Individuals who are interested in helping people manage their money and make sound investments may find a career in finance rewarding. Two popular roles in this field are financial analyst and financial advisor. While they may sound similar, a detailed comparison of financial analyst vs. financial advisor roles reveals key differences.
Exploring the distinctions—and similarities—between the two occupations can help individuals choose the career path that’s right for them. Whether preparing to enter the field for the first time or considering a career change, it’s important to understand what these roles entail as well as how to qualify for either one. For example, what role does an advanced education, such as an Online Master of Business Administration (MBA), play in helping students pursue these roles?
Financial Analyst vs. Financial Advisor: Job Descriptions
The first step for aspiring individuals looking to gain a foothold as financial analysts or financial advisors is to understand each role and their respective duties.
Financial Analyst
Financial analysts examine financial data to help clients―which may include businesses, organizations, and individuals―make informed financial decisions. A financial analyst may provide strategic guidance to help companies improve their profitability. They also help individuals determine financial strategies that can help maximize the performance of their investments, such as stocks, bonds, and real estate holdings.
It’s common for financial analysts to work at banks, pension funds, insurance companies, and corporations. Other titles for financial analysts include investment banking analyst, security analyst, risk investment analyst, and portfolio manager.
Financial Advisor
A financial advisor helps individuals develop wealth-building strategies. A primary area of focus for financial advisors is to execute security trades on behalf of their clients. However, financial advisors help clients in many other ways, including advising on financial planning, debt management, mortgages, budgeting, retirement planning, tax planning, saving for college, and other financial goals.
Financial advisors often work in offices, but regularly meet with clients outside the office. Many are self-employed, according to the U.S. Bureau of Labor Statistics (BLS). While financial advisors can advise their clients on a wide range of matters, some become specialists, focusing on areas such as retirement or risk management.
Similarities Between Financial Analysts and Financial Advisors
Comparing financial analysts vs. financial advisors reveals a few similarities, as the roles share some of the same responsibilities and require similar skill sets and knowledge.
Both occupations focus on developing strategies to help clients meet their financial goals. Financial analysts and financial advisors also rely on their financial expertise and communication skills to describe complex concepts and introduce products, offers, and strategies to help clients make informed financial decisions.
The minimum requirement for both positions is typically a bachelor’s degree in a related field, such as accounting or economics. However, an advanced degree can help individuals stand out to employers when vying for open positions.
Aspiring professionals should also consider certification as a Chartered Financial Analyst (CFA). This postgraduate professional certification demonstrates strong ethical grounding and analytical abilities to potential employers, which can lead to better job prospects. An advanced degree, such as an online MBA, can help individuals prepare for the rigorous CFA exam by providing foundational knowledge in financial practice and principles.
Differences Between Financial Analysts and Financial Advisors
Despite these similarities, the two roles differ in key ways. The primary difference is that financial analysts work with businesses and individuals, while financial advisors generally work with individuals and families.
Licensure requirements also vary. While financial analysts do not require licensure to practice, financial advisors often need to have securities licenses to sell investment products. Common licenses for financial advisors include the Series 6 and Series 7, which are administered by the Financial Industry Regulatory Authority, or FINRA.
Approach
Financial advisors use their knowledge of financial practice and principles, as well as financial strategies and instruments, to help individual investors and clients build wealth.
On the other hand, a financial analyst’s approach is more data-driven. They closely examine clients’ financial data, such as investments, as well as market trends to provide guidance on financial strategies that can help bolster their profitability.
Responsibilities
While individuals in these roles perform some of the same duties, each job also entails different responsibilities.
For example, a primary function of financial analysts is to assess financial data, including gathering and reviewing information about a company’s investments to evaluate its financial stability.
Duties performed by financial analysts can include:
- Investigating a business’s stock holdings
- Coordinating mergers and acquisitions
- Making presentations to business executives
Financial advisors review their client’s financial needs, resources, and goals, and use their knowledge of tax and investment strategies to provide individualized investment guidance.
Duties performed by financial advisors can include:
- Meeting with clients to discuss their financial goals
- Educating clients about investment options and risks
- Recommending personalized strategies related to investments, real estate matters, and estate planning
- Planning for clients’ long-term goals such as saving for college or retirement
Salary
Each of these professions has advantages, whether individuals are looking to enter the field or advance in their careers. This includes highly competitive salaries and strong job growth projections.
According to the BLS, the median annual wage for financial analysts was $95,570 as of May 2021. The median annual wage for financial risk specialists, another type of financial analyst, was $100,000 as of May 2021. Employment of financial analysts is projected to grow by 9% between 2021 and 2031.
The BLS reports a similar median annual wage for financial advisors: $94,170 as of May 2021. However, the projected growth of financial advisor roles is 15%, adding nearly 51,000 new jobs over the same period. The primary factor driving this growth is the nation’s aging population, according to the BLS. As the number of older Americans increases, more financial advisors will be needed to help them plan for retirement.
Choose the Career That’s Right for You
The roles of a financial analyst and financial advisor are just two of the many career paths available to individuals looking to work in finance. With the educational foundation provided by an MBA program, graduates can leverage advanced skills and knowledge to set themselves apart.
Learn more about how Washington State University’s Online MBA in Finance, which includes a concentration in finance, can prepare you to pursue jobs in this competitive, growing field. The finance concentration covers financial practice and principles from an international perspective, which is vital for making sound investment decisions in an increasingly globalized marketplace.
Find out how WSU can help you accelerate your career in finance.
Recommended Readings
5 Hidden Benefits of Getting an MBA
Executive MBA vs. MBA: What’s the Difference?
How Hard Is An MBA Online? Here Are 3 Things You Need To Know
Sources:
Investopedia, “Career Advice: Financial Analyst or Financial Adviser?”
Investopedia, “Financial Planner vs. Financial Advisor: What’s the Difference?”
Investopedia, “Is a Career in Financial Planning In Your Future?”
Investopedia, “What Licenses Do Financial Advisors Need to Have?”
Investopedia, “What Should an Aspiring Financial Advisor Major In?”
U.S. Bureau of Labor Statistics, Financial Analysts
U.S. Bureau of Labor Statistics, Personal Financial Advisors
