What does it take to become a financial analyst from a non-finance background?

July 10, 2006 8:38 AM

I'm currently in a career dilemma, debating myselfe whether I should continue doing what I do as a data analyst (in sales analytics) or start a new career as a financial analyst (FA) after taking some necessary classes or training. One of my motivations is that FA gets paid more than data analyst, very easily, and FA deals with cross-department data and plays a much bigger, visible role in terms of decision advising and/or making. I did very well in accounting, finance, and economics when I was in the business school and still have clear understanding of the concepts. However, I don't have experience or proper training in financial analysis. Will an online course like this one financial analysis gear me up in a short time? If not, whatelse shall I do to get myself ready besides taking classes from a university? My other question is: How likely will companies hire someone like me with strong background in data analysis but none from financial perspective? If you have any experience, thought or input, please share it with me. Thank you so much.
posted by dy to work & money (7 comments total)

This is an interesting question to me. I actually jumped the other way about 3 months ago, going from an FA position with a Fortune 100 company to sales analytics job with a much smaller employer.

Addressing salary: I wouldn't be too sure that FA is a guaranteed moneymaker. There are a lot of analytical jobs in the sales dept. that can get tied into comissions or bonuses. For instant, a pricing manager may get a % of corporate revenue if they hit targets, etc.

As for an FA position, I'd caution you to ask a lot of questions at any interview. There are a lot of 'Financial Analyst' positions that are little more than balancing a checkbook: boring, go-nowhere jobs where you won't learn anything. To advance far in any sizeable organization, you will need to earn a CFA or a CPA. At the very least, I would suggest getting an MBA with a finance major. My last company had a corporate governance decree that everyone working in finance had to have a finance degree.

An online course like the one you linked to is not going to mean much to anyone hiring an FA position. Generally speaking, you check for experience as an FA. If none, you check for a finance degree. If still none, the resume goes in the trash.

That much said, data analytics skills are pretty high in demand these days. I'm assuming you know some combination of SQL, SAS, Business Objects, etc, so you may want to learn a few new systems that are more financially oriented. Hyperion Essbase is a great platform to be familiar with, as is SAS's Activity Based Management software.

My advice to you would be to sell yourself as a rock-solid data analyst with a drive to learn financial analysis. Any decent company will pay for part time grad school, so you could mention this in an interview. Take a year or two and get an advanced degree. I know it's not the answer you want to hear, but it will be very difficult for you to move past a manager position in a finance org without having a finance degree at some point.

I don't know what your particular situation is, but it may be easier for you to transfer into the finance dept at your current employer. If that's an option, I would suggest pursuing it. As a candidate you'll already know the data structure, which is a HUGE plus in hiring someone.
posted by toothless joe at 9:08 AM on July 10, 2006 [2 favorites]

I second getting the CFA. If you are looking a corporate financial analyst position they are not that hard to get. If you are looking for an investment banking position or an equity analyst position they are much trickier and you need both industry expertise and financial analysis skills.
posted by zia at 10:00 AM on July 10, 2006

Will an online course like this one financial analysis gear me up in a short time?
Since you have no prior experience in finance, you'll be coming in at entry-level. Understanding concepts like net present value and DCF (covered in the course) will help but not in the way you think. They'll help because during the interviews, they show you're serious about getting into finance and you understand the basics.

whatelse shall I do to get myself ready besides taking classes from a university?
Research the type of field and the firms in the field heavily. There's a lot of variety out there - retail/commercial/investment banking, private equity, credit (cards), consulting, insurance, accounting, etc. Talk to family, friends, acquaintances and friends of friends who work in these areas.

How likely will companies hire someone like me with strong background in data analysis but none from financial perspective?
It will be more difficult but again, not in the way you think. A monkey could do the stuff an entry-level FA does - with your data analysis background, competency is not the issue. Your drive and reason for wanting to switch from data anlysis into financial analysis will be the issue.

Notes
I work for a consulting firm that's heavy into data analysis. A while back I interviewed at some bulge-bracket investment banking firms. The question that kept coming back is "Why?" I can't speak for other finance positions, but "salary" is not an acceptable answer for banking. At these places, an FA is considered an intern that gets worked to the bone - if you do salary/hr calculation, it's not pretty. Ultimately, they want someone who's confident and motivated and regardless of what you may think, a 10-20% bump over your current salary won't carry you through an extra 40 hours per week. 2-year commitments are standard in i-banking so they want someone who will last all the way through.

If you have the time and money, take the CFA Level 1 exam. It's not very difficult and again shows you have strong finance interest and basic competency. Don't go any further than Level 1.

As with any career move, make certain you want to get into this, especially finance. If you enjoy the technical side of data analysis, I think you should stick to it. There are a lot of lucrative positions in data analysis in niche fields out there that you should explore first.
posted by junesix at 10:48 AM on July 10, 2006 [1 favorite]

why no further than level 1 on the CFA junesix?
posted by leotrotsky at 1:31 PM on July 10, 2006

CFA exams and prep materials are costly and it takes a lot of time to study for each one. Each exam is significantly more difficult and time-consuming to study for than the previous. Also if you don't pass, it looks bad. For someone getting into an entry-level position, CFA Level 2 is overkill. A resume with no prior finance experience and CFA L2 certification draws puzzling questions like "What is this person doing spending thousands of dollars to take specialized exams in a field he's never worked in?"
posted by junesix at 3:13 PM on July 10, 2006

I'm not suggesting the CFA L2 and above isn't worthwhile. For those already working in finance, it makes a lot of sense if it's the norm for their field. But for someone with no experience, L1 is enough. Focus on securing a good position and then make your firm pay for L2 and up.
posted by junesix at 3:17 PM on July 10, 2006

At these places, an FA is considered an intern that gets worked to the bone - if you do salary/hr calculation, it's not pretty. Ultimately, they want someone who's confident and motivated and regardless of what you may think, a 10-20% bump over your current salary won't carry you through an extra 40 hours per week. 2-year commitments are standard in i-banking so they want someone who will last all the way through.

First-year investment banking analysts (first year out of undergrad) at bulge bracket firms made $55k salary + $80k bonus for top-tier this year (the average mid-tier analyst probably made ~$70k in bonus). So $135k total at 90 hours/week is about $29/hr. Banks are having to pay up now since the hedge funds and private equity firms are paying so well and hiring so many. The hourly wage calculations are much better than they were a few years ago, but it's still not worth selling your soul (even for 2 years).

If you want to get into i-banking on the junior levels, you usually have to come fresh from a top undergrad (for the analyst title) or MBA program (for the associate title). If you have securities law, big 4 accounting or management consulting in your background, it's possible to come in outside the normal recruiting cycle, but that doesn't sound like the case here.

Anyway, while investment bankings do have "financial analysts"--it is quite different from a job as an analyst in a corporation's internal finance department. Within that department, jobs could range from analyzing M&A opportunities and new products/markets (more hours, more money, better career path) to doing division-level financial reporting (less hours, less money, not on the fast track). The money in these jobs isn't comparable to investment banking but still decent and the lifestyle will be much, much better. If you live in a sizable city, you can probably find the lower-end jobs on Monster.com.

Depending on how intense of analytical experience you have, maybe something in the sales & trading department of an investment bank or a hedge fund could be a possibility?

In any case, you may find some helpful reading material in this thread.
posted by mullacc at 5:41 PM on July 10, 2006