The fast-paced growth in businesses has given rise to the immense need for professionals in this field. For a business to grow successfully, the teamwork put by professionals from different specializations is at work. One of the significant roles is that of a Financial Analyst. Working closely with the Financial Risk Management team, the Financial Analysts use available data from the company to ensure that a business establishment is financially progressing. One of the most sought-after options for those who want to pursue a career in Commerce stream, the field has many perks, one being high earning jobs. In this blog, we will unveil to you various aspects of pursuing a career in Financial Analysis.
This Blog Includes:
- What is Financial Analysis?
- Roles and Responsibilities of a Financial Analysis
- Pros of Becoming a Financial Analyst
- Cons of Becoming a Financial Analyst
- Eligibility Criteria
- Courses in Financial Analysis
- CFA Certification
- Exam Requirements
- Cost of Becoming a Financial Analyst
- Popular Career Options
- Scope of Financial Analysis
- Top Companies that Hire Financial Analysts
- Tips to Get Hired as a Financial Analyst
What is Financial Analysis?
Financial Analysis deals with devising strategies to improve a company’s performance to maximize its revenues. Using financial data to evaluate its profile, it tends to analyze how a business will perform in future. Financial Analysts primarily use historical data assorted in spreadsheets to perform the analysis of economic trends and build long term plans for businesses. One of the simple ways to perform the analysis is thoroughly examining the company’s financial statements which include income statements, balance sheets and cash flow statements. It can be conducted in both corporate and investment settings as well.
Financial Analysis can be divided into two categories:
- Buy-Side Analysis: Develop strategies for companies planning to invest.
- Sell-Side Analysis: Advise financial services sales agents on selling stocks, bonds and other investments.
The most common types of Financial Analysis are Vertical, Growth, Profitability, Cash Flow, Horizontal, Leverage, Rates of Return, Valuation, Scenario & Sensitivity, Variance, Liquidity and Efficiency.
Roles and Responsibilities of a Financial Analysis
The role of a Financial Analyst is central to a business establishment. Performing an array of tasks, he is a go-to person for companies to make crucial decisions. Also called securities analysts and investment analysts, they work closely with banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. The professional should have experience with statistical analysis and financial forecasting with the ability to identify data patterns.
Some of the duties performed by the Financial Analyst include:
- Evaluating current and historical data to draw a comparison.
- Studying global economic and business trends.
- Analysing company’s financial statements to evaluate its strength.
- Taking meetings with the management team to get insight into the company’s prospects.
- Preparing reports.
- Evaluating investment opportunities.
- Developing financial models and providing financial forecasts.
Pros of Becoming a Financial Analyst
Here are some of the pros of becoming a financial analyst:
- The field has an attractive growth opportunity
- There is no limit for professional growth in business analysis
- There is a high remuneration that investment banking companies offer
- Financial analysts can work in fields like media, investment banking, etc
Cons of Becoming a Financial Analyst
Here are the cons of becoming a financial analyst:
- It is one of the toughest and most demanding jobs
- You must be well informed about domestic and national financial markets
- There is intense travelling so unless you love travelling, it can get daunting
- Growth in the field is subject to growth in the financial market
- The eligibility criteria for the course varies for different universities but primarily you to have completed the required education as a prerequisite. For a master’s degree, you need to have an undergraduate degree.
- Besides, the top business schools might require a valid GMAT or GRE score.
- Since the courses in universities abroad are taught in the English language, you are also required to prove your proficiency in the language. The most widely accepted tests in English are IELTS, TOEFL, PTE.
Note: It is advisable to go through the complete admission requirements on the official website of a university before proceeding with your application.
Courses in Financial Analysis
Owing to the booming growth of businesses and the emergence of start-ups, the universities around the world have started offering comprehensive courses in the domain. Depending on the course level, the duration of the course may vary. The leading universities around the world are known for their multicultural environment, global learning infrastructure and abundance of resources to supplement your research and development in the field.
Some of the top universities that offer courses in Financial Analysis worldwide are tabulated below:
|University of New South Wales||Master of Financial Analysis||Australia||1 Year|
|La Trobe University||Master of Financial Analysis||Australia||2 Years|
|University of Technology Sydney||Graduate Diploma in Financial Analysis||Australia||1 Year|
|Douglas College||Post – Degree Diploma in Financial Analysis||Canada||1 Year|
|Trent University||M.Sc. in Applied Modelling and Quantitative Methods: Financial Analytics||Canada||12 Months|
|Lancaster University||Advanced Financial Analysis MSc||UK||1 Year|
|University of York||Project Analysis, Finance and Investment MSc||UK||1 Year|
|Newcastle university||International Financial Analysis MSc||UK||1 Year|
|London Business School||MSc Financial Analysis||UK||12-16 Months|
|Jönköping University Foundation||Master of Science with a major in Business Administration (International Financial Analysis)||Sweden||1 Year|
|National University of Ireland, Maynooth||MSc in Economics and Financial Risk Analysis||Ireland||1-2 Years|
CFA or Chartered Financial Analyst is a globally recognized certification for the professionals in the field. There are a number of benefits that are attached to getting the certification. The CFA exam is administered by the CFA Institute and it is taken in three stages. To be qualified as the Certified Financial Analyst, you need to qualify all three levels of the exam that covers the topics like accounting, economics, ethics, money management, and security analysis. Being one of the toughest exams in the world, CFA requires a high level of dedication and hard work. Compared to FRM, the CFA exam has a wider scope ranging from Portfolio Management, Accounting, Fixed Income, Corporate Finance, Derivatives etc. The candidates need to pay the one-time examination fee of $450 which is around 3300 INR.
Level 1 Exam
The CFA Level 1 examination is conducted twice a year in June and in December. The exam evaluates the candidates on various parameters using the candidate’s domain of study. The areas include quantitative methods, economics, financial reporting and analysis, ethical and professional standards, fixed income, derivatives, alternative investments, corporate finance, equity investments, portfolio management and wealth planning. The exam consists of 240 multiple choice questions with a time duration of 6 hours.
Level 2 Exam[optin-monster-shortcode id=”xf2mlnjiouddzrshykdb”]
The CFA Level 2 exam unlike Level 1 is offered once a year in June. The exam has 20 item sets with each set having 6 multiple choice questions which in total amounts to 120 questions. The candidates who qualify the first level are allowed to appear in the second level of the exam. The exam focuses on the valuation of assets and the application of investment tools and concepts in different situations. The level of difficulty for the exam is equal to its predecessor.
Level 3 Exam
Like Level 1, the exam for Level 2 is also conducted once a year in June. The exam covers the topics related to portfolio management stressing candidate on synthesizing all the concepts and analytical methods in the entire curriculum. It majorly focuses on wealth planning and the exam format consists of 8-12 essay based questions and 10 multiple-choice questions. The time duration for the exam is 6 hours.
The requirements for candidates to earn CFA charter, they must possess:
- Four years of professional and academic work experience in total
- Be a member of the CFA Institute
- Clear all three stages of examination
Cost of Becoming a Financial Analyst
An average cost of an MBA in Financial Analysis can cost from INR 10,00,000 to INR 60,00,000 from colleges and universities around the world. A diploma course in Financial Analysis can cost around INR 50,000 to INR 3,00,000. Make sure you get a CFA course from the Indian Association of Investment Professionals.
Popular Career Options
When it comes to making a career in Financial Analysis, the field has a great number of opportunities to offer. On average, the professionals in the field are expected to earn 7-8 Lakh a year in India. While as in abroad, the salary can go exponentially up depending on the experience level. A degree from a reputed institute and a certification will make you eligible for a number of job roles.
Some of the most popular options you can find yourself eligible for are given below:
- Fund Managers
- Rating Analysts
- Risk Analysts
- Research Analysts
- Portfolio Managers
- Private Bankers
- Financial Advisers
- Relationship Managers
- Financial Strategists
Scope of Financial Analysis
The scope of financial analysis keeps increasing every year as the number of investors has been increasing every year. Qualified financial analysts will be required to assist in investment planning. The scope of financial analysts is also increasing as colleges and financial institutions in India are not able to meet internationally established standards for finance management. Except for top 20 institutes in financial management, there are not many quality institutes.
Top Companies that Hire Financial Analysts
Here are the top companies that hire Financial Analysts:
- L& T Finance Limited
- Bajaj Capital Limited
- Karvy Group
- SBI Capital Markets Limited
- DSP Merrill Lynch Limited
- Birla Global Finance Limited
- PNB Gilts Limited
- Housing Development Finance Corporation
- Centrum Finance Limited
- CIL Securities Limited
Tips to Get Hired as a Financial Analyst
Here are some of the tips that will guarantee you get hired as a financial analyst:
- It is advisable that you start as an intern with any financial organization that can help you get practical knowledge and the right exposure
- Learn how to use spreadsheets, databases, PowerPoint presentations, etc
- Learn how to use application software like ERP
Opening doors to a plethora of possibilities, the career in Financial Analysis is all you need to give your skills a flight. If you are looking for options to pursue your education abroad, Leverage Edu can give your journey a direction. Providing you with the best career guidance, our experts have a network of mentors to connect you with who can help you with admissions. To get a complete overview book your 30-minute free counselling session with the industry’s leading career counsellors now!