How to become a financial analyst is a question on the minds of many aspiring finance professionals. Financial analysts play a key role in helping businesses make more strategic decisions, handle risk, and improve financial health.
In this blog, we share valuable insights on how to become a financial analyst, including the essential skills, certifications, tools, and industry knowledge required to become a financial analyst.
Table of Contents:
What is a Financial Analyst?
Financial analysts are professionals who analyze a company’s financial statements, stay updated with current events and market developments, and create financial models to forecast market trends and identify potential investment opportunities.
Analysts track market conditions and focus on specific sectors to evaluate investment opportunities. Strong mathematical and critical-thinking skills are a must in this role, as it is highly data-focused.
Professionals with strong analytical and financial skills can work in companies like investment banks, mutual funds, hedge funds, insurance companies, and real estate investment brokerages.
Job Role and Responsibilities of a Financial Analyst
Before we get into the steps on how to become a financial analyst, it’s important to better understand the daily schedule that comes with the job role. Analysts analyze financial statements and provide clear, data-driven insights. Here are the major roles and responsibilities of a financial analyst:
1. Financial Statements Review: By reviewing all financial statements, including the income statement, cash flow statement, and balance sheet, financial analysts can easily assess the financial situation and productivity of a company.
2. Developing Financial Models: To project the future financial results of a company, financial analysts construct financial models, which help them in the process of strategic planning and decision-making.
3. Performing Market Research: Analysts conduct market analysis, which helps them in making informed investment decisions and risk analysis.
4. Detailed Reports Generation: Analysts create detailed reports that summarize their findings and offer practical suggestions.
5. Guidance on Investments: Analysts review possible investment opportunities, provide advice on investment strategies, mergers, and acquisitions, and provide recommendations to support strategic planning.
6. Tracking Financial Performance: The analysts monitor the financial performance of companies to ensure they stay on track. They compare the actual performance of the company with forecasts and make necessary adjustments.
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Why Choose a Career as a Financial Analyst in India?
Anyone who is business-minded, has a strategic vision, and strong communication skills, can make a fulfilling career in the financial analyst role. The following are the main reasons to choose a career as a financial analyst in India:
1. Consistent Industry Development
Every day, a new financial product is launched in the market, reflecting that the finance sector is expanding. This ensures a constant flow of new opportunities, creating a steady demand for financial analysts.
2. Diverse Career Opportunities
Financial analysts work across various industries, including investment firms, banks, insurance companies, and corporations in various industries. Financial analysts can progress to positions such as portfolio manager, investment manager, or finance director, depending on their experience and educational qualifications.
3. High-paying Job
The typical salary for a financial analyst fresher in India ranges between ₹3 – ₹7 LPA, depending on their location, industry, and job role. But after gaining some experience, they can expect something between ₹6 – ₹14 LPA. Further, professionals working as sell-side analysts for a large investment bank earn more.
4. Essential Analyst Skills
Financial analysts must have critical thinking, presentation, analytical, and problem-solving skills, and the ability to calculate and evaluate large data sets from various sources. If you are interested in a career that constantly challenges your abilities and pushes you to think beyond the ordinary, the financial analyst role is perfect for you.
5. Job Stability
Individuals looking for a stable career can consider the financial analyst role. While automation is taking over routine finance tasks, it is also creating new opportunities for professionals who can analyse data, build financial models, and support business decisions. Analysts who adapt to these changes and upgrade their skills are likely to enjoy better job security.
How to Become a Financial Analyst in India: Step-by-Step Process
A financial analyst in India must have a blend of education, strong technical skills, and practical experience. Follow these steps to start your career as a financial analyst:
Step 1: Graduate with a Degree
After completing your 12th schooling, you can begin pursuing a bachelor’s degree in commerce, economics, finance, business administration, or a relevant field. Some good options are: B.Com, BA in Economics, BBA in Finance, and Bachelor’s in Business Management or Accounting.
Step 2: Master the Financial Analyst Skills
In a financial analyst role, there is a lot of calculation and presentation involved, so you must have strong technical and analytical skills. You can learn skills like Advanced Excel, Financial Modeling & Valuation, Quantitative Analysis, PowerPoint & Report Writing, and Accounting Basics. Further tools to learn that can help you in your role include SAP, Bloomberg, QuickBooks, Python, and Tableau.
Step 3: Earn a Professional Certification
Several professional certifications can improve your chances of getting shortlisted. Although it is optional, having one can add credibility to your CV. Some popular certifications are Chartered Accountant (CA), Chartered Financial Analyst (CFA), Financial Risk Manager (FRM), NSE Academy, NISM, and SEBI certifications for the capital markets.
Step 4: Learn by Doing Through Internships
Doing an internship can provide you with real-world industry exposure and practical experience in investment banking, equity research, portfolio analysis, and corporate finance.
You can find an opening for a financial analyst internship on platforms like LinkedIn, Internshala, or on the company’s website.
Step 5: Make a Standout Financial Analyst Resume
To get shortlisted by a company, you need to present a strong resume. A great resume includes your educational background, certifications, case studies, or financial projects you have worked on, tools and software expertise, and internship experience.
Step 6: Apply for Junior Positions
At the beginning of your career, you can target positions like FP&A Intern or Trainee, Junior Financial Analyst, Junior Investor Analyst, and Research Associate.
Step 7: Interview Preparation for Financial Analyst Role
Start preparing for common interview topics such as cash flow, ratio analysis, financial statements, valuation methods (DCF, enterprise value), Excel case studies, and behavioral questions.
Step 8: Enhance Skills and Monitor Career Progress
After getting a job, do not stop learning and upskilling. Gain some experience and shift to a senior analyst role. Keep hustling for new opportunities.
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Educational Qualifications Required to Become a Financial Analyst
As per job specifications, you must hold one or more of the following qualifications to become a financial analyst:
1. Undergraduate Degree
The basic qualification required to become a financial analyst is an undergraduate degree. Individuals must complete their higher secondary schooling, followed by an undergraduate degree in any major they like.
Although there is no requirement for a field-specific qualification to become a financial analyst, pursuing a degree in related fields like finance, accounting, economics, commerce, business administration, and mathematics can help you secure entry-level roles more easily.
2. Postgraduate Degree
Having a postgraduate degree is not compulsory to become a financial analyst, but possessing one opens the door to a senior position. There are several companies that require employees to pursue a postgraduate or master’s degree to qualify for senior positions such as portfolio manager and fund manager.
Options like full-time or part-time, online or offline, are available for individuals to enroll in a suitable postgraduate program, depending on their job timings and other responsibilities. These are a few postgraduate degrees that are well-suited for financial analysts:
- MBA in Finance
- Master of Science in Finance
- Master of Science in Financial Analysis
- Master of Science in Risk Management
- Master of Science in Business Analytics
- Master of Science in Economic Policy and Analysis
Additionally, professional certifications like the Chartered Financial Analyst (CFA), Certified Public Accountant (CPA), and Financial Modeling & Valuation Analyst (FMVA) are also highly valued in this industry.
Top Certifications to Become a Certified Financial Analyst
Though a professional certification is not mandatory to become a financial analyst, having one can improve your technical expertise in financial planning and bring value to the company. Apart from providing you with advanced knowledge, it will also help you get promotions and increase your overall CTC.
The following are some financial analyst certifications that you can obtain to improve your CV :
1. Chartered Financial Analyst (CFA)
The CFA Institute, a global association of investment professionals, offers the Chartered Financial Analyst (CFA) certification. It includes three levels of exams that check a candidate’s knowledge and skills in wealth management, portfolio management, and investment analysis. The curriculum of the CFA course helps advance your expertise and skills in portfolio management and investment analysis.
After getting a CFA certification, a candidate can expect a salary of between ₹6 – ₹10 lakh per year at entry-level positions. The CFA certification requires about 4 years of relevant work experience, which can be completed at any stage of your career.
2. Financial Modeling and Valuation Analyst (FMVA)
The Financial Modeling and Valuation Analyst (FMVA) certification helps you learn the necessary skills to create financial models and accurately execute financial analysis.
The Corporate Finance Institute (CFI) offers this online certification course. This course helps you develop practical skills in financial modeling, financial analysis, and valuation. An entry-level Financial Modeling and Valuation Analyst can expect to earn between ₹4.2 – ₹7 lakh per year.
3. Cost and Management Accountant (CMA)
The CMA certification teaches expertise in areas like financial planning, decision-making, and performance analysis. CMA India is awarded by the Institute of Cost Accountants of India (ICMAI). An entry-level CMA can expect a salary of between ₹4 – ₹7 lakh per annum.
4. Financial Risk Manager (FRM)
The Global Association of Risk Professionals (GARP) awards the Financial Risk Manager (FRM) certification. In this role, the manager identifies, analyzes, and helps prevent financial risk within a company. Having this certification signifies that the professional has the expertise to handle market, operational, and credit risks. The salary of an entry-level Financial Risk Manager role is between ₹6 – ₹10 lakh per year.
Additionally, there are several other certifications available in India, such as Certified Financial Planner (CFP) and Association of Chartered Certified Accountants (ACCA). You can choose any one according to your suitability.
Skills Needed to Become a Financial Analyst
A financial analyst must know a range of skill sets related to their job role. These skills help them perform their responsibilities well:
1. Advanced Excel
Having proficiency in Excel is important for financial analysts as it allows them to calculate complex values, structure data, and build financial models.
2. Valuation Techniques
Using different valuation techniques, financial analysts estimate the investment’s worth, support mergers and acquisitions, and provide advice on financial strategies.
3. Financial Modeling
A financial analyst uses modeling skills to create detailed reports of a company’s financial performance, which helps them to predict future earnings, review investment opportunities, and support strategic decision-making.
4. Data Analysis
To interpret complex datasets, identify trends, and make information-backed suggestions, financial analysts use data analysis techniques. It helps them to inspect, clean, and model data to discover useful information.
5. Risk Management
Financial analysts use risk management skills to reduce potential financial losses and ensure that investment decisions match the risk appetite of the company.
6. Market Research
Market research skill is used by analysts to evaluate market competition, understand industry dynamics, and make strategic investment decisions.
7. Accounting Knowledge
Strong knowledge of accounting principles helps analysts assess a company’s financial position and interpret financial statements accurately.
Other skills include strong attention to detail, an understanding of regulatory compliance, and sound economic knowledge. They should also have presentation and interpersonal skills, clear communication, programming knowledge like Python or R, time and project management abilities, and statistical analysis skills.
Financial Analyst Career Path and Salary Growth in India
Financial analysts play an important role across industries, and their salary reflects their responsibilities. For entry-level financial analysts, the average salary in India is between ₹3 – ₹7 lakh per year.
After gaining a couple of years of experience, they can attain the senior financial analyst role with a salary ranging between ₹6 – ₹12 lakh per year. Senior analysts can earn over ₹20 lakh per year in top investment firms or large MNCs.
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Is a Financial Analyst Career Right for You?
A financial analyst’s career can be both motivating and complex. The demand for financial analysts is expected to increase by 9% from 2023 to 2033. The job profile offers you the opportunity to calculate and interpret data and provide advice to help companies and industries make proper financial decisions.
But is a financial analyst career right for you? If you have a strong knowledge of math and finance, enjoy working with numbers, and possess strong communication and presentation skills, then a financial analyst role might align with your goals. An analyst role is a good foundational career to start working in finance, as it provides you with a mix of technical and soft skills that are easily transferable to other relevant roles.
Conclusion
Whether you are a recent graduate or a professional looking for a job switch, the scope of a successful career as a financial analyst is immense. With relevant skills and experience, financial analysts can work across private companies, multinational firms, and government-related institutions. Remember, the role calls for critical thinking skills, precision, and the ability to communicate complex data easily.
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Frequently Asked Questions
Q1: What tools do financial analysts use?
Financial analysts use different tools for the analysis of a company’s financial data. Some tools that they use include Microsoft Excel, QuickBooks, SQL, Python, Tableau, and Power BI.
Q2: How to become a financial analyst with no experience?
To become a financial analyst with no experience, you must have an undergraduate degree in finance, economics, accounting, or any relevant field to get into a financial analyst position. Further, you can learn skills and tools like Excel, data analysis, and financial modeling. Also, acquire certifications such as CMA, CFA, and FRM to increase your salary package and get a promotion at work.
Q3: Is it hard to be a financial analyst?
The role is competitive and demanding, especially in investment and valuation-focused positions. You must have a bachelor’s degree in a relevant field and learn relevant skills to stand out in the job market.
Q4: What is the salary of a financial analyst vs an investment banker?
While both job roles offer pretty decent pay, in India, the salary of a financial analyst is between ₹2.1 – ₹12 lakh per year, while an investment banker gets between ₹2 – ₹21 lakh per year.
Q5: Is a financial analyst a good career path?
A financial analyst is considered a good career choice in India. With the current job market and industry standards, this job role pays a decent salary, too. You can start your career as an entry-level financial analyst and move to managerial roles like fund manager, investment manager, or executive levels like CFO or CIO.
Q6: How to become a chartered financial analyst?
You need to pass all three levels of the CFA exam, gain relevant work experience, and become a member of the CFA Institute; all this combined takes around 3-4 years.