How to Become a Financial Analyst: 4 Steps (2024)

If analyzing data trends and the performance of stocks and bonds to help businesses or individuals make investment decisions are appealing to you, a career as a financial analyst may be your calling.

TABLE OF CONTENTS:

• Required Skills to Become a Financial Analyst
• Financial Analyst Education
• Certifications for Financial Analysts
• Financial Analyst Career Paths
• US Financial Analyst Salary Ranges
• Financial Analyst Job Outlook in the US
• Steps to Become a Financial Analyst

What is a Financial Analyst?

A financial analyst is someone who interprets financial data and uses the results from their analysis to help businesses or organizations make decisions about investments. Those investments can be in many different areas such as:

• Stocks
• Bonds
• Real Estate
• Business Operations
• Franchise Performance

In their research, they usually combine multiple data sets to make predictions. For example, a financial analyst at an investment firm may combine economic variables like the unemployment rate and a company's growth potential to make predictions about buying or selling company stock.

Required Skills to Become a Financial Analyst

The skills required to become a financial analyst are broad and can depend on the industry your employer is in and the specific job duties for the role. Common skills needed to become a financial analyst include:

• Analysis skills
• Communication skills
• Financial modeling skills
• Knowledge of enterprise resource planning software like SAP
• Multitasking skills
• Understanding of financial law like the Sarbanes-Oxley Act

Financial Analyst Education

Financial analysts usually have a bachelor’s degree in accounting, finance, statistics, economics, business administration, or other related fields such as math, biology, or engineering. Some high-profile positions may require a master's degree.

Masters of Science Degree in Financial Analysis

Sometimes, financial analysts want to distinguish themselves with an advanced degree while pursuing the CFA charter. The College of Financial Planning has an Online Masters of Science in Financial Analysis program that is aligned to the learning outcomes of the CFA Institute’s CFA Program, which allows for students to earn an MSFA while simultaneously preparing for the CFA exam.

Certifications for Financial Analysts

If you don’t have the typical educational background of a financial analyst you could consider getting a certification to help demonstrate your knowledge and eagerness to work as a financial analyst.

The most common credential financial analysts pursue is the CFA designation. The CFA designation is one of the highest distinctions in the investment management profession. It is given to those that finish the CFA Program and meet the work experience requirements.

How to become a CFA Charerholder »

Other common certifications amongst financial analysts include:

• Series 7 exam
• Series 63 exam
• The Securities Industry Essentials exam

Financial Analyst Career Paths

There are a few different directions you can take in a financial analyst career, including a buy-side analyst or a sell-side analyst.

Buy-side analysts work for hedge funds or insurance companies to help businesses with their investment strategies. Sell-side analysts advise financial service sales agents who sell stocks, bonds, and other investments.

Financial analysts may also work for local and regional banks, real estate investment brokerages, and tech companies.

Obtaining a master’s of business administration (MBA) with a finance emphasis is another common route for financial analysts. You may find that many finance employers require a master’s degree for permanent and advanced positions. Getting your MBA will make you more attractive to employers and allow you more mobility in your career.

Sell-Side vs Buy-Side: Key Differences To Know »

Alternative Career Paths For Those Interested in Becoming a Financial Analyst

For those that are interested in learning about other roles in the financial industry that use similar skills consider investigating stock equity analysts and investment banking analysts.

Stock Equity Analyst

Stock analysts (often referred to as equity analysts) work in both buy-side and sell-side firms producing research reports, projections, and recommendations about stocks and companies.

How to become a stock equity analyst »

Investment Banking Analysts

An investment banking analyst evaluates and researches investment opportunities with the aim of finding the investment that best meets the goals of their corporate clients. Investment banking analysts assess opportunities and recommend investments based on client needs and goals. They are usually part of an investment team and are likely to report to an investment banker who will ultimately guide clients to their final decision.

How to become an investment banking analyst »

US Financial Analyst Salary Ranges

The median salary for a financial analyst in the US is $83,660 USD annually, which is $40.22 per hour. The highest-paid financial analysts can earn $112,460 while the lowest-paid financial analysts can earn $63,670 annually according to the U.S. Bureau of Labor Statistics.

Financial Analyst Job Outlook in the US

The job outlook for financial analysts in the US is positive. According to the U.S. Bureau of Labor Statistics, the number of individuals employed as financial analysts is projected to grow 6 percent from 2020 to 2030 (492,100 vs 523,400 positions).

Over 40,000 new positions are projected to open up each year on average. It is expected that these open positions will be created to support new financial products from big data and tech companies. They will also help companies conduct analyses on new investment opportunities from emerging markets.

Why Become a Financial Analyst?

Becoming a financial analyst can give you a high-paying salary with the ability to earn bonuses and share-based compensation. Financial analysts have a median annual salary of $83,660, far above the median annual salary of a full-time worker in the US which is just over $50,000 according to the U.S. Bureau of Labor Statistics.

The position is also popular with people interested in big data and seeing a direct business impact from their decisions.

Steps to Becoming a Financial Analyst

Here are the four big steps we recommend you take to successfully become a financial analyst.

Step 1:Earn a Bachelor’s Degree

If you are currently enrolled in college and working toward your bachelor’s degree, you are already on your way to a financial analyst career. Most practicing financial analysts pursued a finance-related major like accounting, statistics, or economics; however, that is not necessarily a prerequisite.

Other math-heavy fields like engineering and physics are not uncommon backgrounds among financial analysts. It is recommended that you take courses in business, economics, accounting, and math in your undergraduate program, as they will be necessary for this career.

Step 2: Complete an Internship

While this is not mandatory, it is strongly encouraged that you pursue a financial analyst internship. This is especially true if you decide to pursue a credential like the CFA. An internship that qualifies as relevant work experience will count towards the 4,000-hour work experience requirement for the CFA charter.

Completing an internship in the finance industry will help you get a realistic picture of the career and understand the type of work you can expect on a day-to-day basis in this field. Internships also give you an opportunity to network with existing financial analysts and potentially find a mentor. Some of the relationships you form as an intern will help you throughout your career.

An internship will also help you build your resume and provide experiences you can draw on for job interviews. Most employers prefer to hire people with experience, even for entry-level jobs. An internship also allows you to demonstrate your active interest in becoming a financial analyst and build experience.

Step 3: Find a Job

Once you graduate with a bachelor’s degree in a relevant field, you can pursue job openings for titles like a junior financial analyst or entry-level financial analyst. Positions like these are often under the guidance of a senior analyst who will help show you the ropes of the industry.

In these roles, you will encounter tasks like analyzing income statements, maintaining files, processing financial statements for clients, and analyzing plans and forecasts. While junior analysts could potentially advance, progression often requires either a certification or a master’s degree eventually.

Step 4:Get Certified/Licensed

If you want to stay in the financial analyst field, many employers will require you to get the CFA charter for senior-level positions. The CFA charter is the most prestigious designation a financial analyst can obtain. The charter program requires you to pass three rigorous exams:

1. CFA Level I
2. CFA Level II
3. CFA Level III

It is recommended that you study at least 300 hours for each of the exams, so pursuing the CFA charter is not something to be taken lightly. However, it will qualify you for many advanced financial analyst roles.

In addition to passing the exams, you will also need 4,000 hours of relevant experience for earning the charter. Getting experience prior to beginning the CFA Program will ensure you meet the experience requirement by the time you pass Level III.

What Kind of Job Can You Get After Passing the Level I CFA Exam? »

Depending on your role, some employers may also require you to get licensing from the Financial Industry Regulatory Authority (FINRA). This type of licensure generally requires sponsorship from your employer, so it is best to start a job first and find out what they require.