How to become a financial analyst

With a median pay of $81,410 per year, and $100,790 for analysts working in securities and commodity contracts, a financial analyst career is among the most lucrative paths in the financial services sector. A 2022 LinkedIn study also named financial planning and analysis the 13th fastest growing career in the U.S.

Financial analysts are divided into “buy-side” and “sell-side” analysts. Buy-side analysts are employed by a variety of organizations, translating long-term corporate strategy into actionable business objectives. Sell-side analysts are focused on forecasting firms’ financial results for the benefit of the brokerages or other clients that employ them.

What do financial analysts do on a daily basis?

Financial analysts sift through data to evaluate outcomes, identify investment opportunities, and produce financial forecasts, helping executives and clients make informed and data-driven business decisions.

Financial analysts:

• analyze financial statements
• track financial performance
• produce revenue and expenditure forecasts
• undertake capital structure modeling

Additionally, financial analysts may be required to collate market trends and company data to identify variances and their causes. Other general duties can include:

• researching market trends
• performing risk and cost analyses
• tracking operational metrics
• developing reporting tools and dashboards
• creating financial analysis processes and policies
• data mining, valuation computation, and portfolio creation

Financial analyst vs accountant

Both financial analysts and accountants deal in financial information, but they do so for different purposes and communicate this information to different audiences.

Accountants are primarily concerned with a company’s day-to-day financial data and the finer details thereof. Certified Public Accountants in particular are focused on reviewing financial documents for accuracy and completeness before disclosure to the public. Private accounting, which focuses on internal documentation, budget planning, and fiscal performance evaluation, has more in common with FP&A.

However, accounting experience and/or education can be useful for a financial analysis career. “Having an accounting background was very helpful for me when first entering the finance industry,” says Philip H. Weiss, CFA, CPA, and founder of Apprise Wealth Management. “Having passed the CPA exam went a long way in preparing me for the CFA process. I also had a much deeper understanding of cash flow and balance sheets in comparison to my non-CPA peers.”

» Read: Guide to the CPA exam

Financial analysts focus on historical and current market trends to determine prospects and an organization’s future position. They can be thought of as more big-picture thinkers, examining micro and macroeconomic factors as well as accounting information to help management and clients make investment and other business decisions.

How long does it take to become a financial analyst?

The minimum requirement for entering the occupation is a bachelor’s degree, which takes 4 years to earn.

Earning additional qualifications such as the Series 7 or Series 63 license or the Chartered Financial Analyst (CFA) designation can put you a step ahead of the competition but will also require additional time (several years).

The steps to becoming a financial analyst are deceptively simple – earn a bachelor’s degree, find a job, and work your way up. In reality, few fields are as competitive and it’s important to keep that in mind as you set out on your financial analyst career path.

Step 1: Earn a bachelor’s degree

Majoring in accounting, finance, or economics, or are among the best options for an aspiring financial analyst, according to Weiss.

Management, statistics, and math are other good choices. Completing an internship during your studies is an excellent way to gain practical experience and network with those already employed in the industry. Finance internships are extremely competitive, but frequently lead to employment after graduation.

» Read: Scholarships for business majors

Step 2: Get professional experience

The average age of salaried finance interns in the U.S. is 43 – meaning finance internships are not just for recent college grads with little professional experience but are instead one of the key steps to landing a job in the field. Approach finding a salaried internship the same way you do a job hunt, and don’t be discouraged if you don’t land the first internship you apply for.

» Read: How to create a standout resume

Step 3: Network!

Good old-fashioned networking will still get you a long way in the business and finance world. One important way to network is by leveraging your alumni network. Attend alumni networking events organized by your school, but also consider reaching out directly to alumni employed at companies you are interested in. Additionally, attend as many networking and recruiting events as you can manage to build a broader professional network.

Step 4: Earn an FP&A certificate (optional)

Some financial analyst positions require licensing by FINRA, an independent regulator of security and broker firms in the U.S. For instance, financial analysts in the securities sector must be a General Securities Representative registered by FINRA in order to sell stocks and bonds, variable annuities, municipal bonds, mortgage obligations, and more.

Licensure requirements include passing the Securities Industry Essentials (SIE) exam and the Series 7, also known as the GS exam. To be eligible, candidates need to be associated with and sponsored by a FINRA member firm or another self-regulatory organization (SRO) member firm.

What are the best finance certifications?

Many finance certifications are non-mandatory and it can be challenging to sift through all the options and decide which FP&A certificate is right for you.

Perhaps the best known finance certification is the Chartered Financial Analyst (CFA) designation (it has been around since 1963!) Many employers prefer hiring finance professionals who have earned the designation, particularly for security analyst and asset manager roles (less so for venture capital, investment banking, or private equity).

“You are likely going to need something more than just an undergraduate degree,” says Weiss. “I consider the CPA, CFA, and CFP certifications to be the gold standard. I would only pursue other certifications if they fit your particular niche, and rarely as a replacement for one of those key three.”

Other options include:

• Certified Financial Planner (CFP)
• Certified Corporate FP&A Professional (FPAC)
• Financial Planning & Analysis Modeling Certification (FPAMC)
• Chartered Life Underwriter/Chartered Financial Consultant (CLU/ChFC)
• Chartered Alternative Investment Analyst (CAIA)
• Financial Risk Manager (FRM)

It is important to remember that no finance certification will in and of itself guarantee success. Ultimately, there is no getting around the fact that finance may be one of the most competitive professional fields out there.

Step 5: Earn a master’s degree (optional)

Financial analysts may choose to earn an MBA with a finance concentration or a master’s in finance to bolster their career growth and earning potential. Employer-sponsored MBAs are not uncommon, with many companies offering tuition reimbursement, scholarships, or other incentives to encourage employees advancing their education.

A graduate with a master’s in finance from a public university can expect to earn around $18,399 more than with a bachelor’s degree alone, and around $38,724 with an MBA vs bachelor’s in business.

Is FP&A a good career?

Financial planning and analysis is one of the most future-proof fields in finance. While other domains, such as financial control, are at risk of becoming automated, financial planning and analysis requires an in-depth, day-to-day business understanding that is extremely difficult to automate.

However, it’s not uncommon for junior analysts to work 50-70 hours per week, and sometimes up to 100 hours. At the same time, the earning potential of a financial analyst is impressive, as is the case with most finance careers. These are 2 key factors to carefully weigh when deciding if a financial analyst career is for you.

Whether you choose buy-side, sell-side, or independent financial analysis is another factor affecting work-life balance.

Buy-side vs sell-side analysts

The key difference between these 2 types of financial analysts is in who employs them and who they make investment recommendations to.

Buy-side analysts are employed by asset managers, banks, mutual funds, insurance companies, and other institutional investors. Their focus is on maximizing profit for their employer.

Sell-side analysts are usually employed by brokerage firms. They produce carefully researched reports on individual companies that are used by financial services sales agents and the firm’s other clients to make investment recommendations and decisions.

Independent analysts – fee-only or fee-based – are not employed by brokerage companies or institutional investors.

“Fee-only independent analysts charge a fee for a service,” says Weiss. “A fee-only firm is obligated in all cases to make recommendations as a fiduciary” (meaning prioritizing their clients’ best interests).

“A fee-based analyst can sell financial products as a broker and earn a commission,” says Weiss, although not from the same pool of investments they manage for a particular client.

Explore detailed finance analyst salary and job demand data below to learn more.

Types of financial analysts

We’ve explored the field broadly, but what career specializations can you pursue as a financial analyst? Financial analysts can work in various settings, including investment, local, or regional banks, brokerage firms, insurance companies, and data-driven companies.

Final thoughts

Financial planning and analysis experts help executive teams make better-informed decisions about future priorities. They drive company growth by forecasting and evaluating financial performance for the next quarter, year, or years. Imagine the impact that businesses can have with financial projection modeling, scenario analyses, and models that help decide where to make key investments.

Ready to start on the FP&A career path? Explore our finance and business college rankings to take the first step.