Financial Analyst Job Description

Financial Analysts perform a range of research tasks to improve their organization’s or client’s investment strategy and financial decision-making process. These professionals apply their analytic and mathematical background at either small or large organizations like insurance companies or investment banks. Financial Analysts generally focus on either credit markets or equity markets. This overview will explain more about what a Financial Analyst does, what they typically earn, and how to learn the skills required to land a job. 

What is a Financial Analyst?

Financial Analysts work closely with an organization’s financial data and statements to provide insights into how their clients or company should invest. To provide sound advice, these professionals study current market developments and trends and make financial models designed to forecast how their company will perform in the future. Some Financial Analysts review macroeconomic trends or adopt a more specific focus on certain industries or sectors. Regardless of their industry, Financial Analysts perform data-intensive tasks that typically involve mathematical or statistical analysis. Because of how valuable their contributions to their organization are, Financial Analysts are often hired by large corporations like securities firms, private equity groups, government agencies, venture capital firms, investment banks, or insurance companies.

Within the financial analytics field are Sell-Side Analysts and Buy-Side Analysts. Both conduct extensive research on financial data for their organization and create financial models based on it. Sell-Side Financial Analysts direct their efforts toward reporting on sub-sector and niche-sector financial data. Some Sell-Side Analysts use ratings analytics to classify company stock as “buy,” “hold,” or “sell.” Their predictions are valued by their organization because they can lead to new investor business. Buy-Side Financial Analysts provide a broader range of client services than Sell-Side Analysts. These professionals interpret the existing sell-side information and combine it with their own research to devise financial solutions for their organization. Sell-Side Analysts also spot negative outcomes that Investors should avoid.

The daily tasks of a Financial Analyst vary depending on their employer and industry focus. However, most share common core duties, such as:

• Researching industry-specific financial, economic, and business trends.
• Creating financial models for investors.
• Studying the organization’s financial statements.
• Recommending both single investments and investment collections.
• Translating financial information into engaging and accessible reports and presentations.
• Evaluating how investments like stocks and bonds perform.
• Communicating with clients.
• Studying current market conditions and the newest technological development.

Job Requirements

If you’re considering a career in financial analytics, the job requirements will likely depend on your industry and the specific position you are applying for. Depending on their specialization, Financial Analysts may elect to focus on corporate development, investment banking, financial planning and analysis, treasury, or equity. The field they choose will dictate the data and predictions they’ll work with, as well as their work environment. Most employers search for applicants with bachelor’s degrees in finance or a related field. In addition, it’s beneficial to have at least a year or two of experience working in sectors like investment banking or finance before applying for a position as a Financial Analyst.

Those interested in pursuing a career in financial analysis need to understand the jargon used in this field. Terms such as ROE, ROA, YoY, and EPS are just a few examples of the financial literacy you’ll have to acquire to be a successful Financial Analyst. In addition, familiarity with historical reports, statistical functions, databases, regression analysis, presenting, and reporting are other job requirements for Financial Analysts. Often, employers seek applicants with specific training in programs, languages, and software such as SAP, SQL, and QuickBooks, as well as Enterprise Resource Planning tools including SAP, Netsuite, or Sage. In addition, because Financial Analysts will likely need to make presentations to executives within their organization, it’s essential to have soft skills like public speaking training, clear communication, and persuasion. 

Read more about the job requirements for a Financial Analyst.

Job Responsibilities

Financial Analysts are responsible for many financial tasks within their organization. These responsibilities vary depending on their industry focus, the organization where they’re employed, and how senior their role is. The following are some of the daily tasks Financial Analysts complete for their company:

• Collect data: A Financial Analyst’s first task is gathering information about what they will analyze. The type of data they collect includes stock price details, historical financial reports, general ledger accounting data, macroeconomic or statistical information, quantitative data, and industry research. This information comes from internal databases as well as external sources like third-party providers like Capital IQ, Bloomberg, or the Securities and Exchange Commission. 

• Organize data: After the data is collected, it’s entered into a database such as Microsoft Excel. Then, it’s cleaned, organized, and formatted.

• Analyze financial information: Once the data is cleaned and organized, it can be analyzed. This process generally involves studying metrics and ratios such as net margins, year-over-year growth rates, earnings per share, fixed vs. variable costs, and return on equity. In addition, the Financial Analyst will search for industry trends and contrast their organization’s performance with other similar companies.

• Offer projections and forecasts: Making predictions about how an organization is expected to perform in the future requires applying a range of skills, such as bottom-up and top-down approaches, regression analysis, and year-over-year growth rates.

• Make recommendations: Once insights are found in the data, a Financial Analyst can formulate these as recommendations about how to help their organization operate more efficiently. These professionals may recommend how to grow revenue, cut costs, increase market share, or improve customer satisfaction. These recommendations are then presented to the CFO, CEO, or other top executives, such as the board of directors.

• Create Excel models: Financial modeling is a significant part of a Financial Analyst’s job, especially for those who work in equity research, investment banking, or investment banking. Financial models usually link three financial statements, then layer on advanced models like internal planning or discounted cash flow.

• Present findings: Financial Analysts use programs like PowerPoint to present their findings. These presentations often include graphs or charts that can be added to pitchbooks. 

• Write reports: Client information must be presented in a clear, accessible manner. This means that Financial Analysts will create internal reports or dashboards that present findings such as key performance indicators or contrasting the actual vs. budgeted results.

Skills

Although the specific skills you’ll need for financial analysis will likely depend on your industry focus and the requirements of your employer, some skills are common across financial industries and professions. The following are some of the most commonly sought-after hard and soft skills Financial Analysts need:

• A firm understanding of core financial principles, software, and programs.
• Time management and multitasking experience.
• A background in data analytics.
• Clear verbal and non-verbal communication skills for presenting data findings in an accessible and engaging manner. Financial Analysts also rely on effective communication techniques when talking to investors, drafting emails, and leaving phone messages. Additionally, these professionals benefit from interpersonal skills like the ability to interpret nonverbal cues at meetings, which is an asset when interacting with investors or colleagues.
• Strategic thinking and problem-solving knowledge. Those who work with financial analysis often need to solve financial questions or propose ways to deal with a company’s debt concerns. Finding creative solutions to organizational problems is a must for Financial Analysts.
• Financial reporting, forecasting, and modeling.
• Leadership training helps Financial Analysts effectively manage finance teams or departments. This can involve professional mentoring and facilitating collaboration.
• Market research experience.
• Microsoft Excel formulas, features, and functions for tasks like data query, data management, and dashboard reporting.
• Technical skills with bookkeeping or accounting software. Financial Analysts work with programs and tools like QuickBooks, SQL, and Hyperion.
• Variance analysis to evaluate the difference between actual and planned numbers
• Statistics and economics.
• Accounting skills, such as a background working with budgets, cost analysis and reduction, cash flow, ledgers, and bank statements.

Read more about what skills you need to become a Financial Analyst.

Why Do Businesses Need Financial Analysts?

Financial Analysts are involved with many activities that help an individual or an organization evaluate the effectiveness of investments, manage risk, and project future earnings. These professionals play a crucial role in their organizations. The following are some of the reasons why businesses need Financial Analysts:

• They locate strengths and weaknesses within an organization. This process entails spotting problems and providing viable solutions that allow a business to continue to profit from the practices that are helping it do well.

• Financial Analysts can improve operational efficiency. These professionals compare their organization’s data to that of similar companies. This can pinpoint categories in which spending is above average and propose ways to improve efficiency based on these findings.

• They provide forecasts. Working with information like past data or industry trends, Financial Analysts can provide their organization with an understanding of what is currently occurring, as well as how best to prepare for what is likely to happen in the future. Forecasting insights can help with hiring, buying supplies, and anticipating spells of increased demand.

• Financial Analysts are involved with pricing. Some organizations under or over-price services or products, which can result in lost revenue or overlooked valuation. These professionals are skilled at making pricing structures that can increase an organization’s profit margins.

• They help with bookkeeping. Financial Analysts often work with sales teams to adhere to accounting timelines. This can entail ensuring that invoices are made and sent on schedule, travel expenses are accounted for, and all necessary financial paperwork is submitted on time. 

• Financial Analysts ensure that their organization has a sound budget. It’s essential for an organization to have a feasible budget that accounts for all expenses and projected increases or decreases.

Where Do Financial Analysts Usually Work?

Financial Analysts are employed in many industries and serve in a range of capacities. These professionals are employed by businesses like insurance companies, banks, or pension funds. They offer guidance to both individuals and organizations about how to spend money and generate profit. This often involves evaluating how investments like bonds and stocks perform. Some Financial Analysts choose to move beyond buy-side and sell-side analytics into more specialized roles. Those with extensive financial experience may pursue senior-level positions or work at financial services companies as part of management teams. As they gain experience, some Financial Analysts may wish to branch out into other related career paths and work as Portfolio Managers or Fund Managers. Others choose to work for credit agencies, investment firms, or banks as Ratings Analysts, in which they evaluate company debt to rate the likelihood of them defaulting on investments. Some pursue careers as Research Analysts and provide their employer with financial models and forecasts.

Financial Analyst Salary and Job Outlook

Financial Analysts guide their organizations with financial decisions that can help them make a profit. According to the U.S. Bureau of Labor & Statistics, the median pay in 2021 for Financial Analysts was $96,000. Financial analytics is ranked as the 13th best business job currently available. This profession has a high level of upward mobility, with incentives such as raises and career advancement for qualified individuals. 

The job outlook for Financial Analysts from 2021-2031 projects a 9% growth rate, which is faster than the national average. Approximately 32,000 Financial Analyst job openings are expected each year throughout this decade. In part, this expansion is due to an increase in economic activity, as well as emerging industries that need Financial Analysts to help direct their growth. Globalization also contributes to this trend; as markets around the globe develop, many organizations seek Analysts to help them decide how best to expand and where to invest. This is why Financial Analysts with a background in cultural, political, or economic trends in a given geographical location are currently in-demand.

While the estimated growth in financial services is expected to lead to new job creation, the number of individuals who wish to enter this field is currently greater than the number of available jobs. Despite this projected growth in financial analytics, securing a position is still considered competitive. For this reason, pursuing a graduate degree or earning a certification can be a great way to distinguish yourself from other applicants on the job hunt.

Read more about Financial Analyst salaries and the job outlook for a Financial Analyst.

How Long Does it Take to Become a Financial Analyst?

Pursuing a career as a Financial Analyst is a time-consuming process. The time it takes to become a Financial Analyst depends on a number of factors, such as your industry focus, employer, and the skills you have acquired before studying. At a minimum, it takes most people four years to earn the minimum requirements to work in finance. This typically involves completing a bachelor’s degree in a field like accounting, business, mathematics, finance, economics, or statistics. 

In addition to undergraduate study, becoming a Financial Analyst requires work experience and real-world training. This allows aspiring Analysts to develop core financial skills that will be needed as they progress professionally. After completing an internship or working in an entry-level Financial Analyst position, some choose to apply for Chartered Financial Analyst (CFA) certification, a widely recognized Financial Analyst certification. Earning this qualification requires completing a bachelor’s degree, having at least four years of work experience, and passing three exams. 

Some financial analytics roles also require you to become licensed through FINRA, the Financial Industry Regulatory Authority. Because Financial Analysts must learn a range of business, analytical, technical, and soft skills, it can take between seven and nine years to be fully qualified for financial analytics positions. These individuals must have a sound knowledge of topics and skills such as working with financial statements and models, performing variance analysis, and collaborating with a range of internal and external stakeholders.

Financial Analyst vs. Business Analyst

A field closely related to financial analytics is business analytics. While both Financial Analysts and Business Analysts perform similar roles for their organizations, there are some key differences between these professions. Business Analysts are tasked with helping their organizations formulate efficient and effective business solutions. These professionals work across industries with clients, performing research on industry trends, analyzing business data, and ensuring that new procedures and policies are successfully implemented. On the other hand, Financial Analysts help businesses and individuals with their financial needs. This can involve advising them on investing, establishing viable budgets, and finding methods to cut costs and reduce waste. These individuals also work with clients to make financial plans to eliminate debt and increase earnings. Business Analysts work with data like trends to devise strategies, whereas Financial Analysts rely on economic and financial data to evaluate investments and expenses. In terms of certification, these fields also differ in that Business Analysts may elect to pursue the Certified Business Analysts Professional (CBAP) exam and Financial Analysts may choose to take the CFA exam.

Business Analysts tend to be more involved with management and organizational operations, whereas a Financial Analyst helps with investments. Business Analysts currently earn a higher average salary than Financial Analysts; Business Analysts earn approximately $85,000 a year, whereas Financial Analysts make about $74,000 annually.

Learn the Skills to Become a Financial Analyst at Noble Desktop

Noble Desktop, an educational provider located in New York City, offers a range of classes devoted to financial modeling and analysis. Financial Modeling Bootcamp is a hands-on, 18-hour course that teaches students fundamental financial concepts, such as corporate valuation, accounting, and finance. Participants in this small class create their own discounted cash flow using Microsoft Excel. Over three days, expert instructors also help students develop a comprehensive financial model for an actual company. As a prerequisite to this bootcamp, students should have intermediate Excel proficiency.

Noble also has a Financial Analyst Training Program that provides expert instruction on timely corporate and financial concepts, such as making a full valuation model. Those enrolled in this intensive program receive instruction on fundamental Excel skills, such as using shortcuts and PivotTables. Advanced Excel techniques are also covered in this 30-hour program, like Goal Seek and cash flow projection tools. All learners also receive instruction on creating a three-statement financial model for a public restaurant company.

In addition to the Financial Modeling Bootcamp and Financial Analyst Training Program, Noble Desktop also has in-person and live online financial modeling training courses. The

Excel Bootcamp offers 18 hours of instruction on core business Excel skills like working with VLOOKUP, INDEX, MATCH, and What-If Analysis for Goal Seek. FinTech courses are also available, like Algorithmic Trading with Python, Python for Data Science Bootcamp, and FinTech Bootcamp. This course provides students with hands-on training from expert instructors in FinTech skills like working with Python and SQL for data analysis, creating machine learning models, and working with different data types like integers, floats, and strings. All students have the option of a free course retake for up to one year, as well as one-on-one mentoring.

Key Takeaways

• Financial Analysts play an important role in helping their organization perform more efficiently, keep more accurate financial records, stay on budget, and spot internal strengths and weaknesses.
• The time it takes most individuals to become Financial Analysts is between four and nine years. A bachelor’s degree is typically required to enter this field, as is entry-level job experience.
• One field that’s closely related to financial analytics is business analytics. Business Analysts focus on organizational operations and management, and Financial Analysts typically work more with investments.
• You can receive comprehensive training to become a Financial Analyst through an in-person or live online course with Noble Desktop.