How to Become a Finance Analyst

It takes 4 years of professional experience to become a finance analyst. That is the time it takes to learn specific finance analyst skills, but does not account for time spent in formal education. If you include the normal education requirements to complete a college degree, then it takes 7 to 9 years years to become a finance analyst.

To be a financial analyst, you must complete a bachelor's degree and find opportunities to gain work experience.

Most entry-level positions for financial analysts require a bachelor's degree. Appropriate fields of study include accounting, business, economics, finance, mathematics, and statistics. Having a Master of Business Administration (MBA) is recommended but not always required.

It is typical for a financial analyst to also become certified; in fact, employers will often sponsor certification and licensing programs. Some Financial analysts pursue a more specialized Chartered Financial Analyst (CFA) certification.

Unlike the CPA, which is focused on a professional understanding of public accounting, the CFA is focused on making investment decisions on behalf of the client or employer.

Another option is to take advanced courses in subjects related to your specialty. Licensing is typically required for analysts looking to sell financial products. The largest employers of financial analysts are:

1. Security, commodity, and other financial investments and related activities. (18%)

2. Credit information and related activities (15%)

3. Professional scientific and technical services (12%)

4. Management of companies and enterprises (11%)

5. Insurance carriers and related activities (6%)

To start a financial career, you should earn a college degree, complete an internship, gain an entry-level position, and get certified or possess an advanced degree.

If analyzing data trends and the performance of stocks and bonds to help businesses or individuals make investment decisions sounds exciting, then a career as a financial analyst may be for you. There are a few different directions you can take in a financial analyst career, including a buy-side analyst or a sell-side analyst.

• Buy-side analysts work for hedge funds or insurance companies to help businesses with their investment strategies.

• Sell-side analysts advise financial service sales agents who sell stocks, bonds, and other investments.

Regardless of which route you want to take, here are the four big steps we recommend you take to successfully become a financial analyst.

1. Earn a college degree.

   Most practicing financial analysts pursued a finance-related major like accounting, statistics, or economics; however, that is not necessarily a prerequisite. Other math-heavy fields like engineering and physics are not uncommon backgrounds among financial analysts.

   It is recommended that you take courses in business, economics, accounting, and math in your undergraduate program, as they will be necessary for this career.

2. Complete an internship.

   While this is not mandatory, it is strongly encouraged that you pursue a financial analyst internship. Internships provide a great opportunity to network with existing financial analysts and potentially find a mentor.

   An internship will also help you build your resume and provide experiences you can draw on for job interviews. Most employers prefer to hire people with experience, even for entry-level jobs. An internship also allows you to demonstrate your active interest in becoming a financial analyst and build experience.

3. Find an entry-level position.

   Once you graduate with a bachelor's degree in a relevant field, you can pursue job openings for titles like a junior financial analyst or entry-level financial analyst. Positions like these are often under the guidance of a senior analyst who will help show you the ropes of the industry.

   In these roles, you will encounter tasks like analyzing income statements, maintaining files, processing financial statements for clients, and analyzing plans and forecasts. While junior analysts could potentially advance, progression often requires either a certification or a master's degree eventually.

4. Get Certified and/or an Advanced Degree.

   If you want to stay in the financial analyst field, many employers will require you to get the CFA charter for senior-level positions. The charter program requires you to pass three rigorous exams (CFA Level I is offered every six months, Levels II and III are offered annually).

   It is recommended that you study at least 300 hours for each of the exams. In addition to passing the exams, you will also need 4,000 hours of relevant experience for earning the charter.

   Depending on your role, some employers may also require you to get licensing from the Financial Industry Regulatory Authority (FINRA). This type of licensure generally requires sponsorship from your firm, so it might be best to start a job first and find out what they require.

Yes, being a financial analyst is a good job. Financial analysts are ranked #18 in best business jobs. The overall job satisfaction for financial analysts is above average.

Financial analysts help their employers or clients make the best investing decisions by identifying trends in financial data that they extrapolate into making future business predictions. Being a financial analyst is an important job to help employers or clients grow.

One study found that 39% of financial analysts report feeling that their job makes the world a better place or helps to make someone else's life better.

On average, financial analysts are paid well (median salary: $82,000), but many work long hours. The additional hard work usually pays off, though, as financial analysts have many opportunities for advancements and increased earnings.

There is a growing demand in the job market for financial analysts. Future job prospects remain optimistic, with a growth projection of 11% by 2026. The increased demand for financial analysts is related to increased regulations and market complexity, which is driving growth for financial analysts, particularly among larger firms.

Yes, being a financial analyst is a hard job. Most financial analysts report high-stress levels and heavy workloads. The work itself is complex and requires a lot of knowledge and continuous study. While financial analysts are usually paid well, it comes at the cost of a healthy work-life balance in many cases.

While there are many different types of financial analysts, most usually involve standing knee-deep in a pile of data while combing through it, looking for nuggets of opportunities. Thus, working as a financial analyst is not for everyone - especially those who are not keen on spending long hours with complex datasets running statistical analyses.

A major challenge in being a financial analyst stems from being good at analyzing and interpreting financial statements, market trends, and microeconomic conditions.

In order to achieve this, most financial analysts have academic backgrounds in business, financial, or accounting, as well as additional certifications (e.g., MBA, CPA, CFA). Consistent with this, a financial analyst should have a fundamental understanding of theory in order to really understand financial modeling.

One out of three financial analysts works 50-to-70 hours a week. Competition for these jobs is fierce, and, as a result, many financial analysts feel pressure to put in long hours and to over-perform at work. The work-life of a financial analyst, however, can vary greatly depending on the company and industry.

Working at a large firm like Goldman Sachs, for instance, usually means working long hours, dealing with a lot of stress, and having a regular performance analysis (aka: show me the money). However, those who work at smaller companies report feeling less on-the-job stress and feeling greater satisfaction in their work-life balance.

At the end of the day, a financial analyst is just there to provide data-driven recommendations. It's someone else who decides whether to pursue the recommendation. This takes some of the pressure off in being responsible for business outcomes. In fact, many financial analysts report this aspect of the job as being less stressful compared to those in leadership roles.

No, it is not easy to become a financial analyst. To become a financial analyst requires at least a four-year degree, job experience, and certifications.

A financial analyst is there to guide businesses and individuals in decisions about spending money to attain a profit. They assess the performance of stocks, bonds, and other types of investments. To do this requires a deep understanding of statistics, finance, and business acumen.

Experience matters when it comes to being a finance analyst. For example, roughly 25 percent of financial analysts have between six and ten years of experience under their belts, while only eight percent have between zero and two years of experience.

The BLS predicts that the financial analyst career will enjoy much faster growth than average, expanding by 12 percent through 2024.

In total, the BLS estimates that the U.S. market will add more than 32,000 jobs for financial analysts over the next decade, and the current job availability will fall at around 277,000. This is a great opportunity for recent graduates or prospective analysts to get their foot in the door.

While being an analyst is often thought of as a single occupation, there are actually several different types of analysts with their own skills and specialties. Below are 8 types of analysts:

1. Analyst

   Analysts are employees or individual contributors with a vast experience in a particular field that help the organization address challenges. They help the organization improve processes, policies, and other operations protocol by studying the current processes in place and determining the effectiveness of those processes. They also research industry trends and data to make sound inferences and recommendations on what the company should do to improve their numbers. Analysts recommend business solutions and often help the organization roll out these solutions. They ensure that the proposed action plans are effective and produce the desired results.

   Average Analyst Salary: $70,668

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2. Associate Analyst

   An associate analyst is a professional who is responsible for the research and investigation for a specific business process and department to help the senior staff make further decisions. Associate analysts must use their analytical skills to understand how the collected data can affect business decisions, then prepare reports that detail findings and recommend solutions. They must assist in developing new business models that can generate profits while reducing costs. Associate analysts can work in various industries ranging from finance and operations to information technology (IT) and marketing.

   Average Associate Analyst Salary: $68,428

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3. Staff Analyst

   Staff Analysts are employees who oversee the activities related to the employees. They monitor the performance of the employees and assess whether particular employees suit the role they have. They also assess the current roles in the company to see if those roles are really needed. Staff Analysts ensure that the manpower allocation in the company is efficient. They analyze staff-related data to check whether there are more areas for improvement. Staff Analysts may also be assigned to come up with projects related to improving productivity.

   Average Staff Analyst Salary: $85,736

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4. Product Analyst

   A product analyst job utilizes data analysis software and notates trends in market research. Primarily, analysts project the costs of product development and marketing. They think of the possibilities for profit and sales and monitor the performance of products on the market to come up with a better product. Their responsibilities include company product evaluation, product understanding, and product rating reviews. Familiarity with Microsoft Office Suite, strong communication skills, and proficiency in database software is necessary for this job.

   Average Product Analyst Salary: $74,440

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5. Control Analyst

   A control analyst is a professional who is responsible for identifying weaknesses in the work process of an organization and implement methods to minimize risks. Control analysts are required to supervise the process for incident reports and provide technical guidance to their personnel. They must prepare monthly general ledger account analysis and balance sheets reconciliations that are according to the generally accepted accounting principles (GAAP). Control analysts should also assist with the organization's ISO audit procedures and findings.

   Average Control Analyst Salary: $69,169

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6. Resource Analyst

   A resource analyst is responsible for conducting data and statistical analysis, analyzing trends research, and identifying cost-reduction opportunities that would generate revenues and increase profits. Resource analysts evaluate budgeting and financial transactions and implement strategical methodologies to improve business operations, project management, and customer relationships. They also monitor the resource management of the business by coordinating with third-party providers and the senior management to facilitate operational concerns and requests for collaborative partnerships with the clients.

   Average Resource Analyst Salary: $64,403

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7. Business Analyst Associate

   A business analyst associate job supports collaborating with financial reporting and developing strategies and initiatives that optimize costs and improve internal and external reporting. They work closely with business analysts to help make improvements in streamlining reports and review the process requirements by constantly communicating with the clients or end-users. The role should also call for a solid understanding of regulatory and requirements in reporting as well as experience in forecasting, budgeting, and financial analysis shared with a comprehensive understanding of key performance indicators.

   Average Business Analyst Associate Salary: $64,000

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8. Assistant Analyst

   The duties of an assistant analyst depend on one's line of work or industry of employment. Their responsibilities typically include conducting extensive research and analysis to gather insights and performing support tasks such as preparing and processing documents, coordinating with different departments to gather data, answering calls and correspondence, liaising with external parties, and participating in developing plans. Furthermore, as an assistant analyst, it is essential to recommend solutions to optimize business procedures, all while adhering to the company or organization's policies and regulations.

   Average Assistant Analyst Salary: $52,391

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The skills required to be a financial analyst include:

• Quantitative problem solving

• Understanding of financial theory and statistics

• Communication skills

• In-depth understanding of various financial markets and investment products

While there can be specific skill sets needed depending on the type of financial analyst, there are several key skill sets that all good financial analysts should have.

Most common skills performed by Financial Analyst include:

• Research Skills - Ability to gather data and information (e.g., historical, financial reports, accounting data, stock prices, macroeconomic data, industry market trends)

• Organizational Skills - Organizing and maintaining large data sets, financial reports, etc

• Analytical Skills - Ability to analyze financial results and make forecasts and projections (e.g., data modeling past information and historical data to calculate metrics like gross margin, net margin, fixed vs. variable costs, year-over-year growth rate, return on equity, return on assets, debt/equality ration earnings per share)

• Decision-Making Skills - Provide data-driven recommendations and opportunities to the company (e.g., use data to generates insights and recommendations on how to improve the operations of a business, such as how to grow revenue or increase market shares.)

• Technology Savvy - Ability to build databases, spreadsheets (e.g., MS Excel), and PowerPoint. Some employers require financial analysts to know programming languages such as SQL, Python, R.

• Communication Writing Skills - Ability to effectively communicate in a clear, concise, and persuasive manner, as well as making recommendations to team leaders, stakeholders, and various departments within the company.

• Attention to Detail - Building financial models requires not making any mistakes that can impact the findings. For example, a depreciation number could wrongly be typed as $686 instead of $868, leading to a completely different result.

  Also, attention to detail is important when choosing the best format to present their findings. Many companies have specific templates that are used.

A financial analyst should study a mixture of subjects related to accounting, statistics, and economics.

Most financial analysts work to collect, monitor, and evaluate information to make forecasts and recommendations relevant to their sector (e.g., banking, insurance, government). Financial analysts leverage strong accounting and compliance backgrounds to explore historical financial data, predict future results and drive process and policy improvements.

Day-to-day responsibilities for financial analysts include:

• Analyzing current and past financial data and performance

• Preparing reports and projections based on this analysis

• Evaluating current capital expenditures and depreciation

• Exploring investment opportunities

• Establishing and evaluating profit plans

• Identifying trends in financial performance and providing recommendations for improvement

• Coordinating with other members of the finance team to review financial information and forecasts

• Providing financial models and forecasting

With so many different day-to-day responsibilities, it's important to be well-rounded as a finance analyst. You should keep this in mind when designing a study program to become a financial analyst.

In addition to primary education, it's important to work towards any licenses, certifications, and registrations that will help you advance in your career as a financial analyst. Two main types of certification in the field are -

• The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. A license is generally required to sell financial products, which may apply to some positions.

  Because most of the licenses require sponsorship by an employer, companies do not expect individuals to have these licenses before starting a job.

• Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor's degree and several years of work experience and pass multiple exams. They also may choose to become certified in their field of specialty.