What Does a Financial Analyst Do?

A financial analyst helps make business or investment decisions for a company based on their industry knowledge and assessments of market trends, business news, and the company’s financial position. 

Financial analysts can work for financial companies like banks or investment companies or within businesses. Financial analysts commonly have academic backgrounds in finance, economics, accounting, or statistics.

What does a financial analyst do?

A financial analyst works with financial data to help organisations make business decisions. Though the specifics of what a financial analyst does can vary, a financial analyst is often expected to perform the following tasks:

• Build financial models to perform financial forecasts, predict business scenarios, and provide other data analysis to help make business decisions.

• Study economic and business trends to provide context around business decisions.

• Support budgeting efforts at organisations.

• Compile written reports and recommendations on financial statuses.

Financial analyst salary and job outlook

According to Glassdoor, the average salary for a financial analyst in India is ₹6,20,000 a year plus between ₹47,500 and ₹1,27,500 in additional compensation [1]. This amount can vary based on your location, education, and experience.

Types of Financial Analysts

Financial analysts are sometimes classified into buy-side analysts and sell-side analysts. 

• Buy-side analysts create investment strategies for companies that purchase securities and other assets for money management. These companies, commonly called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organisations. 

• Sell-side analysts assist and guide financial services sales agents who sell stocks, bonds, and other investments.

How to become a financial analyst

To become a financial analyst, you must have some basic qualifications. These can include both education and certifications.

Education: An entry-level financial analyst typically has a degree, often in marketing or finance and may also have a relevant certification. If you are looking for a broader scope of opportunity or a higher salary, getting a master’s degree or a PhD in finance may be helpful. 

Certification: You may pursue the NSE Certification in Financial Market (NCFM) credential, which the National Stock Exchange of India manages. Many companies consider NCFM certification as a minimum requirement. Even if you apply for a role with a company that doesn't require it, it can be a plus on your CV whilst providing concrete evidence of your knowledge. 

Financial analyst skills

Financial analysts generally have the following skills to perform well in their tasks:

Technical skills

• Accounting knowledge

• Analytical ability

• Financial literacy

• Data analysis

• Corporate finance knowledge

• Financial software knowledge 

• Budget management training

• Financial reporting skills

• Research skills

• Financial analysis skills

Workplace skills

• Communication

• Negotiation

• Influencing

• Critical thinking

• Flexibility

• Resilience

• Collaboration

• Problem-solving

• Dedication

• Relationship-management

Tips for becoming a financial analyst

Becoming a financial analyst starts with the proper education, certification, and experience. Consider these tips to start your first job as a financial analyst:

1. Take a course. Bolster your knowledge of a particular skill by taking a course. Consider the IBM Data Analyst Professional Certificate to sharpen your data analysis skills or Yale University’s Financial Markets course to improve your understanding of finance.

2. Intern. Apply for an internship with a company that matches your industry interest. Interning can give you experience, knowledge, and networking opportunities within the financial field to help you land a job afterwards. Look for internship opportunities on job sites like LinkedIn or Indeed.

3. Look for entry-level positions. Entry-level positions are geared toward analysts who are starting their careers. Look for the following titles in your job search that generally indicate an entry-level position: 

• Junior financial analyst

• Associate financial analyst

4. Prepare for your interviews. Be prepared for interviews by anticipating questions and having answers ready. Potential interview questions might include: 

• What is your experience with data analysis?

• What do you do to stay informed about this industry?

• How would you create a quarterly sales report?

• What would you do if you found an inconsistency in a financial report?

• What is EBITDA?

• Describe a time you accomplished something as a team.

Financial analyst career paths

These careers can be viable options for people who have skills similar to those needed for financial analysts: 

• Portfolio managers study the current state of the market and work with other financial professionals to determine the best investment opportunities and decisions for a company’s business portfolio. They also have a deep and active understanding of current business trends, allowing them to predict the market's future better. Portfolio managers use this knowledge to guide businesses and individuals' investment decisions.

• Fund managers work primarily with hedge funds or mutual funds. They stay informed on the overall goals of the fund as well as market trends to help make sound decisions.

• Rating analysts evaluate and assess the market and a company’s financial abilities and strategies to make educated recommendations on how a company should proceed.

• Risk analysts use business and financial knowledge to assist companies in determining the amount of risk in possible investment decisions. They make recommendations based on their analysis findings and help track and minimise a company’s financial loss. Risk analysts are often responsible for assessing and reporting asset losses, staying current on investment trends, and collecting and analysing data.

Senior roles

Financial analysts may go on to work in the following senior positions:

• Senior financial analysts may manage a group of analysts and oversee larger financial analysis projects to assist a company’s executive-level team.

• Finance managers are responsible for the financial health of a business. They develop plans for the long-term financial goals of their organisation. 

Executive-level positions

Significant experience in finance and management is usually necessary for people to advance to executive-level positions like director or chief financial officer.

• A finance director uses the experience they have gained in their financial analysis career to help oversee all financial activities of a company.

• The chief financial officer is the highest executive financial role and oversees the company’s business strategy, direction, and financial activities.

Getting started

Take the next step toward a career in finance with a course like Financial Markets from Yale University or Financial Analysis - Skills for Success from the University of Illinois at Urbana-Champaign.