How to become a financial analyst

Individuals who wish to work in finance should lay a career foundation by taking related courses in high school. Classes in applied mathematics, accounting, economics, and business will ease the transition to university level courses.

Most financial analysts have a Bachelor’s degree in business administration, finance, economics, statistics, or accounting. Standard courses include:

 Managerial finance
 Investment analysis
 Statistics
 Financial markets
 International business
 Marketing
 Accounting
 Business law and ethics

Recent graduates who wish to work on the buy side of the industry should pursue positions with a mutual or pension fund, investment bank, or insurance company. Those interested in a role on the sell side should concentrate on finding opportunities with securities firms.

Financial analysts often specialize in a specific financial product, geographic region, or industry. For example, they might focus on the options market, deal in primarily Asia-based investments, or work solely in the telecommunications field.

Even entry-level positions are very competitive. In these roles, financial analysts commonly work under the guidance of a senior analyst. Their tasks often include analyzing income statements, maintaining files, processing client financial statements, and analyzing plans and forecasts. Employers generally run in-house training programs for their newly hired analysts.

As analysts move into more senior positions, they may become:

Portfolio managers
These analysts select the mix of financial products, industries, and geographic regions for their company’s investment portfolio. They are responsible for the overall performance of the portfolio and expected to explain investment decisions and strategies in meetings with stakeholders.

Fund managers
Like portfolio managers, fund managers make buy or sell decisions in reaction to quickly changing market conditions. These managers, though, work exclusively with hedge funds or mutual funds.

Ratings analysts
These analysts evaluate the ability of companies or governments to pay their debts, including bonds. On the basis of their evaluation, a management team rates the risk of a company or government not being able to.

Risk analysts
These analysts assess the risk in investment decisions. They manage unpredictability and limit potential losses in a portfolio by selecting dissimilar stocks or a combination of stocks, bonds, and mutual funds.

Some financial analysts are required to obtain one or more licenses, especially if they deal with securities firms on the sell side of the industry. Licensure is overseen by the Financial Industry Regulatory Authority (FINRA). According to the U.S. Bureau of Labor Statistics, employers generally sponsor their employees’ licensure. If analysts change employers they must renew their license.

Many employers expect financial analysts to pursue Chartered Financial Analyst (CFA) certification through the CFA Institute. Analysts with at least a Bachelor’s degree (or in the final year of a Bachelor’s program) and four full years of qualifying work experience are eligible to sit for the Institute’s three exams. Passing the exams – which test competency in corporate finance, financial markets, economics, accounting, and portfolio management – is commonly considered a qualification for advancement to more senior financial analyst positions.

It is recommended that candidates study at least three hundred hours for each of the three CFA exams. Only one in five students passes the full set of exams.

While an undergraduate degree is sufficient for many positions, Master’s level education is quite common among financial analysts. Employers seeking to fill advanced roles often prefer candidates who have earned a Master’s of Business Administration (MBA).