The 101 series: financial analyst

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Financial analysts are in high demand – after accountant and auditor, it’s the role with the most job adverts on ACCA Careers. So, what does a financial analyst do, why are they in such high demand and how can the ACCA Qualification prepare you for the role?

What does a financial analyst do?

A financial analyst analyses historical and real-time financial data to provide insights that support decision-making. They work with different types of data, from company financial statements, investment performance, industry research, macroeconomic data, stock price movements, and real-time operational data from across an organisation, such as sales, marketing or in the supply chain.

A financial analyst will typically evaluate data to understand an organisation’s financial health; study industry-specific business trends; produce and provide interpretation of data-driven reports to support management teams in taking strategic decisions; develop financial models that forecast business outcomes and profits; measure financial risk associated with investment decisions; and prepare documentation to help startups and small businesses get funding.

‘Routine tasks include financial planning and analysis (FP&A), forecasting, budgeting, and investment analysis,’ says John Lynes, a director at specialist recruiters Ashdown Group. ‘By conducting research and working alongside an organisation’s stakeholders, they produce reports that guide long-term planning and performance assessment. The presentation of financial data around risk, costs and benefit analysis, process improvement, emerging trends and market research lead to better decisions on the part of the organisation or investor.’

They also work in organisations large and small across public practice, the corporate and public sectors, financial services and shared service organisations. ‘In larger organisations, financial analysts work in teams with senior colleagues from accounting, management, and data analysis departments to gather data, analyse trends and present,’ says Lynes. ‘In smaller organisations, they will typically work closely with either the finance manager, financial controller, or finance director to deliver against the reporting requirements of the business.’

Financial analyst: key skills

Some organisations will require their financial analysts to have a bachelor’s degree, preferably with a major in finance, economics, or statistics. The ACCA Qualification also provides a great academic route into the field and can be combined with a university degree.

Unsurprisingly, the role requires strong analytical and numerical skills, but also excellent communication, given it also falls upon the analyst to present their findings to key stakeholders, often senior management. Commercial awareness and ability to interrogate business performance against strategic objectives are also vital.

It helps to be at least comfortable with technology and preferably enthusiastic, given the volume of data available to organisations and the continued innovation of the digital tools and databases used to perform analysis and build reports. These software tools allow analysts to perform deep and real-time data mining, produce highly refined, detailed and unique insights about an organisation, its products, services, customers and markets, and present findings in visualised formats that make it easy for often non-financially minded stakeholders to grasp findings.

How ACCA prepares you for a financial analyst role

The ACCA Qualification’s three Applied Knowledge exams — Business and Technology, Financial Accounting, and Management Accounting – provide a solid foundation in accounting and finance principles and how businesses operate. From here, the Financial Management and Financial Reporting papers in the Applied Knowledge level lead well into Advanced Financial Management, Strategic Business Leader and Strategic Business Reporting at the advanced Strategic Level.

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Where can financial analyst roles lead?

‘The natural progression for a finance analyst would be to a more senior post within the finance team, such as senior financial analyst, finance manager, financial controller or finance director,’ says Lynes.

Within the financial industry, there are also career options within investment and asset management, perhaps as a corporate finance manager, investment manager or a more specialised analyst. Going down the investment industry path can be bolstered by undertaking the Chartered Financial Analyst (CFA) qualification.

‘Alternatively, the skills required to be a successful financial analyst are relevant to other data centric roles within an organisation, such as IT data analyst, marketing data analyst, HR analyst, information systems, data manager, or head of data,’ says Lynes.

How to impress financial analyst employers

Not only are employers looking for people with the right set of technical and soft skills – analytical, curious, investigative and interrogative, having at least a foundational understanding of accounting and finance, a broad interest in business, commerce and the macroeconomic environment, tech savvy and enthusiastic, a good communicator able to work in teams – but they need to have the right attitude.

The right attitude relates to working well with others, fitting with a business’s culture and outlook, and having a positive attitude to professional development. There is always more to learn and situations to adapt to as a financial analyst.

Case study

Madhuhansi Mihindukulasuriya FCCA, financial analyst, Canadian Blood Services

I’m attached to the Canadian Blood Services’ FP&A team as a financial analyst. The team consists of many financial analysts of different grades who report to either the manager or director. Day-to-day activities largely revolve around looking at the expenses recorded by the business units I’m responsible for and ensuring they stay within budget, identifying business requirements and adjusting the forecast appropriately. I also need to find the causes of material variances and provide commentary to the organisation’s leadership.

I work with three different business units — two subunits of the supply chain and one a corporate services department. They all work together to deliver organisational objectives. I continuously monitor where each business unit stands in terms of their budget and communicate where improvements are required. I perform variance analysis to see which units require more or less funds. Ultimately, my work helps to make key decisions.

I like that my work is not repetitive. The business changes every day and I get the opportunity to communicate with people across the business and understand different initiatives.

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