How to become a Financial Analyst?

Finance is a domain without which the businesses can’t work. And, Financial Analyst is one of the most coveted positions in the industry.

People enter this profession as Jr. Analysts and go on to grab some highest positions in the industry.

In this article, we’ll go on to discuss how to begin your career in this field, educational qualifications, skills and personal qualities you need to succeed in this profession. We’ll also talk about some professional certifications and short courses that can help you move to the next level in your profession.

Equally useful for freshers and experienced people.

Who are Financial Analysts?

Ok, the first thing that we need to know is, who is a financial analyst? These are the professionals who analyze the financial data and use their findings to help the companies make business decisions.

This is a vast field & the analyst fall under three categories based on the type of companies they work for:

i.) Buy-side firms - The analysts working here tell their employers or clients, how to spend their money while buying stocks, securities, real estate etc. This side buys and invests large portions of securities for money or fund management. The professionals or investors on this side of the market are the people with money or capital to buy the securities issued by sell side firm.

ii.) Sell side firms - This side of the market deals with creation, promotion and selling of traded securities to the public. On this of the market come the banks, advisory firms and others who facilitate the sales of securities on behalf of their client.

iii.) Investment Banks - There are four common titles that are used for different types of Financial Analysts in the industry and they are: Fund Manager, Portfolio Manager, Risk Analyst and Ratings Analyst.

These are some of the top level, highly responsible and highly paid positions. No doubt, they demand a lot of investment from you in terms of time and efforts.

The career progression for Financial Analysts…

The candidates usually begin as Junior analyst assisting some Senior Analyst. Over a period of 3-5 years, they themselves become Senior Analysts. And, those who continuously keep working hard and looking for growth in their career eventually become the Portfolio Managers, Fund Managers, Partners, Senior Managers in Retail banks or even Investment Advisors.

Skills required to enter the field of Financial Analysis…

Your escalation to next level always depends upon your performance at the present level. To perform well as a junior analyst it is very important to possess some skills. The most important ones are:

Proficiency with MS Excel and Power point. Make sure that you master both these skills during your college time. It is very easy to learn both of these on your own with the help of online tutorials.Secondly, since you’ll need to work with a lot of data, get your hands on a database as well.

Apart from these, as a person, you should have an affinity for numbers with a good quantitative aptitude and analytical skills. Your communication skills – both written and oral & presentation skills also play a very important role in your success. They help you make effective presentations to the senior analysts and managers which can take you a long way in your career.

Make sure that you hone all these skills while you are in college.

Even if you are a finance professional working in some other domain and interested in switching over to this field, start working on sharpening these skills.

Educational Qualifications to be a Financial Analyst

Now talking about the educational qualifications you need to enter and grow in this field. A bachelor’s degree is a bare minimum to enter this field. If you pursue a finance related course like accounting, finance, economics or statistics in your graduation, it’ll help you enter this field. Otherwise, since this is a data driven domain, any mathematics related course would also give you a leverage.

In addition to this, there are many courses available online which teach you the skills for this profession. It’ll be a good idea to choose one of these courses and learn things that you would need to implement in your profession. Don’t pick up an advance level course out rightly, try to get your basics right first.

Another important thing to consider before choosing a course is –Explore all the career options on Sell side and Buy side profession. And then, based upon your personality and interest, decide what is it that you want to do. And only after pondering over all these things, decide upon a course. Don’t choose a course just because your friend is doing it.
In fact, this approach of taking up short courses would also work for the finance and accounting professionals who are working in other fields and want to move to Financial Analysis.

Your experience accompanied by these courses can bridge the gap and get you a good placement in the industry.

It is difficult for me to recommend a particular course, there are certain things you must check before committing to any one of them:

i.) Content of the course - Are they teaching what you would need for the profession?

ii.) Practical training

iii.) Reputation of the trainer.

Role of internship

If you are a fresher, during your vacations, try to find an internship with some practicing accountant, consultant someone related to finance. This will give you an idea about how the work is done.

Your purpose with internship is not to showcase big names on your Resume but to get a feel of the work.

Don’t shy away from approaching start ups or even individual consultants. What they pay you as the stipend is not important here. What you learn during this time is more important.

As I see it, it’s not even compulsory to do an internship until and unless your college needs it. You can hone the skills we discussed above or learn things related to the profession during this precious time.

After passing out – Entry into the profession of Financial Analysis

After passing out, start applying for positions with the title “Jr. Financial Analyst” or “Entry level financial analyst” etc. This will give you a good beginning. However, if you want to rise up the ladder, it is important to possess a Masters degree from a premier college. An MBA in related field will make you more attractive to the employers.

In fact, a lot of CAs are also doing well in this profession but the ones who have really risen upto the top also hold professional certifications like CFA charter, CPA or FRM etc.
Many people go towards earning their MBA after gaining some work experience.

Professional Certifications to be a Financial Analyst

Now, there are some professional certifications also available in the market which many employers would need you to possess before hiring you for top roles.

Each of these certifications focuses on a particular type of career.

I’m discussing some important ones here:

i.) CFA – Chartered Financial Analyst -  Focuses on Portfolio Management and Investment Analysis jobs. The charter holds high global recognition but needs a real commitment to pass through.

This certification demonstrates a good level of intelligence and strong work ethics which helps the employers in choosing their top employees.

ii.) CAIA (Chartered Alternative Investment Analyst) Designation - As the name suggests, this certification is focused on Alternative Investments and is more directed towards the professionals interested in  Asset Management and Hedge fund industries.

iii.) Financial Risk Manager (FRM) Certification - Useful for careers in Risk Management like Risk Officer, Risk Analyst. This is a comparatively newer certification but very focused.

iv.) Financial Modelling and Valuation Analyst (FMVA) Certification - Useful for corporate finance professionals.

The growth prospects in the field of Financial Analysis are no doubt phenomenal. If you are ready to equip yourself with the right skills and put in some hard work, the amount of money that you earn can with this profession can definitely be one of the best in the market. And, the type of reputation that you can command in the market can be something that every professional dreams of.