Ratings analysts evaluate the ability of companies or govern-

Financial Analysts ments to pay their debts, including bonds. On the basis of their
evaluation, a management team rates the risk of a company
Significant Points or government defaulting on its bonds. Other financial ana-
• Financial analyst positions require a bachelor’s or lysts perform budget, cost, and credit analysis as part of their
­responsibilities.
master’s degree. Financial analysts use spreadsheet and statistical software
• Positions may also require professional licenses and packages to analyze financial data, spot trends, create portfoli-
certifications. os, and develop forecasts. Analysts also use the data they find to
measure the financial risks associated with making a particular
• Keen competition is anticipated for these highly paid investment decision. On the basis of their results, they recom-
positions. mend whether to buy, hold, or sell particular investments.
• Financial analysts earn high wages. Work environment. Financial analysts usually work in of-
fices. They may work long hours, travel frequently to visit com-
Nature of the Work panies or potential investors, and face the pressure of deadlines.
Financial analysts provide guidance to businesses and indi- Much of their research must be done after office hours because
viduals making investment decisions. Financial analysts assess their days are filled with telephone calls and meetings.
the performance of stocks, bonds, commodities, and other types
of investments. Also called securities analysts and investment Training, Other Qualifications, and Advancement
­analysts, they work for banks, insurance companies, mutual Financial analysts must have a bachelor’s degree. Many posi-
and pension funds, securities firms, the business media, and tions require a master’s degree in finance or a Master of Busi-
other businesses, making investment decisions or recommen- ness Administration (MBA). Positions may also require pro-
dations. Financial analysts study company financial statements fessional licenses and certifications. However, licenses and
and analyze commodity prices, sales, costs, expenses, and tax certifications are generally only earned after someone is hired.
rates to determine a company’s value by projecting its future
earnings. They often meet with company officials to gain a bet-
ter insight into the firms’ prospects and management.
Financial analysts can be divided into two categories: buy
side analysts and sell side analysts. Analysts on the buy side
work for companies that have a great deal of money to invest.
These companies, called institutional investors, include mutual
funds, hedge funds, insurance companies, independent money
managers, and nonprofit organizations with large endowments.
Buy side financial analysts devise investment strategies. Con-
versely, sell side analysts help securities dealers, such as banks
and other firms, sell stocks, bonds, and other investments. The
business media hire financial advisors that are supposed to be
impartial, and occupy a role somewhere in the middle.
Financial analysts generally focus on trends impacting a spe-
cific industry, region, or type of product. For example, an ana-
lyst will focus on a subject area such as the utilities industry, an
area such as Latin America, or the options market. Firms with
larger research departments assign analysts even narrower sub-
ject areas. They must understand how new regulations, policies,
and political and economic trends may impact the investments
they are watching. Risk analysts evaluate the risk in portfolio
decisions, project potential losses, and determine how to limit
potential losses and volatility using diversification, currency fu-
tures, derivatives, short selling, and other investment decisions.
Some experienced analysts called portfolio managers su-
pervise a team of analysts and select the mix of products, in-
dustries, and regions for their company’s investment portfolio.
Hedge fund and mutual fund managers are called fund manag-
ers. Fund and portfolio managers frequently make split-second
buy or sell decisions in reaction to quickly changing market
conditions. These managers are not only responsible for the
overall portfolio, but are also expected to explain investment Financial analysts research and analyze financial data, helping
decisions and strategies in meetings with investors. managers make sound decisions.

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 Education and training. A bachelor’s or graduate degree
is required for financial analysts. Most companies require a
bachelor’s degree in a related field, such as finance, business,
accounting, statistics, or economics. An understanding of sta-
tistics, economics, and business is essential, and knowledge of
accounting policies and procedures, corporate budgeting, and
financial analysis methods is recommended. An MBA or a mas-
ter’s degree in finance is often required. Advanced courses or
knowledge of options pricing, bond valuation, and risk manage-
ment are important.
Licensure. The Financial Industry Regulatory ­Authority
(FINRA) is the main licensing organization for the securi-
ties industry. Depending on an individual’s work, different
licenses may be required, although buy side analysts are less
likely to need licenses. The majority of these licenses require
­sponsorship by an employer, so companies do not expect indi-
viduals to have these licenses before starting a job. Experienced
workers who change jobs will need to have their licenses re-
newed with the new company.
Other qualifications. Strong math, analytical, and problem-
solving skills are essential qualifications for financial analysts.
Good communication skills are necessary because these work-
ers must present complex financial concepts and strategies.
Self-confidence, maturity, and the ability to work independent-
ly are important. Financial analysts must be detail-oriented,
motivated to seek out obscure information, and familiar with
the workings of the economy, tax laws, and money markets.
­Although much of the software they use is proprietary, financial
analysts must  be comfortable working with spreadsheets and
statistical packages.
With the increasing global diversification of investments,
companies are assigning more financial analysts to cover
foreign markets. These analysts normally specialize in one
country, such as Brazil, or one region, such as Latin America.
Companies prefer financial analysts to have the international
experience necessary to understand the language, culture, busi-
ness environment, and political conditions in the country or re-
gion that they cover.
Certification and advancement. Although not always re-
quired, certifications enhance professional standing and are
recommended by employers. Certifications are becoming in-
creasingly common. Financial analysts can earn the Chartered
Financial Analyst (CFA) designation, sponsored by the CFA
Institute. To qualify for this designation, applicants need a
bachelor’s degree, four years of related work experience, and
must pass three exams. Applicants can take the exams while
they are obtaining the required work experience. Passing the
exams requires several hundred hours of self-study. These ex-
ams cover subjects such as ­accounting, economics, securities
analysis, ­financial markets and instruments, corporate finance,
asset valuation, and portfolio management. Additional certifica-
Projections data from the National Employment Matrix
Occupational Title
Financial analysts...............................................................................
(NOTE) Data in this table are rounded. See the discussion of the employment projections table in the Handbook introductory chapter on Occupational Informa-
tion Included in the Handbook.
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tions are helpful for financial analysts who specialize in specific
areas, such as risk ­management.
Financial analysts advance by moving into positions where
they are responsible for larger or more important products. They
may supervise teams of financial analysts. They may become
portfolio managers or fund managers, directing the investment
portfolios of their companies or funds.
Employment
Financial analysts held 250,600 jobs in 2008. Many financial
analysts work at large financial institutions based in New York
City or other major financial centers. About 47 percent of fi-
nancial analysts worked in the finance and insurance industries,
including securities and commodity brokers, banks and credit
institutions, and insurance carriers. Others worked throughout
private industry and government.
Job Outlook
Employment of financial analysts is expected to grow much
faster than the average for all occupations. However, keen com-
petition will continue for these well-paid jobs, especially for
new entrants.
Employment change. As the level of investment increases,
overall employment of financial analysts is expected to increase
by 20 percent during the 2008–18 decade, which is much faster
than the average for all occupations. Primary factors for this
growth are increasing complexity and global diversification of
investments and growth in the overall amount of assets under
management. As the number and type of mutual and hedge
funds and the amount of assets invested in these funds increase,
companies will need more financial analysts to research and
recommend investments. As the international investment in-
creases, companies will need more analysts to cover the global
range of investment options.
Job prospects. Despite employment growth, keen competi-
tion is expected for these high-paying jobs. Growth in financial
services will create new positions, but there are still far more
people who would like to enter the occupation. For those as-
piring to financial analyst jobs, a strong academic background,
including courses such as finance, accounting, and economics,
is essential. Certifications and graduate degrees, such as a CFA
certification or a master’s degree in business or finance, signifi-
cantly improve an applicant’s prospects.
Earnings
Median annual wages, excluding bonuses, of wage and salary
financial analysts were $73,150 in May 2008, which is more
than double the national median wage. The middle 50 percent
earned between $54,930 and $99,100. The lowest 10 percent
earned less than $43,440, and the highest 10 percent earned
Projected Change,
SOC Employment,
Employment, 2008-2018
Code 2008
2018 Number Percent
13-2051 250,600 300,300 49,600 20
more than $141,070. Annual performance bonuses are quite
common and can be a significant part of their total earnings.

Related Occupations
Other jobs requiring expertise in finance and investment ­include:

Accountants and auditors

Actuaries
Budget analysts
Financial managers
Insurance sales agents
Insurance underwriters
Personal financial advisors
Securities, commodities, and financial
services sales agents

Sources of Additional Information

For general information on securities industry employment,
contact:
hhFinancial Industry Regulatory Authority (FINRA),
1735 K St. NW. Washington, DC 20006. Internet:
http://www.finra.org
hhSecurities Industry and Financial Markets Association,
120 Broadway, 35th Floor, New York, NY 10271. Internet:
http://www.sifma.org
For information on financial analyst careers and training,
contact:
hhAmerican Academy of Financial Management,
200 L&A Rd., Suite B, Metairie, LA 70001. Internet:
http://www.aafm.us
For information on financial analyst careers and CFA certifi-
cation, contact:
hhCFA Institute, 560 Ray C. Hunt Dr., Charlottesville, VA
22903. Internet: http://www.cfainstitute.org
For additional career information, see the ­Occupational
Outlook Quarterly article “Financial analysts and personal
­financial advisors” online at http://www.bls.gov/opub/ooq/
2000/summer/art03.pdf and in print at many libraries and ca-
reer centers.
The Occupational Information Network (O*NET) pro-
vides information on a wide range of occupational char-
acteristics. Links to O*NET appear at the end of the In-
ternet version of this occupational statement, accessible at
http://www.bls.gov/ooh/ocos301.htm

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