Financial analysis is a highly regarded profession lately. Various sectors like corporate, banking, and I/NGOs demand highly experienced professionals as financial analysts.
Similarly, government entities dealing with national policy and programs are one of the significant platforms a financial analyst can contribute to. Owing to the position they are the potential to acquire, financial analysts need to have a deep understanding of accounting principles and practices, as well as extensive knowledge of financial statements.
Their job responsibilities may include researching potential investments, evaluating corporate management, mapping existing financial policies or auditing the books.
The financial analyst may be an ideal option if you are looking for a lucrative, stable and high-income job opportunity in the business sector.
What Is a Financial Analyst?
One can assume that a financial analyst is someone who works in finance. They are responsible for analysing the current market, predicting future trends, and understanding how businesses work and prosper.
The ‘analyst’ part incorporates the responsibility of analysing and interpreting numbers. Therefore, a financial analyst must also have a strong knowledge of accounting principles and regulations.
There are various fields of work a financial analyst can opt for. Some focus on specific industries, while others specialise in areas ranging from mergers and acquisitions to investment banking, corporate finance, venture capital, risk management, fixed-income securities, derivatives, and equity research.
What are the Roles and Responsibilities of Financial Analysts?
- Provide financial analysis to companies that are publicly traded and determine whether a company's stock price is over-or undervalued
- Identify trends in the market and predict future performance
- Analyse the financial statements of companies to determine their ability to pay dividends and meet other obligations
- Evaluate the risks associated with investing in stocks
- Perform market research and do mapping of financial policies and competitors
- Help investors make informed decisions about their investments
- Researching the companies that he/she works for, as well as other companies in his/her field
- Plan out strategies to achieve goals and objectives
- Monitoring the progress of the company's business
- Conduct research using statistical methods to study economic trends and develop new strategies.
- Specialise in particular areas, like foreign exchange rates, bonds, commodities, or interest rates
Qualifications Required to be a Financial Analyst
- An Interest in Finance
The first thing recommended if you want to become a financial analyst is to have an interest in finance. If you are not interested in finance, this may not be your right career path.
It would be best to remember that finance is about numbers, which can sometimes be challenging to understand. However, if you enjoy maths and numbers, you should consider becoming a financial analyst.
- Analytical Thinking Skills
A financial analyst has to have good analytical skills. They need to think logically and make sound decisions based on facts. An analyst needs to be able to understand complex financial statements and figures. This includes being able to interpret them and draw conclusions from them.
- Problem-Solving Skills
Financial analysts are responsible for finding solutions to problems in their field of work. You may argue that problem-solving skills are equally important in any other field.
Nonetheless, it is more important for financial analysts because they deal with substantial monetary figures in both quantity and liability. Remember that if something goes wrong, you can not skip it and must know how to fix it. Also, you need to be creative and innovative to come up with solutions to problems.
- Communication Skills
An analyst's communication skills are critical to be successful. He needs to be able to communicate effectively with others. He needs to be comfortable speaking in front of groups and making presentations to clients. Meanwhile, they also have to be good listeners and have clarity of thoughts and expression.
A financial analyst should have a deep interest in the industry they are analysing. They need to be curious about what makes things work and how they can be improved. They should be urged to learn and stay updated with the latest strategies and market trends. This curiosity and learning attitude will help them perform better as financial analysts.
- Maths Skills
Mathematics is one of the most needed skills to become a financial analyst. All analysts use formulas and equations to analyse data. Since finance is based on mathematics, it is required that you understand this subject well.
If you do not understand mathematics but aim to become a financial analyst, it would be wise to take maths classes in college or high school. Building a strong understanding of these concepts will help save time and money at work.
The Process to Become a Financial Analyst
Get a Degree
Getting a bachelor's or master's degree will come in handy regarding the promotion. Although you can enter the professional sector with different simple training or diploma programs, a degree in the major is essential to rise above the ranks.
The undergraduate program for a financial analyst is 4 years long, and the graduate program is generally 1-2 years.
Degree Programs for Financial Analysts
Bachelor's Degree Programs
BSc (Hons) Financial Mathematics
Bachelor of Science and Master of Science in Financial Engineering
BSc in Financial Mathematics and Economics
Honours BSc in Financial Mathematics and Economics
Global Analysis, BS
Financial Mathematics BSc
BSE in Operations Research and Financial Engineering
Bachelor of Science in Financial Management
Bachelors in Business, Organisation and Society
Master’s Degree Programs
MSc in Mathematical and Computational Finance
MBA with Co-Op
Master of Science in Financial Engineering
Financial Mathematics MSc
Master of Science in Financial Engineering and Risk Management
Mathematical Finance MSc
MSc in Mathematical Finance
Business Data Science and Analytics - Master of Science
Master of Science in Mathematics and Computational Finance
MSc in Financial Technology (FinTech)
MSE in Operations Research and Financial Engineering
Get Licence and Certifications
Certification in the financial sector is a vital tool to help you build a formidable prospect and land rewarding positions. CFP, CFS, CGFM, CIIA, and CIMA are some of the top certification programs to get you started.
Also, the licence programs like FINRA (The Financial Industry Regulatory Authority) add significant credibility to your portfolio if you seek greater heights.
Get Internship and Placement
Besides getting a degree, licence, and certification, financial analysts must garnish on-hand work experience. No matter how outstanding your academic achievements are, job seekers always are on the lookout for someone with experience in the field, even if it's just an internship.
So, the broader range of knowledge in different specialisation fields, the more comprehensive your employment prospects.
Salary of Financial Analyst
Financial analysis is one of the most highly-demanded professions in the business sector; the modern business organisation now understands an analyst's significance in leading the competition.
Like any other field, the salary of a financial analyst is determined by experience and the specialisation field.
The average base salary of a financial analyst in the USA is estimated to be around $62,893/year, with a total pay margin of $48,000 - $88,000.
Average Annual Income of Financial Analyst
Advantages and Disadvantages of Becoming a Financial Analyst
The financial sector has its own merits and demerits. Owing to this, financial analysts also experience both the bright and the gloomy sides of the profession.
- You get paid well; financial analysts are some of the highest-paid professionals out there
- You’re not stuck behind a desk; the profession offers work flexibility
- You don't need a college degree; while a bachelor's degree is usually preferred, you do not necessarily need a four-year degree to become a financial analyst
- Career growth opportunities
- Decent job prospects
- No need for a labour force
- Opportunity to work as a freelancer or consultancy at multiple companies at the same time
- In-work-developed skills will help you to make an efficient investment decision.
- Stable and always in demand line of profession
- Stressful profession, as all the data and analytics should be accurate
- Unpredictable long working hours
- Hard to balance work and life as the job demands a high level of energy concentration
- You may lose track of time, constantly thinking about numbers and trends
- Gets complicated to start your venture, unlike in other fields
- May need to give up on weekends as something always comes up
Career as a Financial Analyst
Financial analyst jobs are some of the best-paying jobs out there. This is because they require skills that are highly sought after. A career as a financial analyst can lead to many different opportunities.
There are several different options, including:
- Investment Banking
- Private Equity
- Public Accounting
- Real Estate
- Other data-driven companies
- Corporate Financial Analysts
- Corporate Statistical Analysts
- Securities Research and Analysts
- Commodity Analysts
- Fund Managers
- Risk Analysts
- Securities Analysts
- Rating Analysts
- Mathematicians and Statisticians
- Database Administrators
- Personal Financial Advisors
- Finance Managers
- Investment Banker
- Portfolio Managers
FAQ Related to ‘How to Become Financial Analyst’?
- What are the top skills required to be a Financial Analyst?
To be a successful financial analyst, you must have excellent analytical thinking, problem-solving, and mad-maths skills, including strategic approach, financial modelling, and excellent communication & presentation skills.
- Which degree program is the best for Financial Analysts?
The degree programs, specifically focusing on Finance, will be the ultimate degree programs for the young pioneers.
- Is it hard to become a Financial Analyst?
Due to the involvement of complex mathematics, economics, accounting, analytics, and business management principles, the financial analyst degree programs are among the most challenging majors.
- Is Financial Analyst a demanding profession?
The financial analyst profession demands a lot of complex knowledge and a continuous learning mindset. Although the analysts are paid well, the workload can be heavy and stressful if you don’t love maths or numbers.