Career uncertainty? Why not become a well balanced and fit financial modeller
Background
With so much change in finance and accounting, it's no wonder many feel anxious and have career uncertainty at the moment.
The next generation has already decided that accounting and finance are being disrupted so badly by automation they don’t even want a career as an accountant anymore at universities. Public practice firms are really struggling to find staff.
For me, this is both shocking and sad, as I studied and qualified as an accountant plus accountants have vital skills to benefit any business if they go beyond just accounting.
The scarcity of competent people is already here and the fight for talent is at all-time highs. Those digitally savvy (good at #Excel and #PowerBI) can demand their price and play games with hiring managers and recruiters. I've seen it first hand recently.
I lived with career uncertainty many times having been made redundant three times in my career and constantly searching for new avenues to explore that would keep me safe.
The reality is there is so much uncertainty, given the massive changes recently, that guaranteed safety doesn’t exist in your career unless you work hard to lower the risk.
There is, however, a way to significantly reduce the risk of redundancy, whilst becoming highly sought after, by exploring new skills and technologies to keep yourself marketable.
It is both possible and achievable to continue doing the thing you love most (working with numbers and solving problems) without being a slave to someone else or having your well-thought-out solutions being claimed by a higher-ranking employee.
Perhaps it’s time to embrace the skill of financial modelling and explore the world out there consulting on your own.
Daunting, but the demand for those skills (assuming they are well-honed) is still outstripping the supply.
Take your financial modelling skills on the road and enjoy the ride.
Why financial modelling?
Even if you didn't want to take those skills on the road, there are plenty of roles that have a high dependency on financial modelling skills.
The fast and ever-changing business landscape is ever-present.
To name a few:
more startups than ever before,
new business models,
old business models needing to evolve quickly to stay competitive and relevant; and
of course remote working.
There isn't a single business today where someone doesn’t have to manage some event that causes uncertainty driven largely by technology.
It causes many people to need to invest in better decision-making to either expand, defend or simply maintain their market share.
Whether a business is expanding, defending or maintaining its profitability the need for some form of what-if scenario analysis is extremely helpful. As an example using a cash flow financial model to assess different business decisions and scenarios.
No matter the size or stage of maturity, decisions at speed are highly valued and financial modelling sits at the core of business decision making.
Scenarios, sensitivities, simulations and building models to a best practice/standardised approach are all part of this skill.
Financial modelling is way more than just planning, budgeting and forecasting. They are all simply points in time of the same model (assume it’s built well).
Just because you can build a long-range plan, budget or forecast doesn’t guarantee you have great modelling skills.
The demand for financial modelling skills still outstrips supply and good financial modellers are very hard to come by.
We hire them and it's a needle in a haystack search.
Even when I was a member of the KPMG modelling team, finding talent was a challenge there too.
It's the golden age for Finance if we decide to make it.
Finance is very well placed, assuming we have the right skills, (which most don't have today), to look forward and hypothesise on these decisions quickly and efficiently.
Gone are the days when producing reports and numbers in the past was valuable, most of this can and has been automated.
Business owners and shareholders are expecting more and we have to deliver.
Therefore to look forward the skill of financial modelling is vital.
What are the roles that often require Financial Modelling as a core competency and skill
I am sure there are more, but these are the ones that are likely to be most familiar:
Forecasting, Planning and Analysis roles (FP&A) - typically in medium to larger organisations
Corporate Finance both in Investment banks and within large organisations
M&A - typically within Investment banks
Business Advisory - this is very broad from SME to large organisations and investment banks.
Specialist financial modelling firms e.g. Model Citizn and others that provide this service
Model auditor - mostly within Big 4 accounting firms but there are a few other niche players in this space which also do model builds
Finance Business Partner helping business stakeholders make better business decisions within medium to larger organisations
Outsourced or Virtual CFO (still don't like the term VCFO)
CFO, yes CFOs still do back of the envelope calcs to chat to the CEO
Strategic consulting has a heavy focus on what-ifs and scenarios. There isn't a strategy consulting firm that wouldn't do elements of financial modelling (not necessarily always 3-way). This may also include operational and business modelling
Commercial Finance assessing major commercial transactions and negotiations within organisations
Pricing and Risk Analyst for key decisions that involve taking particular positions or pricing commodities or other instruments.
Treasury and Financial Markets tend to be found either in banks or large multinational and international trading companies.
3 simple steps to get these skills?
Explore the Financial Modelling knowledge hub and some of the past blogs I’ve written on the topic to explore it more deeply. You may even want to expand that knowledge and get qualified with the Financial Modeling Institute or take the recent elective being offered by Chartered Accountants Australia & New Zealand within their CA program or as CPD for previously qualified CAs.
Practice, Practice and more practice. Apply the tips and learnings you get from #1 to cement the skills. Apply them in your role, for personal finances or for friends and family to help them solve key financial problems. You will be helping yourself improve.
Keep an open mind and embrace the uncertainty which is inherent in our careers and our financial models. No model is ever 100% correct. Models are a combination of both art and science. The science is connecting accounting and business logic to cash, which is king and everyone understands it. The science is also the technology, don’t rely simply on native Excel alone. The art is designing a tailor-made model to suit the problem or scenario.
So what next? I guess you want 10 more steps right?
Rather than watching the technology and skills gap move further and further away out of reach, keep active and push yourself into new domains of financial modelling, analytics and technology.
Here are just a few ideas you can explore, most of which are free, so time is your only excuse, not money.
Download free models from Eloquens.com and explore (don’t reinvent the wheel)
Download the Financial Modelling Knowledge hub app 📲
Research and become familiar with financial modelling best practices (BPSMS, FAST, SMART, PWC one, ICAEW Code etc), they are all pretty much the same. Pick one, but also know sometimes you have to break them too🤣
Listen to the Financial Modelling Podcast with Matthew Bernath (the most listened to podcast on Financial Modelling globally in 90 countries and over 100,000 listeners)👏
Attempt building a personal 3-way model for the next 3 years of your life with scenarios. Your own personal balance sheet (assets you own, liabilities you owe), income statement (salary and/or other income less living expenses) and of course your cash flows. Scenarios if you got that salary increase or not, buying or renting a property, holidays or a new car etc. 🚘
Visit Financial Modeling Institute and explore their content and models (including one of the solutions I developed for them)📚. If you are a chartered accountant in Australia or New Zealand, take the elective on offer in Financial Modelling (you might find chapter 4 of their study guide particularly useful)😁
Start playing with some of the latest Excel features and follow these MVPs on YouTube like Oz Du Soliel, Chandoo, Bill Jelen, Wyn Hopkins, Mynda Tracey, Laila Gerani, and Danielle Stein Fairhurst 📊. All links can be found in the app under #2.
Download and explore #PowerBI free and if you want to get serious about the world of data explore Maven Analytics.💻
Consider participating and or following the Financial Modeling World Cup and see how some of the pros do things with Excel you never thought possible.🏆
Stay connected on social media platforms (like LinkedIn) that often share nuggets of insight and debate on key topics facing financial modellers, accounting and the finance sector. The Financial Modelling in Excel group run by Danielle Stein Fairhurst is a great place to connect too. There are also FM meetups that should hopefully return soon!
If you want to learn more follow us and away connect or subscribe to our monthly newsletter about content as we release it.
I encourage you to take a peek at our past articles on financial modelling which is the foundation of business decision making, planning and forecasting.
Be sure to check out our pods and video page.
Here are also some past blogs that might be of interest.
Why I disrupted my own role and you should do the same?
Your Financial Model can save lives!
The Demand for Financial Modeling Skills Reaches new Heights
Data Analytics / Big Data is not Financial Modeling
Do You Model Off against the Masters of Financial Modelling?
Virtual CFO the Good, Bad and the Ugly
Lance Rubin is the Founder of Model Citizn, co-founder of EXL Cloud and an approved training provider for the Financial Modeling Institute.
Lance has more than 20 years of combined experience working in model audit, investment banking, corporate finance, finance business partner and Fintech CFO.
Lance also recently launched a fintech SAAS solution called EXL Cloud, which brings world-class reports, dashboards and models to everyone in a low-code manner in a tool everyone loves. Keep Excel, leverage the cloud.
Organisations he has worked with include PwC, KPMG, National Australia Bank, Investec Bank and a number of fintech startups including Banjo.
We have a YouTube channel dedicated to the Future of Financial Modeling and also provide access to Models via Eloquens with thousands of viewers and downloads.