So you’ve watched Wall Street a few times and read Barbarians at the Gate cover to cover. You were stunned at the incredible impact the Global Financial Crisis in 2008 had on the world and your brother is the fund manager at one of the top funds in the country and he’s raking it in. You know it in your bones – you want to be an analyst and you want to be in the markets.
So you start typing in words like – How to be a financial analyst? What do financial analysts do? How do I get a job in Financial Analysis? But the problem begins when you say you want to be a financial analyst, and I ask you where? You’re lost. You say – what do you mean? You see Financial Analysis is more of a skill than a job. It’s an exceptionally critical skill when you work in the financial services industry, and that’s where the good news begins. Because Financial Analysis cuts across roles, types of financial institutions and even industry, being a financial analyst means you have a large number of potential careers to choose from. But how do you get the job as a financial analyst?
Develop your analytical skills
A good Financial Analyst studies and interprets data, both qualitative and quantitative, to help both individual clients and companies make a better investment or divestment decisions. A good financial analyst, therefore, needs to have a keen understanding of how the numbers work in the context of the environment.
Quantitative analytical skills required to be a financial analyst include understanding how financial statements interact with each other, calculating and interpreting accounting ratios, understanding the trends they imply, forecasting and valuing cash flows at the bare minimum. Qualitative skills required to be a financial analyst would include understanding both the macroeconomic and microeconomic conditions surrounding the industry along with company/individual/instrument fundamentals to make predictions about businesses, financial commodity markets and industries.
Unlike being a doctor or an engineer, there’s no set education requirement to become a good financial analyst or to get a job in the sector, and therein often lies the problem. History majors can become Investment Bankers, and doctors can become Equity Research Analysts. However employers do look for a keen appreciation of numbers, so a specialisation at undergraduate in finance (if you are a business major) is very helpful. Engineers often make great Financial Analysts because they are good at interpreting numbers and are not intimidated by them. An MBA is very well received as well because most MBA’s include financial analysis and corporate finance and accounting as part of their curriculum. But because the MBA has become such a ubiquitous degree, bulge bracket investment banks will often restrict recruitment from tier one firms or look for additional evidence of affinity towards analysis and analytical skills.
Another way to prepare for a role as a financial analyst is to do a professional qualification like the Chartered Financial Analyst or a short-term course at an institution that will introduce you to the required skills and help you navigate both the career path as well as the role, like the Imarticus Learning EY FAP program. These programs are technical in nature and require a certain amount of study.
However education aside, strong quantitative and problem-solving skills, logical thinking, and good communication are critical in terms of preparing you for financial analyst interviews.
Where do I apply?
As we said before, financial analysts work across industries and roles. But we can break the three main areas down to Corporate Finance on the buy side and financial services on the sell side.
Financial Analyst roles on the buy side include working for a company both as a CFO and as part of the finance function where you handle the investment decisions of a company both with respect to organic and inorganic growth, as well as treasury requirements including any private equity or public market funding they might require.
The Buy-Side is when someone conducts financial analysis on behalf of themselves or their company. So a financial analyst in a private equity firm would be analysing investment opportunities on behalf of the fund. You can also be a financial analyst and work in the mutual fund industry and work your way up to becoming a fund manager.
Financial Analyst roles on the Sell Side include Investment Banking (M&A and Corporate funding advisory), Equity Capital Markets and equity research where you analyse companies and give buy, hold and sell recommendations. Financial analysis roles are not restricted to equity. You can be a Bond Analyst, an Options and Futures Analyst, a gold analyst, a real estate analyst…the options are endless.
Authored by: Reshma Krishnan
There are many opportunities and challenges that could change the banking world, especially for their employees. In some sense 2018 has the potential to be a year of great expectations for the banking industry. There are many socio-economic factors which will influence this change in the banking industry. Demonetization, Bitcoin breakout, Integration of Machine Learning and Artificial Intelligence, are some clear game-changers responsible for the change in the banking industry in 2018. In terms of challenges, many external threats will affect the financial services ability to stay competitive.
Some predictions and possibilities for the banking industry in 2018.
Secure Payment Getaway, with the linking of the Aadhaar card with our bank accounts there will be an increased attention towards advanced security. With more people opting for the digital transaction there will be added pressure on making the payment gateway more secure. In the year 2018, you will see banks focusing on building firewalls and secured gateways not only to protect the details of their customers but to also protect any kind of malicious attacks on their servers.
The flexibility of Making Payments, the way banking was done a decade ago is changing drastically, Fintech firms are working on creating platforms where advanced banking technology can be used while performing transactions. We can sense the effect of this already with the introduction of apps and mobile wallets like BHIM App, TEZ, PayTM, all these have already made the life of the common man way easier.
Along with these wallets, money transactions made across borders has become much easier. So traveling, shopping or simply sending money across the border, has become secure, faster and convenient for the common man.
Mitigating Money Laundering, irrespective of public sentiment, due to demonetization, there has been an incline in the digital transaction. The expectation from the coming year is that banks will bring in more transparency in payment details and source of income.
An expectation of greater profit margins in Investment Banks, all the investment is done in technology and control staff is expected to create a plateau effect, with greater incremental margin in 2018. So as banks bask in the glory of higher profits from past investments, they will definitely secure their hiring and pay market.
The Bitcoin impact will be witnessed greatly in the year 2018. This year will open doors for Bitcoin jobs to enter the investment banking space. In spite of all the controversies and apprehensions, institutions like Goldman Sachs, are looking forward to setting up their very own Bitcoin trading operations. Hence anticipating a start to something new and big for the banking sector.
Integration of the Digital Economy, advances in technology will have a direct impact on the way the banking section functions. There will be a change in its hiring, and organisation structure too, as new requirements will have a new designation, and expertise to perform the said task. There will be several digital advances which will make it possible for the banks to provide services to unserved audiences, specifically in economies like ours. There will be many advantages due to this development, simplified engagement and lower costs, the movement from paper to digital is a win-win for both the banks and the consumers. Technology will also impact the global money movement due to enhanced customer reach.
Machine Learning and Artificial Intelligence will transform the way jobs are performed, more so in investment banking. There is a fear that most jobs will be lost to automation, however, that is not possible this early in the versatile banking sector. It will be the rudimentary exchange which will not require human intervention. In addition, there are many benefits of AL and ML in the Financial sector, the ability to anticipate, predict and thus respond to specific customer needs.
So in the year 2018, the change in financial services will be more pronounced. Customer expectations will be very high, digital innovation will change the way we think and hence will also change customer expectations. The banking industry will be all about value creation. Transformation and adaptation to change will be the mantra for 2018 for the banking sector.
Many choices make decision making that more complicated. Today unlike a decade ago, there are many opportunities an individual has after college. Take a look at LinkedIn or any other networking or job placement site, and a trend is obvious where individuals move their career graphs, not only from one organisation to another but also a shift in industry, vertical and profession is very evident. Gone are the days when you had to pick a profession and stick with it for the next 30 or 40 odd years of your professional life.
A positive to this trend is that there are many opportunities available in the market for young professionals to accurately tap their talent, by taking a wise decision. The downside is, if you have a clouded vision, or if you are unable to identify the right opportunity, you might limit your growth.
One way to avoid the quandary is to understand the career options available, and closest to you and your demographic.
In India with the current scenario, Finance and Analytics are two streams that hold a lot of promise in the coming years, due to various influencing factors.
There are a few questions you can consider getting clarity on before you embark on the selection process.
Know your calling
First and foremost a young individual needs to get clarity on their own skill sets, what are you good at, what do you like, what are you passionate about, that will give you working pleasure? Don’t have broad aspirations, narrow it down by asking yourself questions until you get a definite answer. Passion cannot be the only point of consideration.
Your passion could be singing, but do you have a good voice? Or any formal training?
A skill inventory needs to be done to analyse the prerequisites and gauge the training required.
For example, do you like numbers, do you have the working flexibility with numbers? If the answer is yes then that is a starting point.
To pursue a career in finance you don’t need to be an expert in numbers, the process can be trained skills can be acquired, in fact, you can do law and still be a legal advisor in the field of finance.
Similarly, if your answer is no to numbers, but you have a keen sense of observation, and a fair understanding or flexibility in working with data, then becoming a data analyst with some fair amount of training can also be considered as a career option.
Mental Stock Taking:
There are two types of professional personalities.
Promotion-focused individuals, they are the creative types, entrepreneurs, quick working, opportunist.
Prevention Focused Individuals, opposite of the above, basically people who prefer to maintain their status quo.
One needs both the qualities to succeed, but it is important to realise which direction your personality sways mostly towards.
Say you are looking to pursue a career in the field of finance, and after watching movies like Wallstreet you want to be an investment banker. But your personality is more like that of a prevention-focused individual, then maybe pursuing your career as a Financial Analyst is recommended. Similarly, the field of analytics also offers a variety of titles based on your efficiency, either as an innovator or an individual contributor.
It is believed that you need to invest 10,000 hours into a profession to succeed or become an expert in it. Hence taking a decision based on what others think about your capabilities is not the best advice. After all, you will need to invest about 3.5 years to hit the target of 10,000 hours, so if your interest is elsewhere, then it will be an impossible and excruciating task.
Consider factors like:
What lifestyle do you prefer, what is a success according to you, what atmosphere you think you will strive in, what kind of money will make you happy at each phase of your work lifecycle. Where do you want to live? after all your choice is also highly dependent on the demography.
To seek accurate answers, or to develop skill sets consider associating with a facility which offers both finance and analytics career options to get unbiased advice and training and recruitment support. Such facilities have expert career counselors who know the market trends and are networked to offer you advice and help survive in the industry of your choice.
In the modern scenario, your work and personal life are inseparable. You will see people from finance enter the analytics world and vice versa. Hence you are never stuck, but it becomes very important to start right. Therefore, in the field of finance and Accounts there are many options, become self-aware and take the right guidance and choose the right path.