Committing to becoming a financial analyst with full licensure is a serious decision that requires substantial educational focus before you will be able to succeed, much less take on a C-level or consultant position. Sure, you can get an entry-level position once you graduate with a bachelor's, but completing the process of becoming a CFA can yield high personal compensation, respect, and secure employment with a variety of businesses. To learn whether becoming a CFA is the right strategy for taking your career to the next level, you should start by researching the best path forward.
Financial Analyst Job Description
Those who become financial analysts enjoy plenty of career options, but most CFAs choose to work in the corporate environment, finding companies that need their expertise on investment issues, tax, stock and bond trends, regulatory controls, forecasting and modeling knowledge, budgeting, and communication abilities. Finance and banking institutions are the most common employers for CFAs. In general, financial analysts help to guide investment decisions for both corporations through managerial accounting functions and individuals through personal financial accounting, developing their budget and funding plans. The trading of public securities is usually the focus of a CFA’s job function. An advanced aptitude for mathematical calculations is the cornerstone of a financial analyst’s effectiveness, and skills in rapid data analytics and problem-solving enable practitioners to execute profitable trades in the real trading environment. Just some of the corporations that hire financial analysts include Bank of America, Morgan Stanley, Goldman Sachs, JP Morgan, and Deutsche Bank.
Although large financial and banking institutions are the primary employers of CFAs, you are not limited to working with large businesses when you gain your financial analyst license. Individuals who work for private practices in related fields, such as attorneys or accountants, often become CFAs so that they can add more value for their clients in personal finance. Becoming a CFA is a requirement in any field if you want to buy or sell securities on behalf of another party. An attorney who works as an estate planner, for example, would be able to manage a capital investment portfolio throughout the succession process by becoming a CFA as well as work with a client's financial instruments.
Many CFAs also use their skills to become self-employed professionals once they get their careers established. CFAs tend to make an above average amount of money, based on salary information from the Bureau of Labor Statistics (BLS), so they are able to save for financial independence. Once you have accumulated sufficient capital, you can work on your own as a day trader to profit from your expertise. You could even open a small office to practice as an independent CFA in your community, or you can find offers from employers online to maximize your freedom. Successful CFAs can become partners in their firm, and they can found their own financial institutions. This allows you the freedom to find a niche in which you prefer to work such as with stockholders, accounting management for other firms, tax, asset and capital documentation and investment, company loan agreements, insurance agencies, and more. The growth of your career will be entirely determined by the demand on the market, other job applicants with similar credentials, your job performance, and your own choices.
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Job Titles for Financial Analysts
Financial analysts are not limited to specific roles, but there are job positions that require practitioners to become CFAs. In the corporations, common job titles for financial analysts include:
According to a report published in 2016 by the CFA Institute, $278,937 was the median salary for a financial analyst with at least 20 years of experience in the job market. Additionally, 3.5% of CFAs are chief financial officers. You can, therefore, expect to earn high compensation in the long run if you dedicate the time and effort necessary for master the ability to analyze financial statements and have client conversations after you get your diploma. You'll definitely be able to move past basic bookkeeping.
What Does A Financial Analyst Do
Roles that require CFAs involve the buying and selling of securities. In practice, however, most CFAs focus on duties where trading is of secondary importance. Large financial institutions often have dedicated traders who manage the actual execution of trades using strategic information provided by CFAs. In former times, CFAs would compile trade data in spreadsheets for traders and decision makers. Modern software, however, has automated the organization and transfer of data so that CFAs can focus on more advanced roles such as equity research, helping to evaluate a new strategic program, policy, or technology process, and training new finance employees in their duties that they also help recruit. They may also work, on occasion, as financial managers for new projects, where they report new cash flow, building plans, or a purchase of new product, and track changes to the company income statement in real time.
It is important to recognize that the emergence of advanced software tools is only increasing the value of CFAs in the workforce. Although the roles of CFAs are evolving, human input is still necessary for making trading decisions at the strategic level. Competitive firms task CFAs with using modern software to balance subjective factors with data-driven decisions. The actual execution of trades is done by a computer in most cases based on the limitations in human reaction time.
CFAs also fill a wide range of roles that do not directly involve the trading of securities. Financial institutions, for example, often assign experienced CFAs to roles where they interact with internal or external stakeholders, meeting with them and speaking about each decision made by the company leaders. Finance is a complex field, so experienced workers are required to explain the specifics of an investment strategy to clients or even account managers. Since CFAs work at a high level, they are usually the first candidates for promotion to managerial roles within the hierarchy of a financial institution. While a doctorate might seem like a necessary degree to boost you above the fray, a master's in business administration (MBA) would likely be more than enough, combined with your license, to give you authority in the field.
Day in the Life of a Financial Analyst
If you decide to get a job in the corporate environment after becoming a CFA, you can expect to be immersed in a fast and competitive workplace. CFAs can earn sizable bonuses for high performance, so the most successful practitioners are usually driven and are looking for development of their skills and rapid advancement. Networking is a main driver of career success for CFAs since connections can yield specialized knowledge about the latest trading strategies or upcoming market trends, so don't skip that networking meeting, even if it feels like it might be useless.
Financial analysts spend full days working with advanced financial software to make trading decisions. Trades have to be executed in a fraction of a second in the modern world, so most of a CFA’s work involves preparing automated trading software for future contingencies. Computers tend to do most of the complex calculations, but an understanding of the algorithms that are applied is still necessary for efficient performance. Financial analysts also spend a substantial portion of their day meeting with account managers, traders, and other stakeholders who depend on their work in order to provide reports and keep them well informed.
Education Requirements for Financial Analysts
The financial services industry is heavily regulated, so you should expect to complete an extensive education before getting your first job. As a prerequisite for initiating the licensing process, you will first need to obtain an undergraduate degree from the school of your choice. You can legally obtain a license with a degree in any field, but you should strive to complete your formal studies in a field related to business or finance so that you can add maximum value in future roles. Many people who aim to become financial analysts major in a learning field related to finance, such as statistics, math, or economics.
Earning a degree as a student in a field related to finance gives you better chances of finding a high-paying job as a financial analyst after graduation. Leading firms look for candidates who possess knowledge that will compound their ability to add value in the practical work environment. Mathematical computations are a major part of a financial analyst's work, so training that demonstrates exceptional abilities in mathematics is a strong differentiator when you first enter the workforce.
You should keep in mind that financial analysts often obtain multiple licenses to show additional value to potential employers. Accounting is closely related to finance, so many CFAs also become certified public accountants or certified management accountants. If you are highly ambitious, you may even want to consider the possibility of earning your law degree or MBA after graduation. Financial analysts who are licensed to practice law can do many of the high-level tasks that banks and other financial institutions need to complete on behalf of their clients, and an MBA positions a CFA for rapid advancement into managerial roles.
The key to realizing maximum return on investment from your education is to conduct sufficient research before you begin. You should develop a clear career path so that you will be able to recognize relevant opportunities that will boost your credentials before graduation. For example, reputable business schools work closely with financial institutions to offer mentorships and internships, and these extracurricular pursuits can simplify the process of finding a good job when they match your career goals. Make sure you know the full content of the degree you are earning before you sign up.
Degree Options for Becoming a Financial Analyst
When you start your journey to becoming a financial analyst, you can meet the legal requirement of earning an undergraduate degree through a broad range of conventional and unconventional channels. Most students choose the customary approach of taking courses in a classroom setting. If you live in a major U.S. city, there are likely dozens of schools that you can choose from for earning a business degree without relocating. You also have the option of applying to leading universities throughout the country to earn your degree from a revered institution but doing so can be expensive if you do not qualify for scholarships or financial aid.
The digital revolution has transformed the process of earning a degree for students who are willing to study in an unconventional way. A majority of reputable universities now offer classes online that you can take from anywhere in the world. Students can take classes at the university of their choice without being physically tied down to their school's campus. You can, therefore, work in a city where you can find a job while earning a degree at your ideal university.
Online classes can be less expensive that studying in a classroom setting since many of the overhead expenses associated with classrooms are eliminated when studying online. Employers are also willing to pay for online classes in many cases when your studies are related to your current work. Schools that offer online classes recognize the importance of maximizing flexibility for students who study in different time zones or on a part-time basis. You can, therefore, expect online universities to give you the option of watching lectures at your own convenience or extending deadlines when you can document a busy schedule.
The flexibility associated with the modern education system makes it practical to pursue graduate-level studies after completing your bachelor's degree. Financial analysts can earn a master's degree in finance, accounting, statistics, or other related fields to maximize their income potential. Leading employers are usually happy to pay for a master's degree as long as you agree to continue working for your employer after graduation. Some employers will even pay for you to study on a full-time basis when you can demonstrate an exceptional aptitude for financial analysis.
Earning Your Certification and Getting a License
Upon completing your undergraduate degree, your next step before starting your career is to get certified. The CFA Institute is an international organization that administers the certification exam for financial analysts around the world. You will not, therefore, need to obtain multiple certifications to practice across state lines or in foreign countries.
The CFA Exam
The CFA exam is broken into three levels, and you will have to pass every level to practice as a financial analyst. You can take the CFA exam in a single day by visiting a testing center authorized by the CFA Institute. Degree programs ordinarily organize curricula around preparing students for passing the CFA exam immediately after graduation, but the reality is that most students will need to spend at least a month preparing for the exam. Employers often ask for your test scores before agreeing to hire you, so it is important to earn the highest score possible.
Once you pass the CFA exam, you can go through the final step of obtaining your license, which is officially referred to as a charter. You will need to gather together a substantial amount of paperwork to prove your eligibility, such as proof of graduation and certified test scores. Candidates for the CFA exam must be members of their local chapter of the CFA Institute. You will also need at least 48 months of work experience, but this experience can be earned in any field. Many students succeed at meeting the work experience needed by getting a job in the finance department of a business while in college. You do not have to work in the capacity of a financial analyst for this, but employers give new financial analysts more consideration when they have experience in a relevant field.
Planning Your Path Forward
Becoming a credentialed CFA will give your career a significant boost since you can, then, put the CFA designation next to your name on resumes and business cards. Professionals in the financial services industry know the difficulties associated with passing the CFA exam, so you can expect leaders in your organization to look up to you for your new credentials. The journey toward becoming a CFA requires substantial personal investment, so it is critical to plan your path forward in advance to ensure that you get optimal results. The key to starting your career from an optimal position as a CFA is to conduct sufficient research from the beginning. Aspiring financial analysts who know exactly what they need for success are able to make decisions that will yield high compensation and rapid advancement.
Financial Analyst Salary by States and Major Cities