By Chron Contributor Updated May 13, 2021
Financial analysts assess the performance of bonds, stocks and other types of investments to guide the investment decisions of individual and institutional clients. They often work long hours that are heavy on research and data analysis. As explained by the employment website Glassdoor, the minimum education requirement is typically a bachelor's degree in accounting, finance, economics or a related field.
Financial Knowledge
Financial analysts should have a deep knowledge of investment terms and accounting principles to fully understand the balance sheets, income statements and other financial documents of companies they follow. Understanding finance and accounting principles begins with the right education. Many financial analysts hold Master of Business Administration (MBA) degrees, or advanced degrees in a related field.
Industry professionals who sell financial products as part of their job must be licensed in the state, or states, in which they work. The Financial Industry Regulatory Authority (FIRA) is the primary licensing agency for the financial industry. Employers may also require an individual to obtain certification as a Chartered Financial Analyst through the CFA Institute.
CFA certification is considered the "gold standard" in the investment profession. Earning a CFA requires a course of independent study and successful completion of a series of written exams. The CFA curriculum is rigorous. A great deal of self-discipline and drive are necessary to successfully complete the program and earn the charter.
Big Picture Economics
Financial analysts spend long hours studying the financial documents of companies, but they also must understand the economic "big picture" as well. For many financial analysts, this means poring over financial news to keep up with and understand major events in the global economy. Publications such as "The Wall Street Journal," "The Financial Times" and "The Economist" are often on the desks of many financial analysts and other investment professionals.
Computer Skills
Financial analysis is a data-rich world. Analysts need strong computer skills to access and analyze large financial data sets, transforming the data into usable information that informs the investment decisions of individuals, companies, foundations and other organizations. Financial analysts need proficiency in statistical and spreadsheet software and relational database programs, according to the BLS.
Math Skills
Assessing the performance of stocks and bonds, as well as estimating the value of a company, requires extensive math skills. Analysts use complex mathematical and statistical techniques such as linear regression to analyze financial data. Financial analysts can expect to take complex math courses in college and graduate school, including calculus, linear algebra and statistics.
Salary and Job Outlook
According to the employment website Salary, the average financial analyst earned an annual salary ranging from $54,295 to $65,890. As with most jobs, earnings are dependent on a variety of factors, including employer, geographic location, education and experience.
The U.S. Bureau of Labor Statistics (BLS) tracks numbers on nearly all civilian occupations. As of 2020, the BLS reported that financial analysts earned a median annual salary of $83,660 per year. Median salary means that half in the profession earned more, while half earned less. The BLS also projects that the job growth rate for the profession will be 5 percent through 2029, a rate considered faster than average when compared to other jobs. The demand for financial analysts is attributed to the development and availability of a greater range of financial products.
FAQs
The most important skills for a financial analyst are accounting, reporting, Excel, analytical, communication, forecasting, financial modeling, budgeting, and leadership.
What skills are most important for financial analyst? ›
The most important skills for a financial analyst are accounting, reporting, Excel, analytical, communication, forecasting, financial modeling, budgeting, and leadership.
What are the requirements for a financial analyst? ›
Financial Analyst Education Requirements
Most firms require candidates to have at least a bachelor's degree. The CFA Institute recommends a finance-related major such as a bachelor's degree in finance, accounting, statistics, economics or general business.
What computer skills do you need for a financial analyst? ›
For a financial analyst, technical skills are becoming increasingly necessary. Firms today are looking for candidates who have a strong knowledge of languages like SQL, Python, SAS, R, etc. Knowing these languages helps in managing a large amount of data with ease.
How do you answer a financial analyst question? ›
In short, be prepared to prove that you understand the financial concepts that make up your job. You might be asked to analyze a spreadsheet, read a financial statement, discuss how you'd solve a problem in Microsoft Excel, or explain a financial term (like positive cash flow), among other things.
What are the three core responsibilities of a financial analyst? ›
Financial Analyst Job Description
Analyze financial statements to evaluate investment opportunities. Create financial modeling for investors to find profitable investments. Recommend individual investments and collections of investments.
What are the strengths of a financial analyst? ›
The skills required for becoming a financial analyst comprise technical finance skills and non-technical behavioural skills. The technical skill includes economic modelling, equity research, merger and acquisitions, credit risk modelling, accounting software skills, IFRS knowledge, etc.
What do financial analysts need to do their job? ›
Financial analysts must be adept at using software to analyze financial data and trends, create portfolios, and make forecasts. Decision-making skills. Financial analysts must reach conclusions so that they can recommend whether to buy, hold, or sell a security. Detail oriented.
What should I prepare for financial analyst? ›
10 Must-Know Topics To Prepare For A Financial Analyst Interview
- Ratio Analysis.
- Financial modeling.
- Sector-specific expertise.
- Knowledge of valuation technique.
- Cash flow analysis.
- Impact of changes in current assets.
- Conceptual clarity on DCF, FCF.
- Cost-Volume-Profit Analysis.
A Day in the Life of a Financial Analyst. Financial analysts gather information, assemble spreadsheets, write reports, and review all non-legal pertinent information about prospective deals. They examine the feasibility of a deal and prepare a plan of action based on financial analysis.
Now that you know the most essential finance skills, let's explore the benefits of finance skills in detail and how to enhance them.
- Communication and interpersonal skills. ...
- Problem-solving skills. ...
- Ethics. ...
- Accounting skills. ...
- Strategic financial planning skills. ...
- Financial reporting skills. ...
- Analytical skills.
Analytical skills: A candidate must be able to think logically and critically about a variety of financial information, from a company's financial statements to industry news.
Which skills are required for a business analyst? ›
Top 7 Business Analyst Skills that are High in Demand!
- Competent Verbal Communication.
- Good Listening Skills.
- Ability to Understand Delegated Objectives.
- Being able to Run Meetings with Stakeholders.
- Knowing the Objectives Well.
- Being Diligent with Time Management.
- Documenting and Writing Reports.
How to prepare for a financial analyst interview
- Review the job description. ...
- Research the company. ...
- Review key concepts. ...
- Prepare for challenging interview questions. ...
- Consider your response to simple interview questions. ...
- Make a list of questions to ask.
Tell Me About Yourself Answer For: Financial Analyst
A detail-oriented financial analyst, I specialise in budgeting, forecasting, and financial modeling. Over the past 12 years, I've successfully analysed financial data, identified trends, and provided insights that have informed strategic decision-making.
What does a financial analyst do for dummies? ›
A financial analyst typically performs the following functions: Evaluating historical and current financial data to understand the company's financial condition. Studying industry-specific business trends and research data. Writing data-backed reports to support the management team in taking strategic business ...
How to be a better financial analyst? ›
The Key Financial Analyst Skills to Master
- Accounting. Accounting skills are paramount to your financial analyst career. ...
- Reading SEC filings. ...
- Corporate Finance. ...
- Financial Modeling. ...
- Corporate Valuation. ...
- Technical Analysis. ...
- Leveraged Buyout Modeling. ...
- Mergers & Acquisitions Analysis.
Financial analysts generally focus on trends affecting a specific geographical region, industry, or type of product. For example, they may focus on a subject area or a foreign exchange market. They must understand how economic trends, new regulations, policies, and political situations may affect investments.
What type of person should be a financial analyst? ›
To be a good financial analyst, you should have strong math skills, enjoy solving complex problems, and like making important decisions. You also need to know how to analyze large amounts of data and be very detailed oriented.
What makes you a good candidate for this position financial analyst? ›
A strong candidate for a Financial Analyst role should have a solid educational background in finance or accounting, excellent analytical skills, and the ability to communicate complex financial concepts clearly.
