Financial Analyst Careers
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Financial analysts help individuals and businesses preserve and grow capital. Many work with investment firms, financial institutions, and publicly listed companies. Typical job duties include recommending investments, researching financial innovations, and analyzing financial documents.
Financial analysts should hold at least a bachelor's degree in a business-related field. An MBA in financial analysis and relevant experience also help. Professional certifications, like the chartered financial analyst (CFA) designation, may fast-track your career.
This guide details the required education for financial analysts, along with possible career paths and salaries.
What is a Financial Analyst?
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.
Key Soft Skills for a Financial Analyst
- Achievement Striving: Achievement striving refers to realizing goals and accomplishing more difficult tasks. This trait enables financial analysts to obtain optimal outcomes for individual clients and corporations.
- Emotional Intelligence: Emotional intelligence allows individuals to recognize, understand, and regulate emotions. This soft skill can help financial analysts emotionally engage clients and manage unrealistic expectations.
- Perseverance: Overcoming setbacks allow financial analysts to persevere during unfavorable market conditions without internalizing the heightened negativity of clients and corporate leaders.
- Adaptability: Financial analysts must quickly adjust to unexpected changes and make rational decisions in uncertain circumstances. This attribute can help financial analysts to adapt to ever-changing market conditions.
Key Hard Skills for a Financial Analyst
- Technical Analysis: A financial analyst's job description often includes managing securities and other assets (e.g., real estate or cryptocurrencies). Professionals must know how to read price charts, draw trendlines and continuation patterns, and recognize areas of support and resistance.
- Financial Reporting: Many financial analysts work with accountants to prepare financial reports for clients, executives, the SEC, and other regulatory bodies. Financial analysts must have strong financial reporting skills and an in-depth understanding of financial regulation.
- Risk Management: Risk management refers to assessing uncertainty in investment decisions and reducing excessive risk. Mastering this skill is critical for financial analysts handling financial assets.
- Asset Valuation: A financial analyst's job description often includes determining the fair market value of simple asset classes like companies and complex assets like credit default swaps. Mastering this skill requires expertise in identifying net asset values, building absolute valuation models, and analyzing comparable valuation metrics.
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 $83,660 for financial analysts as of 2020.
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 $129,110 as of 2020. Those working in credit mediation and related activities, by contrast, earned a median annual salary of $79,270 for the same year.
How to Become a Financial Analyst
Entry-level financial analysts should hold a bachelor's degree in business administration, accounting, economics, or a related area. An MBA in financial analysis or a master's degree in finance can help boost employment opportunities and salary expectations.
Professional finance or investment experience and CFA certification can also help advance your career as a financial analyst. The CFA Institute serves as the official certifying body for CFA certification. The prestigious CFA designation demonstrates a strong understanding of financial assessment, management, and regulation.
Many financial analyst roles require a financial securities license. The Financial Industry Regulatory Authority and the North American Securities Administrators Association oversee the requirements and exams for different financial securities licenses. A financial securities license requires an organizational sponsorship.
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, 87,530 financial analysts worked in the investment sector as of 2020, while central banks employed only 1,920, according to the BLS. Annual salaries averaged $132,350 in the financial vehicles sector but only $87,330 in nondepository credit intermediation.
Location also impacts job outlook and salaries. The BLS notes that 68,190 financial analysts worked in the New York-Newark-Jersey City metropolitan region as of 2020, while the Kansas nonmetropolitan area employed only 350. Annual earnings averaged $130,670 and $58,960 in the two states, respectively.
Top Locations for Financial Analysts
As of 2020, the top-paying states for financial analysts were New York, Massachusetts, Connecticut, New Jersey, and the District of Columbia, according to the BLS. Factors like job demand and cost of living can influence earning potential. For instance, annual income average $130,670 in New York but only $66,440 in Louisiana. This difference may be due to the 40% higher cost of living in New York.
The top-employing states for financial analysts in 2020 were New York, California, Texas, Florida, and Illinois. New York employed 61,920 financial analysts, while Wyoming employed only 150. Factors like job prospects, earning potential, and cost of living may explain differences in employment level.
Resources for Financial Analysts
Professional organizations provide valuable resources for aspiring financial analysts, such as networking and certification opportunities. Below, we list four reputable organizations for finance and investment professionals.
Professional Organizations for Financial Analysts
A financial analyst certification organization, CFI offers online development opportunities for investment and finance professionals. The institute also serves as the certifying body for various designations.
A global nonprofit organization and membership association, GARB offers continuing education and networking opportunities to risk professionals. The association also advocates for higher risk management standards.
PRMIA provides networking and training opportunities for risk managers. The association also promotes the implementation of risk management practices. PRMIA is the official certifying body for the professional risk manager designation.
NAPFA is a national financial planning trade organization. The association advocates for fiduciary financial practices, requiring financial advisors to earn a fee only when their clients benefit.
Common Questions about Financial Analysts
What is a financial analyst?
Financial analysts help individual clients and businesses make critical data-driven economic decisions. Common responsibilities include researching market trends, determining a company's financial health, and advising individuals and organizations on growing their capital.
Is an MBA good for financial analysts?
Most entry-level financial analyst jobs only require a bachelor's degree in business or finance. However, an MBA in financial analysis can help professionals advance to higher-level positions.
How much is the salary for a financial analyst?
According to the BLS, financial analysts made a median annual salary of $83,660 as of 2020. However, salary expectations vary with education, concentration, experience, industry, and location.
Is a financial analyst a stressful job?
A job as a financial analyst can be stressful but rewarding. Potential stress factors include managing client expectations, keeping up with the latest market and business trends, and staying in touch with clients and business executives.
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