The finance industry has seen a lot of ups and downs in the past. From the Great Recession in 2008-2009 to the current Covid-19 pandemic, finance analysts stayed at the forefront to guide governments and individuals about where and how to make safe investments to help the economy rise again. The job market for financial analyst has a bright future, but making a switch into this field is a daunting prospect. Here is your complete guide on how to become a financial analyst with no experience.
Table of Contents
- 1 What Does Financial Analysts Do?
- 2 What Does A Corporate Financial Analyst Do?
- 3 How To Become A Financial Analyst With No Experience?
- 4 Financial Analyst Skills
- 5 Financial Analyst Job Description
- 6 Is Financial Analyst A Good Career?
What Does Financial Analysts Do?
Financial analysts use data to make predictions and recommendations about securities and investments and are thus also known as securities or investment analysts. They collect, evaluate, and monitor data for businesses to make wise and profitable decisions. Financial analysts are employed by banks, financial planning institutions, portfolio managing firms, insurance companies, government regulatory firms, and investment advisory firms. You can expect to work with a lot of clients and numbers while factoring in the political and geographical changes to understand their impact on finances.
What Does A Corporate Financial Analyst Do?
The main job of a corporate financial analyst is to use the company data to make sound financial decisions for the company. The analyst should be able to forewarn the company about bad or risky decisions and to pull out of deals that might collapse. They help the company in identifying areas of interest for investment and expanding business and project the returns from the investments as well. There are two types of a corporate financial analyst – a buy-side financial analyst and a sell-side financial analyst. As the name suggests, the buy-side analyst gives recommendations on which investments to buy whereas the sell-side tells which ones should be sold. Financial analysts are also asked to monitor the company’s investments and expenditures and make reports for higher administration.
How To Become A Financial Analyst With No Experience?
Working as a financial analyst is not only extremely rewarding but is an extremely demanding job as well. One in three analysts works up to 70 hours a week, and the starting salary is at $70,000+ per year. Though most companies require you to have at least 3 to 4 years of working experience, you have a chance now even if you’re just starting out or are self-taught. Below are some tips on how to become a financial analyst with no experience:
Increase Your Network
In the financial industry, how much you know is only as important as who you know in the industry. Start by talking to people you already know, like friends and alumni, and expand your network from there. Ask your acquaintances and friends to introduce you to people in the industry. Meet contacts over coffee or lunch and have discussions over the recent topics and news. Be polite, professional, and never ask for a job directly. Always ask for suggestions and advice about financial analysis instead of requesting a job.
In the financial industry, things are constantly changing. Your interviewer or potential employer would appreciate it if you know the latest trends in finance and economics. Be aware of what is in the news and how it impacts businesses and investments. You can read about financial news or watch videos online to help you out. Watching business news and talk shows are the most comprehensive way to stay updated. Apply what you learn to your network to gain some attention from relevant people.
Who said blogs were only for lifestyle writers? One of the best ways to showcase your knowledge is to write about it. Not only will you be reaching out to a wider audience, but you will also be inviting people to discuss things with you through your blog. You can write opinion pieces or informational blogs, or have a mix of both. You can publish your work on WordPress, Medium, SeekingAlpha, or even share it on your social media websites like LinkedIn and Facebook. Remember to keep the comments and sharing options open to the public.
Use A Trading Simulator
A trading simulator gives you a real understanding of how the stock market works. You can also build a mock investment or financial assets management portfolio online. You can put these up on your blog or your resume to showcase your talent to future employers. This is the best way to show people that you not only know how to talk about financial talk but also know how to walk the analysts’ walk. Three of the best online trading simulators are listed below:
- Wall Street Survivor
- MarketWatch Virtual Stock Exchange
Know The Lingo
Knowing the terms used in financial settings like Wall Street will make it easier for you to engage with people. You can have a better discussion with professionals on their terms and learn about the market even before you get a job. This is crucial as unlike other financial analysts, you will fit right in with the experienced pros.
Pursue An Online Financial Analyst Program
There are plenty of online certifications to get you the knowledge you need to become a financial analyst. Getting a certification, whether it is free or paid, shows your employer that you have enough motivation to learn a challenging new thing by yourself. Not only that, but you will also get to know how to do financial modeling and forecasting, which lies at the heart of a financial analyst’s job.
Get An Internship
It doesn’t matter whether the internship is paid or unpaid as long as you gain some practical experience (and possibly a verification certificate). Some firms count an internship as a work experience, which can increase your chances of getting a job. An internship can also open the door to your future career in this field.
Financial Analyst Skills
Educational knowledge must be combined with industry-specific skills to become a great financial analyst. Employers look at both hard and soft skills while evaluating potential employees. Skills that a financial analyst is expected to have include:
The finance world is governed by strict rules and regulations. Formal education in accounting principles, standards, and techniques assist the financial analyst in managing cash flows, maintain ledgers, perform cost analysis and reductions, calculate budgets, etc. Unlike some other jobs where experience may suffice, as a financial analyst, you will need to get formal education and training in accounting skills to do well in your field.
Contrary to past practices where a financial analyst was assigned to his or her desk, crunching numbers, and creating reports to be used by higher administration, financial analysts now have to deal with clients directly. Being able to communicate ideas and theories in simple terms to your investors, persuading them to agree to your point, and giving presentations about future projects is all dependant on your interpersonal skills. They also come in handy when collaborating with teammates and across departments.
Many times, financial analysts have to manage businesses and clients who are not familiar with financial jargon and terms. Being able to explain financial concepts with examples and analogies so they make sense to a non-technical person increases their trust in you. You may use flow diagrams, bar graphs, pie charts, line graphs, and any other visual aid to communicate your point across the table. At the same time, non-verbal communication is just as effective as well.
Financial analysts are constantly solving complex equations and mathematical series to understand finance problems. They may also be required to come up with solutions to help clear the company’s debts and liabilities. All of these require a financial analyst to have impeccable and creative problem-solving skills.
With the advancement in technology, modern software make it easier and faster to run the analysis. Softwares like Hyperion, SAP, SQL, Quickbooks, etc help the financial analyst. Knowing how they work as well as when and where to use them is an important skill for a financial analyst.
Leadership And Management Skills
Though these are not necessary, they certainly help a financial analyst with his or her work. They may also be given charge of the entire finance department and be asked to collaborate with teams across departments. Communicating across teams, leading projects, mentoring new talent are all desirable skills for a financial analyst.
A financial analyst should understand how certain actions and investments will affect the marketplace supply and demand by the company. Understanding what the company does and their business structure is important to the financial analyst.
A financial analyst should be able to analyze situations and plan and prioritize the company’s financial moves accordingly. Strategic plannig and analytical thinking go hand in hand for a financial analyst.
In short. A financial analyst needs to demonstrate his abilities to be able to work independently as well as in a team when need be.
Financial Analyst Job Description
Financial analysts are responsible for all the financial decision making, as well as studying and reporting data. The duties of a financial analysts include the following:
- Perform financial reporting and financial forecasting using available data and metrics
- Create financial models to aid decision making
- Use historic data and results to identify trends and room for improvement
- Work in tandem with the accounting department to ensure accurate financial reporting
- Preparing financial data and reports to be used by higher administration
- Perform market research, data mining, business intelligence, and valuation comps
- Proficiency with Microsoft Excel, and query softwares like Access and SQL
- Help senior management make tactical and strategic decisions using data and financial modelling
- Establish standard costs by collecting operational data
Is Financial Analyst A Good Career?
Being a financial analyst is a popular career choice among finance, accounting and even business graduates. It is a high paying and challenging job that may require long work hours. A financial analyst gets to work with different companies and experience a lot of different financial settings.
To conclude, becoming a financial analyst with no experience requires some extra hard work on your part. It is certainly going to be tough, but knowing the right people can make all the difference between you and the next candidate.