Financial Analysts

Summary

financial analysts image
Financial analysts recommend individual investments and collections of investments, which are known as portfolios.
Quick Facts: Financial Analysts
2015 Median Pay $80,310 per year
$38.61 per hour
Typical Entry-Level Education Bachelor's degree
Work Experience in a Related Occupation None
On-the-job Training None
Number of Jobs, 2014 277,600
Job Outlook, 2014-24 12% (Faster than average)
Employment Change, 2014-24 32,300

What Financial Analysts Do

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Work Environment

Financial analysts work in offices. Most work full time, and many work more than 40 hours per week.

How to Become a Financial Analyst

Financial analysts typically must have a bachelor’s degree, but a master’s degree is often required for advanced positions.

Pay

The median annual wage for financial analysts was $80,310 in May 2015.

Job Outlook

Employment of financial analysts is projected to grow 12 percent from 2014 to 2024, faster than the average for all occupations. A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth.

State & Area Data

Explore resources for employment and wages by state and area for financial analysts.

Similar Occupations

Compare the job duties, education, job growth, and pay of financial analysts with similar occupations.

More Information, Including Links to O*NET

Learn more about financial analysts by visiting additional resources, including O*NET, a source on key characteristics of workers and occupations.

What Financial Analysts Do About this section

Financial analysts
Financial analysts work in banks, pension funds, insurance companies, and other businesses.

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Duties

Financial analysts typically do the following:

  • Recommend individual investments and collections of investments, which are known as portfolios
  • Evaluate current and historical financial data
  • Study economic and business trends
  • Examine a company’s financial statements to determine its value
  • Meet with company officials to gain better insight into the company’s prospects
  • Assess the strength of the management team
  • Prepare written reports

Financial analysts evaluate investment opportunities. They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. Financial analysts are also called securities analysts and investment analysts.

Financial analysts can be divided into two categories: buy-side analysts and sell-side analysts.

  • Buy-side analysts develop investment strategies for companies that have a lot of money to invest. These companies, called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organizations with large endowments, such as some universities.
  • Sell-side analysts advise financial services sales agents who sell stocks, bonds, and other investments.

Some analysts work for the business media or other research houses, which are independent from the buy and sell side.

Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product. For example, an analyst may focus on a subject area such as the energy industry, a world region such as Eastern Europe, or the foreign exchange market. They must understand how new regulations, policies, and political and economic trends may affect investments.

Investing is becoming more global, and some financial analysts specialize in a particular country or region. Companies want those financial analysts to understand the language, culture, business environment, and political conditions in the country or region that they cover.

The following are examples of types of financial analysts:

Portfolio managers select the mix of products, industries, and regions for their company’s investment portfolio. These managers are responsible for the overall performance of the portfolio. They are also expected to explain investment decisions and strategies in meetings with stakeholders.

Fund managers work exclusively with hedge funds or mutual funds. Both fund and portfolio managers frequently make buy or sell decisions in reaction to quickly changing market conditions.

Ratings analysts evaluate the ability of companies or governments to pay their debts, including bonds. On the basis of their evaluation, a management team rates the risk of a company or government not being able to repay its bonds.

Risk analysts evaluate the risk in investment decisions and determine how to manage unpredictability and limit potential losses. This job is carried out by making investment decisions such as selecting dissimilar stocks or having a combination of stocks, bonds, and mutual funds in a portfolio.

Work Environment About this section

Financial analysts
Many financial analysts work at large financial institutions based in New York City or other major financial centers.

Financial analysts held about 277,600 jobs in 2014. The industries that employed the most financial analysts were as follows:

Securities, commodity contracts, and other financial investments and related activities 24%
Management of companies and enterprises 14
Credit intermediation and related activities 13
Professional, scientific, and technical services 12
Insurance carriers and related activities 8

Financial analysts work primarily in offices, but travel frequently to visit companies or clients.

Many financial analysts work at large financial institutions based in New York City or other major financial centers.

Work Schedules

Most financial analysts work full time, and about 1 in 3 worked more than 40 hours per week in 2014. Much of their research must be done after office hours because their days are filled with telephone calls and meetings.

How to Become a Financial Analyst About this section

Financial analysts
Financial analysts must process a range of information in finding profitable investments.

Financial analysts typically must have a bachelor’s degree, but a master’s degree is often required for advanced positions.

Education

Most positions require a bachelor’s degree. A number of fields of study provide appropriate preparation, including accounting, economics, finance, statistics, and mathematics. For advanced positions, employers often require a master’s degree in business administration (MBA) or a master’s degree in finance. Knowledge of options pricing, bond valuation, and risk management are important.

Licenses, Certifications, and Registrations

The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. It requires licenses for many financial analyst positions. Most of the licenses require sponsorship by an employer, so companies do not expect individuals to have these licenses before starting a job.

Certification is often recommended by employers and can improve the chances for advancement. An example is the Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor’s degree, 4 years of qualified work experience, and pass three exams. Financial analysts can also become certified in their field of specialty.

Advancement

Financial analysts typically start by specializing in a specific investment field. As they gain experience, they can become portfolio managers, who select the mix of investments for a company’s portfolio. They can also become fund managers, who manage large investment portfolios for individual investors. A master’s degree in finance or business administration can improve an analyst’s chances of advancing to one of these positions.

Important Qualities

Analytical skills. Financial analysts must process a range of information in finding profitable investments.

Communication skills. Financial analysts must explain their recommendations to clients in clear language that clients can easily understand.

Computer skills. Financial analysts must be adept at using software packages to analyze financial data, see trends, create portfolios, and make forecasts.

Decisionmaking skills. Financial analysts must provide a recommendation to buy, hold, or sell a security.

Detail oriented. Financial analysts must pay attention to details when reviewing possible investments, as small issues may have large implications for the health of an investment.

Math skills. Financial analysts use mathematical skills when estimating the value of financial securities. 

To be successful, financial analysts must be motivated to seek out obscure information that may be important to the investment. Many work independently and must have self-confidence in their judgment.

Pay About this section

Financial Analysts

Median annual wages, May 2015

Financial analysts

$80,310

Financial specialists

$67,740

Total, all occupations

$36,200

 

The median annual wage for financial analysts was $80,310 in May 2015. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $49,450, and the highest 10 percent earned more than $160,760.

In May 2015, the median annual wages for financial analysts in the top industries in which they worked were as follows:

Securities, commodity contracts, and other financial investments and related activities $94,450
Professional, scientific, and technical services 83,240
Management of companies and enterprises 79,200
Credit intermediation and related activities 77,270
Insurance carriers and related activities 74,510

Fund managers are typically compensated by fees, usually structured as a percentage of assets under management and a percentage of the fund’s annual return.

Most financial analysts work full time, and about 1 in 3 worked more than 40 hours per week in 2014. 

Job Outlook About this section

Financial Analysts

Percent change in employment, projected 2014-24

Financial analysts

12%

Financial specialists

10%

Total, all occupations

7%

 

Employment of financial analysts is projected to grow 12 percent from 2014 to 2024, faster than the average for all occupations. A growing range of financial products and the need for in-depth knowledge of geographic regions are expected to lead to strong employment growth.

Investment portfolios are becoming more complex, and there are more financial products available for trade. In addition, emerging markets throughout the world are providing new investment opportunities, which require expertise in geographic regions where those markets are located.  

The continued implementation of financial regulatory reform could constrict growth in the industry, as rulemaking bodies place a greater emphasis on stability. Restrictions on trading by banks may shift employment of financial analysts from investment banks to hedge funds and private equity groups.

Job Prospects

Despite employment growth, strong competition is expected for financial analyst positions. Growth in financial services is projected to create new positions, but there are still far more people who would like to enter the occupation than there are jobs in the occupation. Having certifications and a graduate degree can significantly improve an applicant’s prospects.

Employment projections data for financial analysts, 2014-24
Occupational Title SOC Code Employment, 2014 Projected Employment, 2024 Change, 2014-24 Employment by Industry
Percent Numeric

SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program

Financial analysts

13-2051 277,600 310,000 12 32,300 [XLSX]

State & Area Data About this section

Occupational Employment Statistics (OES)

The Occupational Employment Statistics (OES) program produces employment and wage estimates annually for over 800 occupations. These estimates are available for the nation as a whole, for individual states, and for metropolitan and nonmetropolitan areas. The link(s) below go to OES data maps for employment and wages by state and area.

Projections Central

Occupational employment projections are developed for all states by Labor Market Information (LMI) or individual state Employment Projections offices. All state projections data are available at www.projectionscentral.com. Information on this site allows projected employment growth for an occupation to be compared among states or to be compared within one state. In addition, states may produce projections for areas; there are links to each state’s websites where these data may be retrieved.

Career InfoNet

America’s Career InfoNet includes hundreds of occupational profiles with data available by state and metro area. There are links in the left-hand side menu to compare occupational employment by state and occupational wages by local area or metro area. There is also a salary info tool to search for wages by zip code.

Similar Occupations About this section

This table shows a list of occupations with job duties that are similar to those of financial analysts.

Occupation Job Duties ENTRY-LEVEL EDUCATION Help 2015 MEDIAN PAY Help
Budget analysts

Budget Analysts

Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.

Bachelor's degree $71,590
Financial managers

Financial Managers

Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization.

Bachelor's degree $117,990
Insurance underwriters

Insurance Underwriters

Insurance underwriters decide whether to provide insurance and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.

Bachelor's degree $65,040
Personal financial advisors

Personal Financial Advisors

Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.  

Bachelor's degree $89,160
Securities, commodities, and financial services sales agents

Securities, Commodities, and Financial Services Sales Agents

Securities, commodities, and financial services sales agents connect buyers and sellers in financial markets. They sell securities to individuals, advise companies in search of investors, and conduct trades.

Bachelor's degree $71,550
Suggested citation:

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016-17 Edition, Financial Analysts,
on the Internet at http://www.bls.gov/ooh/business-and-financial/financial-analysts.htm (visited May 30, 2016).

Publish Date: Thursday, December 17, 2015

What They Do

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Pay

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State & Area Data

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2015 Median Pay

The wage at which half of the workers in the occupation earned more than that amount and half earned less. Median wage data are from the BLS Occupational Employment Statistics survey. In May 2015, the median annual wage for all workers was $36,200.

On-the-job Training

Additional training needed (postemployment) to attain competency in the skills needed in this occupation.

Entry-level Education

Typical level of education that most workers need to enter this occupation.

Work experience in a related occupation

Work experience that is commonly considered necessary by employers, or is a commonly accepted substitute for more formal types of training or education.

Number of Jobs, 2014

The employment, or size, of this occupation in 2014, which is the base year of the 2014-24 employment projections.

Job Outlook, 2014-24

The projected percent change in employment from 2014 to 2024. The average growth rate for all occupations is 7 percent.

Employment Change, 2014-24

The projected numeric change in employment from 2014 to 2024.

Entry-level Education

Typical level of education that most workers need to enter this occupation.

On-the-job Training

Additional training needed (postemployment) to attain competency in the skills needed in this occupation.

Employment Change, projected 2014-24

The projected numeric change in employment from 2014 to 2024.

Growth Rate (Projected)

The percent change of employment for each occupation from 2014 to 2024.

Projected Number of New Jobs

The projected numeric change in employment from 2014 to 2024.

Projected Growth Rate

The projected percent change in employment from 2014 to 2024.

2015 Median Pay

The wage at which half of the workers in the occupation earned more than that amount and half earned less. Median wage data are from the BLS Occupational Employment Statistics survey. In May 2015, the median annual wage for all workers was $36,200.