9 min read

How To Hire A Financial Analyst

Nikki Dale
Nikki Dale June 09, 2022
how to hire a financial analyst

A financial analyst is employed by a business to help understand the financial health of the company, and use data to plan and forecast for growth.

Financial analysts have deep knowledge of the financial markets and events that might have an impact on the business, and they also understand the principles and standards of business accounting.

Financial analysts use their abilities to collect and analyse data to create financial models which demonstrate the investment opportunities, options for capital growth, and develop solutions.

For a business or an individual, a qualified and experienced financial analyst is responsible for providing guidance on opportunities, investment, and growth with lucrative outcomes, which can help deal with debt, make decisions on whether to become publicly traded, and help deal with debt.

In this article, we will discuss what skills and abilities you should look for in a financial analyst, and how best you can test for the competencies that are needed to hire a successful financial analyst.

What should a financial analyst be able to do?

how to hire a financial analyst

Financial analysts can be employed by businesses or individuals to provide guidance on investments and improving financial and operational operations.

Through working collaboratively with lawyers, accountants, and PR experts as well as investment bankers, a financial analyst can grow their knowledge of market conditions.

Through analysis of fundamental economic, industrial, and corporate developments as well as financial and trade publications, the information from investment banking firms, company sources and government agencies, a financial analyst will be able to provide detailed research about what to invest in - and when.

Financial analysts will use their knowledge of the wider economy alongside deep research into the financial and operational performance of a company to create plans and forecasts for growth, using data modelling software and presentations to demonstrate the recommended next steps.

The day-to-day operations of a financial analyst involves research and data management, the evaluation of securities and investment opportunities, and planning for growth and development.This can only happen by creating, developing, and fostering strong relationships with clients, investment businesses, and other financial entities that can help businesses make more money.

Financial analysts need to be able to advise clients and provide reasoned and detailed recommendations that can help businesses that are facing financial difficulties, whether that be restructuring debt or refinancing.

Skills to look for in a financial analyst

There are several different skills that a financial analyst needs, and most of them are related to accounting and modelling. The specific software skills that a financial analyst might need to use on a daily basis includes things like accounting, analysis, and database software, but also the following:

  • Spreadsheet Skills: a working knowledge of Microsoft Excel is a good indicator that the candidate will be able to work with databases and produce detailed financial mapping and modelling.
  • Mathematics: financial analysts need to have a deep knowledge of mathematics and be able to skilfully navigate accounting principles and understand how to use maths.
  • Critical Thinking and Problem Solving: logical reasoning and solving problems using critical thinking is part of the financial analyst role. Financial analysts need to be able to gather data and decide what is needed to solve the particular problem of the business that they are working for.
  • Judgement and Decisions Making: financial analysts might need to judge data and news about events, the financial markets, and forecasts to decide what should happen next.
  • Systems Analysis and Evaluation: a financial analyst needs to be able to look at the existing financial and operational systems of a business, analyse what is happening, and evaluate how successful it is at the moment, so they can make the right recommendations on growth and improving the bottom line.

Useful abilities for a financial analyst

The inherent abilities or aptitudes that a successful financial analyst will need are not necessarily what they will have learned in school or in a previous employment, but they are important. Some of the abilities you should be looking for in a potential financial analyst include:

  • Mathematical Reasoning: this is not just the ability to complete mathematical operations, but the ability to use maths to inform logical and reasoned deductions. It is about the application of mathematics to solve a problem.
  • Deductive and Inductive Reasoning: logical thinking is an essential ability in a financial analyst; they need to be able to make the right decisions based on both deductive and inductive reasoning.
  • Oral Comprehension and Expression: speaking to different sources of information and presenting the findings of data analysis needs oral comprehension and expression skills.
  • Information Ordering: sifting through huge data banks and using different sources to analyse will provide a lot of information which needs to be organised and ordered in a thoughtful way.
  • Fluency of Ideas: to be able to make recommendations that help a business, a financial analyst has to be able to come up with lots of ideas. As part of the role, financial analysts should be confident in thinking outside the box.

Which soft skills tests could I use to hire a financial analyst?

Soft skills are the skills that are essential to success in almost any role, and they can be difficult to assess from traditional methods like a resume, application form, or even an interview with a potential candidate.

The soft skills tests put candidates in the position of dealing with a work-related situation to see how their soft skills match up with the needs of the role that they have applied for - in this case, as a financial analyst.

Some of the soft skills that recruiters might want to test for when hiring a financial analyst include:

  • Communication: communication skills are not just about speaking confidently, but also about active listening, recognising non-verbal cues, and adapting speech to suit an audience. The financial analyst needs to be able to communicate effectively to give recommendations and guide businesses.
  • Problem Solving: the role of a financial analyst is usually to solve a financial problem for a business, so the problem solving assessment will demonstrate how well a candidate can solve work-related problems.
  • Project Management: many of the tasks that the financial analyst has to complete are project based, and project management skills include being able to work effectively to deadlines and as part of a team.
  • Decision Making: financial analysts need to be able to make reasoned and logical decisions throughout their research and analysis, deciding what the data is showing and what the right recommendations are for the business.
  • Adaptability: business finances are often a fast-moving part, and adaptability - the skill of working well even when things are in flux and changing fast - is a competency that is useful in many roles but especially for a financial analyst.

Which technical or aptitude tests could I use to hire a financial analyst?

financial analyst

For the role of a financial analyst, technical skills usually involve specific analysis, database management, and accounting software which can be bespoke to an organisation, but there are other technical tests that can be used to assess proficiency.

There are several different aptitude tests that can be used to assess whether a candidate has what it takes to be a successful financial analyst, including:

  • Microsoft Excel: although most financial analysts will use more advanced software, a working knowledge of Microsoft Excel will demonstrate proficiency in other spreadsheet and database software.
  • Numerical Reasoning: numerical reasoning assessments will demonstrate that the candidate has good knowledge of basic math, but is also able to apply that knowledge to answer questions and make reasoned deductions.
  • Logical Reasoning: this simple assessment shows that a candidate has the ability to spot patterns and trends, using logic to find the right answer and make a decision.
  • Error Checking: handling sensitive financial data - and the sheer volume of information that needs to be assessed - needs an eye for detail to ensure that there are no mistakes. This can be evaluated using an error checking test.
  • Verbal Reasoning: this is an assessment that shows how a candidate can understand and analyse written data and information to solve a problem and make a decision, which is necessary for a financial analyst when they are looking at data from different sources.

Although all the above tests would be useful in recruiting a financial analyst, similar results can be obtained using a smaller number of assessments, which is easier to administer for the recruitment team and better for the candidate who doesn't need to take so many pre-employment assessments.

Our recommended test batter for a financial analyst includes:

  • Microsoft Excel: this assessment asks a candidate to work through business-related problems and solve them using their skills in this software. The test is aimed at assessing the candidate on their ability to navigate the software and make the most of the functionality.
  • Project Management: the project management assessment asks questions that are based on work-related scenarios, needing the candidate to decide on the best course of action to solve the problem. The project management test covers teamwork, communication, and leadership skills.
  • Numerical Reasoning: in the numerical reasoning test, the candidate is presented with a series of questions containing numerical data in the form of graphs and tables. To find the right answer from the multiple choice options, the candidate needs to perform basic mathematical calculations.
  • Logical Reasoning: the logical reasoning test is a series of questions that are based on a series of images or shapes in a sequence with one item missing. The candidate needs to find the trend or rule that governs the sequence in order to choose the right answer from the multiple choice options.

For even more in-depth data about a candidate's potential, the financial analyst test provides results that are specific to the role and lots more information about hiring a financial analyst.

Nikki Dale
Nikki Dale June 09, 2022

Enjoy what you’ve read? Let others know!