How To Become a Finance Analyst: A Step-by-Step Guide

By Indeed Editorial Team

Published 27 July 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Working as a financial analyst is a flexible career path that allows you to work in a variety of sectors. These professionals use their expertise to help companies and clients make important decisions to benefit their financial future and ensure that they follow regulations and laws. Knowing more about this profession will help you decide if this could be a good career for you. In this article, we will discuss what a financial analyst is, review four steps on how to become a finance analyst and provide answers to some frequently asked questions about this profession.

What does a financial analyst do?

A financial analyst is a professional who serves as a guide to organisations, businesses and individuals by helping them invest their money properly to gain additional profit. They use their skills to analyse the performance of bonds, stocks, and other financial investments to help their clients make the most lucrative financial decisions with their money. They recommend investment portfolios, review financial data, monitor economic trends, prepare financial reports and consult with company officials to gain insight into how they want to spend their money. They also review their client's financial conditions to ensure that investments have minimal economic risks involved.

How to become a finance analyst in 4 steps

Here are four steps on how to become a financial analyst:

1. Obtain a college degree

The first step to working as a financial analyst is to get a degree from an accredited university. While most companies require that candidates gain at least a bachelor's degree to be considered for employment, there is some flexibility in the degree programme that you choose to pursue since employers do not require a financial analyst degree specifically. Some of the most beneficial degree fields include finance, economics, commerce or another programme that is related to those. However, you can also consider achieving a degree in math, engineering, statistics or business.

2. Obtain certifications

Consider getting a certification, although the requirements to achieve them can vary depending on the employer you are looking to work for. Though not definitively required, getting a relevant certification can provide you with additional job opportunities and often provides you with the framework to advance into a more senior position later in your career. You will find a variety of online certifications and courses like the Financial Modeling and Valuation Analyst programme. You might also need to complete the Chartered Financial Analyst exam as well, which measures your fundamental finance management abilities.

Related: Understanding the CFA Exam

3. Decide your specialisation

Research specialisations that you can transition into during your career as a financial analyst. These professionals work in a number of different industries, providing you with the versatile opportunity to determine the type of financial analyst that you want to pursue.

Consider these available specialisations to help you identify which ones fit your personal career goals:

  • Securities analyst

  • Financial risk specialist

  • Funding manager

  • Rating analyst

  • Portfolio manager

  • Investment analyst

  • Equity research analyst

  • Financial planning and analysis analyst

4. Remain updated on financial news

Stay up-to-date on the latest financial news and information, as employers may expect candidates to have working knowledge of the finance sector. There are print and online publications that you can use to help you stay updated. As the business and financial industries continue to change, it becomes more important for you to be able to gather data from these resources quickly and compile it to use for your work.

Top 3 financial analyst skills

Here are the three important skills as a financial analyst:

Analytical skills

Financial analysts need analytical skills because they need to be able to evaluate data from a variety of sources so they can gather useful information. This allows them to find profitable investments for their clients and assess their financial growth opportunities. Data analytics is an important element of their work and makes it easier for a financial analyst to minimise financial risks and identify investments that offer minimal benefits.

Related: Analytical Skills: Definition, Tips and Examples

Computer skills

Financial analysts use different computer applications and software in order to analyse financial information, data, charts and trends. They frequently use spreadsheet software to create reports. Creating a portfolio and financial forecasting also requires fundamental computer knowledge and capabilities. There is also software made specifically for financial analysts. Finance analysts should be able to navigate through those systems to perform their job duties successfully.

Related: Computer Skills: Definition and Example

Communication skills

Financial analysts need communication skills because they must be able to clearly explain their suggestions to their clients and company. It is important that they can clearly share information and ensure that others understand it as intended. Written communication skills are also necessary for these professionals since they need to write detailed reports, summaries and recommendations.

Read more: How To Improve Communication Skills

FAQs about financial analysts

Here are some frequently asked questions about financial analysts:

What is the average salary for a financial analyst?

The average salary for a financial analyst is ₹4,34,397 per year. However, your salary as a financial analyst can vary based on a number of factors like your geographical location, educational achievements, employer and years of experience. As you gain more experience in the field, you may be able to use your expertise to negotiate for a higher wage or salary.

These cities offer the highest salaries for a financial analyst:

  • Noida, Uttar Pradesh: ₹6,19,832 per year

  • Delhi, Delhi: ₹5,31,569 per year

  • Mumbai, Maharashtra: ₹4,91,204 per year

  • Hyderabad, Telangana: ₹4,90,887 per year

  • Chennai, Tamil Nadu: ₹4,68,233 per year

  • Bengaluru, Karnataka: ₹4,05,893 per year

  • Gurgaon, Haryana: ₹2,76,274 per year

What is a financial analyst work environment?

Most financial analysts can expect to work a normal 40 hours per week schedule, though they may occasionally have to work additional hours depending on the necessities of the project or assignment. They primarily perform their duties in an office setting at individual cubicles and generally work on their own. However, they must regularly attend group meetings in order to discuss various projects and financial business matters. They might also have to travel in order to visit other companies or clients as well.

What are the advancement opportunities for a financial analyst?

The most direct career advancement opportunity for a financial analyst is to become a senior financial analyst. In this role, you can expect to take on more specialised financial projects and handle higher-value investment assignments. Additionally, you would be responsible for managing junior financial analysts and can expect to report to a fund or portfolio manager. You can advance from a senior financial analyst position to a fund manager position. In these roles, you oversee all the senior analysts on your team or in your department, decide which investments go in the company's portfolio and manage even larger client investors.

What types of companies hire financial analysts?

The majority of financial analysts work for securities and financial investment firms, but also credit intermediation companies, professional services, management agencies and insurance companies. Many of them work in the stock market as well and can find employment with banks and law firms. Many large corporations employ financial analysts to help them track and manage their financial health, as this ensures that operational business decisions align with the financial data and information that these analysts provide. Smaller companies employ these professionals to help them grow their economic standing and minimise financial risks.

What is the difference between a financial analyst and a budget analyst?

A financial analyst focuses on presenting useful financial data and information to a company or client to help them make investments that are likely to produce positive outcomes and returns. They analyse and review the financial sheets of other businesses and markets to determine if their employer should invest, withdraw or hold their money. In comparison, a budget analyst focuses on reviewing their own organisation's budget data to make certain they are investing and spending their money properly. They compile future spending estimates and revenue to determine how much their company should spend.

How long does it take to become a financial analyst?

The time it takes to become a financial analyst can vary depending on an individual's personal circumstances, like family obligations and work commitments. Generally, it can take four to five years to become a financial analyst, considering that it takes four years to obtain a bachelor's degree and then it can take a few months to a year to gain an applicable certification. The earlier you complete your degrees and certifications, the sooner you can expect to be able to work as a financial analyst.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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