Financial analysts typically work for banks, insurance companies, mutual or pension funds and securities firms. They evaluate investment opportunities,recommend individual or portfolio investments and meet with investors to explain recommendations. They also study a company’s financial statements, sales, expenses and tax rates to determine its value by projecting the company’s future earnings.
Financial analysts devote a considerable amount of time to studying economic and business trends, generally focusing on a specific industry, geographical region or type of product.
As investing has moved into the global marketplace, some financial analysts specialize in a particular country or region. In addition to understanding new regulations, policies and political and economic trends, those who specialize in foreign markets must also understand the language, culture, business environment and political conditions in the country or region.
Education Requirements
Many financial analyst positions require a bachelor’s degree that can be in a field such as accounting, business administration, economics, finance or statistics. Coursework should include general business classes with a heavy concentration on math, accounting and economics. Finance courses covering subjects such as options pricing, bond valuation and risk management are also important.
Many employers prefer – and some require — a master’s in business administration (MBA) or a master’s degree in finance. Financial analysts with a bachelor’s degree may start as a junior analyst and earn a master’s degree while working. This combination of work experience and education positions them to move into a higher level position.
SEC Registration
Financial analysts may be required to register with either the Securities and Exchange Commission (SEC) or the state securities agency where the business is located. Usually firms guide their analysts through the process. Typically analysts who manage assets topping $100 million need SEC registration while those who manage less register through the state.
Certification
Certifications can be essential to advance a career in finance and most financial analyst positions require certifications in addition to education and experience.
Most certification exams are administered by the Financial Industry Regulatory Authority (FINRA), the largest independent regulator for securities firms in the United States. FINRA also issues certifications based on exam results.
To take an exam and earn certification, candidates must meet education and experience requirements, as well as receive sponsorship from an FINRA member firm or a self-regulatory organization.
Experience and Skills Needed
Entry-level positions such as junior financial analysts usually require up to two years of experience, while higher level positions such as senior financial analysts require three to five years of financial planning and analysis experience.
In addition to experience, financial analysts must be adept at conducting research, often using statistical software and spreadsheets, to analyze financial data, identify trends and develop forecasts.
Since financial analysts often deal directly with clients and make presentations, well-developed communications skills are highly valuable, as are writing skills for reports and other documents detailing research findings and investment performance.
Getting Started on a Career as a Financial Analyst
A financial analyst career requires at least a bachelor’s degree in finance or a related field. Some employers prefer or require a master’s degree. Also, most positions in the field require additional certifications through exams after you meet education and experience requirements.
