What Do Financial Analysts Do?

Financial analysts can take on many responsibilities, but their primary goal is helping individuals and organizations spend their money wisely. They do this by analyzing financial data to evaluate risks and opportunities.

These analysts work in many industries, including banking, insurance, and corporate finance. They collaborate with accountants, managers, and other finance professionals to provide recommendations and insights. They can also work with individual investors, company officials, and the government.

Learn more about what financial analysts do, along with their key skills and available career pathways.

Financial analysts provide individuals and organizations with data-driven insight to help guide their buying and selling strategies and decisions. In general, they ensure that their clients and employers spend money in the most profitable areas.

Depending on the role, they may consult on financial opportunities, manage finances, and/or analyze financial data to evaluate individuals and organizations.

The following list highlights five duties you could take on as a financial analyst.

Financial analysts can stand out in their field by developing an area of expertise. For example, they may specialize in a certain market or region of the world by studying the financial trends and regulations in that sector to understand what makes it unique.

Financial analysts usually fall into one of two categories.

Buy-side analysts manage financial and investment strategies for individuals and organizations. They conduct in-depth research and create financial models to identify opportunities that outweigh the risks and help their clients and employers make informed buying decisions.

Buy-side analysts typically work in portfolio and fund management for investment companies, hedge funds, and insurance companies. They may begin their careers as junior analysts reviewing financial statements and creating models and reports for more senior portfolio managers.

Sell-side analysts may also work with investment research and manage funds, but they specialize in selling investments and other financial services. They typically work for banks and investment firms, providing guidance and reports for their employers and clientele.

Sell-side analysts use company and market data to create valuations and ratings for companies and securities. They may begin their career selling financial services for banks before advancing into research management and senior rating analyst roles.

The financial analyst profession has no minimum requirements, but most analysts have at least a four-year bachelor’s degree in a relevant discipline, such as a bachelor’s in finance. A master’s in finance or an MBA may help you secure more senior positions or roles with larger and more desirable employers.

You can also pursue a professional certification, such as the chartered financial analyst credential from the CFA Institute. This certification demonstrates your expertise in the field, as it requires you to pass an exam and hold a bachelor’s degree or a minimum of 4,000 hours of experience.

The financial analyst occupation appears strong and in demand, following the trajectory of the overall economy. The Bureau of Labor Statistics (BLS) projects 9% growth for the field from 2023-2033, more than doubling the projected growth rate for all occupations.

The BLS also reports a median annual salary of $99,890 for financial analysts as of May 2023. Again, that more than doubles the median annual wage for all occupations.

Your actual wage will depend on many factors, such as your industry, education, experience, and location. States with substantial financial industries, like New York, typically offer more employment opportunities with higher salaries.

I studied economics as an undergraduate and really loved the subject. As I was getting ready to graduate, I considered pursuing a Ph.D. and a career as an academic, but I was also interested in going into finance as a practitioner.

Ultimately, I decided that what I really wanted was to learn practical skills and work in financial analysis or investment management, so I enrolled in a master of finance program and then the CFA program. During that experience, I found that I really loved the challenge of valuing companies, which led me to the valuation consulting industry.

As a result of my education, experience as a consultant, and my industry connections, I eventually was recruited to work at Kaplan Schweser, educating future CFA charterholders. So, I have been able to fulfill my desire to work as a financial analyst and as an educator.

Financial analysts typically have at least an undergraduate degree, often in economics, finance, accounting, or another business discipline. In my case, I had a bachelor’s in economics, a master’s in finance, and had passed the Level I CFA exam when I started working as a valuation consultant.

Although university degrees in business fields are common among analysts, many professionals have backgrounds in science, engineering, or other fields. For individuals with non-business backgrounds, designations such as the CFA charter help bridge the knowledge gap and open doors to finance careers.

The CFA charter is extremely valuable not only because it provides a wealth of knowledge and technical skill required for financial analysis and portfolio management, but also because it serves as a signaling mechanism for employers regarding the intelligence, work ethic, critical thinking, and commitment to ethical practice of the analyst.

That said, there are many very successful investment professionals who are not CFA charterholders. They work in all the same roles at all the same levels that CFA charterholders do and can have successful careers without the charter. So, it’s possible to be successful with or without the charter; however, having CFA after your name will definitely give you an edge over others.

In my role at Kaplan Schweser, I led our global CFA business, working closely with the product, sales, marketing, and other teams to produce the best-in-class CFA exam prep products and services. I’ve held prior roles in this industry, creating content and teaching CFA candidates.

Prior to that, I worked as a consultant in the business valuation industry and continued to take projects from time to time, even after I left to work at Kaplan. The work I did in valuation consulting has served me well at Kaplan, allowing me to analyze and value potential acquisitions and work with internal and external deal teams as we have executed acquisitions.

My background as an analyst has also allowed me to understand the fundamentals of the business I operate and be able to communicate our results to key stakeholders. It’s been hugely rewarding, and I still consider myself an analyst at heart, even though my role has changed so much over time.

I think the most rewarding aspect is seeing your work make an impact. When you spend a lot of time building financial models and writing reports, it’s exciting to see it get put to use, whether that is in a transaction, supporting an investment decision, or developing a business strategy.

One of the most challenging aspects is dealing with ambiguity. We rarely have perfect information and must apply our judgment. That can be uncomfortable at times, but it is also an opportunity to apply our experience and skills.

Learn to ask the right questions and communicate the results of your work. A lot of attention is paid to the technical skills needed to become an analyst. Every analyst must develop technical skills, or they won’t have a job for long.

However, the most successful analysts develop deep insight into the models they build, the underlying assumptions, the numbers they produce, and the reports they develop. Producing high-quality analysis is valuable and necessary, but the top analysts add even more value by developing the skills to communicate complicated analyses with experts and non-experts alike.

Take the time to talk to analysts in different roles at different companies to understand the diversity of roles and corporate environments. Take courses that incorporate financial statement analysis, valuation, and financial modeling, if available. Utilize resources on CFA Institute’s website. They have a wealth of free information on the investment profession.

Finally, consider enrolling in the CFA program if you have already decided that a career as a financial analyst is right for you. The ROI on the CFA charter is extremely high. It’s simply one of the best investments you can make in yourself and your career.