7 Key Tips for Becoming a Financial Analyst

tips becoming financial analyst cfa

For those with a knack for numbers and finance savvy, a career as a financial analyst could be a fulfilling challenge. Financial analysts are key players in the finance world who use their skills to track financial conditions and give sound advice for investments and money management.

Does this sound like you? If so, we've listed seven key tips for breaking into the finance world. Read on to learn more.


What is a Financial Analyst?

Financial analysts use important financial data, both past and present, to help businesses and individuals make sound financial decisions. They gather and translate information, relaying it to their clients as valuable insights into the financial conditions the client is working within.

Financial analysts are the ultimate number crunchers. They're constantly evaluating investments, including stocks and bonds, so they can assess how beneficial these investments may or may not be. 

These number crunchers are essential. Their insights benefit businesses and individuals in many ways, helping them decrease their financial risk and increase their profit margin. Financial stability and growth are more likely when better investment decisions are made. 

Identifying trends within the client's business sector is a huge aspect of this career. Analysts keep a constant watch for these trends on behalf of their clients. From the data they gather they can more accurately forecast opportunities and anticipate risks. 

Market conditions are constantly changing. Financial advisors adapt to these changes, following closely and tracking them so they can deliver valuable insights and sound financial plans.


Types of Financial Analysts

Most financial analysts will fall into one of four main categories, depending on their specialty. 

Fund Managers

These analysts manage mutual funds or hedge funds. They must make quick and accurate buying and selling decisions depending on market conditions.

Portfolio Managers

Portfolio managers supervise a team of analysts and determine the focus of a business's investment portfolio. They decide on the industries, products, and regions that a business will invest in. 

This is a very engaging role. Because they're responsible for the performance of their portfolios, these financial analysts are very active in investor meetings that concern strategies and investment decisions.

Risk Analysts

These analysts are responsible for determining how unpredictable market conditions will be managed so that a business faces less risk of loss. They make sure companies minimize risk by diversifying their portfolio and monitoring the risk of present investments.

Ratings Analysts

Ratings analysts assess the capability of organizations, businesses, and governments to repay what they owe. The reports they prepare help businesses assign risk to these establishments based on their ability to repay debts. 


How to Become a Financial Analyst

If you're ready to take this career move on, you might be wondering where to start. Let these valuable tips guide you in the right direction.


1. Pursue Training and Education

Education is important, especially in a field that requires a deep understanding of business and money matters. Financial analysts usually hold a bachelor's degree in one of the following:


These degrees, especially finance and business administration, make you more marketable when you begin your job search. 

Additionally, they prepare you for your career by developing your business, computer, and communication skills. Some analysts like Courtney Sarofim hold degrees relating to finance and have also studied law. It's always helpful to increase your knowledge base when working in with financial matters.

There are also online financial analyst training programs. These can help you get your foot in the door and can boost your financial modeling and forecasting skills.


2. Consider Obtaining an MBA

If your eye is on bigger investment banks, you can increase your chances of being considered by obtaining your MBA. An MBA is a master's degree in business administration and it sets you apart from those who only hold a bachelor's degree. 


3. Earn Any Licenses You May Need

Some financial analyst positions require licensing. These licenses are obtained after you're employed and are usually sponsored by your employer. Analysts working in the securities industry are required to be licensed. 


4. Actively Immerse Yourself in the Finance World

It's essential that you proactively learn all you can about finance. Make sure you're familiar with financial lingo so you can engage in intelligent conversations with potential colleagues. 

In addition to understanding the language, make sure you carefully follow trends in the industry and keep up with the latest news. 


5. Start Your Own Blog

A blog will serve two important purposes when pursuing this career. First, you'll be able to build a knowledge library for reference and you can easily keep track of your progress.

Second, the content of your blog demonstrates to prospective employers that you not only understand finance but can also clearly articulate financial matters. 


6. Network

In the financial world, like in most fields, who you know is just as important as what you know. If you're interested in becoming a financial analyst, networking is critical. 

If you know people who are already established in the industry, you've got a big advantage. Ask these people if they can introduce you to others at the companies you're interested in. Online platforms such as LinkedIn are also helpful in finding and connecting with people in the finance arena.

Always ask for advice and guidance, not for a job. You'll earn a reputation for being professional and polite. This may result in word-of-mouth referrals that will land you an analyst position.


7. Gain Experience with a Trading Simulator

Trading simulators give you the opportunity to learn exactly what it's like to be a financial analyst. These simulators offer mock portfolios that are often used by potential employers to evaluate your skills. 


An Excellent Career Path: Becoming a Financial Analyst

A career as a financial analyst is both challenging and rewarding. It's an exciting industry where those with a head for numbers and financial know-how can really thrive.

Did you find this article useful? Please feel free to check out our other great finance posts for the latest news and information on the finance world.

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