Are you interested in becoming a financial analyst, but unsure what steps to take next? No problem! In this guide, we’ll outline the education, skills, and knowledge any successful financial analyst needs.
What Is a Financial Analyst?
A financial analyst analyzes financial, business, and economic data and makes financial recommendations to organizations based on their analysis. If you’re thinking that a career as a financial analyst is a good investment, then you’ve already taken the first step toward a challenging and intellectually stimulating career.
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Financial analysts develop financial models to predict the outcome of certain business decisions or the risk of a potential investment. There’s no denying that this role relies heavily on the fields of accounting and data science.
If the financial aspect of a career in financial analysis is what excites your intellect, then perhaps you should also consider a career in accounting. It could also be that the chance to analyze scores of data points makes a career in financial analysis appealing for you. If that’s the case, then a career as a data scientist may be the right choice for you.
Whether you decide to be a financial analyst, an accountant, or a data scientist, you’ll probably need to start with an education in statistics, finance, economics, and business.
Relevant Education Needed
A bachelor’s degree with a major in economics, finance, or statistics will be required by most organizations hiring financial analysts and will provide the background you need to excel in the field. Students who go on to obtain their MBA and attend business school may have a higher probability of finding employment in their field directly out of business school. Students not interested in business school should consider a certification as a Chartered Financial Analyst (CFA) or a license from the Financial Industry Regulatory Authority (FINRA).
Brickmakers need clay. Chefs need ingredients. Financial analysts need data. A career as a financial analyst will require a full understanding of market trends, investment, and microeconomic conditions, as well as skill in data analysis and interpreting financial statements. A financial analyst is the swiss army knife of the financial industry. Nearly every business, organization, and industry needs financial analysis in order to maintain a profitable business model and make smart investments.
Though the precise role of a financial analyst will differ from organization to organization, it will generally focus on a specific business/industry region or sector. Candidates who have an understanding of micro and macroeconomics, as well as both industry and regional trends, can adapt more easily to varied sectors.
Hard skills are quantifiable skills like the ability to drive a stick shift, understand molecular biology, or use Photoshop. To succeed as a financial analyst, you’ll need the following hard skills.
Analytical Ability is the most significant hard skill for an aspiring financial analyst. Financial analysts should have a thorough understanding of advanced problem solving and strong statistical skills.
Numeracy Skills are needed in order to analyze and interpret numerical information. These include:
- Understanding relationships between numbers
- Interpreting mathematical information
- Recognizing trends and patterns
- Thinking logically and problem solving
- Measuring and analyzing data
Students pursuing a career in financial analysis should also stay up to date with the latest financial software. Most financial organizations will require at least a basic understanding of specialized software called ERP (Enterprise Resource Planning). Financial analysts utilize ERPs to manage financial tasks such as data visualization and the development of graphical information.
Soft skills are skills are more open to interpretation and include abilities like “determination” and “communication.” Successful financial analysts utilize the following soft skills on a day-to-day basis.
- Strategic Thinking: Financial analysis requires the ability to solve advanced problems, think through complex scenarios, and extrapolate financial solutions and recommendations that benefit the organization.
- Decision Making: Financial analysts are hired for their professional financial recommendation and are often given authority over an organization’s financial matters. The ability to accurately and concisely make financial decisions is invaluable to a financial analyst.
- Business Insight: Financial analysts must have the insight to predict how various decisions will impact business, customers, and profitability.
- Attention to Detail: Misinterpreting or neglecting a seemingly insignificant financial detail can cost an organization millions. Because they’re hired for their financial recommendation, financial analysts are expected to pay attention to the slightest financial details.
Financial analysts are often employed by banks and financial institutions, investment firms, insurance companies, and private investors. These organizations typically want you to demonstrate your abilities, so building a portfolio is helpful.
Good financial analysts are proficient and analytical, but the most successful financial analysts put in the effort to craft presentations and portfolios that impress their superiors and clients alike. Financial analysts are expected to stay current on all micro and macroeconomic developments, investment trends, and any other relevant financial data.
Regardless of the particular industry you find yourself employed in, a career as a financial analyst is fulfilling, in demand, potentially lucrative, and a worthy pursuit for any student dedicated enough to make it happen.
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