A financial analyst plays a critical role in helping individuals and organizations identify business opportunities and make investment decisions. If you have a passion for solving problems, analyzing economic trends, and making data-driven decisions, then read this guide to learn how to become a financial analyst.
As one of the most coveted careers in the competitive financial industry, breaking into the field and landing a job as a financial analyst can be challenging. If you’re interested in how to become a financial analyst but unsure of the educational path, career opportunities, and relevant skills, this guide can help you get started.
In general, financial analysts, also known as investment analysts, are professionals who are responsible for collecting, monitoring, and examining economic and business trends and financial data for companies.
These experts use their findings to offer forecasts, recommendations, advice, and warnings to help companies in a wide range of fields. Financial analysts can work for banks, investment firms, insurance companies, pension funds, stock brokerages, and many other institutions. A financial analyst ensures that the funds of an organization will be used for lucrative opportunities.
The job description of a financial analyst typically varies depending on the company. They have a variety of roles and responsibilities, which often revolve around guiding companies and individuals in decisions about spending funds to gain profit.
On an average day, a financial analyst would analyze economic and business trends and evaluate current and historical financial data. They study the company’s financial statements and assess the management team’s strengths and weaknesses. Financial analysts also recommend an investment portfolio or a collection of stocks, bonds, or mutual funds to their clients or employer.
According to the Bureau of Labor Statistics, the annual median wage for a financial analyst was $83,660 in May 2020. However, the salary varies depending on the industry. According to the same data, those employed in financial investment sectors have a median salary of $98,850, while financial professionals handling credit intermediation have a median salary of $79,270.
Employment-wise, the Bureau of Labor Statistics predicts that financial analyst positions will have a good growth outlook. They expect this career in finance to grow by five percent between 2019 to 2029, faster than the average.
The COVID-19 pandemic disrupted the global economy and financial market in the first quarter of 2020 and subsequent recovery reported by Statista has been uneven. The current state of the finance industry has highlighted the need for financial analysts, making now a good time to enter the field. Below are some further benefits to becoming a financial analyst.
A financial analyst has a crucial role and responsibility within a firm. They deal with large amounts of data and ensure the company generates revenue from business and investment decisions. Since financial analysts play a critical part in the finances of their potential employer, most companies set several requirements for someone to be considered for the position.
The career paths available for financial analysts are vast. These experts can work in different sectors, including government regulatory agencies, banks, insurance firms, security firms, and other businesses. But under these financial sectors, there are three major categories of financial analyst careers.
Buy-side analysts make up the majority of the professionals in the finance sector. Although they rarely have the final say, they help companies make decisions on how to spend their money by developing investment strategies. They often work for institutional investors, including hedge funds, mutual funds, and pension funds.
Instead of working for institutional investors, a sell-side analyst works for a brokerage firm that manages individual accounts. These professionals offer guidance and advice to financial services agents who issue, sell, or trade stocks, bonds, and other investments.
Equity analysts are finance professionals who help big banks make buy and sell decisions and locate promising initial public offering (IPO) opportunities. They usually focus on finding companies that offer the most lucrative opportunities for ownership.
The duties and responsibilities of a financial analyst will depend on their future employer or the organization they work for, their industry, and seniority. Here is a list of the most common duties of a financial analyst.
A financial analyst’s job begins with data and information gathering. They examine and study financial records, company ledgers, stock price information, and data from government agencies.
After analyzing the data and information, financial analysts make forecasts and projections on how the company will perform in the future. They will use methods like regression analysis and year-over-year growth rates to create financial predictions.
A good financial analyst develops recommendations and insights that can help improve business operations. They may generate ways to cut costs, increase market shares, grow revenue, or improve operational efficiencies.
Aside from obtaining a degree in an appropriate field of study, a person must also possess a wide range of technical and soft skills to become a financial analyst. Here are some essential skills to develop if you’re set on your journey to becoming a financial analyst.
If you’re going for a finance career, then you should expect to work with tons of numbers and formulas. Financial analysts need strong mathematical skills to perform complex equations and determine the value of financial securities and investments.
A financial analyst’s analytical skills will enable them to assess the gathered data and information and examine structures and systems to identify profitable investments for their company.
Strong communication and presentation skills are also crucial in this field since financial analysts have to report and explain their work to their clients. They will need to be able to share the results of their analysis so that those without a financial background can understand them.
It will take you at least four years to become a financial analyst because you have to start by gaining a bachelor’s degree. This timeline is possible if you find a company that hires recent graduates for entry-level financial analyst positions.
However, if you’re aiming for executive or senior-level financial analysts roles, you’ll have to build your resume for the position. That includes completing a master’s degree, developing relevant skills, and gaining relevant work experience, which could take you at least two additional years.
Yes, a coding bootcamp can help you become a financial analyst. These intensive programs can help you learn all the essential knowledge and relevant skills necessary to start a career in this field.
Many bootcamps offer specialized courses and certifications for data analysis, financial modeling, and financial planning. Since these coding bootcamps only take a few months to a year to complete, it’s a good alternative for traditional education if you are looking for an entry-level job.
Yes, independent analysts can base their financial services at home as long as they maintain a level of professionalism with their practices. However, if you’re under a company or institution, a work-from-home option will depend on the industry or sector where you work. You can also gain the necessary education for this field through online degree programs.
Now that you have a solid grasp of the job description, salary and employment outlook, and qualifications, here are the steps to become a financial analyst. While the career path for financial analysts in different sectors may vary slightly, the essential steps will stay consistent.
Earning a bachelor’s degree is the main educational requirement for many companies. An ideal path for a financial analyst would be a degree in finance, math, statistics, accounting, economics, business, or related math-heavy fields.
Opportunities like internships are a great way of gaining hands-on experience and building your resume. Attaining a license and certification can also improve your chances of landing the job and advancing in your career.
Once you’ve checked the qualifications for the level of education, skills, and experience, you can pursue job openings for financial analysts. Whether you’re looking for a junior analyst position or senior analyst role, be sure to read the job description carefully and ensure your resume matches the requirements.
The first step to achieve your dream of becoming a financial analyst is to get the right education. Most companies will require you to have a bachelor’s degree for entry-level jobs, but some also accept candidates with certifications and graduates of bootcamps. If you want to increase your chances of landing your dream role, here are the best schools and education options for this career.
Financial analyst bootcamp graduates can learn the essential knowledge and skills taught in traditional schools for a fraction of the cost and time investment. Bootcamps provide intensive training on specialized courses that run for several months to a year. For a career in financial analysis, consider enrolling in one of the best data science bootcamps.
Vocational or technical schools are also a great alternative to the traditional four-year academic path. Most of these institutions offer programs that take less than two years to complete. You can gain relevant skills required for an entry-level position in less time.
It’s best to choose vocational schools that offer certificates in finance or related fields. Many vocational programs also provide hands-on training, which can give you an advantage when searching for a job.
Another option that offers cheaper and short-term financial analysis undergraduate programs is a community college. Community colleges can help you earn a two-year associate degree in finance, data science, or a related field.
After you acquire an associate degree, you can transfer your credits to a university afterward to earn a bachelor’s. You can also enroll in bootcamps or online courses to earn additional relevant experience.
Even though the demand for financial analysts is growing, the job market is still highly competitive. As mentioned before, most employers require candidates to have at least a bachelor’s degree for an entry-level position. If you want to get ahead of your competitors in the job market, consider getting a bachelor’s in finance, economics, or statistics at a prestigious university.
The University of Pennsylvania, University of California - Berkeley, and Massachusetts Institute of Technology are some of the names you should consider. If you want to land an executive or senior-level role or advance in your career in the future, completing a master’s degree can help you reach that point faster.
If you wish to open up opportunities for career advancements in this field, you should consider earning several certifications and completing additional training programs. In some financial analyst job opportunities, you will be working to sell financial products. The Financial Industry Regulatory Authority will require you to be certified in this situation.
One of the most common credentials financial analysts can earn is the CFA Institute’s Chartered Financial Analyst certification. It’s ideal for those who work in institutional money management and stock analysis.
You will need a CGFM certificate if you’re aiming for a career as a local, state, or federal financial analyst. To earn this professional certification offered by AGA, you will need to complete a bachelor’s degree, build at least two years of professional experience, and pass three CGFM exams.
Those who want financial generalists duties can benefit from earning the Certified Public Accountant credential. Every state has its education and experience prerequisites, so be sure to check the details of the state where you want to practice.
One way to impress your future employer during the interview process is to show your expertise in the field and confidence in your work. To do this, you should craft and deliver an excellent response to their questions. Practicing ahead is the best way to prepare you for this situation. Listed below are some sample questions to help you practice.
Yes, you should become a financial analyst in 2021. Because of the current state of the financial market, many businesses are looking for qualified professionals who can provide financial analysis services.. BLS predicts strong employment growth for the next decade, so you can rest easy knowing you’ll have a steady career.