What does a financial analyst do?

What does a financial analyst do on a daily basis?

I’ve worked as a financial analyst in the past and now help people break into analytics fields.

Here’s what you can expect in the day to day of a financial analyst role.

A Typical Day

Like most other analytics roles, there’s no one single answer to “what does a financial analyst do?”

While there are a lot of similarities across roles, financial analysts can work in multiple different areas. 

Financial analyst jobs are obviously incredibly common within the finance industry - working at investment banks, for buy side firms or sell side firms, etc.

However, they’re also widespread in other industries, functioning in a similar role to data analysts, but focused on the finances of the business.

The one overarching financial analyst job description is to analyze financial data and use their findings to help companies make business decisions.

I’m focusing this article on what a financial analyst does within most industries outside of finance.

Day to day work for a financial analyst centers around analysis, research, forecasting, and reporting.

Depending on the role, these activities may be generic to the entire business or the financial analyst may be focused on a niche area of a business - such as manufacturing, warranty, etc.

Analysis

Financial analysts spend the majority of their time analyzing what has happened within the company.

Using a variety of tools from SAS to Tableau to Python, or a host of other options, they’ll explore what has happened and how different areas of the business have performed.

They’ll spend time drilling down into the depths of information especially if a segment of the business has over or underperformed.

Financial analysts look at what has happened and then often explore for the WHY - working with different segments of the business to explain what has gone exceptionally well or not as good as planned.

This also involves comparing actual results to forecasted results. They’ll determine how accurate the forecasts were, which assumptions may have been flawed, and make adjustments to how they forecast in the future.

Research

No business operates in complete isolation.

Financial analysts need to understand what’s going on outside of their company.

This means looking at macroeconomic trends.

It means accounting for industry changes or cycles.

It also means keeping a close eye on stats that in the past have been strong indicators of increase or declines in the market.

For instance, a financial analyst working in a company that produces earth moving equipment is likely very interested in how new home sales compare to past periods and how much companies are spending on infrastructure investments.

Forecasting

What does the future hold?

Based on what has happened in the past, current and expected trends in the market and overall economy, financial analysts predict what this means for their specific business.

Are sales likely to improve, decline, or hold steady?

What areas present risks to be aware of or perhaps opportunities to capitalize on?

Reporting

Because company finances are always high on the radar of any executive team, there’s no getting around the heavy amount of reporting required for a financial analyst.

This often means multiple reports at varying levels of detail that are distributed to different levels of the organization.

In addition to reporting the facts, most financial analysts are also expected to give recommendations.

Based on their data, analysis, and forecast, what should be done going forward?

Are there changes that should be made or items that require special monitoring?

Of course each position will vary, but that’s the major of what a financial analyst does.

If you’re an analyst or considering becoming an analyst, check out my quiz on analytics career paths. Answer a few questions and find out what analytics career path is the right fit for you.