How to Become a financial analyst?

One of the most coveted careers in the financial services industry is that of an analyst. The primary responsibility of a financial analyst is to scrutinize data to identify opportunities or evaluate outcomes for business decisions or investment recommendations. Financial analysts can hold both entry-level and senior-level positions in companies, a niche that often leads to other career opportunities.

This financial services industry is highly competitive and it is difficult to enter the field. If you’re interested in a career as a financial analyst, read on to find out what you can do to prepare for the job.


  • Financial analysts scrutinize data to spot business opportunities or make investment recommendations.
  • More junior analysts tend to do extensive data collection, financial modeling, and spreadsheet maintenance.
  • More senior analysts tend to spend time writing investment papers, talking to company management teams and other investors, and marketing ideas.
  • A bachelor’s degree in mathematics or a finance-related major is helpful, but a master’s in finance, a master’s degree in a math-related field, or an MBA will also help you get started, as well as industry certifications such as the CFA charter.

Requirements to become a financial analyst

What is a Financial Analyst?

Financial analysts examine financial data and use their findings to help companies make business decisions. Often, their analysis is designed to inform a company’s investment decisions.

More specifically, the study of financial analysts; the fundamentals of macroeconomics and microeconomics company conditions make forecasts for businesses, sectors, and industries. They also often recommend actions, such as buying or selling company stock based on the company’s overall performance and prospects.

Analysts must be aware of the latest developments in their area of ​​​​expertise and prepare financial models to predict future economic conditions for any number of variables.

Not all financial analysts analyze the stock or bond market or help employers make investments. Companies can also hire an analyst to use digital data to precisely judge the effectiveness of various marketing techniques relative to cost. Businesses using the franchise model often have financial analysts who track individual franchises or franchise groups within a geographic area. Analysts identify strengths and weaknesses and make profit and loss forecasts.

Required skills and education

Compared to many high-paying careers, the qualifications to become a financial analyst are less rigorous and clear-cut. Unlike law and medicine, there is no minimum educational standard within the profession. Whether you need a license depends on factors such as your employer and your specific job responsibilities.

That said, in the 21st century, a bachelor’s degree — preferably a major; economics, finance, or statistics; — has become a de facto requirement to become a financial analyst. Other favored majors include accounting and mathematics, and even biology and engineering, especially for those interested in being an analyst in those industries. The competition is too fierce, and undergraduate or advanced degrees are too common in the job market to have the opportunity to apply for analyst positions below a bachelor’s degree.

Big investment banks get paid first-year salaries almost exclusively at elite colleges and universities like Harvard and Princeton. Candidates applying for degrees from less prestigious schools can increase their chances by continuing their education and earning an MBA from a premier business school. MBA graduates are often hired as senior analysts right out of business school.

Regardless of education, being a successful financial analyst requires strong quantitative skills, expert problem solving, proficiency in the use of logic, and above-average communication skills. Financial analysts must work with data, but they must also report findings to their superiors in a clear, concise, and persuasive manner.

Take the Certification Exam

If you are not an MBA graduate student or an undergrad in economics, you may consider taking the University Series 7 and 63 series exams or taking the Chartered Financial Analyst (CFA) & Registration ; ) program. Keep in mind that taking the round 7 exams will need to be from a Final member company or regulatory organization. Beginning in October 2018, FINRA will take FAQs (and a few other tests) from Series 7 and put them into a test called the Securities Industry Fundamentals (SIE) exam. Taking the SIE exam without any sponsorship is Chances are, this could be a good boost for your resume.

While the CFA exam is highly technical, the Series 7 and Series 63 exams are other ways to demonstrate basic familiarity with investment terminology and accounting practices. If you see a sample of the CFA exam and it seems overwhelming, start taking the SIE and then work your way up to the CFA exam, or start interviewing for junior analyst positions and then pass the SIE. Many institutions also offer candidates who show promise in the field to provide training programs for people.

Analyst Job Type

The field of financial analysis is broad, with a variety of titles and career paths. In the financial/investment industry, the three major categories of analysts are:

  • Buy-side firms (investment firms that manage their funds)
  • seller company
  • investment bank

Financial analysts may also work for local and regional banks, insurance companies, real estate investment brokerages, and other data-driven companies. Any business that regularly makes major decisions about how to spend its money is a place where financial analysts can potentially add value.

Buy-side analyst

Most financial analysts work on the so-called buy-side. They help employers decide how to spend their money, whether that means investing in stocks and other securities within an internal fund, buying an income property (in the case of a real estate investment company ), or allocating marketing dollars. Some analysts do not work for a particular employer but provide financial analysis for third-party companies. This shows the value of the work that financial analysts do; an entire industry exists here.

Buy-side financial analysts rarely have the final say on how their employers or clients spend their money. However, the trends they find and the forecasts they make are invaluable in the decision-making process. With global financial markets moving faster than ever, The regulatory environment seems to be changing daily, so it is only natural that the demand for skilled buy-side financial analysts will only increase in the future.

sell-side analyst

At sell-side firms, analysts evaluate and compare the quality of securities in a particular sector or industry. Based on this analysis, they go on to write that the research report has certain recommendations such as “Buy, ” & “Sell,” ” Strong Buy,” “Strong Sell,” or “Hold.” They also track stocks in the fund’s portfolio to determine when/if the fund’s position in that stock should be sold. These advising research analysts have a significant presence in the investment industry, including those who work in buy-side firms.

Perhaps the most prestigious (and highest-paid) financial analyst job is as a sell-side analyst for a large investment bank. These analysts help banks price their investment products and sell them on the market. They collect data on bank stocks and bonds and use quantitative analysis to predict how these securities will perform in the market. According to the study, they made buy and sell recommendations to the bank’s customers, leading them to buy certain securities from the bank’s product menu.

Even within these specialties, there are a few sub-specialties: analysts specializing in equities or fixed income instruments. Many analysts further specialize in a particular sector or industry. For example, analysts might focus on energy or technology.

Investment Bank and Equity Analyst

Analysts at investment banking firms often play a role in determining whether certain transactions between companies, such as initial public offerings (IPOs), are successful, mergers and acquisitions (M&A) are feasible, based on the fundamentals of the companies. Analysts assess current financial conditions and rely heavily on modeling and forecasting to make recommendations as to whether a merger is suitable for the investment bank’s client or whether the client should invest in venture capital in the business.

Analysts who help big banks make buying and selling decisions, as well as those who try to find good IPO opportunities, are known as equity analysts. Their focus is primarily on the stock market; they help find companies that offer the most lucrative ownership opportunities. Typically, equity analysts are among the highest-paid professionals in the financial analysis field. This is partly to the employer’s credit; the big investment banks use huge salaries to attract the best talent.

Equity analysts often deal with huge sums of money. When they make a successful prediction, employers are often in the millions. As a result, stock analysts are paid handsomely.

The median salary is not mediocre

Most financial analysts earn significantly less than analysts in other sectors of the financial industry, especially in New York City. However, in the United States, the median annual earnings of junior financial analysts are significantly higher than the median annual earnings of full-time salaried or salaried workers. As of the fourth fiscal quarter of 2019, according to the US Bureau of Labor Statistics (BLS), the average weekly earnings for full-time salaried workers in the United States was $936. For someone working 40 hours a week, that translates to an annual income of about $48,672.

According to US data. The median annual salary for financial analysts at the Bureau of Labor Statistics (BLS) was $85,660 (or $41.18 per hour) across all experience levels in May 2018. So, on average, financial analysts start with a much higher salary than the average employee. Also, financial analysts at major Wall Street firms tend to make more, even in their first year. Earning total compensation of $140,000 or more is a common goal for first-year analysts at investment banks.

Financial Analyst Job Outlook

In terms of employment, the outlook is positive for the financial analyst profession. While this is a highly competitive field, in 2018 there were about 329,500 jobs in the field according to the latest BLS statistics available, and the industry will grow by about 6% between 2018-28, according to the US Census Bureau. , adding 20,300 jobs. The Bureau of Labor Statistics states:

Demand for financial analysts tends to grow with overall economic activity. When a new business is established or an existing business expands, a financial analyst is needed to evaluate investment opportunities. In addition, emerging markets around the world are offering new investment opportunities that require expertise in the geographic regions where these markets are located.

States with the highest employment rates in this occupation, in descending order: California, New York (where Wall Street is located), Texas, Florida, and Illinois. Other high-level regions include Washington, DC, Delaware, Connecticut, and Massachusetts. The states with the highest analyst earnings are New York, Washington, Connecticut, Massachusetts, and Alaska.

expectations at work

Financial analysts need to be vigilant in gathering information at the macroeconomic level, as well as in gathering information on specific companies, especially by assessing their financial fundamentals through a company’s balance sheet. To stay on top of the latest financial news, analysts need to read a lot on their own time. Analysts tend to read publications such as The Wall Street Journal, Financial Times, and The Economist, as well as financial websites.

Being an analyst also often requires a lot of travel. Some analysts visit these companies to get first-hand accounts of operations on the ground. Analysts also frequently participate in meetings with colleagues who share their expertise.

In the office, analysts learn to master spreadsheets, relational databases, statistical and graphics software packages. They use these tools to advise senior management and prepare detailed financial reports that include forecasts, cost-benefit analysis, and trend analysis. Analysts also explain financial transactions, and documents must be verified for compliance with government regulations.

Promotion opportunities

In terms of inter-office agreements, analysts often interact with each other as colleagues while also reporting to a firm as a portfolio manager or other more senior management role. Junior analysts may progress to senior analysts over a three to five-year period. For those senior analysts who continue to seek career development, they have the potential to become portfolio managers, investment banking partners, or senior managers in retail banks or insurance companies. Some analysts then become investment advisors or financial advisors.

skills for success

The most successful junior analysts are those who are proficient with spreadsheets, databases, and PowerPoint presentations and learn other software applications. However, the most successful senior analysts not only work long hours but also build relationships with their superiors and mentor other junior analysts. Promoted analysts also develop communication and interpersonal skills by crafting written and oral presentations that impress senior management.

Bottom line

A career as a financial analyst requires preparation and hard work. It also has the potential to bring not only financial returns but real satisfaction as it is an integral part of the business environment.

By Cary Grant

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