What Is Financial Analytics? Skills, Jobs, Salary, and More

Financial analytics is a type of financial management that focuses on varying types and methods of investments and ways to improve profitability for an organization or an individual. To work in financial analytics, you’ll need robust technical skills that include financial modeling, valuation, analysis, forecasting, and more.

You can find financial analytics jobs in insurance companies, business media, and private investment firms. Salary varies according to job titles, employers, education, experience, and certification.

What is financial analytics?

Financial analytics analyzes an organization's specific financial processes, functions, and data. It is used for investing, forecasting, strategic financial goal setting, and other financial decision-making to increase profitability. Financial analytics may also apply to individuals. Financial analytics professionals who work with individuals rather than companies may focus on portfolio management and guiding individuals in deciding what investments they should pursue for maximum profitability.

Professionals who work with organizations may spend more time studying economic trends related to the organization’s location or industry and may be affected by company policies or regulations. Investment decisions for organizations may include mergers, acquisitions, stocks, bonds, and other means of financial investment that increase an organization's profitability and valuation. 

Whether working with individuals or organizations, financial analytics provides targeted and strategic recommendations for investments that would be beneficial given past, current, and projected financial status.

Financial analytics vs. data analytics

Financial analytics works exclusively with economic data used in making investment decisions for a company. Conversely, the field of data analytics may work with varying types of financial data within a company for various purposes and not solely for investments.

Both fields analyze data for an organization, but for different reasons and in differing ways. Data analytics doesn’t always handle financial data exclusively, so someone in this field may work for companies other than those in financial analytics. Financial analytics professionals typically work in investment firms, banks, or related industries.

Technical skills 

Critical technical skills you will need when working in financial analytics include a range of accounting skills, such as bookkeeping, technical analysis, forecasting, and budgeting. Software and tools like Excel and other spreadsheets are also critical in record keeping and analysis. You may use various skills depending on where you work and the individual or organization's goals. More specific technical skills include: 

• Valuation analysis 

• Joint venture analysis 

• Internal rate of return 

• Return on investment capital 

• Year over year 

• Net present value 

• Financial modeling 

• Corporate finance 

• Mergers and acquisition analysis 

• Leveraged buyout method 

• Reading SEC filings

Why financial analytics is important

Financial analytics is important because it provides individuals or organizations with guidance on where, how, why, and in which amounts to invest money. Many financial analysts deal with investment opportunities that require a great deal of market research and proficiency in understanding the economic trends and environment while weighing the pros and cons of certain investments against an individual or organization’s financial status and objectives. It requires understanding on a deep level of all the factors that can affect investments and how to position a client properly within an investment decision. 

From research to execution, it’s the job of the financial analytics professional to understand the big picture and advise clients on how and when to take action on varying investment types. The financial stability and continuity of an organization or individual are at stake in many cases, so financial analytics is critically important to ensure individuals or organizations make the most intelligent financial decisions given the circumstances.

Working in financial analytics

Individuals in financial analytics may work for an individual or an organization under different job titles, such as fund manager, portfolio manager, financial risk specialist, securities analyst, investment analyst, or ratings analyst. These job titles work within three broad career categories: sell-side, buy-side, or investment banks.

Those who work for the buy-side are individuals who work with private equity firms, insurance companies, or related organizations, developing investment strategies. Professionals working for the sell-side advise other financial services sales agents who sell investments like stocks and bonds and make predictions about when to buy, sell, or hold stocks. Financial analysts who work for investment banks focus on mergers and acquisitions, assessing the potential success of such decisions and making decisions based on many economic factors.

Job outlook

The US Bureau of Labor Statistics projects a 9 percent job growth for careers in financial analytics, with an estimated 32,000 new jobs added each year within this decade [1]. A few reasons for this projected job growth include an increasingly growing global market, changes in the economic landscape, and data and technological innovations and improvements.

Average salary

The average salary for financial analytics professionals is $91,580 annually, according to the US Bureau of Labor Statistics [2]. However, this is an average estimate for all job titles that fall under the title of financial analytics. As a result, you may find a wide salary range when looking at all job titles in this financial field. Junior-level positions up to senior-level positions are in financial analytics. Most senior-level positions require at least ten years of professional experience. You may also notice that factors like your education, professional experience, and certification status affect your average salary in financial analytics.

Take, for example, the difference between the job of a portfolio manager and a securities analyst. A portfolio manager earns an average salary of $100,091 annually [3], working with clients to manage investment accounts. A securities analyst earns an average of $67,124 a year [4] analyzing, researching, and reporting on market trends, drawing on those insights to create reports to use for investment decision-making. Securities analysts work specifically in securities, unlike portfolio managers, that may handle many different types of investments. Both jobs require at least a bachelor’s degree, but a master’s degree is preferred. While requirements are similar, salaries differ based on job title, duties, and possible employer.

Degree options in financial analytics

Most careers in financial analytics require at least a bachelor’s degree in finance, business, or a related field, with a preference for a graduate degree in many cases. Certifications are often required and highly recommended, particularly if you want to move into more senior-level positions. Chartered Financial Analyst (CFA) certification is considered the gold standard in this profession.

Bachelor’s degrees

All careers in financial analytics will require at least a bachelor’s degree. The majors may vary, with the most common bachelor’s degrees in this field being finance, business, accounting, statistics, economics, or mathematics. You can find bachelor’s degree programs offered online, in person, or a mix of both. Some students will seek out schools known for their reputation in finance to get an advantage when graduating from their program of study. Internships are not always required but encouraged and beneficial if offered by the school.

Read more: What Is a Bachelor’s Degree? Requirements, Costs, and More

Graduate Degrees

It’s not uncommon to see employers requiring graduate degrees for positions in financial analytics. Individuals and organizations trust these financial professionals with their financial future, so a graduate degree is a good idea if you want to pursue this field as a long-term career. Most financial analysts and related jobs earn a Master of Financial Analytics (MFA) or Master of Business Administration (MBA) degree.

Read more: How Long Does a Master’s Degree Take?

PhD options

A doctoral degree in finance can benefit anyone who wants to pursue a career as a researcher or educator in financial analytics. PhDs in finance focus on economics and devising research-based methods for financial analytics. Online and in-person finance doctoral degree programs are available. Some standard PhD options for this field include a PhD in financial planning and financial management. 

Read more: How Long Does It Take to Get a PhD?

Certifications

The most common and desired certification in the field of financial analytics is the Chartered Financial Analyst, or CFA, which the CFA Institute offers. Referred to as the CFA charter, this accolade is achieved by enrolling in the CFA program and passing the three-part exam.  You will need to meet educational and experiential requirements to enroll and be eligible for the exam. CFA charter holders can qualify for senior and executive-level investment and financial analytics positions.

Next steps

Take the following steps and enter the evolving and fast-paced field of financial analytics. You can make a lifetime career and many opportunities for growth and promotion. You can take charge of your future today by enrolling in online courses that can help you learn about this financial field and provide training in crucial skills you will need to be a successful professional working in financial analytics. 

Consider the financial analytics course Applying Data Analytics in Finance offered on Coursera, which provides an overview of financial analytics, ideal for anyone just getting into the field. On Coursera, you can also find a Business and Financial Modeling Specialization, recommended for someone with experience in the field who wants more practice using spreadsheet models and other financial modeling techniques for investment analysis or other applications. Whatever the next steps may look like for you, get started today.