You must have read the term Financial Analyst in business newspapers like the wall street journal or in magazines like the economist. Let us talk about who a financial analyst is. What are the requirements to become a financial analyst? What are the duties of this person? How important is this person to the company? Let us discuss.



A Financial Analyst is a person who analyzes financial data of companies, studies their businesses, and gives an opinion on their investment potential. They give ratings on the company's equity such as "buy", "sell", "market perform", "overweight", "hold", etc. Financial analysts are also called as securities analysts, equity analysts, research analysts, or investment analysts according to the roles they perform in their respective organizations.

What education is required to be a Financial Analyst?

In the USA, the CFA (Chartered Financial Analyst) qualification is required. An MBA degree or a degree in Chartered Accountancy could also be required for the financial analyst position. In other parts of the world, the financial analyst may or may not have the CFA qualification. He/She may have the regional qualification required.

Which skills are required to be a Financial Analyst?

Good analytical skills are very much required to be a financial analyst. The person must be able to analyze with all factors in mind. He or she must be an expert in the subjects of math and statistics. Computer skills are very essential in the making of a good financial analyst. The FA must know the use of spreadsheets, presentations, accounting software, internet, etc. Last but not the least – good communication and people skills are very important. Teamwork plays a dominant part in any financial analyst's work.

What duties do Financial Analysts perform?

Some of the major duties of financial analysts are listed below. The financial analysts

- Write reports and form opinions on the companies they cover by studying public records and other reports.

- Analyze capital budgeting projects.

- Do long-term financial planning and implement financial plans.

- Analyze possible mergers and acquisitions.

- Study competitors of the companies they cover.

- Monitor the daily changes in the market prices of the companies they cover.

- Read financial statements and analyze prices, sales, costs, expenses, and tax rates to determine a company's value and project its future earnings.

- Keep track of the new policies and regulations that may affect the companies in any way.

- May also help companies in making decisions and also help them to remain compliant with SEC and other regulations. They may also help the companies to do initial public offerings.

What salaries and positions do Financial Analysts get?

A junior financial analyst may get a salary between $20k-$50k depending on where he/she takes up a job. This is the entry level job and a three year degree may suffice for it. A senior financial analyst may get a salary between $40k-$80k depending on where he/she takes up a job. A MBA degree is usually required for this position. The CFA qualification further enhances the knowledge and salary demanding power of a financial analyst. A MBA-CFA person could get over $100k+ depending on where he/she takes up a job.

What are the growth prospects for a Financial Analyst?

The senior financial analyst can get promoted to the positions of the treasurer or the controller. Further promotions can take a person up to the position of the CFO or the Chief Financial Officer.