How to Become a Financial Analyst
Are you thinking about becoming a financial analyst? If so, you should know that the Baldrige School of Business at Post University offers a bachelor’s degree in finance. We offer both online and on-campus programs to help you get the education you need for a career in finance.
Before you begin your journey to becoming a financial analyst, you should be familiar with the job and its responsibilities. Understanding the role and responsibilities of a financial analyst, the skills required, and the potential career paths available are all part of this.
A bachelor’s degree in finance or a related field is required for most financial analyst positions. You can also get a master’s degree in finance to improve your chances of getting an entry-level job.
Some organizations and positions require Financial Industry Regulatory Authority (FINRA) licensing; the Bachelor of Science in Finance at the Baldrige School of Business provides the knowledge and skills required to sit for the required exams. You must pass several exams, including the Securities Industry Essentials (SIE) and Series 7. Some of these exams require that the applicant be sponsored by a suitable organization.
The SIE exam is the initial exam for all FINRA registrations. The Series 7 (General Securities Representative) exam is the most comprehensive of the FINRA exams and covers topics such as investment products, ethics, sales practices, and regulations. The BS in Finance offers a variety of courses and study materials that can help you prepare for the FINRA exams. Our courses, whether online or on campus, provide an in-depth understanding of the topics covered in the exams, and our study materials provide practice questions and test-taking strategies. Additionally, our instructors are available to answer any questions students have about the exams.
What Is a Financial Analyst?
A financial analyst is someone who evaluates investments and gives financial advice to companies and individuals. Financial analysts analyze data and make investment recommendations to their clients based on their knowledge of investments, financial markets, and economic trends. In addition, they may be in charge of developing financial models, analyzing financial statements, researching economic trends, and providing financial advice. Financial analysts may work for a company’s finance department or independently.
What Exactly Does a Financial Analyst Do?
A financial analyst examines financial data and makes recommendations based on what they discover. This can include a wide range of activities, such as:
Gathering and analyzing financial data – Financial analysts collect and review financial statements, market trends, and other data to understand a company’s, industry’s, or investment’s financial health and performance.
Making investment recommendations – Based on their research, financial analysts may advise clients to buy, sell, or hold specific investments. They may also advise clients on portfolio diversification or other risk management and return strategies.
Investment monitoring– entails tracking the performance of investments over time and making adjustments as needed to maximize returns.
Financial reports – Financial analysts may prepare reports or presentations for clients that summarize their findings and recommendations. Financial projections, risk assessments, and other information may be included in these reports.
Staying current on economic and industry trends – In order to make informed recommendations to clients, financial analysts must stay current on economic and industry trends. Reading financial news, attending industry conferences, and networking with other professionals in the field may all be part of this.
Work Environment
Financial analysts can find employment in a variety of settings, such as banks, investment firms, insurance companies, and government agencies. They may also work as independent contractors or for consulting firms.
A financial analyst’s environment is typically fast-paced, with tight deadlines and a focus on accuracy and precision. Financial analysts must be able to work autonomously and efficiently while also collaborating with other financial professionals and departments within the organization, such as sales and marketing. They must be able to interpret financial data and make decisions based on what they discover. They must also have strong computer skills, be detail-oriented, and be able to analyze data and interpret pertinent information. They must also be able to think critically and strategically, as well as multitask.
Type of Financial Analysts
There are several types of financial analysts, including:
Investment analysts – also known as securities analysts or stock analysts, assess the performance of stocks, bonds, and other financial instruments. They advise clients on the purchase and sale of investments and may also publish research reports on specific companies or industries.
Credit analysts – evaluate the creditworthiness of businesses or individuals in order to decide whether to make a loan or issue a bond. They assess the risk of default by reviewing financial statements and other data and making recommendations to lenders or investors.
Financial planning analysts assist – individuals and families in developing long-term financial plans, such as budgeting, saving, and investing for retirement. They may also provide advice on taxation, insurance, and other financial issues.
Industry analysts – Industry analysts specialize in specific industries, such as technology or healthcare, and conduct research and analysis on trends and developments in those fields. They may work as independent contractors or for investment firms or consulting firms.
Government analysts – work for federal, state, or local governments and typically focus on financial issues such as budgeting, financial regulation, or economic policy.
Corporate finance analysts – work for large corporations, providing analysis and recommendations on financial issues such as capital budgeting, cost of capital, and mergers and acquisitions.
Quantitative analysts – Quantitative analysts evaluate financial data and forecast market trends using complex mathematical models and statistical analysis. They could work in a variety of settings, such as investment banks and hedge funds.
Financial Analyst Career Path
Many financial analysts follow a similar path that includes the following steps:
Get your bachelor’s degree. A bachelor’s degree in finance, economics, or accounting is typical for financial analysts. This may even be a requirement of the Financial Industry Regulatory Authority, depending on where you work (FINRA). Students can choose the financial planning concentration in the BS in Finance degree at Baldrige and take courses designed specifically to prepare them to sit for the Securities Industry Essentials (SIE) and Series 7 exams.
Get some experience. Financial analysts may begin their careers as financial analysts or research assistants, where they can gain experience and develop their skills. Some financial analysts may pursue a master’s degree in a related field, such as a Master of Business Administration (MBA) with a finance concentration.
Acquire professional credentials. Professional certifications from recognized organizations such as the Financial Industry Regulatory Authority (FINRA) or the Chartered Financial Analyst (CFA) Institute are frequently advantageous for financial analysts. A search of the FINRA website reveals a plethora of licenses available to analysts. A financial analyst may wish to pursue the Series 6, Series 66, Series 57, and Series 24 licenses.
Ascend to higher-level positions. As they gain experience and develop their skills, financial analysts frequently advance to more senior positions such as senior financial analysts or portfolio managers.
Specialize. Financial analysts may eventually choose to specialize in a specific area, such as a specific industry or type of investment, in order to gain expertise and advance their careers.
Financial Analyst Job Outlook
According to the U.S. Bureau of Labor Statistics (BLS), employment of financial analysts is expected to grow 9% from 2020 to 2030, roughly in line with the national average. According to the BLS, the increasing complexity of financial markets and the need for businesses and organizations to make informed investment decisions will drive demand for financial analysts.
The job outlook for financial analysts may differ depending on the industry. Financial analyst employment in the securities, commodities, and financial services industry, for example, is expected to grow 9% from 2020 to 2030, while employment in the insurance industry is expected to grow 7% during the same period. Financial analysts employed by the federal government may have good job prospects as well, as demand for their services is expected to remain stable.
Is It Hard to Get a Job as a Financial Analyst?
Getting a job as a financial analyst can be difficult, especially at top firms or in high-demand industries. Many employers prefer candidates who have a bachelor’s or master’s degree in a related field, such as finance or economics.
How Many Years of College Do You Need to Become a Financial Analyst?
As previously stated, becoming a financial analyst typically requires at least a bachelor’s degree in a field such as finance, economics, or accounting. A bachelor’s degree takes four years on average, though some programs can be completed in three.
Some organizations prefer to hire financial analysts who have a master’s degree in a related field, such as an MBA in Finance. A master’s degree typically requires two years of full-time study beyond a bachelor’s degree.
Financial analysts can obtain professional certifications in addition to formal education, which may necessitate additional coursework and examinations.
Financial Analyst Certification Exams
Financial analysts can choose from a variety of professional certification exams to demonstrate their expertise and advance their careers. Professional organizations, such as FINRA certification, the Chartered Financial Analyst (CFA) Institute, or other industry groups may offer these exams.
The following are some of the most common financial analyst certification exams:
Exam for the Financial Industry Regulatory Authority (FINRA) – In order to become a registered representative of a broker-dealer, the financial analyst position may necessitate passing the Financial Industry Regulatory Authority (FINRA) exam. The Securities and Exchange Commission requires this exam, which is administered by FINRA, to ensure that financial analysts have the necessary knowledge and skills to work in the securities industry. The FINRA exam covers a wide range of subjects, such as securities regulations, investment strategies, and market analysis. Passing this exam is required for a financial analyst to be able to provide clients with investment advice and services.
CFA Exam – The CFA exam covers a wide range of topics in finance and investment, including financial statement analysis, economics, ethics, and portfolio management. To be eligible to take the exam, candidates must have a bachelor’s degree and at least four years of professional work experience.
Certified Financial Planner (CFP) Exam – The CFP exam is a specialized exam that covers financial planning topics, such as retirement planning, tax planning, and risk management. Candidates must have a bachelor’s degree and at least three years of professional work experience to be eligible to take the exam.
FRM Exam – The FRM exam is a specialized exam that covers risk management topics such as credit risk, market risk, and operational risk. To be eligible to take the exam, candidates must have a bachelor’s degree and at least two years of professional work experience.
Certified Public Accountant (CPA) Exam – The CPA exam covers a wide range of accounting topics, including financial reporting, auditing, and taxation. To be eligible to take the exam, candidates must have a bachelor’s degree and meet other education and experience requirements.
What Do I Need to Learn to Become a Financial Analyst?
To become a financial analyst, you must first learn about various economic concepts and financial tools, such as:
Statements of Financial Position. Financial analysts should be familiar with and able to analyze financial statements, such as balance sheets, income statements, and cash flow statements, in order to understand a company’s financial health and performance.
Financial metrics and ratios. To evaluate the performance and potential of various investments, financial analysts should be able to calculate and interpret financial ratios and metrics such as the price-to-earnings ratio, return on investment, and debt-to-equity ratio.
Economic Fundamentals. Financial analysts should understand economic principles such as supply and demand, inflation, and GDP and be able to apply these principles to their analysis of financial data.
Investment Fundamentals. Financial analysts should understand investing principles such as risk management, portfolio diversification, and asset allocation and be able to apply these principles when making recommendations to clients.
Analyze the Industry and the Company. Financial analysts should be able to conduct research and analysis on specific industries and companies, as well as trends and developments that may affect their performance.
Skills Needed
Analytical skills – Financial analysts need strong analytical skills in order to collect, process, and interpret financial data. This may involve using complex mathematical models and statistical analysis to evaluate financial information and make predictions about market trends. Financial analysts should also be able to identify patterns and trends in financial data and use this information to make informed decisions and recommendations.
Problem-solving abilities – Financial analysts frequently face complex financial problems that necessitate innovative and effective solutions. They must be able to think critically and analyze problems from various perspectives in order to identify potential solutions.
Verbal communication skills – Financial analysts must be able to communicate their findings and recommendations to clients, colleagues, and other stakeholders effectively. This may include delivering financial reports or making presentations, taking part in meetings and conference calls, answering questions, and advising clients. Financial analysts must be able to communicate complex financial concepts and ideas in a clear and concise manner.
Written communication skills – Financial analysts should have excellent written communication skills in order to prepare clear and well-organized reports and presentations for a non-technical audience.
Is a Financial Analyst Career Right for Me?
A career as a financial analyst may be right for you if you have the following characteristics and aforementioned skills:
- Analytical abilities that are exceptional
- ability to solve problems
- Attention to detail
- Excellent communication skills
- Finance and investing interests
If you have these qualities and are looking for a challenging and rewarding career in finance, a career as a financial analyst could be for you.
Pursue a Career in Finance at the Baldrige School of Business at Post University
If you want to learn more about becoming a financial analyst, look into available degree programs and certification options.
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