Financial Analyst vs. Data Analyst: Key Differences You Should Know!

Financial analyst and data analyst are two distinct professions within the broader analytics domain. While both positions involve analyzing data, they differ in their focus areas, the types of data they work with, and the specific skills required for each role.

Companies use data to help them make effective business decisions. Analysts often evaluate different types of data, translating raw information into reports and presentations that companies can use to support their decisions. If you’re considering a job as an analyst, understanding the differences between data analysts and financial analysts can help you determine which career is right for you. In this article, we explain what data analysts and financial analysts are, then compare and contrast the two professions.

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What is Data Analysis?

Data analysis is the process of gleaning insights from data to inform better business decisions. Analyzing data typically moves through five iterative phases:

• Identify the data you want to analyse
• Collect the data
• Clean the data in preparation for analysis
• Analyse the data
• Interpret the results of the analysis

Data analysis can take different forms, depending on the question you’re trying to answer. Briefly, descriptive analysis tells us what happened; diagnostic analysis tells us why it happened; predictive analytics forms projections about the future; and prescriptive analysis creates actionable advice on what actions to take.

A data analyst is a person who gathers and interprets data to solve a specific problem. The role includes plenty of time spent with data but entails communicating findings too.

Here’s what many data analysts do on a day-to-day basis:

• Gather data: Analysts often collect data themselves. This could include conducting surveys, tracking visitor characteristics on a company website, or buying data sets from data collection specialists.
• Clean data: Raw data might contain duplicates, errors, or outliers. Cleaning the data means maintaining the data quality in a spreadsheet or through a programming language so that your interpretations won’t be wrong or skewed.
• Model data: This entails creating and designing the structures of a database. You might choose what data types to store and collect, establish how data categories are related, and work through how the data appears.
• Interpret data: Interpreting data will involve finding patterns or trends in data that can help you answer the question at hand.
• Present: Communicating the results of your findings will be a crucial part of your job. You create visualisations like charts and graphs, write reports, and present information to interested parties.

What tools do data analysts use?

Data analysts often use various tools to make their work more accurate and efficient during data analysis. Some common tools in the data analytics industry include:

• Microsoft Excel
• Google Sheets
• SQL
• Tableau
• R or Python
• SAS
• Microsoft Power BI
• Jupyter Notebooks

Data analyst salary and job outlook

The average base salary for a data analyst in India is ₹6,60,000. This can vary depending on your seniority, location in India, and other factors.

Data analysts are in high demand. It’s estimated that 97,000 data analyst jobs remain unfilled annually in India, and demand for these employees has created a 45 per cent increase in data analyst jobs on the Indian market.

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Types of data analysts

As advancing technology has rapidly expanded the types and amount of information we can collect, knowing how to gather, sort, and analyse data has become a crucial part of almost any industry. You’ll find data analysts in the criminal justice, fashion, food, technology, business, environment, and public sectors—amongst many others.

People who perform data analysis might have other titles, such as:

• Medical and health care analyst
• Market research analyst
• Business analyst
• Business intelligence analyst
• Operations research analyst

How to become a data analyst

There’s more than one path toward a career as a data analyst. Whether you’re just graduating from school or looking to switch careers, the first step is often assessing your transferable skills and building the skills you’ll need in this new role.

Data analyst technical skills

• Database tools:  Microsoft Excel and SQL should be mainstays in any data analyst’s toolbox. Whist Excel is ubiquitous across industries, SQL can handle larger sets of data, and experts consider it necessary for data analysis.
• Programming languages: Learning a statistical programming language like Python or R will let you handle large data sets and perform complex equations. Though Python and R are among the most common, it’s a good idea to look at several job descriptions of a position you’re interested in to determine which language will most benefit your industry.
• Data visualisation: Presenting your findings clearly and compellingly is crucial to being a successful data analyst. Knowing how best to present information through charts and graphs will make sure colleagues, employers, and stakeholders will understand your work. Tableau, Jupyter Notebook, and Excel are some tools used to create visuals.
• Statistics and maths: Knowing the concepts behind what data tools are doing can help you tremendously in your work. A solid grasp of statistics and maths can help you determine which tools are best to use to solve a particular problem, help you catch errors in your data, and better understand the results.

Data analyst workplace skills

• Problem-solving: A data analyst needs to understand the question and the problem that needs to be solved. They also should be able to find patterns or trends that might reveal a story. Having critical-thinking skills will allow you to focus on the types of data, recognise the most revealing methods of analysis, and catch gaps in your work.
• Communication: Getting your ideas across to others will be crucial to your work as a data analyst. Strong written and speaking skills to communicate with colleagues and other stakeholders are good assets for data analysts.
• Industry knowledge: Knowing about the industry you work in—health care, business, finance, or otherwise—can give you an advantage in your work and job applications. If you’re trying to break into a specific industry, pay attention to the news in your industry, or read a book on the subject. This can familiarise you with the industry’s main issues and trends.

Paths to becoming a data analyst

Acquiring these skills is the first step to becoming a data analyst. Here are a few routes you can take to get them that are flexible enough to fit around your life.

• Professional certificate: Entry-level professional certificate programmes usually require no previous experience in the field. They can teach you basic skills like SQL or statistics while allowing you to create projects for your portfolio and provide real-time feedback on your work.
• Bachelor’s degree: If you’re considering getting a degree to become a data analyst, focusing your coursework in statistics, maths, or computer science can give you a head start with potential employers. In 2020, the Indian government allowed fully online degrees for the first time. Now the country has over 500 approved online degree programmes available.
• Self-study: If you want a path that doesn’t include formal training, you can independently learn the skills necessary for data analysis. You can build a portfolio to show prospective employers.

Data analyst career advancement

Being a data analyst can create opportunities to move into other careers, as many who start as data analysts go on to work as data scientists. Data scientists use statistics, maths, and computer science to analyse data like analysts. A scientist, however, might use advanced techniques to build models and other tools to provide insights into future trends.

A financial analyst helps make business or investment decisions for a company based on their industry knowledge and assessments of market trends, business news, and the company’s financial position.

Financial analysts can work for financial companies like banks or investment companies or within businesses. Financial analysts commonly have academic backgrounds in finance, economics, accounting, or statistics.

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What is Financial Analyst

A financial analyst guides companies or individuals on business investment decisions by analyzing economic trends, current business news, and companies’ overall business strategy.

A financial analyst helps make business or investment decisions for a company based on their industry knowledge and assessments of market trends, business news, and the company’s financial position.

Financial analysts can work for financial companies like banks or investment companies or within businesses. Financial analysts commonly have academic backgrounds in finance, economics, accounting, or statistics.

What does a financial analyst do?

A financial analyst works with financial data to help organisations make business decisions. Though the specifics of what a financial analyst does can vary, a financial analyst is often expected to perform the following tasks:

• Build financial models to perform financial forecasts, predict business scenarios, and provide other data analysis to help make business decisions.
• Study economic and business trends to provide context around business decisions.
• Support budgeting efforts at organisations.
• Compile written reports and recommendations on financial statuses.

Financial analyst salary and job outlook

The average salary for a financial analyst in India is ₹6,20,000 a year plus between ₹47,500 and ₹1,27,500 in additional compensation. This amount can vary based on your location, education, and experience.

Types of Financial Analysts

Financial analysts are sometimes classified into buy-side analysts and sell-side analysts.

• Buy-side analysts create investment strategies for companies that purchase securities and other assets for money management. These companies, commonly called institutional investors, include mutual funds, hedge funds, insurance companies, independent money managers, and nonprofit organisations.
• Sell-side analysts assist and guide financial services sales agents who sell stocks, bonds, and other investments.

How to become a financial analyst

To become a financial analyst, you must have some basic qualifications. These can include both education and certifications.

Education: An entry-level financial analyst typically has a degree, often in marketing or finance and may also have a relevant certification. If you are looking for a broader scope of opportunity or a higher salary, getting a master’s degree or a PhD in finance may be helpful.

Certification: You may pursue the NSE Certification in Financial Market (NCFM) credential, which the National Stock Exchange of India manages. Many companies consider NCFM certification as a minimum requirement. Even if you apply for a role with a company that doesn’t require it, it can be a plus on your CV whilst providing concrete evidence of your knowledge.

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Financial analyst skills

Financial analysts generally have the following skills to perform well in their tasks:

Technical skills

• Accounting knowledge
• Analytical ability
• Financial literacy
• Data analysis
• Corporate finance knowledge
• Financial software knowledge
• Budget management training
• Financial reporting skills
• Research skills
• Financial analysis skills

Workplace skills

• Communication
• Negotiation
• Influencing
• Critical thinking
• Flexibility
• Resilience
• Collaboration
• Problem-solving
• Dedication
• Relationship-management

Tips for becoming a financial analyst

Becoming a financial analyst starts with the proper education, certification, and experience. Consider these tips to start your first job as a financial analyst:

1. Take a course. Bolster your knowledge of a particular skill by taking a course.

2. Intern. Apply for an internship with a company that matches your industry interest. Interning can give you experience, knowledge, and networking opportunities within the financial field to help you land a job afterwards. Look for internship opportunities on job sites like LinkedIn or Indeed.

3. Look for entry-level positions. Entry-level positions are geared toward analysts who are starting their careers. Look for the following titles in your job search that generally indicate an entry-level position:

• Junior financial analyst
• Associate financial analyst

4. Prepare for your interviews. Be prepared for interviews by anticipating questions and having answers ready. Potential interview questions might include:

• What is your experience with data analysis?
• What do you do to stay informed about this industry?
• How would you create a quarterly sales report?
• What would you do if you found an inconsistency in a financial report?
• What is EBITDA?
• Describe a time you accomplished something as a team.

Financial analyst career paths

These careers can be viable options for people who have skills similar to those needed for financial analysts:

• Portfolio managers study the current state of the market and work with other financial professionals to determine the best investment opportunities and decisions for a company’s business portfolio. They also have a deep and active understanding of current business trends, allowing them to predict the market’s future better. Portfolio managers use this knowledge to guide businesses and individuals’ investment decisions.
• Fund managers work primarily with hedge funds or mutual funds. They stay informed on the overall goals of the fund as well as market trends to help make sound decisions.
• Rating analysts evaluate and assess the market and a company’s financial abilities and strategies to make educated recommendations on how a company should proceed.
• Risk analysts use business and financial knowledge to assist companies in determining the amount of risk in possible investment decisions. They make recommendations based on their analysis findings and help track and minimise a company’s financial loss. Risk analysts are often responsible for assessing and reporting asset losses, staying current on investment trends, and collecting and analysing data.

Senior roles

Financial analysts may go on to work in the following senior positions:

• Senior financial analysts may manage a group of analysts and oversee larger financial analysis projects to assist a company’s executive-level team.
• Finance managers are responsible for the financial health of a business. They develop plans for the long-term financial goals of their organisation.

Executive-level positions

Significant experience in finance and management is usually necessary for people to advance to executive-level positions like director or chief financial officer.

• A finance director uses the experience they have gained in their financial analysis career to help oversee all financial activities of a company.
• The chief financial officer is the highest executive financial role and oversees the company’s business strategy, direction, and financial activities.

Tips for deciding between becoming a data or financial analyst

In order to decide which analytic specialty is right for you, it’s helpful to consider your career goals. You can review the tips below to help you determine what your goals are and which career might suit your personal and professional needs:

• Consider your interests: Financial analysts evaluate accounting and financial information, whereas data analysts focus more on operational performance. Having a preference for accounting or programming concepts can help you decide which specialty to pursue.

• Research job descriptions: Reviewing the job description for both data and financial analysts can help you visualize the daily routine for each profession. Evaluating the responsibilities of each type of analyst can also help you find the career that appeals to you.

• Ask current analysts questions: Discussing the specialty with active professionals can provide you the opportunity to ask more about each profession. You might also ask to job shadow a data or financial analyst to help you understand more about their responsibilities.

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Frequently asked questions (FAQs)

Is a data analyst a good job?‎

Data analysts tend to be in demand and well-paid. The average salary for data scientists in India is ₹6,60,000 annually. If you enjoy solving problems, working with numbers, and thinking analytically, a career as a data analyst could be a good fit for you. ‎