How to Become a Financial Analyst

Written by: Hilbert College • Jan 12, 2024

A financial analyst reviews an analytics dashboard on a laptop screen.

How to Become a Financial Analyst

In business, knowing how to make money and knowing how to make money work are two distinctly different skills. The latter is what businesses need to develop long-term financial plans or to decide whether to invest in a project. Consistently making the right financial decisions can help businesses achieve their growth and stability goals. But landing on the right decision can be challenging without the right guidance.

Enter the financial analyst.

These professionals guide businesses in creating their financial strategies, helping them mitigate the guesswork involved in economic planning to be able to make informed financial decisions that allow the organizations to achieve their long-term financial goals. They can also help businesses remain competitive within their industry and economically compliant with industry standards.

For those equipped with an accounting degree, the financial analyst role can be a rewarding one. It’s also a role with numerous complexities. As such, learning how to become a financial analyst begins with learning the fundamentals of the profession.

What Does a Financial Analyst Do?

Financial analysts help companies and individuals devise strategies to grow capital and achieve profitability over a set period of time. Typically, they evaluate a company’s past and present financial information, such as its cash flow statements, to project the company’s future earnings potential, and its balance sheets to gauge its current stability. They may also meet with the organization’s top leaders to better understand its prospects and assess its management team.

The insights they gain from these tasks enable financial analysts to make recommendations on investment strategies that may encompass anything from a single investment to an entire investment portfolio.

Financial analysts often become specialists in one area of finance. These types of specialists include:

Financial risk specialists evaluate potential disruptions to the economic landscape and develop strategies to mitigate potential losses.
Portfolio managers oversee the performance of an organization’s investment portfolio.
Fund managers focus their work on mutual funds or hedge funds.
Budget analysts prepare budget reports and assess expenditures.
Security analysts monitor securities trends and markets to identify high-performing assets.
Ratings analysts assess a company’s or government agency’s capacity to pay its debts.

Financial analysts work for a wide range of types of employers, including banks, securities firms, mutual fund companies, insurance companies and government agencies.

Steps to Become a Financial Analyst

Individuals interested in learning how to become a financial analyst should know it’s a multistep process. Aspiring financial analysts need to gain specific knowledge and develop key skills to be able to effectively act on financial data and make smart financial decisions.

1. Earn a Degree

Most financial analyst positions require at least a bachelor’s degree. While one of the most common undergraduate degrees associated with the profession is a bachelor’s in accounting, individuals can enter the field with a degree in a related subject, such as economics, finance, math or statistics.

2. Develop Key Skills

Financial analysts must develop the right skills to be able to effectively and efficiently analyze a company’s financial data and articulate strategies based on their findings.

They must have strong analytical skills to correctly identify the patterns and trends that can lead to sound financial decisions. They also must have high-level mathematical skills to accurately interpret valuations from vast amounts of data. Because financial analysts use spreadsheets, data visualization tools and data gathering programs such as Excel, Tableau and SQL to aid in their analysis, they must have solid computer skills as well.

Additionally, financial analysts must be strong communicators. They need to be able to explain their insights and recommendations clearly and unambiguously to decision-makers who may not have the financial expertise they have.

3. Gain Work Experience

Before pursuing a financial analyst role, individuals need to gain experience in entry-level finance jobs such as tax associate or internal auditor jobs. These roles allow individuals to apply the knowledge and skills they cultivated in the classroom to real-world situations and to hone their competencies.

Another way to gain practical experience is through college internship opportunities. This type of experience may also give individuals an advantage when they start looking for their initial professional roles.

4. Earn Certification

While not required, earning certification from an organization like the CFA Institute can help job candidates stand out. Individuals can earn certification as a financial analyst or in a specialized field of financial analysis, such as portfolio management or security analysis. Certification programs have different prerequisites. The CFA Institute’s chartered financial analyst credential, for instance, requires a bachelor’s degree or 4,000 hours of professional and higher education experience to sit for its three certification exams.

In addition to certification, many financial analyst roles require licensure from the Financial Industry Regulatory Authority (FINRA). This license enables financial analysts to sell various financial products, such as bonds, annuities and mutual funds. Licenses typically require employer sponsorship; it is common for beginning financial analysts to not be licensed when they secure their first position.

Financial Analyst Salary and Job Outlook

The median annual salary for financial analysts in 2022 was $96,220, according to the U.S. Bureau of Labor Statistics (BLS). Several factors can affect an individual financial analyst’s salary, such as their education level, years of experience and location.

The job outlook for financial analysts is promising, with the BLS projecting 8% growth between 2022 and 2032. This is significantly faster than the 3% average growth the BLS projects for all professions in the same period.

Become a Trusted Financial Voice

Learning how to become a financial analyst is the first step in pursuing a career in the field. At its core, the work of financial analysts relies on gaining the trust of a company’s decision-makers regarding its financial plans. That trust is built on having the financial expertise that allows the individual to offer accurate insights that can make a positive impact on the organization’s growth and stability.

Hilbert College Global’s online Bachelor of Science in Accounting program can prepare you to make a lasting impact in business. Our program is designed to help you develop the foundational knowledge and skills needed to become a trusted voice in finance, all on a flexible timeline that works around your busy schedule. Learn how we can help you get ready for success.

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Sources:

CFA Institute, Enroll and Register for the CFA Exam

Financial Industry Regulatory Authority

Indeed, “13 Entry-Level Financial Jobs to Start Your Career”

Indeed, “What Is a Financial Analyst? (And 5 Steps to Become One)”

Investopedia, “Financial Analysis: Definition, Importance, Types, and Examples”

Investopedia, “How Do You Read a Balance Sheet?”

LinkedIn, “The Importance of Conducting a Financial Analysis for Your Business”