What Does a Financial Analyst Do? (Duties and Career Advice)

By Indeed Editorial Team

Published 12 October 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

If you are interested in a career in finance, a financial analyst position may be a great fit for you. This challenging career offers candidates the ability to work in a variety of different industries and has a high earning potential. Learning about the different responsibilities and requirements for this role is an important step in evaluating whether it might be a good fit for you. In this article, we answer, "What does a financial analyst do?" and discuss what skills and qualifications you need to become one.

What does a financial analyst do?

A financial analyst is a finance professional who helps companies make business decisions based on factors like market trends, financial performance and predicted outcomes of transactions. Financial analysts research microeconomic and macroeconomic conditions to make predictions about businesses, economic sectors and industries. They also make recommendations about the course of action companies may take to attain specific results.

Financial analysts create financial models to predict the outcome of business decisions. Their primary responsibilities include:

  • meeting with management and executives to gain better insight into an organisation's prospects

  • studying a company's financial statements to determine its value

  • analysing past results, identifying trends and making recommendations for improvements

  • reporting on financial performance and creating financial models

  • evaluating an organisation's financial performance by comparing actual results with plans and forecasts

  • recommending investments and modifications to client portfolios

  • performing market research, data mining, estimations and risk calculations

  • creating forecasts and models to maintain a financial analysis foundation that can be retrofitted to a variety of scenarios

  • monitoring a company's investments and economic situation

Skills for financial analysts

If you are interested in becoming a financial analyst, consider developing the following skills:

  • Research skills: Analysts perform extensive research as part of their job role and may process large volumes of data to generate useful inferences. They benefit greatly from developing the aptitude and skills required to perform their research-related duties.

  • Attention to detail: In this line of work, minor calculation and accounting errors can have huge financial implications for businesses. Strong attention to detail can enable analysts to produce accurate results and avoid discrepancies.

  • Analytical skills: Since data analysis lies at the core of a financial analyst's work, they may benefit greatly from developing their analytical skills. They often develop and execute complex methodologies that enable them to generate useful pointers from the financial data and problem statements that their clients provide.

  • Mathematical skills: Mathematical calculations and statistical approaches are central to the work of a financial analyst. Although the complexity of their tasks may vary depending on their specific role, financial analysts benefit from having good mathematical skills.

  • Communication skills: Financial analysts are specialists who communicate and liaise with a variety of people who may not have good financial literacy. Their communication skills enable them to convey complex ideas in terms that can be understood by everyone.

  • Interpersonal skills: Analysts may work with a wide variety of professionals as part of their job. Using their interpersonal skills, they make long-standing professional relationships over the course of their career.

Related: Business Analyst Skills: Definition and Examples

Types of financial analysts

Financial analysts work in banks, pension funds, securities firms, insurance companies, mutual funds and other companies in the domain of finance. They are often called securities analysts or investment analysts. As investing has become more global, some financial analysts have specialised in a particular region or country. Some common types of financial analysts include:

  • Risk analysts: These analysts evaluate the risk in different investment decisions and identify ways to limit potential losses.

  • Ratings analysts: Ratings analysts evaluate an organisation's ability to pay its debts, rating and estimating the risks involved in financial agreements and transactions.

  • Fund managers: These professionals work exclusively with mutual funds or hedge funds, making buying or selling decisions in reaction to market conditions.

  • Portfolio managers: These managers are responsible for the overall performance of a company's or client's investment portfolio.

Related: Top 10 Careers in Stock Market (With Duties and Salary)

How to become a financial analyst

Follow these steps to become a financial analyst:

1. Complete higher secondary education

The first step involved in becoming a financial analyst is to graduate from a higher secondary school with a focus on commerce subjects. These include economics, statistics, mathematics, business studies and accountancy. Some reputed colleges may require you to clear a cut-off percentage in your board examinations, to be eligible for undergraduate courses.

2. Pursue a bachelor's degree

An undergraduate course in this domain can prepare you for the job role by introducing you to core finance concepts and important workflows. Popular three-year bachelor's courses are BCom (Bachelor of Commerce) in Finance and BBA (Bachelor of Business Administration) in Finance. Alternatively, you may also pursue a Chartered Accountant or CA certification from the Institute of Chartered Accountants of India (ICAI). This certification typically takes candidates five years to attain and involves multiple rounds of examinations.

3. Pursue internships

Internships are often a part of formal academic programmes. They provide candidates with the real-world knowledge and exposure required to start a career in any field. Apply for open internship positions during or after your bachelor's course and mention such work experiences in your resume.

4. Consider a master's degree

Although not mandatory, a postgraduate degree can greatly improve your prospects in a recruitment scenario. It gives you a competitive edge while you apply for higher positions in reputed companies. Additionally, these courses can enable you to take on administrative and managerial responsibilities. Popular courses are MCom (Master of Commerce) in Finance and MBA (Master of Business Administration) in Finance.

5. Get certified

The Chartered Financial Analyst or CFA certification is a globally recognised certification given by the CFA Institute in the USA. It holds great value in the market and can improve your employability greatly. This certification course is offered by several institutes in the country and does not require you to clear any entrance examination for pursuing. You may simply register for the course and pass three levels of examinations to get certified.

Read more: How to Become a Finance Analyst: A Step-by-Step Guide

How much do financial analysts make?

The average base salary of a financial analyst is ₹4,04,943 per year. This figure can improve greatly with specialisations, certifications and relevant work experience. The average base salary of a senior financial analyst is ₹7,48,749 per year.

Financial analyst work environment

Financial analyst roles are usually available in metropolitan cities and global economic hubs, which are home to multinational financial institutions. Analysts are typically employed by banks, brokerage firms, insurance companies and investment companies. They often focus on either buying or selling operations and are hence referred to as buy-side analysts or sell-side analysts. Many analysts also choose to specialise in specific geographic regions and industries. For example, as a financial analyst, you could be working in Mumbai as a buy-side analyst, focusing on purchase operations for the automobile industry in South East and South Central Asia.

Financial analysts typically work out of offices and may travel to meet clients, perform investigations and liaise with other professionals. Within their office, they spend a major portion of their time on the phone, communicating and coordinating operations. They also assume an advisory role in many scenarios. Analysts often work under tight deadlines and hence, may work overtime when the need arises. Most employers offer this position as a full-time work opportunity. Some financial analysts may also work as independent contractors on a freelance basis.

Is financial analyst a good career?

Financial analysts find employment in both junior and senior positions. These professionals have a niche skill set and specialised knowledge of finance and accounting. Hence, their job roles often have high earning potential and security. Analytics in the domain of finance is a fairly competitive field, and professionals often update their skills and certifications to stay relevant and up-to-date in a dynamic domain, like finance.

Global trade, share markets and the national economy have seen considerable growth through globalisation and the influence of the internet. Newly emerging investment ventures in developing countries can provide work opportunities to professionals who have an expertise in the geography, language and culture of those markets. The field of finance continues to become more complex and there is evergreen demand for trained professionals with specialisations. All things considered, this line of work offers good career growth prospects.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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