What are the Top Skills Required for a Financial Analyst?January 16, 2018
It goes without saying that analytical skills are important when you’re a financial analyst but there is a whole host of other attributes employers look for when they hire financial analysts.
Here are the ten most important financial analysis skills we have identified.
Research is by far the most important part of an Analysts job because, without the data mined from research, there can be no analysis. Research involves spending time understanding the problem/scenario, plotting out the questions and knowing where to look for the answers.
This means you need to be resourceful and aware of your environment. What makes one financial analyst better than the other is knowing where to find the best quality data.
A depreciation number of 454 will lead to a very different answer than a depreciation number of 545. One percent here or there on a DCF can completely alter the valuation of a company. The devil really does lie in the details of a financial analyst job and you need to be able to catch the changes, both mistakes, and trends, to be able to arrive at insightful conclusions.
A lot has been said about analytical skills, so much so, people don’t really know what it entails. The analysis in Finance involves pulling apart the threads of a problem, perhaps a balance sheet, asking the right questions of your data, and bringing all your answers together in a coherent form to present to your client or your team.
A financial analyst cannot be intimidated by numbers. The level of numerical complexity is dependent on the job. An investment banking analyst will perhaps only ever have to add/subtract/divide and multiply but a fixed income analyst or a portfolio analyst will have complex equations to calculate. Options and futures are often known as ‘quant’ jobs and mathematical skills have to be very sound to do well in these jobs.
The global financial services terrain is ever changing and a good financial analyst has to be able to make spot decisions based not the data he/she has so that a client can always be certain they are ahead of the curve.
Excel and PowerPoint Skills
Excel and PowerPoint are to the Financial Analyst like a measuring tape and a drill machine to a carpenter. There is no career without it and mastering both software will ensure you are efficient and quick at your job.
Communication and Writing Skills
Being able to listen, speak and write well is critical because you have to be able to wean out information, and communicate everything you analyze efficiently and effectively. You will often be put on the spot in front of clients or asked to write reports with tight deadlines and being confident about your speaking and writing skills goes a long way in your career.
The ability to persuade is important for an analyst. We are persuading investors to listen to our stock recommendations, convincing clients we are the bankers for the job, and getting clients to sign on. All of this requires the ability to sell a story in a convincing manner which goes back to not only communication skills but the ability to use the written analysis to sell the situation.
Analysts need to main relationships across stakeholders be it companies, clients, colleagues, your own leadership team, to ensure they get access to information, create effective solutions, work well in a team, and build your career. Financial analysis is as much a people job as anything else and building and keeps relationships will help in both doing your job and advancing your career.
All analysts will eventually lead teams of analysts and this requires a show of leadership. To not just be able to lead a team, but mentor junior analysts and create a collaborative culture that will create successful companies.