Financial Analyst Careers & Salary Outlook

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.

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Steps to Take


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 decisions. If you can combine business acumen with in-depth understanding of your chosen industry, there is an 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

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Step 1: Start Your Degree

A four-year degree is a requirement to become a financial analyst. The market is crowded and competition for jobs is high, so someone without a formal education 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 less prestigious four-year school, be prepared to try and gain entrance into a highly ranked graduate program. As always, the school and the program need to be accredited, with regional accreditation for the school and specialized accreditation for the program.

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 analysts in their daily operations. The main key is being able to analyze 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 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 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 four-year 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 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 can also meet with clients and help them build financial portfolios that meet their investment needs. Some 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. 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.

  • 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 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’ve analyzed the data and know what it means, creating a solution or providing guidance will make you stand out from other 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 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 -
    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 -
    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 an investment bank 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 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 and senior analysts and report directly to the CFO. They review suggestions and forecasts of the 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 analysts.
  • Analyst training -
    Corporate level training for junior analyst can be done by senior analysts or financial manager.
  • Corporate spokesperson -
    Some companies let their financial analysts represent the organization to the public in interviews with the media.

Financial Analyst Salaries


OccupationEntry-LevelMid-CareerLate-Career
Financial Analyst$57,600$66,700$73,600
Fund Manager$52,800$66,000$70,000
Funding Analyst$41,000$43,100--
Portfolio Analyst$59,800$70,300$80,400
Portfolio Manager$68,200$85,700$112,400
Risk Analyst$60,300$71,200$78,200
Risk Manager$72,200$87,500$93,800

**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 2024. Reasons for the increase in demand will be an increase in financial institutions wanting analysts on staff as well as the retirement of older 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 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.

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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 data and help organizations make solid business decisions that lead to profits, there will be room for you to advance.

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