with hedge funds or mutual funds. Both fund and portfolio managers frequently make buy or sell decisions in reaction to quickly changing market conditions.

Ratings analysts evaluate the ability of companies or governments to pay their debts, including bonds. On the basis of their evaluation, a management team rates the risk of a company or government not being able to repay its bonds.

Risk analysts evaluate the risk in investment decisions and determine how to manage unpredictability and limit potential losses. This job is carried out by making investment decisions such as selecting dissimilar stocks or having a combination of stocks, bonds, and mutual funds in a portfolio.

Work Environment for Financial Analysts[About this section] [To Top]

Financial analysts hold about 277,600 jobs. The industries that employ the most financial analysts are as follows:

Securities, commodity contracts, and other financial investments and related activities 24%
Management of companies and enterprises 14
Credit intermediation and related activities 13
Professional, scientific, and technical services 12
Insurance carriers and related activities 8

Financial analysts work primarily in offices, but travel frequently to visit companies or clients.

Many financial analysts work at large financial institutions based in New York City or other major financial centers.

Financial Analyst Work Schedules

Most financial analysts work full time, and about 1 in 3 work more than 40 hours per week. Much of their research must be done after office hours because their days are filled with telephone calls and meetings.

How to Become a Financial Analyst[About this section] [To Top]

Get the education you need: Find schools for Financial Analysts near you!

Financial analysts typically must have a bachelor’s degree, but a master’s degree is often required for advanced positions.

Financial Analyst Education

Most positions require a bachelor’s degree. A number of fields of study provide appropriate preparation, including accounting, economics, finance, statistics, and mathematics. For advanced positions, employers often require a master’s degree in business administration (MBA) or a master’s degree in finance. Knowledge of options pricing, bond valuation, and risk management are important.

Licenses, Certifications, and Registrations

The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. It requires licenses for many financial analyst positions. Most of the licenses require sponsorship by an employer, so companies do not expect individuals to have these licenses before starting a job.

Certification is often recommended by employers and can improve the chances for advancement. An example is the Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor’s degree, 4 years of qualified work experience, and pass three exams. Financial analysts can also become certified in their field of specialty.

Advancement for Financial Analysts

Financial analysts typically start by specializing in a specific investment field. As they gain experience, they can become portfolio managers, who select the mix of investments for a company’s portfolio. They can also become fund managers, who manage large investment portfolios for individual investors. A master’s degree in finance or business administration can improve an analyst’s chances of advancing to one of these positions.

Important Qualities for Financial Analysts

Analytical skills. Financial analysts must process a range of information in finding profitable investments.

Communication skills. Financial analysts must explain their recommendations to clients in clear language that clients can easily understand.

Computer skills. Financial analysts must be adept at using software packages to analyze financial data, see trends, create portfolios, and make forecasts.

Decisionmaking skills. Financial analysts must provide a recommendation to buy, hold, or sell a security.

Detail oriented. Financial analysts must pay attention to details when reviewing possible investments, as small issues may have large implications for the health of an investment.

Math skills. Financial analysts use mathematical skills when estimating the value of financial securities.

To be successful, financial analysts must be motivated to seek out obscure information that may be important to the investment. Many work independently and must have self-confidence in their judgment.

Financial Analysts Salaries[About this section] [More salary/earnings info] [To Top]

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Entry Level Experienced

The median annual wage for financial analysts is $78,620. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $48,170, and the highest 10 percent earned more than $154,680.

The median annual wages for financial analysts in the top industries in which they work are as follows:

Securities, commodity contracts, and other financial investments and related activities $90,550
Professional, scientific, and technical services 80,720
Management of companies and enterprises 77,070
Credit intermediation and related activities 76,050
Insurance carriers and related activities 73,790

Fund managers are typically compensated by fees, usually structured as a percentage of assets under management and a percentage of the fund’s annual return.

Most financial analysts work full time, and about 1 in 3 work more than 40 hours per week.

Job Outlook for Financial Analysts[About this section] [To Top]

Employment of financial analysts is projected to grow 12 percent through 2024, faster than the average for all occupations. A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth.

Investment portfolios are becoming more complex, and there are more financial products available for trade. In addition, emerging markets throughout the world are providing new investment opportunities, which require expertise in geographic regions where those markets are located.

The continued implementation of financial regulatory reform could constrict growth in the industry, as rulemaking bodies place a greater emphasis on stability. Restrictions on trading by banks may shift employment of financial analysts from investment banks to hedge funds and private equity groups.

Financial Analysts Job Prospects

Despite employment growth, strong 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.

Employment projections data for Financial Analysts, 2014-24
Occupational Title Employment, 2014 Projected Employment, 2024 Change, 2014-24
Percent Numeric
Financial analysts 277,600 310,000 12 32,300


*Some content used by permission of the Bureau of Labor Statistics, U.S. Department of Labor.

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