How to Become a Financial Analyst: Career Path and Job Description

Start your career path to becoming a certified financial analyst today. Learn about the steps, classes and educational options you will need to become a successful financial specialist. The team at University HQ strives to provide accurate and trustworthy rankings that highlight the best programs for finance.

What is a Financial Analyst?

If you are fascinated by data and how it fits in with certain industries, and you have an interest in finance, then a career as a financial analyst could be a good fit for you. Combining a financial education with industry knowledge can allow you to help organizations with business needs. Businesses in all industries need people who can help them decipher financial and industry trends so they can make sound business decisions. There is a market for people who can create and explain financial statements.

Whether you want to become an investment banker and work on Wall St., help real estate investment firms find the right properties in which to invest, or help firms figure out the best way to finance new projects; being a financial analyst can be a rewarding career. You will have to attain a formal education and, depending on your career goals, you may need to sit for several exams, but in the end, if you want to help businesses wisely invest their money, this is a great career for you.

A financial analyst uses analysis of financial data for a variety of reasons. A business that is considering investing in another business needs an analysis of the business to decide if it’s a good investment. Organizations that hold investments need someone to tell them which investments to keep, which ones to drop, and suggestions for new investments. A financial analyst provides this information.

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Steps to Take to Achieve This Career

The steps to becoming a financial analyst are clear and there are several avenues you can explore. The need for a formal education cannot be ignored, the market simply doesn’t allow it. However, there is latitude in the degree in which you receive your education. For example, you are not automatically tied to a degree in business to become a financial analyst. All industries need people who understand the business side as well as the industry itself to help them make financial planning decisions. If you can combine business acumen with in-depth understanding of your chosen industry, there is an financial analyst job out there for you.

Step 1: Start Your Degree
Step 2: Declare a Financial Analyst-Friendly Major
Step 3: Complete Your Degree
Step 4: Attain an MBA or SIE
Step 5: Take the Series 7 Exam

Step 1: Start Your Degree

A bachelor's degree in finance is a requirement to become a financial analyst. The market is crowded and competition for jobs is high, so someone without a bachelor's degree won’t have much of a chance of getting hired. The more prestigious the college, the better, especially if you are focused on working on Wall St. If you are going to a school with a less prestigious bachelor's degree, be prepared to try and gain entrance into a highly ranked graduate program. As always, the school and the bachelor's degree program need to be accredited, with regional accreditation for the school and specialized accreditation for the program.

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Step 2: Declare a Financial Analyst-Friendly Major

You need to decide what kind of financial analyst you want to be. Although we typically think of business when a financial analysis is concerned, most industries use financial analysts in their daily operations. The main key is being able to analyze financial data, so a major in economics, statistics, engineering, or another major that is data driven is a wise choice. The key is making sure you get the required data and financial analysis courses, preferably in an area you are interested in studying. You can pair this major with a business minor such as management or accounting if you want to round out the bachelor's degree.

Step 3: Complete Your Degree

This might seem like a given, but it’s important to finish your degree. First, as was mentioned earlier, competition for analyst jobs is high and a bachelor's degree is a requirement to get even the most basic entry-level position. Second, to advance in your career, specific tests are required, and they require candidates to hold degrees.

Step 4: Attain an MBA or SIE

Attain an MBA
This step isn’t required to attain an entry-level financial position, but those who have MBAs are almost always offered senior analyst positions instead of entry-level ones. Plus, the graduate degree makes you even more attractive if your undergraduate is from a less prestigious school or you majored in something other than business. You look more well-rounded with a larger worldview.
SIE
If you opted to not get your MBA, you can take the Security Industry Essentials exam. It is offered by the Financial Industry Regulatory Authority (FINRA). This exam tests your knowledge of financial rules and regulations handed down by the SEC and other regulatory agencies. Once you’ve passed the SIE and are working for an organization, you can prepare and take the Series 7 exam, which many organizations require their management team to take and pass.

Step 5: Take the Series 7 Exam

All financial analysts are required to take this exam. The catch is that you must be sponsored by a FINRA member firm or regulatory organization. Attaining employment because you have an MBA or you took and passed the SIE means you can take the exam, provided you are working for a FINRA member firm. Passing this exam allows you to obtain a license to buy and sell securities on the exchanges.
It is important to note that steps 4B and 5 are aimed primarily for those who want to work on Wall St. or for large banking institutions. For those who want to work within other industries, attaining an MBA is often sufficient.

What Does a Financial Analyst Do?

Financial analysts do exactly what their title implies, as well as other duties. A financial analyst looks at possible financial planning transactions and determines the best possible outcomes, the worst case scenarios, and the best course of action. If the transaction is deemed a good risk, the analyst will put together a detailed research report for managers to follow so they can achieve the best financial outcome while avoiding as much of the risk as possible. If the transaction is deemed too risky, the analyst will create a report detailing the specific risks and why the transaction might not be worth it.

Along with analyzing possible transactions, financial analysts work with clients and help them build financial portfolios that meet their investment needs. Some financial analysts teach other analyst or students of finance. On any given day a financial analyst might meet with a small customer, interact with other analysts or staff members, and present findings to the CEO of a company. At any point during the day, the financial analyst could be called upon to provide guidance on a variety of issues or financial matters, from understand financial reports to the risk of a certain stock.

Skills to Acquire

As a financial analyst, there are obvious skills you need, but also some other skills you might not have considered. Financial analysts are a blend of scientist, investigator, manager, and customer service representative. It’s not a job that allows you to sit in a corner cubicle and crunch data alone for eight hours.

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Communication skills. Most likely, you will present your findings to at least the management team, if not the entire board. Depending on the type of financial analyzing you do, you could also be required to meet with clients or members of the media. So, clear and well-honed communication skills are a must.
Interpersonal skills. To get the data you need to accurately complete financial analysis requires interacting with other in-house employees who have that data.
Analytical skills. This is a given, but the ability to look at data, calculate it, and decipher what it all means is required.
Financial statement compilation and explanation. Businesses are looking for people who can read and explain financial statements in laymen’s terms. Knowing how to compile, decipher, and explain these reports is a valuable skill.
Computer skills. Knowing how to use various types of software such as Excel and being familiar with SAP and Oracle are useful traits.
Problem-solving. Once you analyze financial data and know what it means, creating a solution or providing guidance will make you stand out from other financial analysts.

Alternative Paths

There really isn’t an alternative path to becoming a financial analyst. Some people might have started out at statisticians, accountants, or economists before they became financial analysts, but these people still have the education and background that a person who specifically set out to become a financial analyst possesses. The desire to examine and decipher data is the bedrock for all of these professions.

Financial Analyst Career & Salary

Where Might You Work?

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Many financial analysts have the goal of working on Wall St. If this appeals to you, then you have a couple of avenues to pursue:

Sell-side firms -
Financial analysts at this type of company help the organization determine which financial holdings (stocks, bonds, notes, etc.) should be kept, sold, or purchased. Also, whether those holdings should be increased or decreased in number.
Buy-side firms -
Financial analysts for investment houses that manage their own funds help the organization determine which stocks make the best investment based on a set of pre-determined parameters.
Investment Banks -
A financial analyst for investment banking will help the bank decide which IPOs, mergers, and acquisitions are best for the bank. As some mergers and acquisitions could be met with pushback, a bank wants to know if it’s worth the hassle.

A financial analyst can also embark on a satisfying career away from Wall St. A few options include:

Local and regional banks -
They have the same needs as the big banks, just on a smaller, more local scale.
Insurance companies
Real estate investment firms
Data-driven companies -
Basically, any company that makes major decisions about how to spend or invest money needs a financial analyst to tell them where to spend the money and how much to invest.

Potential Career Paths

The career path for a financial analyst is vertical, but there are offshoots as well. Basically, a financial analyst starts off in an entry-level analyst position and works his way up through management. But on the way, the analyst can pick up additional career options and interesting financial-based positions in a variety of fields.

Junior financial analyst -
These financial analysts are usually fresh out of college and working on an advanced degree, such as an MBA. This is an entry-level analyst position that works on smaller, less risky accounts and reports directly to a senior financial analyst.
Senior Financial Analyst –
This analyst has attained an MBA and Series 7 certification. They work on major accounts and manage junior financial analysts and report to either the Financial Manager or Chief Financial Officer, depending on the structure of the business.
Financial Manager –
They will manage junior analysts and senior financial analysts and report directly to the CFO. They review suggestions and forecasts of the financial analysts and add additional input and advice for presentation to senior management.
Finance Instructor –
Necessary to teach finance classes on the college level to help train new financial analysts.
Analyst training -
Corporate level training for junior analyst can be done by senior financial analysts or financial manager.
Corporate spokesperson -
Some companies let their financial analysts represent the organization to the public in interviews with the media.

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Financial Analyst Salaries

Occupation	Entry-Level	Mid-Career	Late-Career
Financial Analyst	$55,000	$69,000	$75,000
Fund Manager	$86,000	$96,000	$102,000
Funding Analyst	$32,000	$68,000	$49,000
Portfolio Analyst	$56,000	$74,000	$79,000
Portfolio Manager	$60,000	$88,000	$117,000
Risk Analyst	$59,000	$75,000	$77,000
Risk Manager	$64,000	$91,000	$99,000

**Salary info provided by PayScale

Career Outlook

According to the US Bureau of Labor Statistics, the need for financial analysts is going to increase between the years of 2014 to 2023. Reasons for the increase in demand will be an increase in financial institutions wanting financial analysts on staff as well as the retirement of older financial analysts.

Geographically, most of the demand will take place on the east and west coasts, as well as the larger states, such as Texas. There is also a demand for financial analysts in Ohio and Illinois. Both states have large financial districts and a number of corporate headquarters.

From an income outlook, smaller markets are paying better. In saturated states such as Texas and New York, the median income for a financial analyst is close to the national average of $60,000. However, in parts of the country where there is a shortage of financial managers, these positions can offer salaries close to $100,000. States that are offering higher salaries include Montana, Missouri, Wyoming, New Mexico, and Alaska.

Advancing From Here

A financial analyst can start in an entry-level position and rise to the top as the CEO. This can occur in any industry, from working in the financial district to engineering or real estate. You’ll want to stay abreast of all the regulations that exist in your industry so continuing education and refresher courses are a good idea. If you’re savvy and know how to analyze financial data and help organizations make solid business decisions that lead to profits, there will be room for you to advance.

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Frequently Asked Questions

What does a financial analyst do?

The main job of a financial analyst is to make financial recommendations based on research. A financial analyst will collect and evaluate data to make suggestions of how a client should invest their money. Financial analysts gather data, develop recommendations, generate reports, build excel models, make forecasts, analyze results, organize information, and make presentations.

What is a financial analyst job like?

The job of a financial analyst requires a significant amount of research and information gathering on and off the job. Another aspect of the job may include travel. Financial analysists may be required to visit companies and attend conferences.

What are typical credentials for financial analysts?

Most financial analyst jobs require a bachelor's degree or a master's degree in a related field. After you complete your education, you will also be required to take and pass the series 7 exam.

What skills should a financial analyst have?

A financial analyst should have analytical skills, mathematical skills, leadership skills, research skills, attention to detail, research skills, ease with technology, and communication and writing skills.

What types of companies hire financial analysts?

Insurance companies, law firms, banks, and other large companies all hire financial analysts.

Becoming a Financial Analyst Careers & Salary Outlook