The 5 Traits of Top Financial Analysts


Financial analysts combine the thorough detective work of Sherlock Holmes with a generous dash of fortune teller mixed in. There are, however, definitely key traits and skills that the best financial analysts share.

Trait 1: Inductive and Deductive
Strong analysis includes both inductive and deductive elements.  Inductive analysis involves seeing patterns in the data and the cause and effect relationship between the data points (see Professor Plum in the library with the candlestick).  Deductive analysis, on the other hand, begins with an expectation based on previous experience and then tests and retests that expectation to see if it is evolving.

Trait 2: Create a Simple Hypothesis
Top financial analysts create a simple hypothesis before they start analyzing.  This creates focus and streamlines the process.  The best financial analysts follow the theory of Occam’s razor – when there are competing theories, it is best to examine the one that’s simplest first because it will often have the fewest assumptions.

Trait 3: Business Partnering Skills
For a financial analyst to be able to do their job well, they need business partnering skills.  In fact, in this research the ability to communicate effectively was listed as the number one trait that affected the success of a hire.  For a financial analyst to be effective, they not only have to be able to spot the trends, but help their finance and non-finance peers see the story in the numbers.

Trait 4: Spreadsheets and Data Bases
Good financial analysts know how to apply the tools available in spreadsheets and databases to pull together different sources of data.  And though a strong understanding of pivot tables can go a long way, it’s very important to understand the personal preferences of the individual who will be on the receiving end of the analysis.  Financial analysts know that turning data into actionable insights means understanding their audience.

ReadWhy You Still Need to Excel at Excel” for a general overview on which Excel skills companies are looking for.

Trait 5: Budgeting, Planning and Forecasting
To be a capable financial analyst, one needs budgeting, planning and forecasting experience.  The great financial analysts, however, take it up a notch with a thorough understanding of the company’s products, markets and processes.

Key Takeaways
Great financial analysts use both deductive and inductive reasoning.  They craft the simplest hypothesis first and test it.  They have strong spreadsheet and database skills.  Their budgeting, planning and forecasting skills are founded on a strong understanding of their company’s markets, processes and products.  Perhaps most importantly, they have exceptional business partnering skills which enable them to communicate complex data in an accessible way.

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