What is a financial planning analyst?
Written by Michael Feder
Reviewed byKathryn Uhles, MIS, MSP,Dean, College of Business and IT
Financial planning and analysis (FP&A) has four related areas of focus: budgeting, integrated financial planning, forecasting, and management and financial performance reporting. Let's look at how financial planning analysts carry out these activities.
What does a financial planning analyst do?
The insights from a financial planning analyst help a company define and manage risks, inform decisions, execute strategies and measure results.The forecasts, performance reports and holistic view of the company’s finances provide essential insights for strategic planning and assessment of current processes.
FP&A professionals directly influence decision-making. They might report to top executives, like the chief financial officer.Afinancial planning analyst’s job dutiesvary depending on their employer’s industry and the organization of its finance department. That being said, many analysts are required to do the following:
- Forecasting and budgeting: Financial planning analysts look at reports and define trends within the company and the overall market. They then use this information to create realistic budgets that account for variables. According to business software company NetSuite, many businessesto continually update and improve plans.
- Performance reporting: FP&A professionals use profit and loss (P&L), management analysis and variance reports to measure adherence to budgeting plans across the company and assess overall financial performance. In addition to these documents, executives might ask for other reports to provide insights into a specific area of the business.
- Profit and cost-saving analysis: Analysts assess financial performance in relation to the profit margins of each product or service the company provides. They might use these insights to suggest cost-saving measures or advise increased focus on activities offering the best profit margins.
- Modeling: Financial planning analysts can also create forecasts based on specific situations within the company or economic scenarios. These insights help with risk management and planning.
FP&A professionals use accounting and analytics software to manage and analyze data and visualize it for presentation to company decision-makers.
Essential financial planning skills
Financial planning analysts need technical skills, an understanding of their company’s industry and structure, and soft skills, according to the .
- Quantitative skills: FP&A analysts use financial data for almost every aspect of their job. They need to be comfortable using financial formulas and making algebraic calculations manually or with computer software. A knowledge of statistics and probability is also vital.
- Computer skills: FP&A jobs involve using software to collect, organize and analyze data and make forecasts. In addition to spreadsheets, database applications, and accounting or bookkeeping software, this job also requires a knowledge of data visualization software.
- Critical thinking and analytical skills: Analysts must be able to assess research and forecast results, form conclusions and support suggestions with data. They also need the ability to select information to use for forecasting.
- General business knowledge: FP&A specialists provide a holistic view of company finances. This requires an understanding of corporate structures and how different departments interact. An understanding of economics is also helpful when accounting for external factors affecting the company.
- Budgeting abilities: Financial planning analysts need to understand how to read financial statements and data and use them to create a budget that accounts for all spending and potential income.
- Communication: Despite the focus on quantitative analysis, financial planning analysts are not only number crunchers. Analysts need to be able to communicate effectively with peers in their department and be able to succinctly report findings to company managers and executives.
In addition to the aforementioned skills, analysts need organizational skills and the ability to pay close attention to details and complete different detail-oriented tasks.
Tasks and responsibilities
Financial planning and analysis professionals have specific responsibilities and work on different tasks and projects based on the needs of their employers:
- Market research: Analysts look for market trends andanalyze economic datarelated to their employer’s industry and competitors. Insights from this research can inform budgeting and forecasting activities.
- Cost-benefit analysis: FP&A teams are often responsible for performing cost analysis to forecast profits andpotential benefitsfor an impending project or a strategy change.
- Trend analysis: Trend analysis seeks to find trends within a company or in external markets. Well-defined trendshelp with forecastingbecause they show what conditions will be if the trend continues.
- Budgets: Analysts create budgets that take into account different departments and activities within a company. These financial plans take into account current activities and financial forecasts.
- Risk management: Forecasting, trend analysis and market research can help define potential risks and inform overall financial management decisions. FP&A reports can focus on risks and offer situation-specificmodels illustrating best- and worst-case scenarios.
- Evaluation: These analysts alsocollect and analyze datato assess each department’s or team’s performance in relation to budget plans and financial forecasts.
In many cases, FP&A teams compile reports based on their research, analysis, forecasts and findings.
Working in FP&A
Financial planning analysts provide holistic views of acompany’s financial performance. They need to work cross-functionally since their budgets and forecasts affect other departments.
For example, an FP&A specialist might work with the accounting department toensure budgets are accurateand obtain input from the sales department to set reasonable benchmarks and track performance.
Education requirements and certificates
Financial planning analysts have asignificant influenceover the financial plans and strategies of a company. Therefore, positions require a solid knowledge base that includes an understanding of business.
According to BLS, financial analyst entry-level positions require abachelor’s degree in businessor a related field, like finance or accounting.
In addition to business, financial planning analysts can choose to studyaccounting or finance. These two degrees offer different advantages: Accounting focuses more on budgeting and planning while finance focuses more onanalyticsand the financial aspect of business operations.
While most employers typically require a bachelor’s degree, BLS reports that some employers prefer candidates with amaster’s degree. Though postgraduate degrees may not be necessary to obtain an analyst job, anMBA, along with experience and specialization, may be necessary to qualify for more senior positions.
A stand-alone financial planning certificate program can help aspiring analysts specialize in FP&A if they a relevant degree. Industry certifications and licenses may be preferred or even required depending on the employer. BLS notes that a license is generally required to sell financial products. These licenses often require sponsorships by employers, meaning they will not be expected prior to being hired for a position. Industry certifications may also be preferred or required, but that is up to the employer.
Financial planning analyst job outlook and salary expectations
Financial analysts earned an, according to BLS. Salary can vary depending on experience, industry, employer size, education and location. BLS projects the demand for qualified analysts togrow by an estimated 8%from 2022 to 2032.
Salary ranges are not specific to students or graduates of ۴ý. Actual outcomes vary based on multiple factors, including prior work experience, geographic location and other factors specific to the individual. ۴ý does not guarantee employment, salary level or career advancement. BLS data is geographically based. Information for a specific state/city can be researched on the BLS website.
BLS Occupational Employment Projections, 2022-2032 is published by the U.S. Bureau of Labor Statistics. This data reflects BLS’ projections of national (not local) conditions. These data points are not specific to ۴ý students or graduates.
Learn more about financial planning analysts and other business and finance careers
If you’re interested in learning more about what a financial planning analyst does, ۴ý offer several relevant degrees:
- Bachelor of Science in Business
- Bachelor of Science in Finance and Technology
- Bachelor of Science in Accounting with an Associate of Arts with a concentration in Business Fundamentals
- Master of Business Administration
Contact ۴ý for more information.
ABOUT THE AUTHOR
A graduate of Johns Hopkins University and its Writing Seminars program and winner of the Stephen A. Dixon Literary Prize, Michael Feder brings an eye for detail and a passion for research to every article he writes. His academic and professional background includes experience in marketing, content development, script writing and SEO. Today, he works as a multimedia specialist at ۴ý where he covers a variety of topics ranging from healthcare to IT.
ABOUT THE REVIEWER
Currently Dean of the College of Business and Information Technology,Kathryn Uhles has served ۴ý in a variety of roles since 2006. Prior to joining ۴ý, Kathryn taught fifth grade to underprivileged youth in ۴ý.
This article has been vetted by ۴ý's editorial advisory committee.
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