Employment and Income for Financial Analysts
Employment
Financial analysts and personal financial advisors held 298,000 jobs in 2002; financial analysts accounted for almost 6 in 10 of the total. Many financial analysts work at the headquarters of large financial companies, several of which are based in New York City. Nineteen percent of financial analysts work for securities and commodity brokers, exchanges, and investment services firms; and 17 percent work for depository and nondepository institutions, including banks, savings institutions, and mortgage bankers and brokers. The remainder work primarily for insurance carriers; accounting, tax preparation, bookkeeping, and payroll services; management, scientific, and technical consulting services; and State and local government agencies.
Approximately 38 percent of personal financial advisors are self-employed, operating small investment advisory firms, usually in urban areas. About 31 percent of personal financial advisors are employed by securities and commodity brokers, exchanges, and investment services firms. Another 14 percent are employed by depository and nondepository institutions, including banks, savings institutions, and credit unions. A small number work for insurance carriers and insurance agents, brokers, and services.
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Job Outlook
Increased investment by businesses and individuals is expected to result in faster-than-average employment growth of financial analysts and personal financial advisors through 2012. Both occupations will benefit as baby boomers save for retirement and as a generally better educated and wealthier population requires investment advice. In addition, people are living longer and must plan to finance more years of retirement. The globalization of the securities markets will increase the need for analysts and advisors to help investors make financial choices.
Deregulation of the financial services industry is also expected to spur demand for financial analysts and personal financial advisors. Since 1999, banks, insurance companies, and brokerage firms have been allowed to broaden their financial services. Many firms are adding investment advice to their list of services and are expected to increase their hiring of personal financial advisors. Numerous banks are now entering the securities brokerage and investment banking fields and will increasingly need the skills of financial analysts in these areas.
Employment of personal financial advisors is expected to grow faster than the average for all occupations through the year 2012. The rapid expansion of self-directed retirement plans, such as 401(k) plans, is expected to continue. As the number and complexity of investments rises, more individuals will look to financial advisors to help manage their money. Financial advisors who have either the CFP (R) certification or ChFC designation are expected to have the best opportunities.
Employment of financial analysts is expected to grow about as fast as the average for all occupations through the year 2012. As the number of mutual funds and the amount of assets invested in the funds increase, mutual-fund companies will need increased numbers of financial analysts to recommend which financial products the funds should buy or sell.
Financial analysts also will be needed in the investment banking field, where they help companies raise money and work on corporate mergers and acquisitions. However, growth in demand for financial analysts to do company research will be constrained by the implementation of reform proposals calling for investment firms to subsidize independent research boutiques and separate research from investment banking. Firms may try to contain the costs of reform by eliminating research jobs.
Demand for financial analysts in investment banking fluctuates because investment banking is sensitive to changes in the stock market. In addition, further consolidation in the financial services industry may eliminate some financial analyst positions, dampening overall employment growth somewhat. Competition is expected to be keen for these highly lucrative positions, with many more applicants than jobs.
Earnings
Median annual earnings of financial analysts were $57,100 in 2002. The middle 50 percent earned between $43,660 and $76,620. The lowest 10 percent earned less than $34,570, and the highest 10 percent earned more than $108,060. Median annual earnings in the industries employing the largest numbers of financial analysts in 2002 were as follows:
| Other financial investment activities | $74,860 |
| Management of companies and enterprises | $60,670 |
| Securities and commodity contracts intermediation and brokerage | $58,540 |
| Nondepository credit intermediation | $51,700 |
| Depository credit intermediation | $51,570 |
Median annual earnings of personal financial advisors were $56,680 in 2002. The middle 50 percent earned between $36,180 and $100,540. Median annual earnings in the industries employing the largest number of personal financial advisors in 2002 were as follows:
| Other financial investment activities | $74,260 |
| Securities and commodity contracts intermediation and brokerage | $68,110 |
| Depository credit intermediation | $51,030 |
Many financial analysts receive a bonus in addition to their salary, and the bonus can add substantially to their earnings. Usually, the bonus is based on how well their predictions compare to the actual performance of a benchmark investment. Personal financial advisors who work for financial services firms are generally paid a salary plus bonus. Advisors who work for financial-planning firms or who are self-employed either charge hourly fees for their services or charge one set fee for a comprehensive plan, based on its complexity. Advisors who manage a client’s assets usually charge a percentage of those assets. A majority of advisors receive commissions for financial products they sell, in addition to charging a fee.
This information courtesy of the Occupational Outlook Handbook (USBLS)
