Financial Analyst Salary Guide

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Financial Analyst Salary Guide

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Last Updated:March 4, 2023

A financial analyst is one of the most famous jobs among the young generations in the finance industry. These analysts must be good with numbers, given that they often work with them.

These analysts can be both experienced and beginners. This is one of the most popular career options at the moment. The main responsibility of an analyst is to analyze and collect data and identify the opportunities which help them to make proper decisions for the company.

This will lead to the best possible outcomes in the investment. The financial services industry is competitive and full of opportunities for people looking for spots in this field.

If you are interested, you must work hard to get a job. Someone must be prepared for the upcoming battle and prepare themselves for the role. This field is very competitive, and finding an appropriate position is quite challenging.

Some of the essential takeaways are:

The primary role of these analysts is to collect the data and use them correctly in the investment decision so that the company can come up with the best decision. Analysts are one of the most important employees who play vital roles in the company.
There are two types of analysts: junior and senior. Junior analysts mainly collect data, maintain spreadsheets, manage financial modeling, etc. They work to help the senior analysts.
Senior analysts are responsible for understanding the data collected and analyzed by the junior analysts, discussing them with the management, and making proper decisions. They provide suggestions to the management on making the right decision.
A bachelor’s degree in finance, mathematics, or higher is required to apply for these positions. MBA or CFA are often appreciated in these positions and given preferences.

What Is a Financial Analyst?

Financial analysts are mainly responsible for collecting and analyzing the data so that the company can come up with the proper decision that will help it in the near future. Thus, they need to collect the data accurately, as decisions will be taken based on that information.

Analysts study subjects and topics such as microeconomics, macroeconomics, and other fundamental subjects to collect data accurately. These topics are very vital in terms of providing accurate data.

They also help the company find out when and at what company shares need to be sold or bought, along with collecting and processing the data. So, being an analyst is not a very easy task.

They must be cautious and constantly updated about the market and the field they work in. They also need to prepare financial models to help the company predict their future condition in the industry so that they can remain competitive.

Analysts can be hired for several responsibilities. They are not always employed to do the same jobs again and again. Their responsibilities don’t only include data collection and analysis of them but also help the company to make the right decision.

Some analysts use numerical data to present the different marketing techniques and their effectiveness. For example, some businesses work with franchise models and have analysts tracking specific groups or franchises within a particular area.

Some others also determine both the strengths and weaknesses of the company in a quantitative way. It helps the company forecast its profits or loss tentatively, which is very helpful for its management when considering its subsequent decisions.

Required Skills and Education

You are not bound to have a fancy degree to be an analyst, but often the recruiters ask for at least a bachelor’s degree. Employers often look for a degree in finance or mathematics-related fields. It is one of the most popular and high-paying jobs in the modern market.

Employers may ask for a certification course or incense, but these courses are optional and depend on the job’s nature and the company’s policy. If the company asks for those licenses and courses, they will sponsor them.

As mentioned before, degrees are not compulsory for these positions. Still, in this highly competitive job market, employers prefer candidates to have at least a bachelor’s degree in finance, mathematics, economics, or other related fields.

Some related experiences are welcomed, but in entry-level jobs, it is not necessary. For example, some education or experience in accounting is also welcomed, but they need to train themselves for the right positions.

Fresh graduates from prestigious schools get jobs in well-known banks or financial initiations. In contrast, candidates with degrees from less prestigious schools typically need help to get a suitable job in this highly competitive job market.

So, in every situation, having some experience, additional training, licensing, or certifications are privileges. Getting postgraduate degrees along with experience is also a perfect idea. It raises the chances of getting the desired jobs with comparatively less hardship.

Education is essential but optional. More important is a strong knowledge of the quantitative field, analytical ability, problem-solving skills, and strong communication skills.

Analysts are not allowed or required to make decisions based on their findings from the data they work on. Instead, they report to their superiors, present their findings, and discuss them. Superiors will continue with the rest and decide along with the management.

Types of Analyst Positions

The field of financial analysis is vast and offers various opportunities, job titles, and career paths. There are three major categories of analysts who work in the financial or investment industry:

Investment banks
Sell-side firms
Buy-side firms

Most financial analysts work on the buy side. Their job is to help their employers in many ways, which allows them to organize their work appropriately to make decisions regarding the business.

These include planning the company’s finance, investing in stocks or other securities, and infrastructure, such as new buildings, machinery, or other real estate properties.

Some of them work for clients who provide financing solutions and suggestions. It is a client-oriented job requiring confidence, knowledge, and training. Some of those training and guidelines are provided during the job by the supervisors.

They must bring clients to the company to get paid, given that these positions are based on commission. In terms of getting paid, they are asked to bring the target number of clients to the company.

Buy-side analysts play a vital role in the company’s progress. Their opinions always matter as they are the ones who help with the forecasting and estimations. They do not interfere with the company’s expenditures.

Sell-side analysts are very different in terms of their responsibilities compared to buy-side analysts. Sell-side analysts mostly get very lucrative and prestigious jobs in investment banks.

They are responsible for helping the company set the quantity of the items that need to be sold to earn a profit. They also collect data on the bank’s stocks and bonds so that they can be used to analyze the nature of the securities to make sure they will perform well in the market.

Companies always rely on them as their analysis is very vital. They also do a lot of research on the previous experience and analysis of the company to help them set their goal regarding the production quantity.

The jobs in the finance industry offer very high pay to their employees. However, the analysts get significantly lower payments compared to the other professionals in the finance industry, which is not a very good thing.

Money

Almost all analysts are highly educated, but their poor salary doesn’t do justice to them. However, the median annual income of an entry-level financial analyst is much higher than the annual median income of a full-time, experienced wage or salary worker in the USA overall.

According to the U.S. Bureau of Labor Statistics (BLS), an average entry-level financial analyst earns around $52,520 annually. If the calculation is based on 40 hours, the result would be $1,010, meaning they earn this amount during a week of their service.

A financial analyst can earn much better than other entry-level professionals. For example, they can earn $81,410 annually if they have completed an impressive five years of service in the industry.

Compensation has been mentioned below in ascending order, from the least experienced analyst to the most experienced analyst. In addition, the approximate total amount of the compensation has been cited by BLS based on the experience level.

Entry level ( 0 to 2 years of experience): Entry-level analyst gets $45,776 annually on average.
Less than five years of experience: From 2 to 4 years of experience, an analyst receives $46,000-$52,000 annually.
5 to 10 years of experience: This is when mid-level starts, and the analyst gets $55,422-$84,000 annually.
10 to 20 years of experience: Senior level starts at this point, and the employee receives $85,000-120,000 annually.
More than 20 years of experience: The experienced analyst gets $400,700 annually on average at this highest level.

Also, a financial analyst of a prominent Wall Street company gets much more than analysts from other companies, even in their first year of work. That’s why more and more young people are considering a career as a financial analyst.