What does a Financial Analyst do?

By Jordan Fabel •  Updated: July 22, 2021  •  8 min read  •  Financial
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Taking on a new career as a financial analyst is a big step. It’s not a career you can just jump into without some type of experience. However, understanding what a financial analyst does can help you down this career path.

As a financial analyst, you will be in the accounting department. However, you will do more than just basic accounting. You will deal with quite a few numbers every single day. It’s a job for those enjoying math and data. Let’s look at some of the things financial analysts do and how you can become one.

What does a Financial Analyst do?

The Duties of a Financial Analyst

The best way to answer the question, what does a financial analyst do, is to look at the different duties. These include:

Let’s look a little closer at each of these duties.

Gathering Data

Just about every project a financial analyst will take on starts with gathering data and information. This will be the data they will work with through the rest of the duties of their job. It may include accounting data, stock prices, macroeconomic data, industry research, historical financial reports, or another type of data.

Commonly, financial analysts will gather data from the internal database of their employer. They may also use the Securities and Exchange Commission or sources, such as Capital IQ or Bloomberg.

Organizing Information

Once the data has been gathered, it needs to be properly organized. This is often done with a database through Excel or another spreadsheet program. The data will need to be inputted, cleaned up, and properly formatted.

This part of the process includes sorting out the data by category, adding formulas, and ensuring the formatting styles are consistent.

Analyzing the Results

After the data has been properly organized, a financial analyst will start to look at the data. This may include looking at metrics and ratios, such as:

A financial analyst will look for trends and check the company’s performance compared to others in the industry. This is one of the main job duties. You might find answers to the question, what does a financial analyst do, only including this part of the job description.

Making Predictions

Another part of the job of a financial analyst is to make predictions or forecasts. They will use the data gathered and analyzed to predict or forecast future performance. While this part of the process is a bit more of an art than a science, it’s based on data and trends.

Developing Recommendations

Providing recommendations for companies is something a financial analyst can do, as well. These may include recommendations to cut costs or to help increase profits. Often, they will recommend ways to operate more efficiently and how to increase the company’s share of the market based on past data.

Building Excel Models

As a financial analyst, you will spend a good amount of time building Excel models. These models will be used to do the rest of your job. They may include creating cash flow analysis models, LBO models, M&A models, internal planning models, and more.

Presenting Information

After going through the process of analyzing data, you may need to create and present the information. Often, this is done in the form of a PowerPoint presentation. In addition, you will likely take Excel sheets and turn them into graphs and charts to present to decision-makers in the company.

Generating Reports

It’s also common for a financial analyst to generate reports. These may include reports to track certain data, such as actual vs. budgeted results. Companies need to see specific information to make good decisions, and generating reports can make it easy to see the necessary information.

Common Types of Financial Analysts

Not everyone in this space goes by the same name. While you may work with this title, there are also more specialized positions. Some of the common types of financial analysts include:

You can take a position as any of these types of financial analysts with the right training.

Steps to Become a Financial Analyst

Get the Right Education

If you want to land an entry-level job, you will need at least a bachelor’s degree. It’s a good idea to get a degree in business, finance, accounting, economics, statistics, or mathematics. Some employers will require a master’s degree, even for entry-level positions.

Gain Licenses and Certifications

The FINRA (Financial Industry Regulatory Authority) will provide the majority of the licenses and certifications you will need. However, you may need to gain specific licenses to sell financial products, depending on your actual position. Typically, you will need employer sponsorship, so most companies don’t expect you to have the right licenses before you’re hired.

However, you can gain certifications, such as the Chartered Financial Analyst certification. This comes from the CFA Institute and can be very helpful. You will need a bachelor’s degree and several years of experience in the financial field. To become certified, you will also need to pass several exams.

Gain Experience

If you want to advance as a financial analyst, the best thing you can do is gain experience. You can start with an internship in college and work in an entry-level position. However, For example, some experience you can gain in the financial industry can help you enjoy a better career in the future.


As a financial analyst, you can specialize on the sell-side or the buy-side of the industry. You can also choose a specific type of company you prefer to work with or type of client. For example, some prefer private clients, while others prefer to work with corporations or businesses.

Frequently Asked Questions About Financial Analysts

How much does a financial analyst make?

Typically, you will be paid an average salary of around $83K per year or $40 per hour. Financial analysts with plenty of experience can make quite a bit more, however. But, of course, your actual salary will also depend on the company you work for and your location.

The lower end of the pay scale is about $48K per year. However, the higher end is as much as $160K. With the right education and advancement, you can make a six-figure salary as a financial analyst.

Is the field of financial analysis growing?

Yes, it’s growing slightly faster than the average occupation in the United States. Growth is expected to increase about 5% over the next ten years.

What will the work environment be like as a financial analyst?

It’s common to work in an office setting. However, they may also do a good amount of traveling. For example, you may have to visit specific companies first-hand to see their operation. It’s also common to attend conferences throughout the year.

When you’re in the office, you will spend time working with databases, spreadsheets, and statistics. It can be quite a bit of time in front of a computer, but you will also spend time gathering data on the ground level of companies.

What are the advancement opportunities for financial analysts?

As a financial analyst, you can advance to a senior position with three to five years of experience. Career advancement continues with more experience. You can become a portfolio manager, a senior manager, or a partner in an investment bank. Some will even work as financial consultants or investment advisors.

Where do financial analysts work?

Banks or brokerages will employ most financial analysts. This is known as the sell-side of the financial industry. It’s also common to work for private equity or investment firms.

Some will work as freelancers also. They may work with specific companies or have a few clients they work with throughout the year. Freelance analysts can even work for nonprofit groups or specialize as an adviser for small businesses.

What type of skills do financial analysts need?

It’s common for a financial analyst to have excellent math skills and to be very detail-oriented. You will also need to develop good computer skills. Most will be very analytical. Communication skills are also necessary, along with good decision-making skills.

What type of hours do financial analysts work?

Most financial analysts are employed full-time. They will work at least 40 hours per week. It’s common for this type of career to lead to a longer workweek than the average.

Jordan Fabel

Jordan Fabel

Covering different 'paths' that people's lives can take. Creative, foster parent, ticket dismissal, you get the idea. Exploring the requirements, certifications, exams, and obviously, approved courses along each path.