Financial Analysts is a major occupation in management world. They facilitate managers of corporate world in analyzing the financial results. They provide support on deciding how to fund activities related to operations. People who do financial analysis also help the corporate managers, public and investors in understanding firm’s financial statements at the end of a quarter and a year.
The position of a financial analyst is competitive and highly coveted. It is a very challenging career but it is also very rewarding. If you are thinking of taking this career, here are few tips on how to get into the career of financial analysis.
How to Get Into the Career of Financial Analysis?
- First, you need to get the appropriate background and training that is required for this position. You need to study subjects like accounting, mathematics and economics. Also, you will be required to develop your analytical skills.
- You should have knowledge and understanding of database programs, spreadsheets, Microsoft power point and word-processing programs.
- Your verbal and written communication should be strong because one of the roles of financial analyst is to explain complex financial analysis to the management.
- Get a master’s degree in the field of business management.
- Do your research and know which financial analyst position you are interested in. Also, decide the industry-type you want to go in.
Areas Where Financial Analysts Are Required:
- Buy side firms
- Sell side firms
- Investment banks
Buy side firms are where a financial analyst is required to study different companies, perform research and analysis tools and give recommendations for investments. This is called in-house research. Buy side firms are different funds that include mutual funds also.
Sell side firms are brokerage firms or research houses. They study certain companies, write detailed equity research reports which they sell to the clients. The main motive is to generate brokerage from clients by selling research.
In investment banks, a financial analyst covers mainly Initial Public Offering and Mergers and Acquisitions. A financial analyst processes IPO and M&A deals.
Skills Required For Financial Analyst Profile
- Strong and solid analytical skills
- Interest and curiosity in understanding and analyzing companies in depth
- Valuation skills that are acquired in business schools
- Interest in understanding and analyzing businesses.
- Good understanding of financial and quantitative concepts
- Ability to design financial models
- Sectoral expertise in Media, Food & Beverage, Insurance, Technology, Telecom and Banking.
- Strong and powerful communication skills
- Strong and good MS Excel skills
Certification Required For Becoming a Financial Analyst
After meeting experience, education and ethical requirements, financial analysts can go for certification. Professional Certification carries prestige in the profession. Some certifications include certified designations like financial manager and chartered financial analyst.
Perils of Becoming a Financial Analyst
The job of a financial analyst is not easy. A financial analyst is hired by a marketing research company to do its research in domains such as equities, investments and securities. A financial analyst does research only in financial domains.
A senior financial analyst in India uses the basic principles and fundamentals of analysis to conduct his research. His work is related to assessment, that is to say, he gives ratings and then makes recommendations on investment actions.
The responsibility of a financial analyst is to obtain precise information from available records, databases, repositories and files. He analyse balance sheet of a company and examines financial statements to assess lending risks. Not only this, he also analyze commodity prices, costs, tax rates, expenses, sales, etc. to find out the current value and future earnings of a company.
Often, a market research company provide its financial analyst with sophisticated software packages for extensive forecasting and spotting trends.
In short, a financial analyst performs financial analysis to find the value of a company for internal and external clients. Based on this valuation, an analyst provides a rating and recommends investment actions.