How to become a financial analyst

Are you curious about how to turn raw data into informed decisions? This skill set is central to a career as a financial analyst, although the role is about more than just spreadsheets. It's about driving the financial strategies that power businesses and industries. Read on to learn more.

A financial analyst takes financial data, analyzes it and then uses the information to help provide businesses and individuals with financial advice and guidance.

These finance professionals essentially act as data detectives. They analyze economic trends and company performance to guide investment decisions. They also advise on whether to buy, hold or sell stocks, bonds and other assets.

Let’s explore further responsibilities that someone in this role may take on.

According to the U.S. Bureau of Labor Statistics (BLS), financial analysts work in securities, commodity contracts, professional services, company management, credit intermediation and insurance.

A financial analyst job description might outline the following responsibilities:

• Recommend individual investments and portfolios
• Analyze current and historical financial data
• Research economic and business trends
• Review financial statements to assess a company’s value
• Meet with company officials to evaluate future prospects
• Evaluate the management team’s effectiveness
• Draft detailed reports

While financial analysts and financial advisors both work in the financial sector and share some similar responsibilities (e.g., risk management and investment advice), their roles serve distinct purposes. Analysts focus more on financial data and market trends to guide investment decisions for clients.

Financial advisors, on the other hand, work closely with clients to create personalized financial plans and offer advice on budgeting, investments, retirement planning, estate planning and tax planning.

Financial investment analysis evaluates an organization’s stability, liquidity, solvency and profitability. It helps assess economic trends, shape financial policies, plan long-term business strategies and identify investment opportunities.

This process applies to both corporate and investment finance, where analysts examine key financial statements, including income statements, balance sheets and cash flow statements.

Analysts may use vertical analysis to express financial components as percentages of a baseline (e.g., total sales) or horizontal analysis to compare financial results over different years.

Professionals in this field will likely have the following skills:

• Ability to analyze diverse data to identify profitable investment opportunities
• Ability to clearly convey recommendations to clients
• Proficiency in financial software to analyze data, track trends and create portfolios
• Strong decision-making and problem-solving
• Keen attention to detail
• Excellent mathematical and quantitative abilities
• Familiarity with spreadsheets, databases and financial modeling

Finance professionals interested in analysis can consider several career paths within two primary types of firms: buy-side and sell-side.

Buy-side analysts develop investment strategies for hedge funds, insurance companies, private equity firms, pension funds and nonprofits with large endowments. Sell-side analysts assist financial sales agents by providing advice to help them market stocks, bonds and other investment products.

These two categories include various roles. After college graduation, there’s a good chance you could work in a junior position under the supervision of a senior analyst. After gaining enough experience or completing graduate school, there are plenty of positions to pursue along your career path.

Financial risk analysts assess potential investment threats and devise strategies to manage uncertainty and minimize losses. They make investment decisions, such as diversifying portfolios with a mix of stocks, bonds and mutual funds. Plus, they provide recommendations to reduce risk.

Portfolio managers oversee their company’s investment portfolios to determine the mix of assets, industries and regions. They’re responsible for portfolio performance and must justify their strategies to stakeholders. Additionally, portfolio managers collaborate with other analysts to align investments with long-term goals while staying up to date with economic changes.

An investment analyst evaluates data (e.g., business valuations and investment programs) while addressing client and advisor inquiries about asset allocation, hedge funds, real estate and venture capital.

They also perform detailed valuation analyses (e.g., discounted cash flow and leveraged buyout models) to assess the worth of assets or businesses. Additionally, they develop financial models to predict outcomes and present these findings to clients. 

FP&A analysts assess company performance and the planning for future financial goals. They examine financial statements and investments to extract insights that drive budgeting and resource allocation. FP&A analysts collaborate with various departments to ensure accurate forecasting and prepare internal reports that guide executive decisions. 

As of May 2023, financial and investment analysts earned between $60,830 and $175,840, with a median wage of $99,010, according to BLS.

Salary ranges are not specific to students or graduates of University of Phoenix. Actual outcomes vary based on multiple factors, including prior work experience, geographic location and other factors specific to the individual. University of Phoenix does not guarantee employment, salary level or career advancement. BLS data is geographically based. Information for a specific state/city can be researched on the BLS website.

First, you would need a college education in finance, economics or a related field such as business or statistics. It typically takes four years to complete a bachelor’s degree if you attend college full time. You might take courses in financial data, risk analysis, financial accounting and more.

Some analyst jobs may require a master’s degree, especially at major banks or investment firms. Degrees in math, engineering or biology can also be valuable for industry-specific positions. 

Certain positions may require a FINRA license, particularly for roles involving the sale of financial products. The Financial Industry Regulatory Authority serves as the primary licensing body for the securities industry. However, these licenses require employer sponsorship. Therefore, you don’t typically need them before you’re hired.

To prepare for future opportunities, consider completing the Chartered Financial Analyst (CFA) certification program from the CFA Institute. To be eligible, you’ll need a bachelor’s degree, gain 4,000 hours of relevant experience and pass the required exams. The CFA designation takes three to four years to obtain.

Want to learn more skills for a career in finance? Consider developing your business acumen. This includes a strong knowledge of diverse business strategies, concepts and practices. It also involves keeping an ear to the ground on economic and industry trends.

Additionally, you’ll need to be adaptable to work in finance. This involves learning about emerging markets, technologies and investment opportunities. If you’re looking for advanced finance jobs, a bachelor’s degree may not suffice. Consider obtaining a master’s degree to deepen your financial knowledge.

Ready to take the first step toward becoming a financial analyst? University of Phoenix offers online business degree programs such as a Bachelor of Science in Finance and Technology that can give you relevant skills for this career path.

To learn more about obtaining a degree that can prepare you for a variety of finance careers, reach out to UOPX to request information.

*University of Phoenix does not specifically prepare for these specific certifications, licenses or programs.