Episode 16: Dave Hallwood, Giles Male, and Rafaël Le Saux Explore Being a Better Financial Modeler and Financial Modeling Certifications
Show Notes
Welcome to Financial Modeler's Corner (FMC) where we discuss the art and science of financial modeling with your host Paul Barnhurst, The FPandA Guy . Financial Modeler's Corner is sponsored by Financial Modeling Institute (FMI) the most respected accreditations in Financial Modeling globally.
In this LinkedIn Live, Paul Barnhurst is joined by three amazing Modelers, Dave Hallwood, Giles Male and Rafa ë l Le Saux.
David Hallwood FCCA is the Group Finance Director at Aldrich Group Ltd . He is a Chartered Certified Accountant, Commercially minded with a background in Accounting and Business in SMEs
Dave took the AFM last year and the CFM this year.
Giles Male is a co-founder of Full Stack Modeller - an award-winning training program and community for Modelers at every level, with an opportunity to gain Full Stack Modeler accreditation. He will also be taking on a limited number of coaching clients in 2024. Giles took his AFM 2 years ago and is awaiting the result of CFM.
Rafaël Le Saux, CFA, CAIA, CFM, ABV, FMVA is a Director and Valuation & Modeling Advisory Lead at PwC Luxembourg / LVPA Board Member. He is passionate about Valuation and Modeling disciplines and has piloted his professional path toward amassing sufficient knowledge to support clients in solving complex valuation problems across different asset classes, industries, and geographies.
Listen to this episode as the guests talk about:
Their experiences in Modeling.
The value of Financial Modeling Accreditation.
How to improve your Financial Modeling skills
Their position on controversial modeling issues, including circular references, dynamic arrays, modeling standards, AI in modeling, and more.
Quotes:
“this job is about people, it's about talking to people, it's about giving them information instead of data”
“One of the really good things about FMI is if you have got both AFM and CFM on your CV, that’s the level of credibility that reflects what you are doing.”
"Simple is hard, complex is easy"
Sign up for the Advanced Financial Modeler Accreditation or FMI Fundamentals Today and receive 15% off by using the special show code ‘Podcast’.
Visit www.fminstitute.com/podcast and use code Podcast to save 15% when you register.
Go to https://earmarkcpe.com, download the app, take the quiz, and you can receive CPE credit.
Follow David Hallwood FCCA
Follow Giles Male
Follow Rafaël Le Saux, CFA, CAIA, CFM, ABV, FMVA
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In today’s episode:
(00:22) Intro;
(00:46) Background of the guests - Dave, Giles, Raphaël;
(02:36) How did they become interested in building Financial Models?;
(06:40) Rapid Fire;
(14:55) What led these guys to take the FMI?;
(21:45) Why are they a fan of Financial Modeling World Cup?;
(23:36) How FMI helped them professionally?;
(24:45 - 25:30) Validate your Financial Modeling Skills with FMI’s Accreditation Program (ad);
(27:18) What makes FMI unique?;
(37:36) When must someone take AFM and CFM?;
(41:03) FMI as a part of regular Graduation;
(46:08) Advice on being a better Financial Modeler;
(49:26) Connect with Dave, Giles and Raphaël;
(50:40) Outro
Transcript
Host: Paul Barnhurst
Welcome to Financial Modeler’s Corner, where we discuss the art and science of financial modeling with your host Paul Barnhurst. Financial Modeler’s Corner is sponsored by Financial Modeling Institute.
Thank you everyone for joining us. My name is Paul Barnherhurst, I'm the host for this event and the host of the podcast Financial Modeler’s Corner. In this episode, we have with us three amazing modelers and we're going to talk a little bit about their experiences in modeling. We're going to ask them some fun questions, and then we're also going to talk about the FMI certification program, which all three have taken at least level one, and I believe a couple of them have taken level two.
So why don't we get started with introducing our guests we have with us today.
Dave, if you'd just like to tell us a little bit about yourself, that'd be great. We'll start there!
Guest: David Hallwood
Hi, mate! My name is Dave. I'm a chartered certified accountant with ACCA and I work for a small business in the UK. We're a clothing retailer and we have our own menswear brand, and I took the AFM last year and I took the CFM this year, currently pending a result.
Host: Paul Barnhurst
Got it! Thanks, Dave. Giles, why don't you just tell us a little bit about yourself and what you're doing?
Guest: Giles Male
Sure, so I'm co-founder of Full Stack Modeller, which is a training company. We try and get people as good as they can be at Excel and modeling and data viz and analytics and yeah, I'm a lifelong modeler. Similar to Dave, I think I took AFM maybe two years ago, and I am awaiting my CFM results with bated breath.
Host: Paul Barnhurst
Well, good luck for both Dave and Giles on that second test. Why don't we go over to Rafaël now?
Guest: Rafaël Le Saux
Hello, Paul! Hello, everyone! So, my name is Rafaël Le Saux, I'm a director at PwC Luxembourg, I'm in charge of valuation and modeling advisory services locally. I took the CFM test, I think, two and a half years ago. The AFM, I took it on the first generation, so I think it was October or November 2017. So, yeah, that's a bit about me. I'm based in Luxembourg, but I'm originally from Chile.
Host: Paul Barnhurst
Thank you! And fortunately, he didn't tell us he was still waiting his results or I'd really be worried. All right, well, I appreciate all three of you letting us know a little bit about yourself and just the audience, if you guys have questions throughout this, please feel free to add your questions to the comments and we'll cover them as we can throughout the episode, we want this to be as interactive as we can.
So the next question I'd like to ask each of you, and maybe we'll start with Giles on this one, is how did you become interested in financial modeling and just building financial models? How did that come about?
Guest: Giles Male
I got really lucky. So I actually got a role as a modeler in my placement year from Uni. I was the guinea pig at a company in the UK that was probably doing it for cost reasons, to see if they could get some cheap labor with a student. But it was a test case. Could a student handle the stresses of modeling in a sort of bid environment? Luckily, it was sort of sink or swim, and I managed to swim and I went back into that role after Uni, and I just loved it. I always gravitated towards problem-solving and being that Excel person, really more so than worrying about becoming a manager or a director and things like that. And I've never really looked back.
Host: Paul Barnhurst
So what is it you loved about it? You mentioned Excel, problem-solving, but what was it about modeling in particular that you loved?
Guest: Giles Male
I think it was just the fact that it was a test of your own ability, you had to use your brain in unique ways, and, yeah, I really took to excel quickly and I think, as everybody knows, probably watching this, you can never stop learning things with Excel, I probably still only know 10% of what you can do. So I just loved it. And yeah, it's hard to describe why, but that was just the thing that I felt really passionate about from the moment I stepped into the workforce.
Host: Paul Barnhurst
I mean, that's awesome that you're able to figure that out in uni and have that opportunity from day one. So, Rafaël, how about you? How did you kind of get involved in financial modeling and what interested you in that?
Guest: Rafaël Le Saux
I think the first time I knew that I started appreciating Excel was the first time I saw a professor of mine showing us in our project evolution course, a data table, a sensitivity table, and when you see how powerful this tool can be, I mean, you start saying, well, suddenly there are many things that they can do around this. Early in my career, I worked at another big firm with a shorter name for almost ten years, always in the valuation and modeling department, and coming from Chile, I was working a lot with mining projects, with infrastructure projects, power energy projects, and it came to me, the importance of the models for all the evaluation of all these types of projects was very high. And that's where I started paying attention more to the models, and I started seeing models that were better than others. I promised myself that I’ll be able to produce models of very high quality, to be able to provide insightful conclusions for our clients. Since that point, I think I've tried to learn more and more about modeling, and that would take me to FMI eventually.
Host: Paul Barnhurst
Great, I appreciate that, and thank you for sharing that. So we're going to go to you next, Dave.
Guest: David Hallwood
Okay, yeah, so one of the really great things about the organization I work for is that it's constantly changing. We've got new stores opening, we've got acquisitions going on, we've got disposals going on. And so more and more of my work over the last sort of five years has been more and more future-looking, looking at different scenarios of we could open this store, we could open that store, and less and less about management, account preparation, and looking into the past, which is what my main qualification was around, which is why I started looking more and more into modeling and actually found that's a really interesting part of my role. It's one of the more exciting things. And so, yeah, that's how I came to get really stuck in.
Host: Paul Barnhurst
And you found you really enjoyed it, it sounds like, so that's great.
Guest: David Hallwood
Yeah, it's great fun trying to build in as many sensible variables as you can without ending up with a really complicated model.
Host: Paul Barnhurst
Yeah, that's always the challenge, the simplicity versus complexity. As I always like to say, try to keep it as simple as you can because the partners you're working with will make it complex, whether you want it to be or not, before you're done. And I see some smiles there. I think everybody can relate to that one.
Guest: Giles Male
I like that, that’s good.
Guest: David Hallwood
Yeah!
Host: Paul Barnhurst
All right, so what we're going to do now, before we jump into talking a little bit about the certification and FMI, we're going to change the order up a little bit on this one and ask you guys the “Rapid-Fire” questions we ask in our episodes. And what I'm going to do is I'm going to ask one of you all the questions, then I'll ask the next, then I'll ask the last person and I'll give you the opportunity to pick one that you want to elaborate on. So this is a fun section because one you have to pick an answer. I don't want you to say “It depends”. I get you could probably say it depends to every single one of these. I want you to, based on your experience, if you had to pick one or the other, which would you pick. We'll go through all of them, you'll get about 10 seconds to answer each question, then I'll go to the next person, we'll run through them, and as I'm going through them, the audience, if you want to answer, feel free to throw what your answer would be to each of these. We always love to hear different opinions. We just had someone mention they're coming in from London in the UK, so great, happy to have you.
So, Dave, why don't we start with you on these “Rapid-Fire” questions? And I'm just going to work from right to left here on my screen, we'll go from top to bottom. So in your view, Circular or no Circular references in a model?
Guest: David Hallwood
No circular references.
Host: Paul Barnhurst
VBA or no VBA.
Guest: David Hallwood
A small amount of VBA.
Host: Paul Barnhurst
Horizontal or vertical model?
Guest: David Hallwood
Vertical works for me.
Host: Paul Barnhurst
Dynamic arrays in your model, yes or no?
Guest: David Hallwood
Yes, but don't overdo it.
Host: Paul Barnhurst
Okay. Workbook links, yes or no? External workbook links.
Guest: David Hallwood
Necessary evil in my business.
Host: Paul Barnhurst
Yeah! Haven't had anyone say, oh, I love having them!
So, Named Ranges or no Named Ranges?
Guest: David Hallwood
No named ranges.
Host: Paul Barnhurst
Okay. Do you follow a formal standard like fast or smart or one of those that's out there for your modeling?
Guest: David Hallwood
No.
Host: Paul Barnhurst
Will Excel ever die?
Guest: David Hallwood
No.
Host: Paul Barnhurst
Will AI build the models for us in the future?
Guest: David Hallwood
Yes. Already happening.
Host: Paul Barnhurst
What is your lookup function of choice? Vlookup, Index match, Xlookup, or Choose?
Guest: David Hallwood
Index and X match.
Host: Paul Barnhurst
All right, there we go. You had to throw in that X match. Should we use sheet cell protection in our models?
Guest: David Hallwood
Yes.
Host: Paul Barnhurst
Okay. And the last one- do you believe financial models are the number one corporate decision-making tool? If no, what do you think it is?
Guest: David Hallwood
Yes.
Host: Paul Barnhurst
All right, great. So we're going to run through that with Giles here next. Circular or no circular references?
Guest: Giles Male
Before we do that, can I just say, I listened to all of your podcast episodes and I enjoyed hearing everyone else squirm under these. And all I want to say now is “It depends” to every answer, but I'm going to play the game.
Host: Paul Barnhurst
That's the whole goal, to make you squirm.
Guest: Giles Male
Exactly, yeah! So no circular references!
Host: Paul Barnhurst
VBA or no VBA?
Guest: Giles Male
No VBA.
Host: Paul Barnhurst
Horizontal or vertical?
Guest: Giles Male
Horizontal.
Host: Paul Barnhurst
External workbook links, yes or no?
Guest: Giles Male
No.
Host: Paul Barnhurst
Dynamic arrays, yes or no?
Guest: Giles Male
Yes, but that's the one I want to come back to.
Host: Paul Barnhurst
All right, we'll give you all a chance to come back when we're done here. Named Ranges versus no Named Ranges.
Guest: Giles Male
If it's black or white, they're there or not, then yes, Named Ranges.
Host: Paul Barnhurst
Okay. Formal standards, do you follow them? Yes or no?
Guest: Giles Male
Yes.
Host: Paul Barnhurst
All right. Will Excel ever die?
Guest: Giles Male
Everything dies, I just need it to not die before me because I don't have a backup career.
Host: Paul Barnhurst
Will AI build the models for us in the future?
Guest: Giles Male
Absolutely.
Host: Paul Barnhurst
So what is your lookup function of choice?
Guest: Giles Male
Xlookup.
Host: Paul Barnhurst
All right. You and I are on the same page there.
Okay, so should we use sheet cell protection in our models?
Guest: Giles Male
Yes.
Host: Paul Barnhurst
All right. And do you believe financial models are the number one corporate decision-making tool? Yes or no?
Guest: Giles Male
I think people are the number one tool, but spreadsheets are the best supporting tool for them, so no.
Host: Paul Barnhurst
All right, so we'll come back to you. I know you want to elaborate on one, we'll come back to you once we've gone through all these. So, Rafaël, are you ready?
Guest: Rafaël Le Saux
Certainly, yeah.
Host: Paul Barnhurst
All right! Circular or no circular references?
Guest: Rafaël Le Saux
No circular reference.
Host: Paul Barnhurst
All right. VBA or no VBA?
Guest: Rafaël Le Saux
No VBA.
Host: Paul Barnhurst
Horizontal or vertical?
Guest: Rafaël Le Saux
Vertical for me.
Host: Paul Barnhurst
Dynamic arrays? Yes or no?
Guest: Rafaël Le Saux
Yes.
Host: Paul Barnhurst
Okay. External workbook links, yes or no?
Guest: Rafaël Le Saux
Certainly not.
Host: Paul Barnhurst
Named ranges or no Named ranges?
Guest: Rafaël Le Saux
No named ranges.
Host: Paul Barnhurst
Do you follow a formal standards for your models?
Guest: Rafaël Le Saux
PDC has a global financial modeling guidelines, so I would say yes.
Host: Paul Barnhurst
So you follow theirs versus the other ones out there. Makes sense.
Will Excel ever die?
Guest: Rafaël Le Saux
It will.
Host: Paul Barnhurst
All right.
Guest: Rafaël Le Saux
It will take some time, but yes.
Host: Paul Barnhurst
Yeah, I think everybody who says yes at least says it will take some time.
Host: Paul Barnhurst
Will AI build the models for us?
Guest: Rafaël Le Saux
Yes, certainly.
Host: Paul Barnhurst
Okay. What is your lookup function of choice?
Guest: Rafaël Le Saux
Index match, followed by Xlookup.
Host: Paul Barnhurst
And should we use sheet cell protection in our models?
Guest: Rafaël Le Saux
I would say no.
Host: Paul Barnhurst
Fair enough! And do you believe financial models are the number one corporate decision-making tool?
Guest: Rafaël Le Saux
They are one of the important ones. I don't know if the number one, but I think that many decisions are not taken based on models. And they should.
Host: Paul Barnhurst
Yeah, I think there's a lot of times they probably should be used that they're not. All right, so why don't we, Raphael, we'll give you, since you got the last one to go, we'll give you a first opportunity to elaborate, if there's any of those that you want to elaborate on your answer? We'll give you a minute here to elaborate on it. You can pick one.
Guest: Rafaël Le Saux
Okay. I mean, I think that I could go with “Will Excel ever die?” That one, I think it's a tricky question. I think that eventually, we'll see that there are many other software that are competing with it in terms of functionality. We can find other software that can be better. However, I think that it's very difficult to replace something that's universally accepted. For the same reason that invaluation were stuck with some methodology that have been demonstrated not to be valid ones or the most relevant ones, but we still use them because everyone is accepting them. And to a very high extent, the same happens with Excel. You will not build a financial model in Python if it needs to be reviewed by your auditors, by your stakeholders that do not know how to review this using other software.
Host: Paul Barnhurst
Great points!
All right, Giles, I know you had you one you wanted to elaborate on.
Guest: Giles Male
Yeah, Dynamic arrays. So, I mean, if I were doing client work nowadays, which I'm not really doing any of, I'd still be quite hesitant to throw in things like dynamic arrays and the newer stuff. But I 100% believe that's where financial modeling is going to end up. I heard some feedback from the collegiate challenge, I think that might have been from you, Paul. Everybody was using Dynamic arrays there already, so without a doubt, I think the future of modeling is going to be Dynamic array-based. Let Lambda we'll see, but certainly based on Dynamic arrays.
Host: Paul Barnhurst
Great! I appreciate that, and I tend to agree with you on that one, Giles. I think you are similar on that.
Dave, which is the one you'd like to elaborate on?
Guest: David Hallwood
Yeah, I'm going to elaborate a little bit on workbook links and why I said that they're a necessary evil.
Host: Paul Barnhurst
I figured you would.
Guest: David Hallwood
The people who say absolutely not are the people who don't have to deal with what I have to deal with. So we have to combine several kinds of SBUs worth of historical data to get rolling models going, and they come from different people. Because we're a small business, we don't have an enormous database we can connect Excel to. We don't have some tens of thousands of pounds ERM systems you can just pull the data out in a single report. So, unfortunately, it is a necessary evil. Obviously, the reason I say evil is because people preparing the source data that you're trying to refer to, move lines, they add rows, they add columns, they change headings, and you can get around that a little bit if you're clever with your formulas and you have Index and Matching going on all the time, but that really slows down your model.
So, our golden rule is, before you give this model to anybody else, you must break every single link. So the links only exist to bring in the source data, then you break the links before you let anybody else touch the model, if you're giving it to other users.
Host: Paul Barnhurst
All right, appreciate the explanation there, each adding a little bit. We're going to move past that section and just talk a little bit about the FMI, I know each of you decided to invest in taking the certification. And so where I'd love to start is just, why did you guys decide to take it? And on this one, we'll start with you, Rafaël, what led you to decide to take the FMI?
Guest: Rafaël Le Saux
I screen CVS from time to time, because we need to recruit people, and I don't think I ever seen a CV lately that doesn't say that they have advanced Excel. And if everyone has advanced Excel, how do we differentiate one from another? So I think that, for me, I knew that I wanted to be able to put in my CV at some point, that I was proficient in working with complex models, and when I learned about the FMI the first time, said, look, this is certainly something that is going in the right direction. So that's why I did not hesitate to sign up at all on the first generation of the FMI, and I think it was a good decision. That was part of the motivation to be able to show that there were differentiating features in this certification.
Host: Paul Barnhurst
It makes a lot of sense, right? Because anyone can say they're good at financial modeling in a CV, but showing some certification or training or something beyond that, that really validates it, right? If I'm an accountant, I show my CPA, people know I've hit a certain level. If you get your MBA, whatever it may be, there are different things you can do to help validate that, beyond, yes, I'm advanced in Excel, whatever that means, right? Or I'm an advanced financial modeler, whatever that means, because everybody has a different idea of what that means.
So, Dave, how about you? What led you to take the FMI?
Guest: David Hallwood
Well, as I said, a lot more of my work was getting more and more forward-looking, and I was finding, actually, I didn't really have the skills, particularly around modeling a balance sheet, cash flow, and P&L, you kind of do that all the time, but modeling a balance sheet and some of the working cap requirements, I just didn't really have enough knowledge. And the chance came up with ACCA to take part in the first kind of group cohort. They did a strategic partnership with FMI, so it came up as part of ACCA's kind of feed of CPD that's available. So I took part in that. It was the first one. I think they've done at least one more, and they're carrying on into the future.
So if anyone from ACCA is listening in, the next cohort with them enrolls in early 2024, and you can study with people from the same organization, so you're all accountants, none of these FP&A guys.
Host: Paul Barnhurst
Hey, I'm offended by that part. I saw that little scheme!
Guest: David Hallwood
Yeah! So the chance came up and it was really, really good, I really enjoyed it, and that's why I went on to do CFM, because I thought, actually, do you know what? I'm really enjoying learning all this stuff.
Host: Paul Barnhurst
Great. Thank you! Giles, what about yourself?
Guest: Giles Male
It was easy for me. So I had members of my own community at Full Stack coming to me and saying they'd passed it, or they were taking it and asking me questions. And I just hated that, I couldn't give them anything. I couldn't say, like, yeah, make sure you do this, or, these bits are tricky. So I felt a kind of growing sense of motivation to get through both levels, really, so that I could start interacting with my own members.
Host: Paul Barnhurst
And that kind of answers a little bit of my next question. I know you run full stack modeler, you're training a lot of people on modeling, and so I was kind of wondering why you decided to take it, because it felt like, okay, it's not something you need to be on your CV if you're training people every day, all day on modeling. So it sounds like it was really a motivation to be able to have those conversations and help your own students. Is that what I'm hearing?
Guest: Giles Male
It's part of it, but I'll probably say there's still like a credibility thing, even for me. So, yeah, I train people and I'll do some webinars on modeling, but I think you could still be somebody that does webinars for 40 minutes and takes a few structured questions. But does that mean that I'm really good at modeling? Do I actually know what to do if I'm under pressure? And I think one of the really good things about FMI is if you've got AFM or both AFM and CFM on your CV, that is a level of credibility that says you know what you're doing. And I do think if you were a hiring manager who knew about modeling and you had two people and one person had maybe slightly more experience, but the other had AFM and CFM on their CV, I think you would choose the person with AFM and CFM, or I would if I was hiring.
Host: Paul Barnhurst
Great, I appreciate that, and I'm curious, before we get to your answer, Rafaël, for 1 second, you said you do some hiring. Are you starting to see people have that on their CV, like, are you seeing that periodically where people may say AFM or CFM or not really yet?
Guest: Rafaël Le Saux
Not really. I've seen a couple and I think there are other tools now that have become more and more present. But yeah, I think that now there is more ways to justify that there is a certain level of competence. For me, the gold standard is still FMI, but we see others that are more basic, that are showing their CVs and that help us to differentiate the knowledge.
Host: Paul Barnhurst
I like how you said the gold standard is FMI. I think the fact that, you know, you see a lot of certifications where all you do is memorize. I mean, I think historically, a lot of the CFA, if anyone's taken that, I took level one. I felt like I spent forever memorizing formulas, and that doesn't necessarily test that you know, how to do it in the real world. And I think that's one of the things I like most about FMI is it's an experiential experience. You're really building a model very similar to something you may see in work. Of course, is it the exact same? No, but there are a lot of similarities, and I think that adds a level of credibility to something is to go, hey, I know they've been doing actual work, they've had it not just memorize something and guess on a multiple choice test and hope they passed.
Any thoughts to that, Dave? Curious about your thoughts on that.
Guest: David Hallwood
I was just thinking, I don't really hire many people. Well, not in finance anyway, so I wouldn't have seen it going around, but being part of the community with FMI and also with ACCA, I can see that Ian is here, there, and everywhere, all over the world, rolling this out with more and more people. So, although I don't think it's enormous yet, I think it will be. It's very quickly becoming the known standard for people who know what they're looking for, and so I can see it in the very near future.
Host: Paul Barnhurst
Yeah, no, definitely. I know they've made a lot of strides in those partnerships. I believe, if I'm not incorrect, Giles, don't you include that in part of your package, that people can take the FMI? Isn't there a kind of partnership there?
Guest: Giles Male
Yeah, we've got a bundle that I'm very proud of because it's Full Stack Modeler, FMI, Maven Analytics, and a season pass with the World Cup team. So we try at Full Stack to lean into what FMI does a lot. I personally love it. I tell all of our members, and bear in mind our Full Stack members are doing a three-stage kind of accreditation program with us, and I tell all of them, you should be going and getting FMI on your CV, when they get into our modeling stage.
Host: Paul Barnhurst
Great. And so real quick, we're going to just switch gears here for 1 second. You also mentioned they get a season pass for Financial Modeling World Cup. So those who are listening, who don't know, this will be released a couple of weeks from now, ut at the time we're recording this, last week was the Financial Model World Cup and they had all the champions, and I know, Giles, you've competed in the different stages, and why are you a fan of that? Why do you push people to kind of do the Financial Modeling World Cup in your bundle?
Guest: Giles Male
I mean, I've competed, but I've never done particularly well because honestly, it's really humbling taking part in those competitions. I think it's very unique. And again, if you think of how unique FMI is, I think the World Cup is really unique as well. And for almost everyone that's looking at it, And I've spoken to lots of people who've kind of thought about entering, but then thought, this looks horrible, I don't want to feel stupid, I don't want to look stupid, firstly, you could anonymize your name so you don't ever have to look stupid to anyone else, but also just accept you're going to do badly at it, probably for a long time, but every time you compete, you learn something. I got completely stuck on using Indirect, which I've used a million times, but under pressure, with 30 minutes, my brain just melted and that was it. But I'll never get that wrong again, I can promise you.
Host: Paul Barnhurst
I can confirm you'll get better. My second time was, I think my score was about six times my first try, so definitely I made progress.
Guest: Giles Male
Well, you were very brave because you went live publicly on your first ever attempt, which I had huge respect for.
Host: Paul Barnhurst
Yes, and then I proceeded to bomb, which I'm totally fine with. It was a good experience, but we won't talk too much about that.
So, David, I'm curious, you've spent your whole career in corporate finance. It sounds like it was really that move when you started doing more forward-looking from accounting that had you decide to take the FMI. So what I'm curious is how has it really helped you in your work? Have you seen it kind of help you day to day doing a better job in modeling or what are some of those things you've brought into the workplace from the experience?
Guest: David Hallwood
Absolutely! So first of all, we now have a really good rolling forecast. So every time we produce management data going back twelve months, we also produce a forecast fit for the board that goes forward up to 60 months. Also, a lot of the kind of work I've been involved in over the last year, there's been some insolvency work, there's been some acquisitions, there's been new store openings, there's been decisions to close stores. All of those things have needed modeling into the future, and I think I've done a better job of every single one of those areas of my job over the last twelve years than I did in the preceding twelve years because of the skills that I learned. And part of that, talking about competitions is just problem-solving and working under a reasonable amount of pressure to come up with something quickly.
Host: Paul Barnhurst
It's amazing how being under pressure changes things. Like you can do something when you're practicing on your own and you have 6 hours to figure it out, but when you got to figure it out in 30 minutes, it often changes the game.
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Host: Paul Barnhurst
So, Rafaël, I'd love to know how having both AFM and CFM, how they've helped you in your work, how they've kind of helped you in your job, and the benefits they've brought beyond just having it on your CV, but maybe if you have an example, you could share of how they've helped, you in your work.
Guest: Rafaël Le Saux
I think that's difficult to relate, but generally what you see is that, for example, we were here in Luxembourg to give you an example, around half to 80% of the work that we do is for alternative investment fund managers. Among them, the largest infrastructure funds worldwide normally have funds here, and we need to review the valuation for their assets. We need to assist them with portfolio valuation. The models that you will see that they share for us for valuation tend to be models that have, I mean, the same model that they use during the investment phase, mainly project finance models that have 5000 to 10,000 unique formulas, more than 30 tabs, and being able to have in place or to be able to work around efficiently with these models safely, because the spreadsheet risk that you have with these models can increase very quickly. The fact that you can be confidently working with these models helps you to work better and to provide better service to our clients.
Host: Paul Barnhurst
Great. And I love that last part of better service to the clients. That's something you emphasize, Dave, right? You're able to roll that package up better for the board. So at the end of the day, you really want to be better for your clients, for your end users. I think that's one of the big benefits that I hear people talking about.
So I'd like to get your thoughts. Giles, I know you know the industry well, and obviously, you provide training. So how do you kind of differentiate the FMI from the other programs out there? Like what makes it unique to you, that you included in your training?
Guest: Giles Male
I think certainly the exam approach itself is unique. And if I'm right, it reminds me of my SEMA days a little bit, but where you kind of have to study and then you've got an exam to get through. I kind of agree with everything Dave was saying earlier that I think Ian is building some amazing partnerships and I think it's only going to grow and grow. I think the level that you're tested at, at both levels, AFM and CFM has been pitched really well. So AFM, you have to do a certain amount of studying as you know you've got coming up, Paul. But if you do that and you learn the fundamentals of building a three-statement model, you will pass, because within reason, with a few tweaks, you kind of know what's going to come up. And then CFM, as I just found out in October, is a big step up. And it's hard, and I'm guessing the pass rate is a lot less than it is for AFM, but it's appropriately hard and it can be a bit frustrating because you're going to study for things that you won't get tested on. Some of the things in the topic list, I think lean really nicely on experience, so if you've got years and years of modeling experience in the real world, which I think Rafael and Dave have both talked about at times, you build up this knowledge bank of, it's almost just like ways of thinking to solve logical problems. It's like Tetris. You've got to think of things visually and then connect everything together. So I think CFM gives you a massive advantage if you've got experience. And yeah, it's appropriately difficult, it's probably what I would say.
Host: Paul Barnhurst
Great. So I'm going to share a comment here, and I think Danielle made a great point here as you were talking, Giles, and she said, ” and for anyone thinking about doing the CFM, one of the best places to train is the FMWC. But it's comforting to know that the FMWC is generally far more difficult than what you're likely to see on the CFM.”
Guest: Rafaël Le Saux
If I can comment on this, I think Danielle is being very modest because I failed the first time I took the CFM. For me, it was one of the most difficult exams I've been confronted with. I'm a CFA charter holder, but I think this CFM is a very grueling exam. You don't know what to expect when you sit for the exam because there are many different types of exercises you can get. And the second time I took the preparation course from Danielle, which was one of the only few available courses at that time, and it was very helpful for me to gain confidence and to be able to pass the exam, so I think that certainly, a financial modeling workup is a good preparation, but I think that Danielle has a very good course to prepare for the exam.
Host: Paul Barnhurst
Yeah, I've heard great stuff about her courses. I know she has some to help prepare, and she knows her modeling stuff as well. She's a great resource out there to follow on LinkedIn if you're not following her. I think everybody here and everybody in the Financial Modeling community knows she does a lot of great work in the stuff she's putting out. So, I totally agree with you, Rafaël, but let's talk a little bit more. So we've mentioned FMWC is one way to prepare. Obviously, studying for the certification is a way to get better at modeling. But maybe any other tips or things you found that have really helped you to get better at modeling? I mean, obviously there's the easy answer- practice, but kind of any other thoughts beyond that? Dave?
Guest: David Hallwood
Yeah, perhaps not preparation for AFM and CFM, but listen to your users. If they ask for a certain thing, think about either building in or communicating with them why it's not a good idea to build in. And sometimes you do have to say no. That will complicate it, or that won't actually make a big difference. Let's pick two or three things that are actually going to really impact the outcome scenarios. And let's not worry about what percentage credit card fees are going to be, because it's great to add, but it's not actually really going to change the model.
Host: Paul Barnhurst
I couldn't have said it better myself, there's something to be said for focusing on key drivers and learning to really hone in and do a good job of those, instead of trying to guess 60 different variables at an average level, because you've just complicated the model and you probably really haven't added a whole level of accuracy.
So we'll go to Giles next on this. Your thoughts, Giles?
Guest: Giles Male
Yeah, I mean, just picking up on that. I think that that's one of the things you gain as you get more years of experience, is an ability to see the materiality of things. You'll hear this being said everywhere, but building things in a simple way, models and beyond models, is a really hard skill. It takes more time quite often, to build things that are simple. So I would say that just to add to Dave's point, literally my first job, I used to go around the office, literally, I would walk around the office and I would say to everybody in different teams that I didn't know, are you struggling with anything in Excel? Sometimes it wasn't pure Financial Modeling, but I guess the point of me sharing that is, be proactive in seeking other opportunities to test yourself, to find challenges, because the more you can test yourself, you might find yourself solving problems that you solve once and ten years down the line, maybe in the CFM exam, you'll use it once ever again in your life, but you can't get enough experience. So be very proactive in finding it.
Host: Paul Barnhurst
I think that's great advice, and there's two things I'd like to comment. I love when you said simple is hard because a quote I often teach whenever I'm doing design principles or stuff around modeling or Excel, I'm like, “simple is hard, complex is easy”. It is almost always harder to really make it simple. And one of the examples I give is I can write this nasty “if” statement, nested “if” statement for something. Or I could take the time to create a helper column and do some kind of lookup, which may take me more time initially and maybe a little harder to think through, but it's much more dynamic, it updates, it's easier for people to understand. Everything about it is better. But often we default to the nested because that's quick and easy, but it's really more complex for the end user.
And the second one I really appreciated is asking people questions they have. I think forms are a great way around Excel or different things like that. Not as much as it used to be, because a lot of people now ask chatGPT and Google and all those things to answer those questions.
But we'll turn to Rafaël next on this question. Any advice there, Rafaël, from your end?
Guest: Rafaël Le Saux
Certainly, yes. I think that a critical point is to understand the questions you want to answer. That means that will help you to form your models, to understand how your models need to be structured, and also if you want to get better at modeling, whenever you want to start a model, my advice will be to unplug your computer, to take a blank sheet of paper and start drawing a map for the model and understanding how do you want your model to be structured, because this will help you to have a cleaner structure in terms of your models and understand much better the flow of information. And I think that, for me, works perfectly.
Host: Paul Barnhurst
I think that's great advice. It's like, well, they tell you to shut off your computer when you're building a presentation and jot down some of your thoughts on sticky notes. The example I often use is I compare it to building a house. If anyone's ever had a house built, you don't just hire somebody, whether they're qualified or not, as a contractor, and start building. You start with a blueprint, then you find a qualified contractor, you do an inspection at the end. There's a lot of similarities. And so I really like that, shutting it off and spending some time thinking about what that model is going to look like. I mean, I didn't do that at first. I didn't start in investment banking or somewhere where I got taught about modeling or Excel. Did my MBA start in a role where there was no training, and I built a lot of Franken models, as I call them, kind of that Frankenstein thing, and they were awful. And I kind of had to learn it all myself and I think that's why I'm such a big fan when I hear people talk about, really about thinking about design, because I got good at Excel and I could get the answer and those type of things, but I wasn't designing them well, I just hadn't thought through.
You look like you were about to add something there, Giles.
Guest: Giles Male
I was. So it's interesting, I remember years ago at a model off event in London, Ian Bennett, who, you may know, who, I think I'm going to get this wrong, I think he's at PWC, very senior. Yeah. So heads up, has managed lots of modelers there. He did a talk on modeling years and years ago, and I remember he said he gets his teams, typically, to spend 40% of their project time in the scoping phase. And that number never left my mind because it just astounded me how high it was. 40% of time in the planning phase, before you start tapping away at your functions, you're just figuring out what you're going to do and how you're going to solve the problem.
Host: Paul Barnhurst
Yeah, I could say I'm not at 40%. That's some good advice. It shows the importance of planning.
You work for PwC, Rafaël, any thoughts on tha, on that 40% number? Have you seen that kind of being?
Guest: Giles Male
I hope I've got that right, by the way, because it was nearly ten years ago, so hopefully it’s good.
Host: Paul Barnhurst
We won't hold into it!
Guest: Rafaël Le Saux
No, that sounds about right for me. I think that the scoping, how much time you need to dedicate, understand what needs to be answered, I think that's a critical phase, is like theory of cows. Every single project you have worked on starts very structured, everything is tidy and in place, and whenever you finish, things start to unfold and you start having less control of what's about to happen when you're reaching the deadline. That's why the critical part is to decide how you're going to scope, how you're going to structure the project and what's the map and the roadmap that you need to follow during the project.
Host: Paul Barnhurst
I think definitely one thing we're hearing from everybody here is spend more time upfront. Also find ways to improve your technical skills, your critical thinking. We've talked about FMWC, we've talked about taking the test, we've talked about Giles running around the office and asking people if they had a problem. Although ask them an Excel problem, don't just say problem in general, or that could be interesting.
Guest: Giles Male
Very true.
Host: Paul Barnhurst
So there's lots of ways to do that, obviously. One thing I'd like to ask each of you, if we have someone here in the audience thinking I probably should do FMI, is there a point at their career do you think it makes the most sense? Like, if someone's just getting started, would you recommend they do it right out of college after a few years of modeling? Kind of your thinking when they're starting to look for other jobs or any advice around when they should take it? And I'll get your thoughts first, Rafaël, what do you think you would kind of offer there for people?
Guest: Rafaël Le Saux
I think AFM is very suited for anyone starting their career in finance or anyone that's looking to transition more to a modeling role, corporate finance role, etcetera. CFM, I think that this is more like graduation to show that your skills have improved and that you are at the right level to execute more complex models. I don't think there is only one stage to it. If you enjoy modeling, and most of the people that end up getting into this program, the ones I know, is because they are legitimately enjoying being within a model for 4 hours or more to make it, and they are in the state of flow when they're working in excel and building different types of models.
Host: Paul Barnhurst
Giles, your thoughts on that?
Guest: Giles Male
Quite similar, I think. Yeah, I think AFM is a really good challenge, even if you're pretty early on in your career. I mean, it certainly doesn't hurt to learn how to build three-statement models as early as you can, if you're going into this sort of area of a career path. CFM, like I said, I think everybody should try and do it, to be honest. But as I said earlier, experience gives you a huge advantage. Maybe there's a little bit of a counter risk, like if you just go straight into CFM and you've not got much experience, and then that's on your CV, people might think you're more experienced than you are, but I don't know, I think you could still do it and get the experience. You've just got a much higher likelihood of passing if you've got years of real-world experience behind you.
Host: Paul Barnhurst
Dave, how about yourself?
Guest: David Hallwood
So I can obviously mainly speak from stages, I suppose being qualified or experienced as an accountant. AFM is built around a three-statement model, and you really do need to understand those three statements and how they knit together and how they interact with each other, otherwise you're going to end up with a model that doesn't balance and you'll spend a lot of time and a lot of stress trying to make it balance in the exam. So you really need to get down that path. So I would say in kind of SEMA and ACCA, there's a stage called part qualified where you've done most of the technical skills and just before you move on to the professional level stuff, which is more about corporate and strategy, that would be a great time to start looking at AFM. CFM is quite a step up, and as Giles said, real-world experience really helps. So I wouldn't rush straight into CFM if you are relatively early in your career and your qualification journey. There's plenty of time to do it a few years down the line and you'll probably find it more rewarding because you'll have better experience and you will have naturally honed your problem-solving skills before you take on CFM. I think if you do it too early, you might find it really demotivating and quite draining, and you might think, God, I'm never going to get anywhere with this because it's so hard.
Host: Paul Barnhurst
Good advice. Thank you on that. So I'll summarize what I heard there AFM early in your career. As a general rule, CFM, you want some solid experience behind you before you take it, if you decide to take it.
I want to share one comment that came in. “I'm wondering why it's not part of the regular graduation, at least the basics”. So I'll comment a little bit on this and then I'll give any of you the opportunity to add your thoughts. I know Ian is trying to work to add some programs in colleges. I think in general, college doesn't do a great job of adding modeling to the program and really learning details of modeling. They have so much they're teaching you around finance and other things. But I do know there are areas where they're trying to add it similar like you see CFA and there's some people who take it right out of undergrad and things they've done to try to incorporate that in the program. I do think universities in general should do a better job of teaching how to design a model and some of those modeling skills to help us when we come out. I'll give any of you three, if any of you want to tackle that one, just raise your hand and I'll give you the mic.
Guest: Rafaël Le Saux
I lecture at university, so I've lectured at eleven business schools so far. There is one that I've been lectured for the past six years, which is Grenoble Ecole de Management, and I think that the added value that we have as practitioners coming there is that you realize quite soon that the amount of exposure that the students, even last year students have had to working with Excel, working with financial modeling, can be limited. Some of them had it through their internships, some of them don't have much. Whenever I lecture, I try to incorporate this and I think this is partly where we can add more value as practitioners. But as you mentioned, I don't see that most schools are incorporating it systematically, even if many of them are already conscious and they're moving towards the right direction. It's not something that we see everyone doing at the moment.
Guest: Giles Male
So I'm going to have to plug my vlog now because I was in Australia with Danielle and Ricard Warner, lead from Mazars recently. So Ricard shared some really useful insights with me, and the main one that jumps out is that this whole idea of being a career financial modeler is quite a recent thing. It almost doesn't surprise me that it's not kind of embedded in all of these kind of other establishments. I get the sense we're heading in the right direction, but, yeah, I think if you went back 15 years, the idea of standards and certifications for a financial modeler's career was probably a little bit alien, or at the very least right at the start of what it's become now.
Host: Paul Barnhurst
Yeah, I would agree with you. I remember Ian on one of the shows commenting that when he started his career, it was the Wild, Wild West, right? Anything went, basically, you just figured out how to build the model, and that was a little less than 30 years ago. So I agree with you. It used to never be that financial modeling was your career and you're seeing that more.
Any thoughts on that one, Dave?
Guest: David Hallwood
Yeah, I was actually thinking along the same lines. The more people carve out a bit of a career for it, the more people will start planning to go into it. And so that will generate a little bit more demand in the education sector, I think, for getting those basics as, you know some people, they might not get the opportunity to try it, but have they done so at that stage? They might have thought, you know what? This really floats my boat and I want to do this as part of my career, and I think that's part of the journey that modeling is on as a path. It's becoming more and more important, it's becoming more and more standardized, and there's a discipline behind doing it properly. I also think some of the skills that it teaches you, presentation, planning, good structure, simple is hard, complex is easy, all of those things would be great to have in as early as possible for all aspects of your career, because a lot of what we all do is actually not about the technical side. It's about communication. This job is about people, it's about talking to people, it's about giving them information instead of data. And the sooner you learn some modeling, the better you'll get at all of those things which will make you successful, whether modeling is your full-time vocation or if, like me, it's just a chunk of your job.
Host: Paul Barnhurst
I love what you said there around the communication and the other skills that are so important. I had the opportunity to present when I was at the training last week for the Financial Modeling World Cup, and what they had me speak on is what I've learned from interviewing over 100 finance leaders, because I've done this so much. And one of the things I said and kind of joke, I realized this is going to be hearsay, but it's not about Excel, guys. It's not about your technical skills. Right? And as you're talking to people, it's really about having those conversations and the business partnering and understanding the business and being able to validate it. You need those skills to build the model, but if that's all you have, you've sold yourself short. You're not going to be able to do what the business needs. You need to know the business. As you said, Dave, you need to know how to communicate. So modeling is one of those things that helps you communicate and help people make smart decisions. But the model isn't your product in the sense of, as one person put it, he goes, the spreadsheet is not your product, the insights are. It's that process you go through to ensure you're making a smart decision.
So, we're coming near the end of our time here, so I can ask a question of each of you, and if anyone in the audience has a question, feel free to put those in the chat. But what I want to ask, if you could give our audience members, those listening, one piece of advice that would help them be a better financial modeler, what would that piece of advice be? And maybe we'll start with you on this one, Giles.
Guest: Giles Male
I've already said my one about going and being proactive. So, I think what I would say is, I think there's a roadmap of skills. There are layers that you can or steps to a journey that you can go on as a modeler. Clearly in Excel at the moment, there's lots of new stuff coming out, lots of flashy things. I would say, don't get too sidetracked by the new flashy stuff if you're right at the start of your journey. So if you still struggle with some of the fundamentals of logical problems, boolean logic, flags, factors, tables, power query, all of this stuff, don't get sidetracked because you're seeing everybody using Lambda and Dynamic arrays. Just stick on your path and build the fundamentals as best you can. It's the whole thing like with driving a Tesla or having a fully automated car. I still think we should hold on to the skill of being able to manually do all of these fundamentals ourselves, even if the world is going to change in the next sort of 5-10 years.
Host: Paul Barnhurst
Sure. Even if AI is going to build the model for us, we still need to know how to build it. Just like math, we still need to know how to do certain things in math, even if we can pick up a calculator. There's value in understanding the underlying principles that drive whatever you're trying to learn.
We'll go to you next. Dave, any thoughts there?
Guest: David Hallwood
Yeah, not so much advice, but a tip I've given in response to people asking me, how are you so quick at Excel? Press Ctrl F1. Do you know what that does?
Host: Paul Barnhurst
Go ahead and tell us.
Guest: Giles Male
Ctrl F1- hide your ribbon. Hide your ribbon, force yourself to learn the keyboard shortcuts. Everything in the ribbon can be hit with Alt. If you hide the ribbon and force yourself to learn keyboard shortcuts, before you know it, you'll be working twice as fast in Excel, and that gives you more time for thinking.
Host: Paul Barnhurst
Great. So we got the keyboard shortcuts. Always a great one. Rafaël!
Guest: Rafaël Le Saux
I like the shortcuts. I have another one to add. I think that embrace the fact that more than half of your time modeling will be about formatting and painting, which is cruel to think about. But we are visual animals. It's very important how the models look. I mean, I'm not able to trust a model that's not properly formatted. This is a very difficult part, because that means that you need to spend a lot of time formatting. Just choose a good podcast, like the Financial Modeler’s Corner podcast or any other, or good music, and play it in your headphones and start painting around BCC, because that will be half of your modeling life. But enjoy it, because that will create models that will be aesthetically pleasing and functional, but also the mod, I mean, what I say to some of my students is that “the day you will die, your models will still be here, your legacy in this world”. So you don't want people to think that you were building crappy or poorly looking models.
Host: Paul Barnhurst
I love it. Don't want garbage in, garbage out, or models that are just ugly to look at, even if they're well designed, because you have your management looking at them and you want to make it look good for them.
So, you know, we're pretty much at the end of our time, but we're going to move to the last question here. The audience wants to learn more about you or get in touch with you. What would be the best way for them to do that? And Rafaël, we’ll start with you on this question.
Guest: Rafaël Le Saux
LinkedIn, that's the best way to reach out to me. I'm very active also in the local Valuation Association of Luxembourg. For those who don't know where Luxembourg is, this is between Belgium, Germany, and France is the second country in terms of investment funds that are established worldwide, and we have a very healthy, growing environment of alternative investments and many opportunities for talented modelers and finance professionals.
Host: Paul Barnhurst
Great. Thank you, Rafael!
Dave?
Guest: David Hallwood
Yeah, probably easiest to find me on LinkedIn if you don't know me already. And once you've joined the FMI, I'll see you on the FMI platform. I'm always on there interacting with people.
Host: Paul Barnhurst
Great. And how about yourself, Giles?
Guest: Giles Male
I'm going to take a second opportunity to plug my vlog that I haven't released yet because I'm also learning that it's very hard to actually produce a vlog. LinkedIn's the easy one, but I'm coming out with a vlog called Excel on the Road. I've just come back from Australia interviewing Danielle, who's in the audience, and Ricard but you will get updates if you just follow me on LinkedIn.
Host: Paul Barnhurst
Well, thank you, each of you, for joining us today. And I want to thank the audience for listening. If it wasn't for you, we wouldn't have this show. And just a reminder, the show is sponsored by the Financial Modeling Institute. If you're interested in doing the accreditations, if you go to their website, you use the code PODCAST, you can save 15%. And more important than that is just take the time to continue to invest in yourself, to become a better financial modeler. All three of our guests here have invested in themselves. That's the number one thing I'll say, is they've spent many hours learning and honing their craft, and that's really how you become better at financial modeling.
So again, thank you for joining us, and we've really enjoyed this hour with each of you and look forward to releasing this episode, so thank you everyone!
Financial Modeler's Corner was brought to you by Financial Modeling Institute. Visit FMI at www.fminstitute.com/podcast and use code PODCAST to save 15% when you enroll in one of their accreditations today.