How to Become a Financial Analyst
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.
Finance generally is a lucrative industry that provides high wages and incentives for a variety of positions. Financial analysts can work in a variety of industries studying economic trends, making predictions, and offering recommendations for investments and other money moves.
A financial analyst’s primary responsibility is to sift through data in order to find opportunities or assess results in order to make business choices or investment recommendations.
Financial analysts can work in both junior and senior capacities within a firm, and it is a niche that often leads to other career opportunities. The majority of financial analyst positions call for at least a bachelor’s degree, and entry into the sector can be challenging. We’ll provide a succinct but thorough description of what a financial analyst does, potential career paths, necessary qualifications, and steps to take to become a financial analyst.
Who is a Financial Analyst?
Financial analysts do research on macroeconomic, microeconomic, and firm basic factors in order to develop forecasts about companies, markets, and industries. To be more precise, they look at financial data and utilize the results to assist businesses in decision-making. Financial analysts anticipate a company’s profits and losses and identify the company’s strengths and weaknesses.
They provide businesses and private citizens with advice on the best investment opportunities. In the following sections, we will be discussing how to become a financial analyst. But before that, let’s start by looking at the prerequisites required to become a financial analyst.
Because of the nature of the profession, there are several qualities you possess that are pointers for you to think about delving into this lucrative profession. The important qualities of a financial analyst include:
- Proficiency in the use of spreadsheets, databases, and PowerPoint presentations
- Time management
- Good communication skill
- Good interpersonal skill
- Technical skills
- Leadership and management skills
- Critical thinking
- Meticulous and pay attention to details
Where a Financial Analyst can Work
Financial analysts are professionals who collect, monitor and evaluate financial data to make forecasts and recommendations relevant to their companies. Financial analysts are often employed in companies such as:
- Portfolio management providers
- Government regulatory firms
- Financial planning institutions
- Investment advisory firms
- Insurance companies
How to Become a Financial Analyst
The following steps are what you should take if you are considering pursuing a career in this lucrative field:
1. Earn a Bachelor’s Degree
A Bachelor of Science in Finance can be ideal for individuals who are pursuing a career in financial analysis. Earning a bachelor’s degree is often the most important step a future financial analyst takes toward achieving his or her goals. According to the BLS, a majority of financial analysts hold a bachelor’s degree in a field related to finance, including finance and accounting, economics, statistics, analytics, business management, or mathematics.
2. Attain Licensing and Certifications
Licensing is a key component of how to become a financial analyst. Financial Industry Regulatory Authority (FINRA) requires entities under its purview to register and comply with its regulations. Employers often recommend that prospective hires pursue the Chartered Financial Analyst (CFA) credential. While not required, this additional certification often improves chances for advancement. According to BLS, the requirements for the Chartered Financial Analyst credential include:
A bachelor’s degree in finance or accounting
- A minimum of four years of qualified work experience
- Passing scores on the three CFA Institute exams
Financial analysts may also achieve certification in more specialized areas by demonstrating their expertise and passing additional exams.
3. Earn a Master’s Degree (Optional)
Although a master’s degree is not often required by companies, it may aid analysts in progressing to the following level in their profession. A financial analyst who has a successful track record may eventually work for wealthy individual investors as a fund manager or portfolio manager. An MBA can demonstrate an analyst’s communication and business knowledge.
4. Build On-the-Job Experience
Obviously, in order to work as a financial analyst, you must possess the appropriate schooling as well as any necessary licenses or certifications. Building on your professional background is equally vital. Many financial analysts join an internship programme to build their job experience before starting a full-time job. It also helps them learn new skills on-the-job. Employers do take appropriate job experience into account when selecting prospective financial analysts. Candidates for jobs may have a significant edge over other candidates if they have previous experience working in finance, economics, or accounting.
5. Take up a Job
The last step to becoming a financial analyst is to take up a job as a financial analyst. Take up a job that ensures maximum growth and career progress.
According to the US Bureau of Labor Statistics, BLS, employment of financial and investment analysts is expected to increase by 9% between 2021 and 2031. By 2031, this will result in an additional 32,000 financial analyst positions, which is more than the overall average growth in employment. Financial analysts are needed to direct the expansion of emerging and developing industries.
The median salary of a typical financial analyst is $84,300, according to the Bureau of Labor Statistics. Financial analysts who work in securities, commodity contracts, and other financial investments earn a higher median salary. Employers may be willing to pay you more if you have a financial analyst certification or pursue a Master of Accounting or Master of Business Administration degree.
A financial analyst’s primary responsibility is to sift through data in order to find opportunities or assess results. Financial analysts can work in a variety of industries studying economic trends, making predictions, and offering recommendations for investments. The majority of financial analyst positions call for at least a bachelor’s degree, and entry into the sector can be challenging.
What qualifications do I need to be a financial analyst?
To pursue a career as a financial analyst one needs to obtain a bachelor’s degree. A degree in finance, economics, business management, statistics, or related fields is beneficial but not a requirement.
Do financial analysts need CFA?
Financial analysts do not need the CFA credential to work in the field, but employers may prefer individuals with certification. Candidates with a relevant degree alone can qualify for entry-level positions.
Are financial analyst paid well?
Financial analysts do get paid well. The average annual base salary for a financial analyst in the United States is $68,496. However, that number can vary based on location and years of experience, with highly experienced professionals making up to $92,770 annually.
Is financial analyst better than accountant?
Financial analysts typically make more money than accountants, and they often have higher starting salaries. The U.S. Bureau of Labor Statistics estimates that accountants will have a 4% growth rate by 2029, while financial analysts will have a 5% growth rate by 2029.
Where can a financial analyst work?
Financial analysts work in banks, pension funds, insurance companies, and other businesses. Financial analysts guide businesses and individuals in decisions about expending money to attain profit. They assess the performance of stocks, bonds, and other types of investments.