World-Class Financial Analyst

What is a World-Class Financial Analyst?

A world-class financial analyst has a unique combination of skills that enable them to have an enormous positive impact on an organization. These skills include being able to analyze both quantitative and qualitative data, understanding detailed and big picture thinking, balancing simplicity and complexity, and being technically and socially sophisticated.

#1 Analyzing Quantitative and Qualitative Data

While the job of a financial analyst is mostly dealing with quantitative data, a great analyst can easily handle qualitative information as well. It can be challenging since most analysts think that if you can’t model it, then it doesn’t count. The art of incorporating qualitative data usually comes in the form of making adjustments, ranking priorities, and incorporating risk.

Quantitative analysis includes:

• Financial statement analysis
• Ratios, metrics, KPIs
• Operational data

Qualitative analysis includes:

• Assessing management
• Understanding the role culture plays in businesses
• Customer satisfaction, brand value, etc.

#2 Combining Detailed and Big Picture Thinking

As a financial analyst, there is an extraordinary focus on details, as there very well should be. It’s critical to ensure that analysis is error-free and accounts for as much detail as possible. Where some analysts fall short though, is getting lost in the detail and losing sight of the big picture. This is not to say that analysts need to think like executives (i.e., where the company is going to be in 10 years) but they should aim to at least see the bigger picture of their analysis and how it fits into strategic decision making at the organization.

Detailed analysis includes:

• Adjustments and normalization to numbers
• Accounting for all available information
• Maximum precision in all calculations

Big picture thinking includes:

• Knowing what they key takeaways should be
• Understanding how the analysis fits into an overall strategy
• Highlighting the main tradeoff

#3 Balancing Simplicity and Complexity

Most financial analysts spend a great deal of time performing financial modeling and similar types of analysis. A great analyst knows how to “right-size” the analysis to the situation, which means determining how simple versus how complex a model should be. This requires making a judgment call about what needs to be extremely sophisticated and what can be simple or basic.

Simplicity means:

• The analysis and logic are easy to follow
• Unnecessary detail is strategically omitted
• The layout and presentation of results are easy to understand

Complexity means:

• Building dynamic models that can adapt to different situations
• Incorporating correlations and statistics into the analysis
• Accounting for as many scenarios as possible

#4 Being Technically and Socially Sophisticated

A great piece of financial analysis that never gets buy-in isn’t really worth anything. It’s important for a financial analyst to not only be extremely technically strong but also have the social skills to get their work accepted. It means understanding the decision making processes within an organization, and strategically thinking about how to get feedback, buy-in, and implementation of a good idea.

Technical sophistication includes:

• Financial knowledge
• Accounting knowledge
• Excel modeling skills

Social sophistication includes:

• Effectively communicating the results of the analysis
• Navigating the decision-making process
• Getting buy-in and execution of good ideas

Learning Financial Analyst Skills

If you truly want to become a world-class financial analyst and learn the above skills, then CFI’s Financial Modeling & Valuation Analyst (FMVA)™ certification could be the perfect option for you. With the right mix of granular detail and high-level strategy, the curriculum covers a unique skill set, not covered by other financial analyst accreditations.

To learn more about what it takes to be a great analyst, these additional resources will be helpful:

• Free Financial Modeling Guide
• Sensitivity & Scenario Analysis Course
• Advanced Excel Formulas You Must Know
• DCF Model Training Free Guide
• See all career resources