In a volatile world where the financial landscape is forever changing, understanding your company’s financial situation to make informed decisions has never been more critical.
Navigating through uncertainty with the utmost confidence is a distinguishing factor between those who thrive and triumph and those who stagnate and stumble.
As a financial modeller, you have a huge role to play in ensuring your company makes pertinent decisions to propel it to greater heights.
Whether you’re a new kid on the block or have racked up a few years of financial modelling experience, let’s look at the three foundational pillars for you to make headway in the field.
Build a strong foundation in finance and accounting
Before diving into financial modelling, it’s best to have a solid grasp of core financial literacy skills so you’re up to scratch with the concepts and terminology used.
Get familiar with key terms like revenue, expenses, assets, liabilities, and equity. A solid understanding of these will make financial modelling principles come a lot more naturally.
It’s also worth getting to grips with balance sheets, income statements, and cash flow statements. Learning how these are prepared, what they are composed of, and the relationships between them is vital for extracting relevant data and analysing them accurately.
Learn actively, not passively. Ensure you apply your knowledge to case studies based on real-world examples. Analyse financial statements of publicly traded companies, conduct valuation exercises and try building financial models to forecast future performance.
Continuous learning and development
When you stand still, others overtake you, so paramount to your success is a willingness to stay ahead of the curve with the latest financial modelling developments.
Becoming a great modeller is not about having a narrow focus. You need to explore broader areas, such as data analysis and programming, so you’re equipped with the versatility to take on challenges.
Many in-person and online events take place all the time, and these are worth considering. You can find upcoming ones on Meetup.
Microsoft MVP Danielle Stein Fairhurst is jetting across from Australia to London this month to deliver two days of financial modelling mastery. The event will be hosted at the iconic Dominion Theatre. If you’re interested, head to the In-Person Courses page to book your place!
Furthermore, take advantage of the power social media brings, especially professional platforms like LinkedIn, which is the perfect place to connect with a diverse range of financial modellers, young and old.
And don’t forget to hone your Excel skills, either! After all, that is the tool you’ll likely use a lot for financial modelling. It’s very common for people to overestimate their Excel ability, but learning the ins and out will ultimately lead you to build more efficient and robust financial models.
Obtain accreditation to become credible
You don't have to look far to find places that offer financial modelling certifications. These are a good start, but to truly increase your credibility and make yourself stand out from the crowd in a competitive job market, consider becoming accredited.
Financial Modeling Institute (FMI) is the only financial modelling accreditation body in the world that exists to create and uphold standards in the field. It offers a pathway to becoming an accredited financial modeller through its four-stage track.
FMI Foundations in Financial Modeling
If you’re a newbie, learn about the key financial modelling concepts and best practices, including how to optimise model design and flow. You’ll also cover financial statements and how to build model schedules, such as revenues, costs, and fixed assets.
Upon completing the learning material within around 15 hours, there’s a proctored one-hour multiple-choice exam to complete. This will show you’ve absorbed the material.
While this isn’t accreditation itself, it will get the ball rolling on your financial modelling journey and equip you with the fundamentals to leap towards the next stage. You’ll also receive a digital badge to show off!
Use code GES10 at checkout to get 10% OFF. Sign up here.
Level 1: Advanced Financial Modeler (AFM)
Building on the foundations, you’ll gain exposure to more challenging material to prepare you for a rigorous exam.
This will require you to create a 3-statement model from scratch using Excel within a four-hour period.
Successfully passing the exam will award you with the highly acclaimed AFM accreditation.
Use code GES15 at checkout to get 15% OFF. Sign up here.
Other options
Level 2: Chartered Financial Modeler (CFM) and Level 3: Master Financial Modeler (MFM) are the two more advanced offerings, with the former requiring AFM as an entry prerequisite and the latter being application-only.
To find out more information about all these, go to https://fminstitute.com.
Hopefully, you now have an idea of what it takes to become an accredited financial modeller. The benefits are vast, whether you’re chasing that promotion or forging a new career.
Consider all the points discussed, and good luck on your financial modelling journey!
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