In finance, the role of a financial planning and analysis (FP&A) analyst is integral to an organisation’s success. These professionals provide vital insights, guide financial decisions, and ensure fiscal responsibility; therefore, understanding the qualifications and skills necessary to thrive in this dynamic field is essential. This article will explore the qualifications and skills that make an FP&A analyst successful.
What is a Financial Planning and Analysis Analyst?
Financial planning and analysis professionals sit alongside accountants in the engine room of enterprise finance, but they work at either end of the finance spectrum. FP&As set the tone for financial planning and are intimately involved in financial risk assessment, measurement, forecasting, and budget trends.
While accountants deal with present and past accounts, FP&As look to the future by mitigating risk and looking for opportunity through strategic financial knowledge and placement, matching actuals against plans, and giving management advice based on data to guide how money is spent, invested, and saved. In public companies, where information, financial reports, and financial plans that inform shareholders are based on the information and data gathered and shared by FP&As, FP&As are particularly crucial. Their primary responsibilities include:
- Budgeting and forecasting: developing and managing budgets and forecasting financial performance based on historical data and market trends
- Financial modelling: creating complex financial models to assess various scenarios and their potential impacts on the organisation.
- Performance analysis: analysing financial statements, key performance indicators (KPIs), and variances to spot trends, opportunities, and improvement areas.
- Strategic planning: assisting in long-term financial planning and strategy development
While the above would suggest that it is a highly technical role, it is essential to recognise that to be successful, there is a need to keep an eye on the bigger picture and have a strong understanding of the business context. An FP&A analyst should provide actionable insights supporting senior management in critical business decisions.
What Qualifications Does a Financial Analyst Need?
To meet the minimum requirements to enter an FPAC/FP&A course programme, you must have a bachelor’s degree or be enrolled in an undergraduate programme with a finance-related major (finance, accounting, economics, or business). For an analyst role, a bachelor’s degree is sufficient. However, as they progress towards becoming FP&A managers or directors, candidates should consider, at some point, a master’s degree.
Candidates must consider a range of supported certifications for a role as an FP&A:
Certified General Accountant (CGA), Certified Government Financial Manager (CGFM), Certified Internal Auditor (CIA), Certified Management Accountant (CMA), Certified Public Accountant (CPA), Chartered Accountant (CA), Chartered Global Management Accountant (CGMA), Chartered Financial Analyst (CFA), Chartered Certified Accountant (ACCA),
The essence of an FP&A is that all of the analytical and market knowledge is for a definite audience—a decision-maker. Whether internally (your CFO) or externally (involved stakeholders or board), your work will be considered an essential building block of future financial health.
Therefore, work experience relevant to an FP&A is slightly varied and can include any occasion in a role, including the following responsibilities: financial analysis, accounting, budgeting, forecasting, financial modelling, corporate financial planning, and strategic planning.
Alternatively, there are other paths a financial professional can take to pivot to FP&A:
Candidates with two years of FTE college or university teaching experience in budgeting, forecasting, financial modelling, corporate financial planning, strategic planning or financial analysis investment banking
The starting point is as a management accountant in the finance department of any company; this would give the candidate the necessary background in terms of technical skills and business acumen that would become invaluable as the career progresses.
The path to a successful career as an FP&A analyst starts with preparing the ground for the first step on your journey—that of an FP&A analyst.
An internship as a junior analyst within a financial firm, investment banking, or finance department with elements of economic analysis, accounting, or financial modelling will stand any candidate in good stead. In theory, the same channels of internship and training that support a career in accounting are appropriate to becoming an FP&A and would give candidates a basic understanding of accounting, industry trends, project management, interpretation of financial records, and investment decisions at a very high level. Internships also help develop the necessary skill set over time.
What Are the Skills Needed to Succeed as an FP&A?
The proximity of an FP&A professional at any stage in their career to CFOs and business decision-makers requires a healthy amount of commercial acumen. By that, we mean you have to factor in the compound effect financial decisions and planning have on the vast array of commercial and branding elements attached to the business. You need to distil and convert sometimes complex financial data sets into communicable and understandable packages of information for non-financial decision-makers. Financial analysts need to be financially literate and have a combination of financial and other skills. Below is an extract of the expected financial analyst skills (both soft skills and hard skills).
Data Analysis and Financial Analysis Skills
Analytical skills need to be part of the armour of any finance professional; what has changed over the years is the emphasis on data-driven decision-making versus intuition. Proficiency in data analysis tools such as Microsoft Excel, Python, SQL, or specialised financial software is essential to gathering and interpreting financial information for financial analysts. However, this must be coupled with a thorough understanding of economic data, such as relevant historical data and financial problems, which are the key drivers behind business performance.
In essence, an FP&A analyst must deal with complex data but also provide the foundation for informed decisions.
An FP&A professional’s core responsibilities include financial and organisational risk assessment. This involves predicting and, where possible, mitigating risks and potential financial insecurities in strategy alongside:
Impact assessment, trend analysis, business analysis, scenario planning, variance analysis, predictive analysis, maturity modelling, case study creation, behavioural finance, collaborative planning, and improving forecasting quality
This assessment will be communicated to every stakeholder, and any further project management has to avoid project sprawl. Specificity of goals and the outcomes required are essential.
FP&A is usually a “central function” within a business. Therefore, it is unavoidable for FP&A analysts to deal with other departments or business units to build a comprehensive picture. The outcomes judge the quality of FP&A work sought and actioned on. Due to the high amount of predictive modelling done in the role and the vast array of people this data and analysis affect, it is no surprise that a significant challenge to a financial analyst’s daily routine is stakeholder management and ensuring the correct financial information gets to the right people. Being part of the finance function, you will also liaise with accounting, reporting, and general finance management to assess differences between actuals, forecasts, and budgets on the monthly review.
Effective communication is crucial, as financial analysts often need to present complex financial data to non-finance stakeholders. Clear and concise communication is critical to ensuring that decision-makers understand the implications of the data.
Financial analysts deal with financial problems that are critical for strategic decision-making, often executed by non-financially expert management. As such, the ability to dissect, interpret, and present information to potential investors (internal or external) in an easy-to-understand manner requires excellent communication and collaboration skills.
Attention to Detail
Precision is vital for financial analysts (and finance professionals in general). FP&A analysts need to ensure their calculations are accurate and don’t overlook any critical data points. Investment analysis or cash flow modelling that underpins investment strategies must be 100% accurate and supported if they are to be relied upon.
Time Management Skills
The role of an FP&A analyst often involves managing multiple projects and deadlines simultaneously. Effective time management is essential to meeting reporting and forecasting deadlines.
Strategic Thinking and Corporate Financial Planning
FP&A analysts should have a strategic mindset to help the organisation make informed decisions about resource allocation, investments, and future financial goals. Any professional in the finance industry (whether FP&A, management accountant, or senior analyst) has to develop this skill throughout their career, as the expectation of FP&A analysts is more than just “reading and crunching numbers”. Corporate financial planning, which, in essence, is what financial analysts assist in executing, relies heavily on strategic thinking.
An understanding of the broader business context is essential. FP&A analysts need to align their financial analysis and recommendations with the organisation’s strategic goals
Presentation Skills in Financial Reports
Closely linked to communication skills, the ability to create compelling presentations to convey financial insights and recommendations effectively is crucial in this role.
The financial landscape is constantly evolving. FP&A analysts must adapt to market conditions, regulations, and technology changes to provide relevant and accurate analysis.
In summary, FP&A analysts play a vital role in an organisation’s financial decision-making. Financial analyst skills combine financial knowledge, data analysis skills, effective communication, soft skills, problem-solving, and the ability to think strategically to excel in their role. The above skills enable them to provide valuable insights and support the financial health and growth of the organisation.
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