Within the business sector, finance professionals are the wizards who handle money decisions. While they can have many titles and job descriptions, they share similar duties. It's up to them to help companies and individuals make smart business and investment decisions.
What exactly does a financial analyst do? Any or all of the following:
- Meet with individual clients and recommend investment strategies.
- Review investment performance data and economic trends.
- Examine business financial documents.
- Assess a company's financial strategies to determine if they align with business goals.
- Prepare written reports with recommendations.
Within this career path, people may become experts in a particular area of finance. For instance, here are some specialized roles that are available in the field.
- Portfolio managers are responsible for making investment decisions and ensuring an investment portfolio matches the goals of an individual or business.
- Fund managers are employed to oversee hedge funds or mutual funds and manage the investments within them.
- Ratings analysts consider how well a company or government can pay off its debts. Management teams use their evaluations to determine bond ratings among other things.
- Risk analysts look at how much risk is involved with certain investment decisions and how to mitigate that risk.
How to Become a Financial Analyst
The following steps are often involved in becoming a financial analyst.
- Earn a high school diploma or GED.
- Attend a school of finance. Although many financial analysts have bachelor's degrees, you could start with an associate degree in finance or even enroll in one of the online finance certificate programs offered at some schools.
- Become licensed. This step is only required if you plan to sell financial products.
- Earn a certification. Certification isn't required, but employers may seek out analysts who have a professional credential.
- Specialize your work. Once you've worked in the field for a few years, you may want to move into a specialized role such as that of a portfolio manager.
Throughout this process, you'll learn about the following topics:
Finance certificates and degrees
You'll find finance programs at both the undergraduate and graduate levels. Here's a look at some of your education options.
- Certificate: Finance certificates may be offered at the undergraduate level to provide an introduction to the field. However, they are most commonly intended for graduate students or those with some previous background in business. These short-term programs are best for those who want to hone their skills in a particular area such as financial management. Online finance certificate programs may be completed in as little as three months.
- Associate Degree: An associate degree in finance is another way to get started on this career path. Both traditional and online programs are available at a variety of schools, and these cover topics such as money, banking, financial markets and investments. Most associate degrees can be completed in two years although accelerated programs may be offered by some schools to shorten that time.
- Bachelor's Degree: A four-year degree is the standard level of education for financial analysts, according to the Bureau of Labor Statistics. However, you don't have to start here. Earning an associate degree can be a good way to determine whether you like the world of finance, and credits from a two-year program can typically be transferred toward a bachelor's degree.
Business schools within four-year colleges and universities are where you will find many finance degree programs. However, there are also associate degrees and certificates offered through community colleges. What's more, online finance schools offer a number of programs that can be completed without ever setting foot on campus.
Licensure and certification for financial analysts
Some financial analysts sell investment products as part of their job. To do so, they need to be licensed by the Financial Industry Regulatory Authority. However, you don't have to worry about getting this license right away. Most licenses require an employer sponsor so it's something you pursue after you've landed a job.
There are a number of professional certifications available to finance professionals. They are offered by a variety of industry groups and often require a certain level of education and experience. Many also involve passing a certification exam and require continuing education credits to maintain the credential.
Here are some of the most prominent credentials offered to finance professionals.
- Chartered Financial Analyst (CFA) from the CFA Institute
- Certified Financial Planner (CFP) from the Certified Financial Planner Board of Standards
- Chartered Financial Consultant (ChFC) from The American College of Financial Services
- Chartered Investment Counselor (CIC) from the Investment Counsel Association
- Certified Fund Specialist (CFS) from the Institute of Business and Finance
Career advancement in the finance industry
Many finance professionals begin their career by working in a general position. Those with a certificate or associate degree in finance may reconcile accounts and prepare financial reports. With education and experience, workers may advance to become financial analysts or take on specialized roles such as that of ratings analysts. Some workers may climb the ranks of management to eventually work as a chief financial officer or other executive.
Skills and Qualities for Financial Analysts
To excel in a career in finance, you'll need to have skills that are obvious and not so obvious.
- Mathematics: Overseeing a company or client's finances means working with numbers and having an aptitude for math can help you succeed in this field.
- Near Vision: A less obvious skill needed by finance professionals is good near vision. This is necessary since much of an analyst's day is spent working on a computer or reviewing documentation.
- Complex Problem Solving: Whether it's selecting the right investments or judging a firm's overall financial health, analysts must be able to sort through complex material to make their recommendations.
- Problem Sensitivity: Along with problem solving, financial analysts must have problem sensitivity. This is the ability to anticipate when something might go wrong.
- Monitoring: Financial analysis isn't a one-time activity. Professionals must monitor market conditions and other factors to see if their recommended strategy needs to be changed over time.
Career Outlook and Salary Information for Financial Analysts
Financial analysts can be critical to a company's success so these professionals often command high incomes. Average finance analyst salary figures are below but be aware that wages can vary significantly. When it comes to how much does a financial analyst make, a person's education, experience and certification can impact how much he or she brings home on payday.
Career growth for financial analysts is expected to be robust, overall, in the years to come according to government estimates. However, most job opportunities may be concentrated in and around cities with strong financial districts.
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Professional Resources for Financial Analysts
There are a number of finance industry organizations and associations, and here are three you should know about if you plan to pursue a career in the field.
- CFA Institute - Describing itself as the premier global association for investment management professionals, the CFA Institute offers professional certification, has developed industry standards and serves members through its CFA Societies.
- Association for Financial Professionals - Known as AFP, this group provides advocacy, certification and professional support for those working in treasury or corporate finance positions.
- American Association of Finance & Accounting - The AAFA helps companies recruit top talent to their finance positions. Those looking for career advancement can submit their resume to the association.
- Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Financial Analysts, Accessed March 2019, https://www.bls.gov/ooh/business-and-financial/financial-analysts.htm
- Financial Management Cornell Certificate Program, eCornell, Accessed March 2019, https://www.ecornell.com/certificates/financial-management/financial-management/#viewpdfDlModal
- AS Financial Management, Franklin University, Accessed March 2019, https://www.franklin.edu/degrees/associates/financial-management
- Finance Certifications, Financial Management Association, Accessed March 2019, https://www.fma.org/finance-certifications
- Financial Analysts, O*Net Online, Accessed March 2019, https://www.onetonline.org/link/summary/13-2051.00