What Does a Financial Analyst Do?

by on November 15, 2012

financial analyst jobEver wondered what a financial analyst does?  Are you in college and majoring in finance in hopes of being a financial analyst?  Is being a financial analyst the same as being an accountant?

These are all good questions to ask yourself when searching for a career in finance.  Personally, I’ve been a financial analysst, a stock analyst, an investment banker, an internet sales forecasting manager, a self employed blogger, and now, after many years, a financial analyst again.  If you’re wondering what the role of financial analyst really means, I’d like to share my insight.

First of all, the job position of financial analyst is actually pretty common.  It can range from an entry level position that does mostly data input to a senior position that is the right hand person to the CFO.  The position itself offers some room to grow over the years.

Is being a financial analyst the same as being an accountant?  I would answer an emphatic “no” to this question.  An accountant is someone that takes the financial information of a company and classifies it into accounts.  Then ties the accounts together using a very advanced system of checks and balances to ensure that everything is “accounted” for.  A financial analyst, on the other hand, takes the information from the accountant and meets with key business heads and departments in order to solve business problems and to improve business profitability.  While there is a lot of overlap between the two positions, typically the financial analysis role is more proactive and the accounting role is typically more reactive.

What are the typical duties of a financial analyst?  This varies dramatically depending on the company you work for and what they expect.  Some companies struggle to even report and understand their own finances, while others are very organized and detailed, and analyses can involve tens of thousands of rows of data.  Typical duties include reporting results to the various departments and to senior management.  They also include doing forward looking analyses like sales forecasting, budgeting and other yearly or quarterly tasks.  In addition, most analysts are endeavored to complete ad hoc analyses that help make both big and small business decisions.  For example, I did a stint a few months ago working for an insurance company, where I did financial modeling on how to value a possible acquisition target.  In summary, the role of financial analyst can carry many different levels of complexity and detail.

What is the next career step for a financial analyst?  This is a tough question.  Most financial analysts end up moving on to something else, or eventually becoming the head of finance for their company.  If you’re looking to become CFO, however, it may be difficult starting from this position.  In many cases, a financial analyst gets so involved with other business departments that they can switch jobs and become a product manager or take some other role in their company.

How much can a financial analyst make? Depending on the company you work for and the role you take on, the level of pay has a gigantic range.  Entry level financial analysts make somewhere between $25 and $45k.  Senior financial analysts often make between $50 and $110k.  If you make it to the next level, it can rise even more.  However, if you get stuck working for a crappy company watch out.  You may not be able to move up very quickly or maybe even at all.  The best way to make more money is to switch jobs, find a director or manager position, or find a company that is in a better paying industry (think services companies).

These are my quick thoughts on being a financial analyst.  Do you have any thoughts to share?

{ 1 comment… read it below or add one }

Chris Adams November 27, 2012 at 5:10 pm

Interesting job. The whole world of finance is unknown to me, and I have to say, that I have never thought about it. According to your article, it doesn’t sound bad to me at all. Where can I study to be a financial analyst?

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