Financial Analyst vs. Financial Advisor

Financial Analyst vs. Financial Advisor

SmartAsset: Financial analyst vs financial advisor

Financial analysts and financial advisors are both professionals who help people and organizations achieve their financial goals. The roles are similar and overlapping in some areas but also have specific differences. Financial analysts focus on using data and research to value investments and recommend purchases or sales. Advisors may also do analysis as part of recommending and managing investments but are equally or more concerned with explaining concepts, guiding budgeting and saving and crafting specific plans for funding clients’ retirement, education and other financial goals.

A financial advisor can be an important member of your team.  

Financial Analysts

Financial analysts provide organizations and individuals with insight and recommendations about investment opportunities. They conduct research and collect data on securities and other financial assets, including economic and market data, and crunch numbers to develop analyses of valuation, trends and risks. They often issue recommendations about buying and selling investments.

Financial analysts typically have a bachelor’s degree in economics, finance, business or a related subject area and many also earn advanced degrees, although the work does not require any specific educational attainment.

They may have professional certifications, such as Chartered Financial Analyst, but there are no licensing requirements for much of the work that financial analysts do. If an analyst actually sells securities, they must be licensed by the Financial Industry Regulatory Authority (FINRA).

Where to Find Financial Analysts

SmartAsset: Financial analyst vs financial advisor

Financial analysts typically are employed by banks, insurance companies, securities firms, investment advisors, mutual funds, hedge funds and pensions. They may also be called securities analysts, investment analysts, portfolio managers or fund managers.

Financial analysts may be buy-side analysts, advising clients or employers about which investments to purchase, or sell-side analysts, helping securities firms and others price their investment offerings.

Financial analysts are often salaried employees. But sometimes, as in the case of fund managers, receive a percentage of the assets they are managing. Median earnings for financial analysts in May 2021 came to $95,570 per year, according to the Bureau of Labor Statistics. There were 373,800 jobs for financial analysts at the time, and the number of jobs was projected to grow at 9% annually through 2031.

Financial Advisors

Financial advisors help people and organizations with specific advice and, sometimes, the implementation of financial strategies. Advisors’ service offerings may cover budgeting, borrowing, retirement saving, education funding, selecting investments, risk management, estate planning and tax management.

In addition, advisors may be compensated by flat fees or by receiving a percentage of the assets they manage for clients. So in addition to making recommendations, many financial advisors facilitate buying and selling securities and other assets for clients. When they do this, sales commissions are often part of their compensation.

Financial advisors don’t have to have any particular educational background. Although, many have four-year degrees in finance, economics or a related field. Some undergo significant training in order to qualify for certifications such as the Certified Financial Planner designation.

Where to Find Financial Advisors

Financial advisors are often self-employed, and others work for banks, brokerages, investment companies and investment advisory firms. Financial advisors may work for investment firms that are registered with the federal Securities and Exchange Commission. Some are registered with state officials. If they sell securities, they must have licenses from FINRA.

Also, personal financial advisors earn median annual income of $94,170, according to BLS. There are 330,300 financial advisor jobs in the US., and it’s expected to expand at 15% annually through 2031, which is much faster than average.

Bottom Line

SmartAsset: Financial analyst vs financial advisor

Financial analysts and financial advisors perform similar and sometimes overlapping duties for individuals and organizations pursuing financial objectives. Financial analysts are more focused on researching and evaluating investments with the objective of making recommendations, while advisors are more involved personally with clients and may guide the development of long-term financial plans as well as directly brokering purchases and sales of securities and other assets. Overall, both jobs pay similar amounts, although advisors have a more positive job outlook.

Tips for Choosing a Financial Advisor

  • There are many ways a financial advisor can help you, as they often have substantial experience in dealing with various types of financial issues. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • As you search for an advisor, look for someone who has the proper certifications, and you can start by taking a look over these top 10 financial certifications to get prepared beforehand. If you’re looking for help with your taxes, you might want to find a CPA. For anyone getting a divorce, a certified divorce financial analyst (CDFA) could be helpful.

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