Financial Analyst Job Description

Financial Analyst Job Description Guide

Author: Ethan Sweeney
Ethan Sweeney
Ethan Sweeney
My name is Ethan Sweeney, I am a senior at Connecticut College pursuing a BA in economics with a minor in finance. I have experience at Wall Street Oasis, Aflac, and founded an online publication at my college. I am passionate about economics, research, analysis, and writing.
Reviewed By: Osman Ahmed
Osman Ahmed
Osman Ahmed
Investment Banking | Private Equity

Osman started his career as an investment banking analyst at Thomas Weisel Partners where he spent just over two years before moving into a growth equity investing role at Scale Venture Partners, focused on technology. He's currently a VP at KCK Group, the private equity arm of a middle eastern family office. Osman has a generalist industry focus on lower middle market growth equity and buyout transactions.

Osman holds a Bachelor of Science in Computer Science from the University of Southern California and a Master of Business Administration with concentrations in Finance, Entrepreneurship, and Economics from the University of Chicago Booth School of Business.

Last Updated:September 22, 2023

What Is A Financial Analyst?

A financial analyst is responsible for a great deal of research and analysis around financial statements and company operations, both externally and internally.

Financial analysts working in a banking or investment role may be responsible for analyzing companies for potential investment and assisting in the research and development of portfolios.

In addition, they may be responsible for finding companies for investment and for making reports about updates on companies already invested in. They may also assist in facilitating large financial transactions.

On the other hand, financial analysts working in a corporation use their knowledge and expertise in financial and economic analysis and forecasting to assess the condition of an organization and its growth potential.

No matter what position a financial analyst is in, it is likely that they will be involved in creating financial models, some accounting and organization of financial statements, conducting research and creating reports, as well as analyzing a company’s operations and efficiency of business practices and forecasting future profitability.

Most of the work done by financial analysts can be applied to a person’s own company or for analysis of other companies.

As one of the most analytical positions within a business setting or government agency, they must have some qualifications from a wide range of academic backgrounds. In many cases, candidates are expected to have a bachelor’s degree in economics, accounting, finance, or related fields. 

In some more prestigious positions or firms, a candidate may even be expected to have a Master’s degree or niche certifications. Employers also require candidates to have some amount of professional experience.

Understanding Financial Analyst

A financial analyst is a professional who, through their knowledge and expertise in financial and economic analysis and forecasting, assesses the condition of an organization and its growth potential.

They may assess the business they work for or analyze other companies to decide whether they may be good investments.

Working closely with management, they assist in maximizing organizational performance and profitability by analyzing past and current figures, making recommendations for the company's future direction, and providing timely information to internal departments or organization members.

It is a very broad term that can refer to several specific roles that can include several different job functions. A few specific positions that require financial analysis are described briefly below.

Equity Research (ER) Analysts are responsible for researching and assessing the value of equity in various companies and making recommendations on whether to buy, sell, or hold the security. This job involves a great amount of financial modeling and researching financial markets.

An analyst should also write detailed reports that explain a thesis about a security that is well backed up by their research. They should also present and explain these reports and their findings to investors.

Investment Banking Analysts assist companies with large transactions. A large part of investment banking is assisting with mergers and acquisitions and helping companies make an initial public offering (IPO). Analysts will spend a large part of their time creating pitch books, reviewing presentations, doing market research, financial modeling, and valuations.

Treasury Analysts deal with the company's internal operations, assisting in analyzing financial statements and transactions, ensuring that assets are being efficiently utilized within the company, and making suggestions to improve efficiency.

They also work within accounting, recording transactions and properly organizing a company’s financial information, working with management and making presentations to improve its operations.

Private Equity Analysts spend much of their time researching other companies in-depth, creating financial models and reports, and finding new deals for the firm.

In addition, an analyst may work to assess and reassess an investment portfolio, involving a lot of research on these companies and giving opinions on their operations.

Credit Analysts analyze the creditworthiness of loan applicants. This involves managing risk for a company, giving recommendations for how many loans to give to groups with a certain credit rating, and analyzing the likelihood of being repaid by potential debtors.

Many factors go into this analysis, such as current capital, collateral size, loan terms, and credit history. 

The term financial analyst can refer to many positions outside the ones above; however, these jobs give a good outline of many of the responsibilities involved in being a financial analyst.

The Bureau of Labor Statistics estimates that the median financial analyst earns $83,660 as of 2020. This is a good benchmark; however, there is also a lot of variance in salary between specific positions and firms.

Financial analysts can earn a salary in the low six figures in many positions. Most analyst jobs are also considered junior positions, meaning that there are often opportunities to get higher-paying jobs within the field a financial analyst is working.

What does a financial analyst do?

Financial analysts may work both internally and externally. The role of a financial analyst is very dependent on the particular position within the firm. They have several different responsibilities that have to do with building models and presenting the outputs of the said model. Below, we describe these responsibilities in brief detail.

A financial analyst may be responsible for working with the accounting department to create accurate financial statements in corporates. Beyond this, they will create several different financial models meant to assist senior positions in making various decisions.

This can include building variance models to show differences in forecasted performance and the company's actual performance and highlighting inefficiencies or reasons for these discrepancies. 

Financial analysts in banking and consulting spend a lot of time building valuation models on companies and researching potential investments. This includes doing due diligence and analysis of companies’ financial statements, creating various financial models, and researching the macro environment and market trends. 

The job of a financial analyst involves a great deal of analysis and research. In many cases, it is also an analyst’s job to present their findings and reports to senior management to assist decision-making.

To be a financial analyst, one should be good with numbers, comfortable presenting research, analytical, and have great ability to research large amounts of data and pay attention to small details.

How to Become a Financial Analyst?

The most important thing to understand about pursuing a position as a financial analyst is that the profession is so broad and includes many different job functions that require different sets of qualifications and skills; hence you would probably have to first pick a niche within it. 

The qualifications necessary for a position will depend on the specific role a candidate is pursuing and how prestigious the firm is that they are applying to.

At a minimum, aspiring candidates for this role should have a bachelor’s degree in economics, finance, accounting, or related fields, should make sure they have at least some professional experience within finance, and should make sure they have knowledge surrounding accounting principles and both macro and micro-financial markets.

If a candidate is applying to a prestigious firm or for a more competitive job, an employer may require a Master’s degree such as the Masters of Business Administration (MBA).

However, even if not required, it can often be useful to pursue an MBA, as candidates with MBAs have a strong competitive advantage over other candidates and are highly sought after by employers.

In addition to their academic background, most employers are looking for work experience in accounting, finance, budgeting, or forecasting. It can be obtained through internships, summer jobs when they were still enrolled as full-time students, or part-time positions while completing their bachelor’s degrees.

Candidates should expect to have a solid grasp on creating and interpreting financial statements and using tools such as Microsoft Excel.

Some positions may require that a candidate pursue other certifications such as completion of series exams which would grant certifications such as the Series 7 and Series 66 licenses, which allow brokers to sell certain types of securities and are necessary for fulfilling certain job functions. 

Even if your specific employer does not require this, it would be beneficial to pursue these certifications and additions to your resume due to the growing need for qualified candidates and increased demand for these positions.

In some cases, additional certifications may be expected and can be extremely helpful for proving a candidate’s ability and can give them a competitive advantage. This includes the Certified Public Accountant (CPA) certification, which can signify a deep understanding of accounting principles. 

Candidates with the Chartered Financial Analysts (CFA) designation are typically highly sought-after candidates. This certification focuses on portfolio management and in-depth financial analysis and is considered difficult to obtain. Therefore, a CFA charter may be useful for giving candidates a competitive advantage.

Aside from these specific certifications, countless other professionally recognized accreditations can help build a candidate’s resume, and that may be a good idea to pursue.

Financial Analyst Roles

In most cases, financial analysts are considered junior team members, and in some cases, are even the most junior position within a field.

Unfortunately, this means that financial analysts are involved in some mundane and tedious tasks meant to assist and save time for more senior roles, which in many cases means low to no say in decision making. 

As financial analyst is a broad term encompassing many different positions and job functions, many of these jobs have a wide range of responsibilities and considerable overlap between different positions.

They may be primarily responsible for preparing and analyzing financial reports, such as income statements, balance sheets, and cash flow statements. They may also be required to study and interpret data related to company operations and the economy at large. 

They may also be tasked with identifying an organization’s strengths and weaknesses in order to help management identify areas for improvement within a company. 

In some cases, this research is concerned primarily with internal operations and resource allocation. For example, one might be tasked with organizing financial information and finding and fixing inefficiencies within company operations. 

In other cases, they will be required to analyze external companies for investment opportunities and create financial models and forecasts to make recommendations on investment which may require studying the economic environment and making recommendations on how an organization should invest its assets or make changes to its product or service offerings.

Analysts who work for government agencies or non-profit organizations often spend their time analyzing market trends and forecasting future economic conditions to guide future decision-making within those organizations.

In many financial analyst roles, you can expect to perform the following job functions:

  • Assess the performance and profitability of an organization
  • Contemplate long-term strategy and forecast future investment needs
  • Assist in maximizing organizational performance by evaluating past figures
  • Make recommendations for the future direction of the company
  • Provide timely information to internal departments or members of the organization
  • Prepare and present financial statements
  • Conduct variance analysis to understand the reasons behind major fluctuations in the company’s financial statements or other financial data
  • Maintain up to date financial modeling skills
  • Create and maintain dashboards and visualizations around key financial performance metrics and KPIs
  • Create valuation comps models for both transaction and trading comps

Job Outlook for Financial Analysts

As such a broad term, financial analysts make up a great number of those working in finance and accounting. It is unlikely that financial analysts won’t be in high demand in the future, simply because they fill so many positions and are important for many different roles.

The Bureau of Labor Statistics projects that between 2020-2030 employment opportunities within this field will increase by 6%.

As of 2020, there were about 492,100 financial analysts, which is expected to grow to 523,400, or a difference of 31,300. But, of course, some positions within this field will grow more than others. 

For example, equity research analysis has been growing slower because of regulation that has been recently introduced in Europe. However, this field is expected to grow, even if it slower than other roles such as investment banking analysts or credit analysts.

Further, as current analysts get promoted to senior roles such as associates and managers, the actual number of jobs up for grabs would be closer to the current number of analysts already on the job than just the difference due to growth. Several factors will be important in determining the job outlook for this particular profession.

The analyst position is generally seen as recession-resistant because, even if they are affected by economic downturns, they can still be very valuable to any organization as no organization runs without finances.

Beyond financial analysis, which is likely to be a steady career path in the future, the qualifications that a financial analyst is expected to have are likely to be of value in many other industries.

For example, knowledge about accounting and the economy and business operations will likely continue to be a highly valuable skill set. Individuals who work towards this will fill many positions within a broad range of industries such as politics, business, and journalism.