Financial analysis is essential to determine an organization’s financial growth and health. Analysts are necessary to understand the financial stability and requirements for a business to thrive. Several responsibilities usually surround them in terms of seniority and the department they work for.
The average financial analyst salary in the US is $67,617 per annum, which can be regarded as a high earning potential in US. A new graduate with less than one year of experience, earns around $62,071 per annum. Analysts having a career over 6-9 years receive an annual salary of around $77,071 per annum, while an expert financial analyst over ten years of experience can have $79,795 per annum as their salary.
To consider it a career option, we need to learn about the job description, skills required and qualifications required for sound financial analysis. Check out this article to know more!
What does a Financial Analyst do?
The job of a financial analyst encompasses a wide range of duties, including:
- Focus on operatic metrics tracking, reporting, and forecasting on financial matters
- Create financial records and analyze data
- Analyze past performances and understand and identify trends to make recommendations for improvement
- Follow trends to focus on actions and optimizations
- Guide the process of cost analysis by enforcing procedures and policies
- Increase productivity by reporting and forecasted tools
- Perform market research, including data mining and business intelligence
- Work with the accounting team to understand financial reporting
What Skills Should a Financial Analyst Have?
With an attractive salary, many people consider pursuing it as a career goal. But many skills are required to become a successful financial analyst. The roles performed by a financial analyst is mentioned below:-
- Gathering data and information: Collecting accurate data and information is one of the primary roles a financial analyst should perform. These figures are usually gathered from internal databases, government agencies, and third-party providers. Stock price information, macroeconomic data, and previous financial records are examples of specific necessary data acquired by financial analysts.
- Organizing of information: Gathered content is entered into a database, the most popular one being an Excel sheet. The next step includes organization, cleaning up, and sorting the information. This includes arranging numbers, adding formulas, and providing functions.
- Analyzing financial results: Comparison of past and present records occurs when a financial analyst requires interpreting results. Dealing with metrics and ratios such as net margins, return on assets, earnings per share fall under this category.
- Make forecasts and projections: It is an essential objective because it focuses on how the company will perform. Such tasks include year-over-year growth rates top-down and bottom-down approaches.
- Develop recommendations: Numbers are not the only department a financial analyst has to be good at. To become an excellent financial analyst, one has to gain insights and provide recommendations. These understandings are presented to the CEO or the board of directors.
- Create Presentations: Along with Excel, presentations play a vital role in a financial analyst’s life. Hence, gaining experience in such courses is mandatory to become a successful financial analyst.
- Generate Reports: Dashboards and internal reports are essential for an analyst. To present key performance indicators or track budget results, reports should be generated in an easy, accurate, and detailed language.
What are the Types of Analyst Positions?
There are three major divisions of financial analysis. The following are:-
- Buy-side Analysts: The role of buy-side analysts provides help to their employers by creating financial plans for their companies. They also perform the role of a third-party company with similar functions. An entire industry works around them, further justifying the high financial analyst salary.
However, the final say does not lie with the financial analyst. Their role is to pave the way for the employer to decide whether it is a feasible decision or not. With financial environments evolving at a faster scale, the demand for buy-side analysts is growing large in this world.
- Sell-side Analysts: This division analyzes the security qualities of a specific industry or sector. They prepare a report with recommendations, help banks price their products, and compile a Compilation of stocks and bonds to understand how the securities are applicable in the market.
Sell-side analysts receive the highest financial analyst salary out of all the divisions. Subspecialties mentioned here include analysts focussing on stocks or fixed instruments. For example, further sections are also discovered by certain analysts, such as technology and energy.
- Investment Banking and Equity Analysts- Analysts who are a part of investment banking firms determine deals between companies which include IPOs, M&A, based on corporate credentials. They assess the recent financial changes plus modeling and forecasting to provide recommendations as to whether mergers are suitable or not.
Equity analysts can be referred to as those analysts who deal with vast sums of capital. If their prediction is correct, the analysts can earn over millions. Big investment banks aim to have equity analysts because they help to find companies with the most satisfying opportunities available for ownership.
What is the Range of a Financial Analyst’s Salary?
The starting salary of a financial analyst ranges in around $62,071 per annum. The highest salary earned by a financial analyst in the US is around $128,194 per annum. The pay scale depends on the companies largely as well. In the US, Washington D.C. offers the best jobs in financial analysis with a high pay scale.
The main objective of being a financial analyst can be regarded as upheaving their finance skills to provide a better lifestyle for an organization or sector. Beginners in this field also have a scope to reach the zenith and earn a considerable sum of money. Meanwhile, the work experience also gets enhanced due to a massive level of interaction with several banks and companies. Additionally, the demand for analysts due to changing financial conditions is another reason why this job can be ideal for you.
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Which are the best cities to apply for a financial analyst job?
Washington D.C. is the best city in the US which offers a plethora of opportunities for one thinking to pursue a career in financial analysis. However, other cities Houston, New York, Dallas and Chicago also offer varied scopes applicable to this field.
What are the qualifications required to become an analyst in finance?
A bachelor’s degree is mandatory if you want to pursue financial analysis. The fields of study demand proficiency in economics, accounting, finance, mathematics, and engineering. However, having a Master’s degree brings about more opportunities and opens up advanced positions with a higher payscale. The demands of having a degree in Masters of Business Administration (MBA) or a master’s degree in finance can offer more accomplished jobs and establish you in the long run. Additionally, gaining knowledge on bond valuation, risk management, and options pricing is vital in acquiring a career in financial analysis.
How can one prepare for a financial analyst job interview?
Certain steps can be followed to crack an interview and gain a job in financial analysis: Reviewing of the job description Researching about the company Understanding key concepts Preparing common interview questions Create responses for a set of probable questions. Mock interviews