The employment field for financial analysts is set to grow by 6% from 2018 to 2028, which is as fast as the average for all occupations. This demand will be driven by the growing range of financial products and the detailed knowledge needed to deal with them.
Demand will be linked to the overall economic activity in the country. Financial analysts will be required to evaluate various investment opportunities when new businesses are established, or when existing ones choose to expand. In addition to that, emerging markets all over the world will fuel the demand for these professionals.
If you think you have what it takes to assume this high-intensity business role, then the following guide on the steps to become a financial analyst would be of great use to you.
What Does a Financial Analyst Do?
Financial analysts are responsible for providing guidance to businesses and individuals regarding smart investment decision. They do this by assessing the performance of bonds, stocks and various other kinds of investments.
Before getting into a detailed discussion on how to become a financial analyst, let’s first take a look at their basic job duties. According to the US Bureau of Labor Statistics, financial analysts are responsible for:
Recommending investments, also referred to as portfolios
Evaluating historic and current financial data
Examining business and economic trends
Studying a company’s financial statements and determining its value
Meeting the relevant company officials to get a better understanding of a company’s prospects
Determining the strength of a business team
Preparing written financial reports
Steps to Become a Financial Analyst
To become a financial analyst, candidates will have to complete a series of educational and experience requirements. The following steps shed some light on this process.
Step 1: Get a Bachelor’s Degree
The minimum level of education required for financial analysts is a 4-year long bachelor’s degree. Potential options for majors include accounting, economics, finance, math and statistics.
Step 2: Consider a Master’s Degree
Even though a master’s degree is not required for entry level positions in this field, it can certainly boost up your resume and make you more marketable.
Step 3: Get a Job
There are numerous job opportunities in the financial market. You will have to determine whether you want to work on the buy side or the sell side. If you intend to work on the buy-side, you can get a job with a mutual fund or a pension fund, an insurance company or an investment bank. If you choose to work on the sell-side, you will have to get a job with a securities firm. As a financial analyst, you will typically specialize in a specific product, industry or region. For example, you can work in the options market, or you can choose to work primarily in Asian markets etc.
Once you begin working, most employers would give you some on-the-job training to help you understand the specific business elements. Entry level positions for financial analysts are usually very competitive, with most employers requiring a few years of experience for eligibility.
Step 4: Get Licensed
Licensing is not mandatory for all positions as a financial analyst. You will have to get licensed if you are dealing with securities firms on the sell side. The Financial Industry Regulatory Authority (FINRA) is the main licensing body for the securities industry. Most licenses require sponsorship by an employer. Therefore, companies do not expect applicants to have these licenses before getting started on the job.
Step 5: Get a Certification
A certification is not mandatory. However, it is highly recommended by a lot of employers, since it can improve chances for advancement. An example of a certification is the Chartered Financial Analyst (CFA) credential from the CFA Institute.
How Much Does a Financial Analyst Earn?
According to the US Bureau of Labor Statistics, Financial Analysts made an annual mean income of $100,990 in 2018. The top paying industry for these professionals was the Grantmaking and Giving Services Industry, paying $137,170 in annual mean wages. The top paying state for Financial Analysts was Wyoming, with an annual mean wage of $139,660, followed by New York, California, Colorado and New Jersey.