By Chron Contributor Updated May 13, 2021
Financial analysts assess the performance of bonds, stocks and other types of investments to guide the investment decisions of individual and institutional clients. They often work long hours that are heavy on research and data analysis. As explained by the employment website Glassdoor, the minimum education requirement is typically a bachelor's degree in accounting, finance, economics or a related field.
Financial Knowledge
Financial analysts should have a deep knowledge of investment terms and accounting principles to fully understand the balance sheets, income statements and other financial documents of companies they follow. Understanding finance and accounting principles begins with the right education. Many financial analysts hold Master of Business Administration (MBA) degrees, or advanced degrees in a related field.
Industry professionals who sell financial products as part of their job must be licensed in the state, or states, in which they work. The Financial Industry Regulatory Authority (FIRA) is the primary licensing agency for the financial industry. Employers may also require an individual to obtain certification as a Chartered Financial Analyst through the CFA Institute.
CFA certification is considered the "gold standard" in the investment profession. Earning a CFA requires a course of independent study and successful completion of a series of written exams. The CFA curriculum is rigorous. A great deal of self-discipline and drive are necessary to successfully complete the program and earn the charter.
Big Picture Economics
Financial analysts spend long hours studying the financial documents of companies, but they also must understand the economic "big picture" as well. For many financial analysts, this means poring over financial news to keep up with and understand major events in the global economy. Publications such as "The Wall Street Journal," "The Financial Times" and "The Economist" are often on the desks of many financial analysts and other investment professionals.
Financial analysis is a data-rich world. Analysts need strong computer skills to access and analyze large financial data sets, transforming the data into usable information that informs the investment decisions of individuals, companies, foundations and other organizations. Financial analysts need proficiency in statistical and spreadsheet software and relational database programs, according to the BLS.
Math Skills
Assessing the performance of stocks and bonds, as well as estimating the value of a company, requires extensive math skills. Analysts use complex mathematical and statistical techniques such as linear regression to analyze financial data. Financial analysts can expect to take complex math courses in college and graduate school, including calculus, linear algebra and statistics.
Salary and Job Outlook
According to the employment website Salary, the average financial analyst earned an annual salary ranging from ​$54,295​ to ​$65,890​. As with most jobs, earnings are dependent on a variety of factors, including employer, geographic location, education and experience.
The U.S. Bureau of Labor Statistics (BLS) tracks numbers on nearly all civilian occupations. As of 2020, the BLS reported that financial analysts earned a median annual salary of ​$83,660​ per year. Median salary means that half in the profession earned more, while half earned less. The BLS also projects that the job growth rate for the profession will be 5 percent through 2029, a rate considered faster than average when compared to other jobs. The demand for financial analysts is attributed to the development and availability of a greater range of financial products.
FAQs
The main skills that a financial analyst needs include critical thinking, analytical skills, presentation skills, an understanding of financial and economic terms, financial modeling skills, understanding of financial regulations, and being personable.
What are the skills required for a financial analyst? ›
16 common financial analyst skills
- Accounting. Financial analysts have accounting skills that allow them to read and understand financial statements and reports. ...
- Organization. ...
- Financial modeling. ...
- Technical analysis. ...
- Research. ...
- Communication. ...
- Mathematical knowledge. ...
- Writing.
A successful career as a financial analyst requires strong quantitative skills, expert problem-solving abilities, adeptness in logic, and above-average communication skills. Financial analysts have to crunch data, but they also have to report their findings to their superiors clearly, concisely, and persuasively.
What are the working conditions for a financial analyst? ›
Work Environment
Most financial analysts work in an office in a corporate setting. Frequently, they work alone (e.g., when conducting research or talking on the phone to clients). Some may work out of their homes. Much time is spent working on a computer, doing research and compiling data.
Do financial analysts need programming skills? ›
Experience with data analysis tools and techniques. Familiarity with business valuation methods. Accounting and financial literacy skills. Knowledge of programming languages and relational databases.
How do I prepare for financial analyst? ›
Tips for becoming a financial analyst
- Take a course. Bolster your knowledge of a particular skill by taking a course. ...
- Intern. Apply for an internship with a company that matches your industry interest. ...
- Look for entry-level positions. ...
- Prepare for your interviews.
The ebb and flow of an analyst's daily activities depend upon factors such as the earnings calendar, the senior analyst's marketing calendar, and whether or not there are research projects in progress. Generally speaking, a day in the life of a junior or senior analyst can be very labor-intensive.
What are the three financial requirements? ›
The income statement, balance sheet, and statement of cash flows are required financial statements.
What does a financial analyst do daily? ›
A Day in the Life of a Financial Analyst. Financial analysts gather information, assemble spreadsheets, write reports, and review all non-legal pertinent information about prospective deals. They examine the feasibility of a deal and prepare a plan of action based on financial analysis.
Can I be a financial analyst without a degree? ›
Financial Analyst Degree and Educational Requirements. There is no specific degree required for a career as a financial analyst, but finding a job will probably be easier if you have a bachelor's degree, and most companies require it. Nearly all financial analysts start with an internship or entry-level position.
Data Quality and Accuracy 📉
Challenge: Inaccurate, incomplete, or inconsistent data can lead to flawed financial analysis, poor decision-making, and potential regulatory issues. Solution: Establish rigorous data validation and reconciliation processes to ensure data integrity.
How stressful is a financial analyst? ›
Financial Analysts often navigate high-pressure environments, balancing tight deadlines with the need for meticulous accuracy in data analysis and forecasting. Stress levels can peak during quarterly earnings reports and fiscal year-ends.
Is financial analyst a stable job? ›
Careers in the field of finance generally provide a high level of job security. Because finance is an essential industry, the need for qualified Financial Analysts is a constant, regardless of market conditions.
Do you have to be good at math to be a financial analyst? ›
While the educational requirements needed to work in finance will ultimately depend on your employer, as well as your specialization, a strong background in math, data analysis, business, and financial literacy are core skills needed for this profession.
