How to Become a Financial Analyst [2021 Guide]

If you enjoy crunching numbers, solving problems and making data-driven predictions, a financial analyst career may be a good fit for you. Keep reading to learn common pathways on how to become a financial analyst.

Becoming a financial analyst generally requires a bachelor’s degree, though a master’s in finance or business administration may be beneficial when seeking advanced roles. Some employers may also require a specific professional license. In addition to educational requirements and hard skills, many soft skills are beneficial in a financial analyst career.

What Is a Financial Analyst?

When considering a career in finance, you might wonder what a financial analyst does. The primary duty of a financial analyst is to help clients make investment decisions. Financial analysts have a variety of responsibilities and often offer advice, forecasts, predictions, recommendations and warnings to their employers or clients based on the data they review. 

That’s the big picture, though. If you’re still wondering, “what is a financial analyst?,” let’s take a deeper look at the work of a financial analyst.. 

Some common job duties of financial analysts, according to the Bureau of Labor Statistics (BLS), include:

• Recommend investments. 
• Study financial data.
• Analyze economic and business trends.
• Develop written reports.
• Examine financial statements to determine a company’s value.
• Talk with company officials to better understand the company’s prospects.

It is important to note that the duties of junior and senior financial analysts may vary. 

Required Skills and Education to Become a Financial Analyst

Everyone’s career path is different, but there are some common skills that may be helpful to financial analysts, as noted by the Bureau of Labor Statistics:

• Mathematical thinking: Math skills are used to estimate the value of financial securities. 
• Analytical approach: Financial analysts synthesize a lot of information when searching for profitable investments. 
• Computer savviness: Financial analysts use various computer programs to analyze data and create forecasts.
• Communication: Financial analysts need to clearly communicate and explain their investment decisions in written and verbal presentations.
• Decision-making: Deciding whether to buy, sell or hold a security is one example of decision-making in this field.
• Attention to detail: Being detail-oriented enables financial analysts to spot issues when reviewing potential investments. 

Educational requirements

A bachelor’s degree is typically required for financial analysts, the BLS reports. It notes that degrees in math, finance, accounting, economics and statistics may be helpful. A bachelor’s degree may be enough to get you started in the financial sector, but a master’s in finance or business administration may help you advance into more senior roles, the BLS reports. 

If you want to focus on analytical skills, master’s in business analytics programs might be an option. There are also short-term financial analysis courses at fundamental and advanced levels and online fintech bootcamps. 

How to Get Certified

Depending on your role and employer, certification may be required or help your chances of advancement. Here are some possible certifications to pursue as a financial analyst: 

• Chartered Financial Analyst (CFA): This series of three exams certifies someone as a financial analyst. In addition to passing the exams, you must have a bachelor’s degree and four years of work experience to earn a CFA designation.

• Securities Industry Essentials (SIE): The SIE exam is offered through the Financial Industry Regulatory Authority (FINRA), the primary licensing organization for securities. This is an introductory-level test that measures your knowledge of basic security industry concepts and may help you distinguish yourself from peers, according to FINRA. The 75-question exam  takes up to one hour and 45 minutes.

• Series 7 – General Securities Representative Qualification Exam: The Series 7 exam determines your competency as an entry-level registered general securities representative. Passing the SIE and Series 7 qualifies you to become a general securities representative under FINRA. To be eligible for the Series 7 exam, candidates must be sponsored by a FINRA member firm or another relevant regulatory organization member.

• Series 63 – Uniform Securities Agent State Law Exam: The Series 63 exam is a North American Securities Administrators Association (NASAA) test administered by FINRA to qualify those who want to sell investment products. Most states require registered representatives to pass this exam.

FINRA certifications

There are several other types of FINRA certifications. The appropriate exams to take depend on your position and career prospects. 

• FINRA Representative-Level Exams: Series 6, Series 7, Series 22, Series 57, Series 79, Series 82, Series 86/87, Series 99.
• FINRA Principal-Level Exams: Series 4, Series 9/10, Series 14, Series 16, Series 23, Series 24, Series 26, Series 27, Series 28, Series 39.
• Municipal Securities Rulemaking Body Exams: Series 50, Series 51, Series 52, Series 53, Series 54.
• National Futures Association Exams: Series 3, Series 30, Series 31, Series 32, Series 34.
• NASAA Exams: Series 63, Series 65, Series 66.

Types of Financial Analyst Positions

Financial analysts may work in banks, securities firms, pension funds, mutual funds, insurance companies and other businesses. They mainly work in offices but may also travel to see clients. Below are some types of financial analysts, according to the BLS: 

• Portfolio managers: These financial analysts are responsible for choosing a mix of investments (products, industries, etc.) for a company’s investment portfolio. They’re also accountable for portfolio performance and explaining investment decisions. 
• Fund managers: In this position, you work with hedge funds or mutual funds, making buy and/or sell decisions based on market conditions.
• Ratings analysts: A ratings analyst determines a company or government’s ability to pay its debts (including bonds). 
• Risk analysts: In this type of financial analyst position, you measure investment risks, evaluate how to manage unpredictability and limit losses. This may be done by choosing a mix of stocks, bonds and mutual funds for a portfolio. 

There were approximately 487,800 financial analyst jobs in 2019, according to the Bureau of Labor Statistics. Here’s a breakdown of the top employers of financial analysts:

Buy-side vs. sell-side financial analysts

When it comes to financial analysts, there’s another important distinction to note. Some are buy-side analysts, and others are sell-side analysts. Buy-side analysts develop investment strategies for institutions that have significant funds to invest. Buy-side financial analysts help their employers make smart financial decisions. Another type of buy-side analyst is someone who makes recommendations for their employer’s third-party clients.

Sell-side analysts work for financial services agents who sell bonds, stocks and other investments. They analyze the quality of specific securities and track the performance of securities within specific portfolios to evaluate if it’s time to sell. A sell-side analyst may narrow their focus to a particular industry. 

Financial Analyst Job Outlook

Financial analyst jobs are expected to increase 5% from 2019 to 2029, the BLS projects. 

Here are some reasons the BLS notes for the expected increase in employment of financial analysts:

• Increasing types of financial products and need for geographic-specific expertise.
• Growth of overall economic activity.
• Growth of technology and big data enables financial analysts to conduct in-depth analysis for businesses.

Financial analyst salary

When choosing a career, you may want to consider your future income. According to the BLS, the median financial analyst salary was $81,590 in 2019. The highest-paid 10% of analysts earned more than $156,150, while the lowest 10% earned less than $47,230, the BLS reports.

Your salary may depend on your experience, geographic location and employer. For example, here are the 2019 median financial analyst salaries in the top industries in which they worked, according to the BLS:

Here are the metropolitan areas with the highest financial analyst salaries, based on 2018 annual mean wage data from the BLS:

The Bottom Line

Becoming a financial analyst takes time and consideration. Everyone’s career path is different, but here are some general steps to become a financial analyst:

1. Earn a bachelor’s degree.
2. Complete relevant certifications.
3. Gain experience.
4. Consider advanced education and certifications.

Earning a bachelor’s degree in math, finance, accounting, economics or a similar field is a great place to start. Depending on your career goals, completing certifications or additional education may assist with career advancement. As you gain on-the-job experience, you may better understand what kind of advanced education you’re interested in or if your employer requires certain certifications. With many types of financial analyst positions available, you may find your place in either the buy- or sell-side of this occupation. 

Last updated: November 2020