4 Skills and Tools Every Aspiring Financial Analyst Should Learn
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4 Skills and Tools Every Aspiring Financial Analyst Should Learn
Navigating the complex world of finance requires a certain skill set that is indispensable for success. This article distills the quintessential skills and tools for aspiring financial analysts, drawn directly from the wisdom of industry experts. It's a straightforward guide to understanding fundamental business analysis, developing financial literacy, mastering Power BI, and becoming proficient in financial modeling.
- Understand Fundamental Business Analysis
- Develop Strong Financial Literacy
- Master Power BI for Efficiency
- Become Proficient in Financial Modeling
Understand Fundamental Business Analysis
Based on my experience transitioning from corporate finance to independent investing, the most essential skill for financial analysts to master is fundamental business analysis - being able to truly understand how a business operates and creates value. While technical skills are important, I've found that the ability to look beyond the numbers and understand the underlying business model, competitive advantages, and growth potential is what separates great analysts from good ones.
I recommend starting with "The Education of a Value Investor" by Guy Spier, which teaches not just analysis techniques but how to develop the right mindset for evaluating businesses. The most effective learning path is to practice analyzing real companies - start with businesses you know well, study their financial statements, and try to understand their competitive advantages. Remember, raw technical skills can be learned, but developing good business judgment comes from experience and careful study.
Develop Strong Financial Literacy
Having strong financial literacy is one of the top skills I believe financial analytics must master. To find success within this career, the ability to understand good financial decision making is non-negotiable. To build this foundational skill, I recommend pursuing a degree majoring in Finance or Accounting. These focused degrees consist of necessary courses, terminology, and activities that aid in building high financial literacy. It gives you the knowledge and experience implementing it within real life situations. Thus, when you move onto a career within financial services, you have the most necessary skill to perform your role successfully.
Master Power BI for Efficiency
I am a big advocate of using Power BI for financial analysis. I worked as a Financial Analyst in Autodesk for 3 years, and management gave me a lot of credit for creating Power BI reports.
Most financial reports still run on Excel, but if you migrate them to Power BI, you can achieve multiple efficiencies:
- Power BI makes it easy to share reports. Excel files can get to 100MB, and users with old laptops struggle to open them. On the other hand, Power BI reports are shared through a link that can be viewed online. There's no need to download heavy files that make your laptop crash.
- Power BI has more capabilities for data visualization. This improves communication through data and helps management discover more actionable insights.
- Power BI helps with automation. You can automatically extract and transform data in Power BI by using Power Query. Automation is a significant trend in financial analytics right now, and if you can save working hours for your team, this effort will be noticed and appreciated.
I recommend starting to learn Power BI from an inexpensive course on Udemy. You can also access free learning resources from Microsoft that help you prepare for the official PL-300 exam. Once you pass this exam, you will become Microsoft-certified in Power BI.
Become Proficient in Financial Modeling
Aspiring financial analysts should master financial modeling, a key skill for assessing a business's financial health and performance. This involves creating models based on historical data and future projections, enabling data-driven decisions. To start, analysts should become proficient in Excel, using resources like "Excel for Finance" courses. Following that, they can pursue specialized financial modeling courses to enhance their skills further.
