One of the most common career pathways in finance is that of a financial analyst. This is because analysts can operate in a variety of sectors and that the field offers some advantages, including a high earning opportunity. A financial analyst role is certainly worth considering whether you’re a business or finance major. And if you’re not pursuing a degree in a similar field, you may be interested in learning more about this role and determining if it’s a good match for you.
When it comes to deciphering financial data, financial analysts are geniuses. They are often very goal-oriented, with the ultimate goal of assisting enterprises and individuals in achieving particular goals.
Financial analysts are a combination of accountants, investigators, psychologists, and fortune-tellers. Come along with us as we dig straight into the job role of a financial analyst to see if it’s the right fit for you.
The work profile of a Financial Analyst (skills and duties)
A financial analyst’s job entails deciding whether to purchase or sell a company’s stock after analyzing its overall results and forecast. Business analysts do not always work on the equity or bond markets. Several financial analysts continue to be interested in the application of marketing strategies concerning cost and total efficiency. They frequently discover the best practices for streamlining recruiting procedures to save a significant amount of money. Depending on the job, such as an investment bank, insurance firm, start-up, or pension scheme, a job as a financial analyst can come with differing financial management responsibilities.
Financial analysts are in charge of a company’s or corporation’s financial preparation, research, and projections. They estimate projected sales and costs to assess cost structures and project financing decisions. Senior financial analysts collaborate with CFOs as well as other members of the management committee to determine the company’s overall investment strategy and policies.
Regional and local banks, real estate investment brokerages, information, and insurance firms can hire financial analysts. A financial analyst may bring value anywhere it is needed to make important investment choices.
Here are amongst the most common financial analyst responsibilities:
- Evaluate evidence from the past and present.
- Examine the effects of business decisions by identifying trends and patterns in statistics.
- Develop perspectives that would help the organization achieve its objectives.
- Make a report
- Management should be consulted.
- Create a financial plan.
- Make suggestions for changes.
- Make budget suggestions
- Analyze your investing options.
- Financial forecasts should be used to gain insight into the future.
- Create processes and regulations.
- Contrast financial results against projections.
- Carry out cost analyses
- Financial transaction documents must be reconciled.
Here are the soft skills you’ll need if you want to stand out as a financial analyst candidate:
- Dedicated to the information
- Dedicated to a specific goal
- Analytical approach in communication
- critical-thinking abilities
- Accuracy in the workplace
Educational Qualification Requirement
A bachelor’s degree is required for the majority of positions. Accounting, economics, banking, analytics, mathematics, and engineering are only a few of the areas that will help you get ready. Employers also need a master’s degree in business administration (MBA) or a master’s degree in finance for advanced positions. It’s crucial to understand option pricing, option valuation, and risk assessment.
Registrations, Licenses, and Certifications
The below is a list of the top finance certifications:
- Certification as a Chartered Financial Analyst (CFA)
- Certification as a Certified Public Accountant (CPA)
- CAIA stands for Chartered Alternative Investment Analyst.
- The title as Certified Financial Planner (CFP)
- Certification as a Financial Risk Manager (FRM)
- FMVA stands for Financial Modeling and Valuation Analyst.
While certifications are not always needed, some employers believe they are. But just because they aren’t doesn’t mean that grabbing one (or a few) isn’t a good idea. Certifications allow you to show your knowledge and experience in a specific area.
Salary of Financial Analyst
The salary of a financial analyst is determined by the expertise and experience the professional possesses. Any new financial analyst should expect to earn between Rs 15,000 and Rs 40,000 per month. The pay package of financial analysts increases four to five times after five years of work experience. Qualified CFAs can gain competitive wages in the United States or Canada.
Indian financial analysts with the requisite experience and presenting expertise are hired by global hedge fund organizations and financial institutions, including investment banks.
A financial analyst in the United States should expect an average wage of $80,000, ranging from $48,000 to $152,000, according to salary portals that report wages of workers in the finance industry. The average annual remuneration in India is around Rs 10 lakh.
Career Progression/Role of Financial Analyst
- Financial Analyst: As already discussed before. A financial analyst is a professional who works in the financial sector. They continue to be active in marketing research to predict future developments, as well as producing financial analyses focused on insight and offering suggestions. The role of a financial analyst can differ depending on the organization.
- Credit Analyst: Their primary duty is to evaluate a loan applicant’s credit ratings.
- Research Analyst: They investigate, evaluate, analyze, and deduces data, concepts, and hypotheses for specific use by a financial institution or an external financial customer.
- Portfolio Manager: It’s an intermediate finance job. They collaborate with a set of people to make investment decisions in joint, exchange-traded, or closed-end fund funds. They put financial policy into action to handle day-to-day stock trade.
- Chief Financial Officer: It’s a senior-level officer who is in charge of a company’s financial activities. They monitor working capital and strategic planning, as well as analyzing the company’s financial strength.
- Chief Investment Officer: It’s a high-level finance role. He or she is in charge of supervising a group of experts engaged in the administration and supervision of investing operations. Pension plans, investor affairs, and collaboration with external researchers are all part of it.
Different Types of Financial Analyst
There are two different types of Financial Analysts.
- Buy-side Financial Analyst
- Sell-side Financial Analyst
Buy-side Financial Analyst:
Create investment options for businesses with a lot of capital to spend. Mutual funds, pension funds, investment firms, private wealth management, and non-profit entities with substantial endowments, such as some colleges, are examples of institutional investors. As a result, they assist with “Purchasing Investment funds.”
Sell-side Financial Analyst:
Financial services salesmen who trade securities, shares, and other portfolios should seek advice. They aid in the pricing and sale of investments. This group includes most investment bankers.
Some analysts work with the corporate media and are not on the buy or sell side.
Financial analysts typically concentrate on factors impacting a single market, geographical area, or product category. For eg, an analyst may specialize in the oil sector, a global region such as Eastern Europe, or the foreign exchange market. They should comprehend how new legislation, laws, and political and economic developments can influence investment decisions. Financing is becoming more competitive, and some financial experts focus on a specific nation or area. Companies expect their financial analysts to be fluent in the language, history, economic landscape, and political climate of the country or area they represent.
The Job Prospects of Financial Analyst
The demand for financial analysts is constantly growing. Time has also boosted investment activity. Investment preparation necessitates the use of trained analysts. When the need for skilled experts in financial analysis grows, so will the number of job openings.
The Indian financial market is expanding steadily. As a result, it has increased the number of workers in the finance industry. India’s financial hubs are clustered in Bengaluru, Pune, Chennai, Kolkata, Mumbai, Ahmedabad, and Kanpur. There are various openings in IPOs, FDI, FII, and other financial institutions. People are becoming more mindful of the importance of investing in the finance sector. This reality has given rise to a plethora of mutual fund firms. These businesses necessitate the services of professional financial analysts. Financial services are now rapidly expanding. That will also lead to more job openings for financial analysts.
Advice for Getting Hired
Candidates must be mindful that financial analyst is an occupation that can genuinely be considered difficult, as what counts most is the candidate’s skills and knowledge. Beginning as an intern for a finance organization allows new graduates to gain professional experience and exposure. The applicant will learn about using spreadsheets, databases, and PowerPoint displays, which can benefit them in getting a position with a financial firm. Furthermore, mastering application technology such as ERP may be advantageous when looking for a job since most MNCs use such tools for optimal performance and choose applicants that have a realistic knowledge of these.
Since financial analysts must communicate and present a large amount of knowledge to customers and colleagues, they must develop outstanding communication and presentation skills. Interpersonal skills are essential in the profession of a financial analyst because he deals with investors, consumers, the media, regulatory authorities, and so on. Awareness and up-to-date insights about the existing finance industry would undoubtedly help applicants increase their odds of being hired as a financial analyst at a financial firm.