CareerBuilder | May 4, 2016
If you have a head for numbers, you might want to pursue a career as a financial analyst. These professionals track stocks, bonds, equities, and other financial instruments and make recommendations based on their research. They often work for banks, investment houses, stock brokerages, insurance agencies, and similar institutions. If you prioritize education, you can create a lucrative career in this industry, particularly if you enjoy high-risk, high-reward situations.
Learning how to become a financial analyst is the first step toward building that future. Although you can take many routes to a job in financial analysis, you'll enjoy more success if you know what potential employers will look for and how they choose the best candidates for open positions.
A financial analyst job description will vary depending on the employer. For instance, insurance companies have different needs than an investment bank. Some financial analysts make recommendations for private, in-house funds. In other words, your buying and selling suggestions are based on your employer's potential gains from those activities, and may deal with stocks, bonds, or other securities. However, financial analysts can also work for publications and businesses that make public recommendations.
Outside of investments, some financial analysts make observations and recommendations for a company's solvency. By analyzing financial documents and the current market, the analyst can help the business make critical decisions in terms of merchandising, budgeting, and forecasting.
Some of your key responsibilities as an investment financial analyst may include:
Financial analysts who advise major corporations, nonprofits, and other entities have a different set of job responsibilities, which might involve:
Financial analysts bear tremendous responsibility for the financial performance of an investment or corporate firm. Consequently, this is a high-stress job that requires fast decision making and utmost confidence. Most financial analysts work in typical corporate offices. They often spend considerable time on the phone calling experts, other analysts, and prospective trading partners.
Some financial analysts also travel to meet with investment bankers, C-level executives, and other professionals in the industry. Many analysts live in major cities, such as New York City and Chicago, because they can find jobs in greater abundance. While some analysts telecommute or work freelancing positions, this is far less common.
Approximately one-third of financial analysts work more than 40 hours every week, according to the Bureau of Labor Statistics (BLS). Additionally, the BLS reports that many analysts must take their work home with them, often to research information and data that can help them on subsequent business days.
What Qualifications Are Required to Be a Financial Analyst?
A financial analyst needs a minimum of a bachelor's degree — preferably in a finance-related major, such as accounting, statistics, or economics. Analysts who want to enjoy greater opportunities for jobs and salaries might consider pursuing a master's degree in finance or a Master's of Business Administration (MBA). Advanced education makes these professionals more appealing to potential employers.
Additionally, many employers only hire financial analysts who have certifications from the Chartered Financial Analyst Institute. There are several programs designed to prepare analysts for the challenges they will face in the workplace. Analysts who plan to work in securities can also take their Series 7 and Series 63 exams to ensure they are prepared for any available position.
Many financial analysts find employment as soon as they graduate from an MBA or CFA program. According to Bloomberg, about 16 percent of managing directors at banks hold MBA degrees, while only 7 percent have CFA designations. The right educational path will depend on the job you intend to pursue.
However, you shouldn't need any experience outside of your education. As you gain traction in the industry, you'll enjoy increased salary potential, and you might get the chance to move up the corporate ladder, whether you have your eye on a coveted consultancy position or the C-suite.
According to Career Builder research, 25 percent of financial analysts have between six and 10 years of experience under their belts, while only 8 percent have between zero and two years of experience.
Financial analysts need a wide range of skill sets to compete effectively in this industry. They might include:
As of May 2015, according to the BLS, financial analysts earn a median annual salary of $80,310. However, the average salary potential varies depending on the specific job a financial analyst holds. For instance, those in securities, commodities, and related pursuits enjoy median wages of $94,450, while the median yearly salary for analysts in insurance falls to around $74,500.
Some financial analysts (such as those who work as fund managers) work largely by commission. They earn a portion of a fund's returns, which means their salaries depend on their ability to perform well in the market.
According to the BLS, the most successful financial analysts earned more than $160,000 in 2015, while the lowest-paid professionals pulled salaries of less than $50,000 per year.
For more info about how much you can expect to make as a financial analyst, check out these insights.
The BLS predicts that the financial analyst career will enjoy much faster growth than average, expanding by 12 percent between 2014 and 2024. The complexity in the industry combined with the demand for finance experts will fuel this growth as companies and investment firms create new positions for these professionals and expand their finance departments.
In total, the BLS estimates that the U.S. market will add more than 32,000 jobs for financial analysts over the next decade, and the current job availability falls at around 277,000. This represents significant opportunities for recent graduates or prospective analysts, as well as for seasoned professionals.
A financial analyst's future depends largely on his or her ambitions. Some analysts continue to work the same jobs for their entire careers, managing funds or selling trading opportunities on the sell-side. Others rise to the C-suite, becoming chief financial officers, chief operating officers, or controllers. They also sometimes manage finance departments in major corporations, directing activities like buying and selling assets, creating financial forecasts, and making strategic investments.
Financial analysts can also find career opportunities in consulting. This broadens their income opportunities and allows them to work for themselves rather than for other people. They might consult with firms on a project basis or maintain full-time commitments, depending on the situation.
A career as a financial analyst offers financial security, as well as an exciting opportunity to shape the finance industry. If you're thinking about this career for your future, obtain the necessary education and start searching for lucrative financial analyst jobs.