What Do Financial Analysts Do? Evaluate Data to Forecast Success

Individuals and businesses depend on financial analysts for guidance on investment decisions. These skilled professionals evaluate financial data and study economic trends to assist clients in creating and expanding their investment portfolios. Financial analysts should have a quick mind for numbers and a strong foundational understanding of accounting and economics principles.

From the big concepts to the day-to-day tasks, what do financial analysts do? Professional analysts review and evaluate fiscal data to predict market conditions and investment performance. By analyzing stocks, bonds, equities, and other types of investments, analysts perform cost-benefit analyses and economic forecasts that help individuals and companies make strategic decisions about their finances.

In the office setting, analysts work with spreadsheets, relational databases, and statistical and graphics packages. For corporate clients, analysts may develop detailed presentations of data and market trends for executive review. Another important task is the verification of corporate documents to determine compliance with government regulations.

Financial Figures on a Screen

There is a growing demand for financial analysts in the business sector. Regardless of the specific industry, all corporations rely on analyst expertise to inform business decisions. Financial analysts with the correct skill set and field experience can evaluate where funds are coming in, analyze competitive market trends, and forecast a company’s economic future. This important work gives executives and stakeholders the power to make informed decisions to generate the greatest return on investment. Financial analysts can also positively impact the economy at large, as smart business decisions will stimulate business growth.

Higher education is beneficial to help students gain the skills necessary to become a successful financial analyst. Students enrolled in a Master of Science in Business Data Analytics program can acquire the practical skills and industry knowledge they will need as financial analysts.

To excel in this position, financial analysts should be skilled in financial modeling, data analysis, decision-making, mathematics, marketing, and strategic thinking. Attention to detail is crucial, as a single mistake could cost clients a significant amount of money.

What Do Financial Analysts Do? Daily Responsibilities in Forecasting

The role of a financial analyst is fundamental to a company’s fiscal health, business strategy, and operations, but many professionals are unaware of what functions a financial analyst performs on a daily basis. The core answer to “what do financial analysts do?” is that analysts help their clients make smart, educated investment decisions. There are a variety of research and strategy tasks involved, which may include:

  • Tracking macroeconomic and microeconomic trends
  • Reading publications to research the current economic climate
  • Meeting with clients to discuss investment strategies
  • Determining a company’s value by examining its financial statements
  • Creating buy-side or sell-side recommendations
  • Facilitating trades to generate revenue
  • Maintaining databases of financial records

In addition to possessing specific technical skills, financial analysts should also be excellent communicators. The role of communication is key, as analysts must be able to clearly explain their findings and recommendations to clients while answering questions and responding to feedback along the way. In fact, without proper communication, the data could be lost in translation.

“I could have done the most brilliant analysis out there, but it would be for naught if I couldn’t communicate my thoughts in a manner that fit the portfolio manager’s style,” says Manisha Thakor, founder and CEO of MoneyZen Wealth Management. “Your ability to speak with management teams, frontline employees, and product end users is every bit as important as crunching numbers in Excel.” While back-end proficiency with spreadsheets is paramount, client-side communication is an essential skill for successful financial analysts.

What to Expect When Forecasting Business Trends

The workplace reality for financial analysts can mean long hours and high pressure. What do financial analysts do? They typically work in stressful environments and clock in more hours than average positions in other industries. About one-third of financial analysts work more than 40 hours per week, according to the U.S. Bureau of Labor Statistics (BLS). During this time, analysts are often on the phone talking to experts, prospective trading partners, and other market analysts. Outside the office, financial analysts travel frequently to meet with clients. Depending on the company specialty, some analysts may need additional professional qualifications, such as becoming registered with the Financial Industry Regulatory Authority to work in securities or earning the Chartered Financial Analyst credential, which is the most respected investment management designation in the world.

Career Outlook for Financial Analysts

When seeking answers to “what do financial analysts do?” it’s also relevant to consider where financial analysts work. There are a wide range of career opportunities for skilled financial analysts. Common types of employers seeking qualified analysts include hedge funds, mutual funds, banks, securities firms, insurance companies, and nonprofit organizations.

Most financial analysts work for employers that handle securities, commodity contracts, and other financial investments and related activities, according to a 2014 study by the BLS. Other types of employment include management of companies and enterprises; credit intermediation and related activities; professional, scientific, and technical services; and insurance carriers and related activities.

Financial analysts tend to find more lucrative opportunities in large metropolitan areas with greater concentrations of financial institutions and major corporations. In an office setting, analysts may answer to a portfolio manager or other senior manager. Junior analysts may work their way up to the senior analyst level in three to five years. Senior analysts may aspire to become portfolio managers, or senior managers at banks. Some analysts opt to become financial consultants or investment advisors. Other titles for financial analysts could include fund manager, ratings analyst, risk analyst, investment analyst, and securities analyst.

The median salary for financial analysts is just over $84,000, according to the BLS Occupational Outlook Handbook. Some financial analysts, such as fund managers, may work on commission and also earn a portion of a fund’s returns. However, it’s important to note that salary and earnings will vary depending on an analyst’s experience level, place of employment, and respective responsibilities. Junior analysts with only a bachelor’s degree can earn less than the median salary, with raises based on performance as they advance in the field.

The BLS estimates that more than 32,000 financial analyst jobs should become available over the next decade, as it expects the field to grow 11 percent between 2016 and 2026.

Maryville University’s Master’s Degree in Business Data Analytics

A changing economy may be signaling a growing need for financial analysts. The online Master of Science in Business Data Analytics (MSBDA) program at Maryville University can prepare students for careers as financial analysts or related positions in the field of financial services.

Sources:

BLS, Financial Analysts

BLS, Financial Analysts: Work Environment

BLS, What Financial Analysts Do

CareerBuilder, “So You Want to Become a Financial Analyst?”

CFA Institute, CFA Program

FINRA, Registration and Qualification

Monster, Financial Analyst Jobs

My Next Move, Financial Analysts

Study.com, Educational Requirements for Financial Analysts

U.S. News, Financial Analyst: Reviews & Advice