Financial Analyst Jobs

Overview

Financial Analysts are skilled in converting unprocessed financial data into useful insights. They use advanced tools and techniques to examine a company's financial information to identify patterns, evaluate performance, and forecast future events. Businesses can use this information to make well-informed decisions, streamline processes, and meet financial objectives.

The field of financial analysis is rapidly growing. Top companies that employ financial analysts are Deloitte, Google, Accenture, Wipro, Adobe, Citibank, Honeywell, Visa, and JPMorgan. The Bureau of Labor Statistics has forecast an 11% increase in the employment of financial analysts from 2016 to 2026.

Global Salary and Demand

• As per estimates by the BLS, the overall jobs for financial analysts will increase by 8% between 2022 and 2032.
• Over ten years, there are expected to be 27,400 positions each year for financial analysts.
• In May 2023, the typical yearly salary for investment and financial analysts in the United States was $99,010, and for financial risk experts it was $106,090.
• According to stats available on Glassdoor, the average annual salary for financial analysts in India is Rs 620,000. However, with potential bonuses and other compensation, this amount can rise to Rs 747,500 or as high as Rs 1,747,500.
• Forbes reports that the demand for financial analysts is expected to surpass that of professionals in numerous other fields by 2026.

Essential Skills a Financial Analyst must possess

• Critical Thinking
• Ability to multitask
• Persuasive skills
• Presentation-making
• Time-management
• Exceptional market research

Day-to-day tasks/ functions of a Financial Analyst

Gather Data and Information

The first step is to gather all the information they need. It could be past financial records, details from accounting records, stock market statistics, economic data, industry research, or other statistical information. All this data could be gathered from the company’s internal database, third-party sources, and government agencies.

Organize raw data into structured

After the collection of all data is achieved, the analyst feeds it into an Excel sheet or any other database. Next, the raw data is properly formatted, and organized to make it more readable and understandable. This is done by sorting and categorizing the data in terms of numbers, categories, etc by using functions and formulas.

Examining outcomes using metrics

The storing and sorting are done, now comes the main part- analyzing the data. The Financial Analyst examines all available historical records and information. This usually means taking a detailed look at a company's financial performance and analyzing important indicators such as profitability, efficiency, liquidity, and creditworthiness. Through the analysis of various metrics, including profit margins, growth rates, and debt levels, a full picture of the company's financial status is constructed.

Make forecasts and estimates

This step requires a high sense of judgment and logical thinking skills. The analyst makes estimates and projections based on his assumptions and available tools. Techniques like Regression analysis, both top-down and bottom-up techniques, and year-over-year growth rates are all commonly used for predicting outcomes.

Propose Recommendations

Financial analysts convert raw data into ideas that can be put to use. By examining financial results, they find possibilities to increase profits, reduce expenses, grow market share, and enhance operations. They present their recommendations to the top management and C-suite executives who make strategic business decisions based on the findings.

Develop Financial Models

These analysts frequently rely on financial models to get the work done. In a nutshell, these models are spreadsheets that forecast the monetary success of a business in the future. Firstly, the 3 fundamental documents- income statement, balance sheet, and cash flow statement are connected when creating financial models. Keeping these as source documents, more complex models are developed for internal planning, company valuation (DCF models), and the analysis of possible transactions like mergers and buyouts (LBO and M&A models).

Creating Reports and Presentations

Data transformation into visual forms is one of the most crucial tasks for financial analysts. By using data derived from Excel sheets, they generate graphs and charts to further produce eye-catching reports and presentations. Both internal and external communication of financial performance depends on these deliverables. Financial Analysts are responsible for ensuring these documents are precise, understandable, and offer insightful information.

Types of Financial Analysts

Typically, there are 2 types of analysts depending on the nature of their work.

Buy-side Analysts: Buy-side analysts mostly work in insurance companies, hedge funds, and private equity firms. Their main role is to assist employers in making decisions to spend wisely. These analysts assist with in-house funds or income-producing properties and provide tailored advice on financial goals such as stock investments through the use of market research. They create small reports of 1-2 pages and can access only publically available information.

Sell-side Analysts: Sell-side analysts are mostly employed by Investment Banking and trading firms. Firstly, they perform primary research, conduct a thorough analysis of businesses, and create highly detailed reports by accessing both public and private information. Based on this market analysis, they suggest purchasing or selling real estate, equities, or additional assets. Becoming a sell-side analyst is an attractive choice if you are searching for a high-paying position in the global field of investment banking.

How to become a Financial Analyst with no experience

Get a relevant degree: Getting a basic Bachelor’s degree in a finance-related field is the first step towards becoming a financial analyst. The degree could be a Bachelor’s in finance, statistics, economics, accounting, business administration, or general business.

Earn a certification in Financial Analysis: The Financial Industry Regulatory Authority (FINRA) offers the Securities Industry Essentials test, which is a good beginning point. This SIE test evaluates your understanding of fundamental securities markets and regulatory organizations and does not require sponsorship from a FINRA company. But, while you are eligible for an entry-level analyst job, you need to pass the CFA exam for advanced-level certification.

Financial analysts are frequently advised by their employers to obtain the CFA Institute's Chartered Financial Analyst (CFA) certificate. This additional accreditation generally boosts the financial analysts' prospects for career growth, even though it is not legally needed.

The BLS (Bureau of Labour Statistics) states that the following are necessary to obtain the Chartered Financial Analyst credential:

1.  a bachelor's degree in accounting or finance
2.  four years or more of relevant employment experience
3.  obtaining passing grades on all three CFA Institute tests

Keep an eye on Industry Trends: It is critical to read business publications and follow financial news to stay up-to-date on the most recent advancements in financial analysis. This will help you get familiar with the latest financial software and learn about new accounting techniques.

Utilize a Trading Simulator: As an aspiring Financial Analyst, you can improve your abilities by using online trading simulators. You can test various investing methods on these sites without risking actual money. You can get useful experience by creating online portfolios and evaluating market movements.

Network & Connections: Making acquaintances with experienced Financial Analysts by attending networking events regularly is a great way to learn insider news. They can recommend you to a company, give you advice and reality checks, and inform you about internships or jobs. Nurture this relationship with industry professionals and use it for your career advancement.

Career Paths/ Profiles after Financial Analyst Certification

• Financial planning and analysis (FP&A) analyst
• Investment banking analyst
• Corporate development analyst
• Treasury analyst
• Private equity analyst
• Equity research analyst
• Geospatial Analyst
• Profitability Analyst
• Ratings Analyst
• Risk Advisory Analyst
• Credit Analyst
• Cloud FinOps Analyst