Finance is a broad and lucrative industry with a large number of career opportunities. Professionals earn huge salaries and bonuses across a variety of jobs in this field. If you are interested in numbers or the career, you might be thinking about becoming a financial analyst. A financial analyst is somebody who performs financial analysis to study the financial health of an organization and make recommendations based on the findings.
They look into finance-related information about products, regions and industries and use the data to make financial forecasts and assess potential risks of decisions in the company. They often work for investment houses, banks, stock brokerages, insurance companies and other similar institutions. This job responsibility can be found in almost every industry and is, therefore, a great way to combine the financial skill set with other passions to make a high-paying career.
The first step in towards building a great future is learning how to become a financial analyst. Though employers prefer hiring professionals with some experience in the field, there are some ways you can start your career as a financial analyst without any prior experience. Read on to find out how.
What you Need to Know before Becoming a Financial Analyst
Types of Jobs
There are three areas where a financial analyst role is important.
These individual or corporate investors invest in future returns. Here, the risk factor is high and investment decisions are made solely by investors.
Sell-Side is associated with entities involved in decision making of the buy-side individuals and corporate. The risk involved on this side is less and their responsibility is to present estimates and opinion.
The job of an investment banking analyst is quite rewarding. Investment banks assist individuals, corporations and governments issue securities and underwriting to raise capital.
The job description of a financial analyst varies according to the employer. Investment banks, for example, have a different set of requirements than insurance companies. Many financial analysts work for private funds dealing with bonds, stocks and other securities. They can also work for businesses which make public recommendations.
Apart from investments, financial analysts can make recommendations for a firm’s solvency. They can help the business with critical decisions about forecasting, budgeting and merchandising by analyzing the market and financial conditions.
Some of the key responsibilities of a financial analyst working in investment banks include:
- Reading publications like Wall Street Journal to stay up-to-date on the information about current climate and trend in the industry
- Understanding and keeping track of economy
- Creating sell-side or buy-side investment recommendations
- Generating revenue with trade facilitation
- Meeting C-level teams to discuss investment strategies
- Executing trades for the employer
- Inventing lucrative, innovative approaches to buy-sell strategies
Financial analysts working for major nonprofits and corporations have a different set of job responsibilities including:
- Maintaining a database of financial records for easy viewing and comparison
- Maximizing the cost of operations by analyzing the market and business requirements
- Identifying areas where the firm could save or make additional profit
- Identifying trends and emphasizing on them
- Preparing financial reports for stockholders
- Co-ordinating with the consultant or finance department
- Comparing the financial forecasts with actual reports to find inconsistencies
- Creating detailed financial models for analysis and comparison
As financial analysts take up the important responsibility for the financial performance of a firm, their job is stressful and requires confidence and quick decision-making. Analysts often work in standard corporate offices and spend much of their time analyzing the financial information of the institution. They also call experts, trading partners and other analysts and even travel to meet C-level executives, investment bankers and other professionals.
While majority of analysts live in big cities as jobs can be found in abundance, others even telecommute or freelance though this is less common.
According to the BLS (Bureau of Labor Statistics), about one-third of financial analysts work over 40 hours per week. BLS also reports that most analysts take their work with them home generally for research that can help them on subsequent days at work.
A person aspiring to become a financial analyst needs a minimum qualification of a bachelor’s degree – preferably in finance major like statistics, accounting or economics. Those who want to enjoy better opportunities for job position and salary should consider a master’s degree in finance or MBA. Advanced education makes them more appealing to employers.
Many employers prefer hiring financial analysts with certifications from the CFA Institute. There are many other courses and programs designed to prepare these professionals for the responsibilities and challenges in the field.
To be able to compete effectively in the industry, financial analysts should possess a wide range of skills including:
- Financial Analysis – Analysts are required to break down complex money-related issues into simpler segments to understand how they are linked.
- Financial Modeling – They must represent financial issues in modeled forms.
- Data Analysis – Analysts must know reading and interpreting large amounts of data and drawing conclusions.
- Marketing – An analyst should have the skill of convincing others to follow recommendations.
- Strategic Thinking – Most analysts need to consider complex problems and situations and craft solutions to maximize profit.
- ERP – They need to use ERPs for management and automation of finance-related tasks.
- Math – Analysts need calculating big financial problems and equations in their mind and on paper.
- Decision-Making – These professionals are often the decision-maker in a company for buying, selling or holding elements and serving the finances.
- Alertness – If a financial analyst makes a small mistake, the employer may have to bear significant loss of money. This is why these professionals should pay attention to the tiniest details in their models and reports.
According to BLS, the median annual salary of financial analysts, as of 2017, was $84,300. However, the average salary expectation varies on the basis of the specific role the financial analyst takes up. For example, professionals in commodities, securities and other pursuits get media wages of $95,550.
Some financial analysts also work on commission, earning a part of a fund’s income. This means their earning depends on their ability to work. Earning a salary of $1,40,000 or higher is a general goal for entry-level analysts at investment banks.
The complexity in the financial industry combined with the demand for finance experts will increase the growth of financial analyst career as investment firms and financial companies create new positions for the finance professionals and expand their finance departments. BLS estimates creation of 32,000 more jobs for financial analysts in the coming decade while the current job availability is about 2,77,000. These figures demonstrate significant opportunities for prospective finance professionals and graduates and expert analysts.
The future of a financial analyst depends much on his/her ambitions. While some professionals continue the same job throughout their careers, others rise to become chief operating officers or chief financial officers in their company. They can even grow to become finance managers in big corporations, taking charge of strategic investments, buying and selling assets and making financial forecasts.
Financial analysts can even find lucrative opportunities in consulting. It is a great way to maximize income while working for them rather than for other organization. They can consult for large firms on a contract basis or engage in a full-time co-operation. A career as a financial analyst provides financial freedom and security while offering an interesting and challenging opportunity to shape the industry.
Tips to Become a Financial Analyst with No Experience
Learn the Lingo and Follow Current Events
If you are interested in a financial career, there is no option to learning the Wall Street Lingo. You should consider learning concepts and terms used in finance by browsing the internet or reading The Wall Street Journal. For a non-financial graduate, not knowing the financial language can make it impossible to pass the interview for a job. This is because the employer assumes and requires that the applicant for the position of a financial analyst has knowledge about finance, regardless of his educational background.
Moreover, you should consider following current events in the finance industry. You can follow the news about the largest investment banks to stay updated on what they are up to. When you network with other people in the industry, you will need to carry out interesting conversations about the current trends and happenings in the industry.
Round off the Education
If you graduated with a degree in a non-finance subject, it is possible to change the things by taking some relevant courses emphasizing on finance at the undergraduate or post-graduate level.
Courses in accounting, economics and financial analysis are good options at undergraduate levels while post-graduates prefer an MBA as it bridges the gap between finance and non-finance graduates. Enrolling for Chartered Financial Analyst (CFA) Program is also a great option to round off your education and become a financial analyst.
Enroll in Financial Camps
Firms like Training the Street and Wall Street Prep offer intensive courses which teach valuable skills essential to pursue a career in finance like financial modeling and advanced spreadsheet techniques.
Though these crash courses cost a bit, they offer the advantage of not indulging into a long-term commitment as they are conducted over a period of few days. If you are familiar with the basic concepts of finance, you can get the optimum benefit out of such programs.
Expand the Knowledge Base
Knowledge relevant to the financial industry is not just obtained through a degree in finance. There are various other resources available. You can use a local library or even online resources to widen your financial knowledge.
You can find freely available resources or access paid services from course providers. Acquiring knowledge yourself in a field like finance can prepare you for a great future as a financial analyst.
Build a Professional Network
Creating a strong network is important in any field but is specifically essential in the financial industry that relies greatly on networking throughout the process of recruitment. The most effective ways to build a great network are connecting with people you already know and asking them to introduce you to companies where you intend to work.
It is also important to stay in touch with managers from your past internships, peers from your classes and attend networking events from time to time.
You can even try using services like LinkedIn to connect with new people. Be polite, curious and professional. Moreover, avoid asking your connections for a job. You can either discuss with them what they would do if they were in your place.
Maintain a Financial Blog
Starting and running a blog related to finance can give you the chance to share your investment ideas with others. You can publish informative, engaging finance posts on your blog to impress your potential employers with your diverse skills.
These posts serve as an opportunity to begin a conversation with your prospective employers. Possessing a relevant skill in investment and finance gives you an edge when writing on your blog. It is a self-marketing method suitable for those who want to showcase their skills.
Take an Internship
Taking an internship is crucial for various reasons like gaining professional experience and developing relevant skills. Internship is a great way to learn about the industry and assess whether you want to work in the industry in the future.
Since the role of an analyst depends largely on the industry chosen, having some practical knowledge acquired through internship can go a long way towards helping you choose the right industry for you. Many firms select their new hires from those who score interns. Non-finance graduates can even consider options like an unpaid internship or a volunteer work with a broker.
Use a Trading Simulator
A number of sites feature trading simulator which people use to make mock portfolios. These simulators compel you to track the market and stay updated on market developments. This is a nice way to impress your employer with your market knowledge and capability without any investment on your part.
Work with a Mentor
Connecting with a mentor is an effective way to jump-start your career in finance. A mentor can be anybody who believes in your capabilities and is ready to help you achieve your ambitions.
Some of the examples of a mentor include a college professor, a relative or friend with a successful career in finance or somebody you know like a supervisor from your last internship. Remember not to hesitate to reach out such people you think can help you search for the right job.
Complete Industry Courses
Completing a course relevant to the industry shows your commitment to the career in finance and gives you an edge over competitors when it comes to recruitment. Though this option is not available for all the jurisdictions, there are many tests and courses available without a sponsorship.
Do everything you can to get your foot in the door. Use your network to stay updated on the latest openings, target HR departments to submit resumes and expand your job search. Getting an entry-level position in a financial company, even a non-finance role, can open doors to career paths in finance.
Steps to Become a Financial Analyst
The career of a financial analyst is considered to be one of the highest paying jobs. It is a profession for those who want to earn more than $120,000 annually and work in a dynamic environment with new, exciting, challenging projects every time. You do not need any previous experience in the financial industry to get started to your career path. Here are the easy steps to get started:
Step 1: Get a Degree
Most financial analysts have a bachelor’s degree in finance, economics, accounting, statistics or administration. However, this is not essential. Maths-related fields like physics and engineering are also common among financial analysts.
Taking courses related to accounting, economics, business and match in your undergraduate or post-graduate program can also help. See that you develop strong computer and communication skills as they are necessary for this career.
Step 2: Find a Job
Once you complete your graduation with a bachelor’s degree, you can pursue a job as an entry-level financial analyst. These positions are often under the guidance of senior financial analyst who can guide to further. Working in this role will require you to handle analysis of financial statements, processing them for clients, maintaining files and analyzing forecasts and plans.
If you want to work on the buy side, seek a job with an investment bank, insurance company or mutual or pension fund companies. If you are interested in working on the sell side, obtain a job with a securities firm. A financial analyst often specializes in a particular region, product or industry. You may, for example, focus on telecommunications field, work in Asia or stick to options market.
Once you get a job, you will notice that many employers offer in-house training programs for entry-level financial analysts. You can even begin with any other entry-level position in finance like an accounting technician and then move to the role of an analyst after some time.
Step 3: Earn Licensure
When you want to start a career as a financial analyst, you may need to obtain one or more licenses, particularly when you work with sell-side securities firm.
License for the securities industry can be obtained from The Financial Industry Regulatory Authority. Your employer generally sponsors your licensure and you should not worry about this before seeking a job.
Step 4: Get Certified
As a financial analyst, you can consider obtaining additional certification as a Chartered Financial Analyst (CFA). It is administered by the CFA Institute which offers professional credential to candidates interested in pursuing a career in financial and investment fields.
The CFA Program covers a wide range of topics related to financial analysis, investment management, equities, quantitative analysis, fixed income and provides generalist knowledge of other areas related to finance. A candidate completing the program successfully is awarded the CFA Charter. The CFA Program is the key to beginning the lucrative career of a financial analyst without any prior experience in the field.
To know more about the program and prepare for the CFA Program Exam, check out FinQuiz.com! It is an online CFA Program preparatory resource which guides the candidates through the entire course and exam and prepares them with study plan, mock exams, question banks, curriculum notes, summaries and a lot of other digital materials. With effective tools like practice questions, study notes and video lectures, candidates can prepare for their CFA Program flexibly at their convenient time and place.
Step 5: Get An Advanced Degree
You may find that many employers require a master’s degree to give you an advanced and permanent position. You can either consider getting a master’s degree in a finance-related subject or an MBA to make yourself more appealing to your employers while getting you more mobility and options. If you don’t have a financial educational background or prior experience in the industry, going for an MBA is a great way to cover up.
Step 6: Advance Your Career
Staying updated on the financial markets, tax laws and economy can help you advance in your career. Taking responsibility of more important products, becoming a senior financial analyst in the firm or managing other financial analysts are some examples of advancement. You can also decide to move to another career as a consultant, portfolio manager, investment banker or advisor.
With such an increasing demand for financial analysts in the global marketplace, considering this career is certainly a wise decision. Now that you have got sufficient knowledge and guidance on how to become a financial analyst with no experience, you can plan your path to the lucrative career and achieve your dream job for a bright future! We welcome your experiences and thoughts in the comments section below.