How to Become a Financial Analyst: Step By Step Guide

The job outlook for a financial analyst is impressive.

According to the forecast by the U.S. Bureau of Labor Statistics, the employment of people in this profession is expected to grow 11% from 2016 to 2026.

That’s faster growth than the average for all occupations.

The median pay of $81,760 is another great motif for people to consider becoming specialists in this profession.

Let’s cover all the basics.

What does it take to become a professional in financial analysis? What education do you need? and What personality do you need?

It’s a lot of information to process, but we’ll make it as digestible as possible in this guide to become professional in financial analysis.

Financial Analyst Careers

Looking at the Big Picture: What Does a Financial Analyst Do?

A financial analyst advises their clients when to buy and sell investments.

These suggestions come from a strong background that involves analysis of the current economic trends, business forecasts, and the strategy of the specific company.

In addition to making a recommendation, the financial analyst will make a report that explains the background.

It’s a demanding job. 30% of financial analysts worked more than 40 hours per week in 2016.

Due to the fact that phone calls, meetings, and report writing take most of their office hours, they have to work overtime to cover a large part of their research.

Many financial analysts have in-house roles.

Some may work for investment houses, banks, insurance agencies, stock brokerages, and similar institutions that base their work on investments.

They typically focus on becoming experts in stocks or bonds. Others work in large corporations in different industries.

They analyze internal financial data, create financial plans, and project revenues and expenses with the goal to help the executives make a proper budget and investment decisions.

No matter where the financial analyst works, their main responsibilities include providing senior management with all information and analysis they need to make strategic decisions on buying and/or investing.

In short, these are some of the specific responsibilities you’ll have as a professional financial analyst:

  • Tracking and analyzing micro- and macroeconomic trends.
  • Determining a company’s value by studying its financial statements.
  • Staying informed regarding the current economic trends and forecasts. Reading important publications (such as The Wall Street Journal, Financial Planning, Journal of Financial Planning, and InvestmentNews) is a daily habit for a financial analyst.
  • Staying informed on the development of a specific sector or industry.
  • Recommending investments to clients and the managers of the organizations they work for. They advise them when to sell, strong sell, hold, buy, or strong buy.
  • Discussing investment strategies with executives.
  • Trading on behalf of the employer or client.
  • Creating detailed financial reports and models for comparison and analysis.

Based on the responsibilities, there are two major types of financial analysts:

  • Sell-side financial analysts, who advise agents that sell stocks, bonds, and other types of investments, and
  • Buy-side financial analysts, who advise institutional investors (corporations with a lot of money to invest).

What Does It Mean to Be Professional in Financial Analysis?

It means being focused.

You may understand financial analytics superficially, but that won’t make you a financial analyst.

Building a lucrative career in this field demands dedication, commitment, and education.

Education has to be your priority.

Although you can take different routes in becoming a financial analyst, they are all founded on your knowledge and skills.

A degree will open the doors to this career, but you will have to remain consistent on your self-education journey.

Let’s focus on different aspects of the qualifications needed for success in this profession.

Suggested: Read more about Finance Careers Path

A Professional Financial Analyst Needs the Right Personality

What does personality have to do with becoming a professional financial analyst? A lot.

  • A successful analyst has to be analytical, detail-oriented, and interested in lifelong learning. Only a highly self-motivated person with outstanding communication skills can achieve success in this profession.
  • In addition to the knowledge you’ll have to obtain, you’ll also need to develop specific computer skills. You’ll be using software packages to analyze data, evaluate trends, craft reports, and provide forecasts in a visual format.
  • Decision-making skills are also crucial. You’ll be recommending people to make huge investments or sell important securities. You won’t be making the selling or buying decision for them, but the recommendation itself is a huge responsibility. A hesitative character won’t do well under such a burden.

Why are we talking about personality, anyway? – Because you can work on it.

Before you decide to get on this journey, you must understand what it takes.

Then, you can start working on the skills you lack.

If you’re not a great communicator, for example, you can start practicing both verbal and written communication. You can improve any skill with enough practice.

FinanceWalk came up with an insightful career in finance guide that helps you discover the type of job in finances that’s perfect for your personality.

There’s a difference between buy-side and sell-side analyst.

There’s also a distinction between the analysts who work in different industries.

The test will help you focus on the right path.

If you prefer another specific career option and you realize you lack skills for it, you shouldn’t waste a single minute before you start working on them.

The Educational Path

If you intend to become a professional financial analyst, you will need at least a BA degree, preferably in a major related to finances.

That can be finance, economics, statistics, accounting, or even mathematics. An MA degree in finance or business administration will put you in an advantage over other job applicants. This is a profession where education is valued a lot.

According to the rankings made by US News, the best finance MBA programs are provided by the following institutions:

If you intend to work in this field after graduation, you’ll need to become a certified financial analyst.

If you want to become a sell-side financial analyst, you will be required to obtain a license. The main licensing organization is FINRA (Financial Industry Regulatory Authority).

The good news is that a license requires an employer’s sponsorship, so you don’t necessarily need it before starting a job.

In addition to a license, there are certain certifications that are beneficial and recommended for all types of financial analysts. These are the most important ones:

  • Chartered Financial Analyst Certification, which proves you’re a highly-qualified professional for investment banking and analysis, economics, and portfolio management. This credential will make you suitable for work in banks, insurance firms, mutual funds, and investment groups. Large corporations usually hire financial analysts who already have a CFA certification.
  • Financial Risk Manager Certification, which shows you can apply knowledge and risk-management skills in real-life situations. It’s a great certificate to have if you intend to work as an advisor, analyst, risk control manager, consultant, or credit manager for investments.
  • Financial Modeling Certificate, which makes you suitable to work as a fund manager or investment manager in banks; a property & fund manager in real estate; or a consultant, analyst, or finance manager in corporations.
  • Certified Financial Planner Certification, which shows your expertise in the planning of investment, employee benefits, insurance and retirement, tax and risk.

Did you notice how diverse these certifications are? That’s why it’s important to focus on a field of specialty and get the right type of experience and certificate. That’s what makes you a professional in financial analysis.

What Happens After Getting a Degree?

No one will hire you just because you have the right degree. Since most certification programs require some kind of experience, you’ll have to build a solid foundation that would make you eligible for such accreditation.

From there on, you can start becoming the professional you want to be.

Get an Internship

The university provides great theoretical knowledge and a foundation of skills you can build on.

For a financial analyst to get real-world experience, however, internships are crucial.

If possible, start accumulating this type of experience before you even graduate.

That will help you form relationships with financial firms and corporations that give you invaluable training opportunities.

Manisha Thakor, founder, and CEO of MoneyZen Wealth Management shared an insightful tip for the readers of U.S. News: “Something as basic as offering to work with an established financial professional for five to 10 hours a month can make all the difference. So remember to keep one hand in the books and one hand out shaking new ones.”

Take Networking Seriously

The key to getting a job in this field is networking.

Remember when we talked about the importance of communication skills? This is the stage of the journey when they have to shine.

  • Use your alumni network to its full potential.
  • Connect with the right people on LinkedIn.
  • Join an investment club and attend the events. There, you’ll meet professionals willing to offer tips and share experience. You can learn more about the profession and get first-hand info about job openings.

Write the Perfect Job Description

Although the opportunities in financial services are estimated to grow, there are still far more people who’d like to become financial analysts than there are jobs available for them.

This means that the competition is stiff.

The first factor that separates you from the competition is the documentation you present during the job application process.

It’s important to show how qualified you are and what your vision for the future is.

The cover letter, in particular, must present you as the perfect candidate for the specific position.

It has to show how you would fit into the office culture and push the organization towards growth.

Remember: no matter how great your job application documents are, you still have to send them to all the right places.

Solely apply for positions you’re qualified for! The entry point is usually an accounting position in a corporation or public accounting firm. You can move up towards a managerial position in financial analysis from there on.

Boost Your Interview Skills

  • Understand the questions recruiters usually ask the candidates for finance positions.
  • Learn as much as possible about the specific organization. They will want to see how informed you are.
  • Stay calm and relaxed, but professional enough.
  • Dress for the job you want to get. This is a golden rule for interview success. Since it’s a serious job in a corporate environment, it’s best to suit up.
  • Mind your body language. Uncontrolled movements will show you’re nervous. Show your confidence through your position and hand gestures.
  • When the hiring manager invites you to ask questions, do it. Think of an insightful question, which shows your interest in the organization’s work and the particular position.

Financial Analyst Salary

The median salary for a beginner financial Analyst is $54000/yr. Whereas the senior financial analyst salary is $84000/yr.

Always Keep Growing

A career in financial analysis imposes an ongoing process of learning. There are many progressive steps along the way, and it all starts with education. Our guide should give you the foundational information that will help you plan this career and start making the right steps towards success.

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5 thoughts on “How to Become a Financial Analyst: Step By Step Guide”

  1. Can I enter into investment banking after class 12th Commerce after doing some specialized course?

  2. Is their any institute in Ahmedabad

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