Financial Analyst

According to the U.S. Department of Labor, Bureau of Labor Statistics, 2010-11 Occupational Outlook Handbook, “Financial analysts provide guidance to businesses and individuals making investment decisions. Financial analysts assess the performance of stocks, bonds, commodities, and other types of investments. Also called securities analysts and investment analysts, they work for banks, insurance companies, mutual and pension funds, securities firms, the business media, and other businesses, making investment decisions or recommendations. Financial analysts study company financial statements and analyze commodity prices, sales, costs, expenses, and tax rates to determine a company’s value by projecting its future earnings. They often meet with company officials to gain a better insight into the firm’s prospects and management.”

Following is a summary of additional information from the 2010-11 Occupational Outlook Handbook. Financial analysts can be either buy-side analysts or sell-sideanalysts. Buy-side analysts work for institutional investors such as mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations with large endowments. Sell-side analysts work for securities dealers such as banks or brokerage firms and sell stocks, bonds, and other investments. Business media also hire financial analysts to discuss investments in print, online, or via electronic media.


According to the Handbook, financial analysts usually specialize in a specific industry, region, or type of product. An example would be focusing on utilities, or Latin America, or the options market. As part of this specialty, the analyst studies new regulations, policies, and political and economic trends to see what impact they might have on the investments the analyst monitors. Risk analysts work to try to help investors limit potential losses and volatility. This can be done by diversification, currency futures, derivatives, short selling, or through other decisions. Portfolio managers, usually highly experienced, supervise a team to select the mix of products, industries, and regions to meet the company’s investment goals. Ratings analysts look at the ability of governments to repay debts like bonds.

The Handbook indicates that “[f]inancial analysts use spreadsheet and statistical software packages to analyze financial data, spot trends, create portfolios, and develop forecasts. Analysts also use the data they find to measure the financial risks associated with making a particular investment decision. On the basis of their results, they recommend whether to buy, hold, or sell particular investments. Financial analysts usually work in offices. They may work long hours, travel frequently to visit companies or potential investors, and face the pressure of deadlines. Much of their research must be done after office hours because their days are filled with telephone calls and meetings.”

The Handbook also indicates that a bachelor’s or graduate degree is required for financial analysts. These degrees are usually in fields such as finance, business, accounting, statistics, or economics. An accounting course like business analysis is particularly helpful to those working as financial analysts. The Financial Industry Regulatory Authority (FINRA) licenses members of the securities industry. Various licenses are required depending on the work being performed. Licensing requires sponsorship by the employer, so most individuals don’t have licenses before they are hired.

Financial analysts need strong mathematical, analytical, and problem-solving skills. Good oral and written communication skills are needed so that analysts can present complex financial concepts and strategies to investors. Other qualities needed include self-confidence, maturity, and the ability to work independently. As the Handbook states, “Financial analysts must be detail-oriented, motivated to seek out obscure information, and familiar with the workings of the economy, tax laws, and money markets. Although much of the software they use is proprietary, financial analysts must be comfortable working with spreadsheets and statistical packages.”

The employment outlook for financial analysts is good. According to the BLS, “employment of financial analysts is expected to grow for all occupations. However, keen competition will continue for these well-paid jobs, especially for new entrants. Median annual wages, excluding bonuses, of wage and salary financial analysts were $73,150 in May 2008, which is more than double the national median wage. The middle 50 percent earned between $54,930 and $99,100. The lowest 10 percent earned less than $43,440, and the highest 10 percent earned more than $141,070. Annual performance bonuses are quite common and can be a significant part of their total earnings.”