How to Become a Financial Analyst?


Have you heard the name, Meredeth Whitney? If you haven’t, allow us to introduce her. She is the co-founder and Chief Investment Officer of Kenbelle Capital LP who is acknowledged for successfully predicting the difficulties of Citigroup and other major banks during the financial crisis of 2007-2008. She has a great reputation as a financial analyst. You might be wondering how she did everything. In this article, we will take you to the world of financial analysts, plus we will give you tips on how to become successful in this career path.

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Understanding the Nature of Work of a Financial Analyst

Financial analysts guide individuals and businesses in making investment decisions. They are also called as investment analysts and securities analysts. They carry out financial analysis by studying the macroeconomic and microeconomic conditions along with the fundamentals of the company to make forecasts about business, industries, and sectors and make further business recommendations based on the analyses.

Financial analysts are categorized into two: the buy-side analyst and the sell-side analyst. The main differences between the aforementioned types of analysts are the people to whom they make recommendations and the firms that employ them.

  • The buy-side analyst works for institutional investors such as independent money managers, insurance companies, hedge funds, mutual funds, pension funds, and nonprofit organizations with large endowments. This type of analyst develops investment strategies for companies or organizations that have a lot of money to invest.
  • Meanwhile, the sell-side analysts work for a brokerage or firms that manage individual accounts and they give pieces of advice to sales agents who sell bonds, stocks, and other investments.

As a financial analyst, it is vital to have a strong background in understanding investment-affecting trends, specifically regional, political, and economic trends. It is part of their duties to prepare reports,financial models, evaluating historical and current data, and advising investment sales agents. Moreover, financial analysts also determine where the strengths and weaknesses lie and develop financial strategies out of it. Financial analysts typically work for businesses or organizations that look into money-related data such as banks, insurance companies, mutual funds, pension funds, stock or bond markets, securities firms, and other businesses. In addition, some financial analysts work for businesses that are independent of the buy and sell-side of the spectrum such as those that work for business media or other research organizations.

Steps to Follow to Become a Financial Analyst

Assessing the performance of a company and its financial health is vital in every workplace. In that regard, the presence of a financial analyst is highly required. Indeed, the role of an analyst is quite challenging. Did the nature of the work of a finance analyst awaken your passion? If it does, then the following guidelines will suit you best.

1. Earn a Degree

Presently, having a bachelor’s degree—preferably in business administration, economics, finance, accounting, and statistics—has become a de facto requirement for becoming a financial analyst. Financial analysts have a huge role to fill in, especially in analyzing and interpreting the trends affecting a specific industry. Now that investing are becoming global, companies are in search of competent individuals to hire as an investment analyst. The competition of acquiring the position as mentioned above is too tight, thereby applying with less than a bachelor’s degree have a lesser chance to be hired compared to those who have a bachelor’s degree. In fact, big investment banks exclusively hire graduates from elite colleges and universities. Other candidates who applied for this position who came from less-prestigious schools had to obtain a Master of Business Administration (MBA) from a renowned and highly ranked business school to increase their chances. The advantage of having an MBA is they are often hired as a senior financial analyst.

2. Develop your Knowledge and Skills by Taking on an Internship

Having a pre-professional experience allows you to build your relevant skills and acquire more knowledge in your chosen career path. Having a practical and relevant work background carries a major significance when you attempt to enter the job market. You have to have an edge among other applicants since it is all about competition. Having an internship provides experience and exposure to the nature of your job. Moreover, it gives you an opportunity to learn more about yourself and it prevents your curriculum vitae from being neglected by the human resource. Since the role of an analyst varies depending on the field they work in, having first-hand experience and exposure to a specific role will help you pick the right industry.

3. Obtain Licenses, Certifications, and Registrations

If you want to prove your credibility, you have to obtain one or more licenses, certifications, and registrations, especially if you are dealing with security firms. Obtaining a license allows you to sell financial products, which is applicable to some financial analyst positions. Analysts who work in security firms get their licenses from the Financial Industry Regulatory Authority (FINRA) which is the main licensing organization for the security industry. Employers also recommend certifications and registrations, which are useful tools that can improve the chances for career advancement. The Chartered Financial Analyst (CFA) certification from the CFA Institute is the most common certificate that every financial analyst should have. Analysts can become CFA certified if they acquire a bachelor’s degree, had passed three examinations, and have four years of qualified work experience. Moreover, financial analysts can also be certified in their field of specialty.

4. Build your Professional Network

Having a great professional network is vital to every field and should not be underestimated. It can help you in finding a job and in moving up in the career ladder. However, your professional network should also be part of your work life. As a financial analyst, it is extremely important for you to build a strong professional network since you are dealing with the financial services industry which heavily relies on networking in the course of the networking process. You can build solid networks throughout your career by attending networking events and by staying in touch with managers from your previous job, as well as managers from your internships.

5. Advance your Career

Once you acquire various experiences in your chosen career, you become a strong candidate for advancement. This opportunity includes becoming responsible for important products, larger projects, managing junior financial analysts and becoming a senior financial analyst. In case if you move into another career, you can consider becoming an investment advisor, consultant, fund or portfolio manager, or investment banker.

Important Skills that a Financial Analyst Should Acquire

1. Analytical Skills: Finance analysts should have great analytical skills since the nature of their job requires them to analyze various data and process a range of information in finding profitable investments.

2. Communication Skills: The audiences of a financial analyst can vary from in nationality. Having a strong communication skill allows them to explain their recommendations to their clients in a clear language.

3. Computer Skills: Financial analysts should know how to use software programs and packages since these are the platforms where they can encode and analyze the financial data, create portfolios, see trends, and make forecasts.

4. Decision-making Skills: Having this skill is vital since financial analysts have to make clear decisions so they can provide a clear recommendation to their clients with regards to buying, holding, or selling a security.

5. Detail Oriented: Financial analysts should always be keen on the data. They must closely pay attention to details, especially when reviewing possible investments because a minor issue can have a huge implication for the health of an investment.

6. Math Skills: We are talking about finance here, therefore, a financial analyst should acquire mathematical skills. Financial analysts use this skill every time they estimate the value of financial securities.

Every job has its own level of difficulty, as well as different requirements to qualify for the position you applied for. With the aforementioned data, we hope that we helped you in your pursuit of becoming a financial analyst.

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