Financial analysts are the translators of modern business. They analyze investment opportunities, refine budgets, and build reports to help businesses make strategic decisions with their money. They also help companies navigate financial risks associated with shifting markets, operations, interest rates, and customer behaviors.
Businesses also rely on financial analysts to forecast financial trends. They study historical data, market dynamics, and key performance indicators to evaluate different scenarios. This information informs company decisions to revise budgets, invest in certain markets, and improve specific products.
Roles and Responsibilities of a Financial Analyst
A financial analyst plays an important role in supporting their employer’s investments. They consider market, industry, and customer data — and perform their own analyses — to determine how companies should best allocate funds.
The work of a financial analyst is critically important for a company’s financial health. They collect, study, and report on valuable information that allows companies to maximize returns on their investments. Analysts also identify potential risks, allowing their employers to address any weaknesses in product positioning, operations, or workforce management before financial loss.
Companies in virtually every major industry require some form of financial guidance, allowing financial analysts to work in a variety of different fields. Many work with investment firms, credit intermediation companies, and business management agencies. Others work internally with various professional and technical companies, serving as internal financial strategists.
Daily Tasks of a Financial Analyst
A financial analyst’s responsibilities can vary greatly on a day-to-day basis. On some days, particularly at the beginning of the fiscal year, they might spend more time analyzing potential new investment opportunities. But they also spend time reviewing previous investments, studying new market data, as well as auditing spend and return trends across an organization.
Here are a few of the specific responsibilities they might handle each day:
- Financial modeling: They use data from company operations and financial statements to build reports that inform future decisions. Stakeholders might use these models to better understand potential investments, emerging market trends, or market risks.
- Strategic planning: They help companies build long-term financial strategies based on competitor activity, market shifts, and new growth opportunities.
- Budget optimization: While budget creation and monitoring is often left to a budget analyst, financial analysts can provide useful insight to make financial plans even more effective.
- Portfolio management: They manage investment portfolios on behalf of their employer. This includes thorough research, risk-return profiles, and diversifying investments to ensure a well-balanced portfolio.
Financial analysts also contribute to decision-making processes shared across a company. For example, they contribute a number of valuable data points discussed in team settings. They translate raw data into visualizations that decision-makers can understand, evaluate, and act on. When these evaluations happen in an open environment, financial analysts are often present to answer questions and help non-financial employees understand the results.
What Do You Need To Become a Financial Analyst?
Aspiring analysts need a combination of education, skill, and experience before they qualify for careers in finance. Depending on your preferred employer, you might need an undergraduate degree, post-degree certifications, and skills like communication, problem-solving, and data analysis.
Education Needed to Become a Financial Analyst
The right education helps prepare aspiring financial analysts for meaningful careers. Typically, a financial analyst will need to obtain at least an undergraduate degree in finance, economics, or a related field like statistics.
To further improve the strength of their resume, many financial analysts go on to obtain a Master of Global Business Administration degree (GBA). This provides leadership-level skills in business development, international commerce, and economic policy. It also helps financial analysts navigate emerging market trends and the latest financial compliance regulations.
Postgraduate Degree and Certifications
Additional education helps to further separate you from other financial analysts during the hiring process. An advanced degree signifies your drive to improve in your field. The aforementioned online GBA helps students master international corporate finance and international business strategy.
Certification programs teach in-demand skills that today’s employers are looking for — often on an accelerated schedule. A Certified Financial Planner (CFP) certification, for example, reinforces skills like investment, financial planning, and risk mitigation. If you plan to work with government employers, a Certified Government Financial Planner certification (CGFM) provides additional skills necessary for federal employment. These certification programs help separate you from other applicants during the hiring process.
Key Skills
Financial analysts depend on a combination of technical and soft skills to perform their responsibilities.
These skills can include:
- Data analysis: Studying large data sets to examine customer activity, market trends, website analytics, and other information that informs investments.
- Critical thinking: Making decisions based on factual data to solve complicated financial challenges and determine the best ways for companies to invest funds.
- Attention to detail: Carefully reviewing data, reports, and all calculations to avoid errors and present factual information to company decision-makers.
- Communication: Explaining financial information clearly and persuasively through written and verbal reports, for both financial and non-financial employees.
These and other skills allow financial analysts to work effectively with their colleagues, sharing ideas and integrating feedback to protect company finances.
How To Become a Financial Analyst
Becoming a financial analyst takes a few steps. You’ll need to earn your undergraduate degree, complete any required certification programs, and develop valuable technical skills. Participating in internships, networking in your industry, and building a strong resume can all help you land a career in financial analysis.
Steps To Start a Career
Starting a career as a financial analyst requires education and a thorough job search. After you obtain a relevant undergraduate degree — and potentially a graduate degree — it’s time to find relevant experience. In many cases, you can gain this experience through an internship. Financial institutions, investment firms, and corporate finance departments all offer internships to students looking to build futures in financial analysis.
Be sure to add relevant skills, certifications, and any hands-on experience to your resume before you apply for a position. This helps separate your profile from other applicants.
Networking is also an effective strategy when starting your career. Attend finance networking events, connect with peers in person and online, and get in touch with your university’s alumni network.
Career Progression and Opportunities
A financial analyst career can also lead to other meaningful roles in international business.
Here are some further career paths in analysis:
- Investment analyst: Alongside other leadership roles in finance, investment analysts evaluate changing markets and returns to determine the best ways for organizations to invest their funds.
- Risk analyst: Professionals in this role identify, rate, and track potential risks organizations face.
- Financial consultant: One of the key business consulting roles, financial consultants provide financial advice to organizations of all sizes, in all industries. They help companies adjust strategies and cut costs to improve cash flow and return on investment.
The world of finance changes over time. It’s important to stay up to date as customer expectations, market trends, and global economies evolve. Continued education qualifies financial analysts to provide employers with the most up-to-date information. It can also help you advance your career, particularly for employers who look for financial analysts with the latest knowledge and certifications.