Financial Analyst Guide

How to Be a World-Class Financial Analyst

Do you want to be a world-class financial analyst?  Are you looking to learn industry-leading
best practices and stand out from the crowd?  If so, then this is the ultimate guide for you on how
to become the best analyst you can be. 

This guide is broken down into three main sections:

1. Analytics
2. Presentation
3. Soft skills

All three of these are required to rise to the top, and will henceforth be referred to as The Analyst
Trifecta.

Analytics

A world-class financial analyst lives and breathes numbers, calculations, and interpretations. 
They know how to distill vast amounts of data into a simple and easily digestible format.  They
have unwavering attention to detail, and dream in numbers.

The best analysts know how to collect, organize, analyze, and interpret data.  Each of these four
steps are equally important and form the bedrock on which their career is built.

Collecting Data

Collecting data is the logical first step.  It may sound simple, but it’s important to know where to
go for information, and how to get it. We have provided a list of financial data sources on our
website where financial analysts typically begin their search. However, knowing these sources is
not all there is to collecting data. It is the specific reports and sections of these reports that are
most important. For example, a basic analyst will know to pull a company’s 10-K report
from Bloomberg, but an advanced analyst will know exactly which notes to flip to and what
parts of the MD&A (Management Discussion & Analysis) provide the most information.

Organizing Data

Organizing data in a clean structure is critical.  You may have hit the “jackpot” with a large data
dump, but if it’s not well organized then the analysis that’s built on top of it will be a disaster to
audit. Confidence in the results will be diminished. It’s important to plan your financial
modeling with a logical framework and structure the data with a long-term view of what the final
product will look like. This is particularly important in financial modeling, where best practices
on structuring are what separate the good analysts from the great.  Check out our complete
financial modeling guide to learn more.
Financial Analysis

Analyzing the data is what we typically think of as the main job of an analyst – hence the name. 
At this stage, it’s time to start calculating metrics and ratios (e.g. EV/EBITDA), rates of return
(e.g. ROA), risks, accretion/dilution, and IRR.  This is where sharp accounting and finance skills
come in handy and many analysts take the opportunity to showcase their skills by analyzing
information in the most insightful and intuitive way.  It’s also where the analyst can start to have
some direct impact over the story that’s being told with the data, whether that’s confirming a
thesis, supporting a client’s agenda, or getting to the “truth”.

Interpretation & Recommendations

Interpretation is where world-class financial analysts shine and show off their skills at making
recommendations. This is where we reach the “so what?” part of the analysis, and it’s time to
suggest some specific action items. A great analyst knows they have to be careful here – this is
the bridge between where their job ends and executives take over. It’s important to provide
insightful suggestions, but typically not wise to push an agenda or an extreme view.  With that
said, objective advice will hopefully prevail in the long run.  In order to help you reach this level,
we’ve designed an extensive online training program.

Presentation

This is much less talked about than analytics, but is still incredibly important.  A significant
portion of an analyst’s work is creating compelling presentations (e.g. investment banking pitch
books), documents, memos (e.g. greensheets), and other forms of internal or external
communication.  It’s absolutely critical that these documents be well written, visually appealing,
and persuasive.

The two main aspects of communication that we will build on in this guide are written and visual
communication.

Written Communication

Written communication skills can make or break an analyst.  Even though most of your efforts
(on a time basis) will be spent performing quantitative analysis, it’s the expression of your
findings that matters most.  What constitutes good written communication for a world-class
financial analyst?  Strong written communication comes down to an analysts structure,
argument, and supporting points.  It’s important to isolate the central argument and hammer that
point home with relevant supporting information.  It takes practice, but there is a knack to
writing persuasive business documents that an analyst should strive to develop over time. Take a
look at our templates for a letter of intent or a term sheet for some examples of good written
communication.
Data Visualization

Visual representation of data is at the center of good financial analysis.  It’s important to create
charts and graphs that make the information easy to follow, with clear takeaways, and a feeling
of confidence.  This is an area where CFI can help, as we have designed several courses that
walk you through the process of building beautiful Excel outputs, step by step.  Our advanced
excel and data visualization courses include lessons on building various types of charts for pitch
books, research reports, or other documents.

Soft Skills

This part of the trifecta is absolutely critical but often receives the least training, development, or
focus.  It’s easy to focus on financial modeling training but that won’t be enough to stand out.
The areas of soft skills that a world-class financial analyst needs to work on are communication,
politics, and personal branding.

Communication

Oral communication is probably the least practiced and leased focused-on subset of
communication but it’s very important for financial analysts.  To rise in the ranks, you have to be
able to hold your own on a conference call with a client or with an executive and
communicate your thoughts in an effective way. Good communication requires confidence,
awareness, and the ability to read other people. If you can read them, there’s hope of adjusting
your approach based on the non-verbal feedback they give you.

Politics

Politics can be a dirty word and many people prefer not to talk about it or pretend it doesn’t exist
in their organization. The fact is, as soon as you have two or more people working together, there
is potential for politics.  The suggestion here is not to become a highly political person, it’s
simply to be aware of the politics in your organization and to have a plan to manage politics.
Analysts frequently make decisions with no regard for the political implications and that
can backfire.  Conversely, those who are able to navigate the system seem to rise more quickly.

At the end of the day, make sure that:

1) You understand the politics of your organization.

2) You make a strategy about how to successfully navigate the politics in your organization.

3) You constantly check in with yourself to stay grounded.

Personal Brand

Managing your personal brand can mean several things. At its core, it means conducting yourself
in a manner that causes colleagues and clients to respect you, enjoy working with you, and view
you as a high achiever.  This is easier said than done as it takes a lifetime of good decisions to
build a strong personal brand. It only takes one bad decision to destroy it.

Our recommendations for building the best personal brand are:

1) Always have a positive attitude.

2) Work well with teammates and don’t create drama.

3) Always follow through on what you promise to do and operate with the highest level of
integrity.