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How Do You Become a Financial Analyst?

OK, so you have decided that you are passionate about becoming a financial analyst.

However, the million-dollar question is…

What is the path to becoming a financial analyst?

Well, according to the U.S. Bureau of Labor Statistics, financial analysts typically must have a bachelor’s degree, usually in business administration, finance, economics, statistics, mathematics, or accounting.

A master’s degree in business administration or finance can improve your employment prospects. Even if you have chosen other majors for your bachelor’s degree, courses in business, statistics, accounting, economics, and financial analysis can be helpful in preparing you for this career. Strong computer skills also prove very helpful in advancing your career as a financial analyst.

Education

Most financial analyst positions require a bachelor’s degree. A number of fields of study provide appropriate preparation, including business administration, finance, economics, statistics, mathematics, and accounting.

Licenses, Certifications, and Registrations

The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. A license is generally required to sell financial products, which may apply to some financial analyst positions. Because most of the licenses require sponsorship by an employer, companies do not expect individuals to have these licenses before starting a job.

Employers often recommend certification, which can improve the chances for advancement. The most widely recognized of these certifications is the Chartered Financial Analyst (CFA) certification from the CFA Institute. Financial analysts can become CFA certified if they have a bachelor’s degree, 4 years of qualified work experience, and pass three exams. Individual level exams may be taken prior to satisfying this requirement.

Financial analysts can also become certified in their field of specialty.

Advancement

Financial analysts typically start by specializing in a specific investment field. As they gain experience, they can become portfolio managers and select the mix of investments for a company’s portfolio. They can also become fund managers and manage large investment portfolios for individual investors. A master’s degree in finance or business administration can improve an analyst’s chances of advancing to one of these positions.

Important Qualities

Analytical skills. Financial analysts must process a range of information in finding profitable investments.

Communication skills. Financial analysts must explain their recommendations to clients in clear language that clients can easily understand.

Computer skills. Financial analysts must be adept at using software packages to analyze financial data, see trends, create portfolios, and make forecasts.

Decision-making skills. Financial analysts must provide a recommendation to buy, hold, or sell a security.

Detail oriented. Financial analysts must pay attention to details when reviewing possible investments, as small issues may have large implications for the health of an investment.

Math skills. Financial analysts use mathematical skills when estimating the value of financial securities.