Shaping Business Strategy: Ian Bennett's Insights on What Makes for a Great Financial Modeler

Written By Ankita Ghosh

Show Notes

Welcome to the Financial Modeler's Corner (FMC), where we discuss the art and science of financial modeling with your host Paul Barnhurst. Financial Modeler's Corner is sponsored by the Financial Modeling Institute (FMI), the most respected accreditation in Financial Modeling globally.

In this episode, Paul is joined by Ian Bennett, Partner, Deals Modelling team at PwC, Australia. 

With over 20 years of experience as a professional financial modeler, Ian has constructed and assessed models critical for major transactions, infrastructure projects, and routine forecasting and reporting. Today Ian leads the deal modeling practice for Pwc Australia.

In addition to being a world class Modeller Ian is incredibly dedicated to diversity, inclusion, and wellbeing (DI&W). This has propelled him through various positions within PwC and beyond. As a proud LGBTIQ+ ally, he serves on the Steering Committee of Shine@PwC, the firm's LGBTIQ+ employee network, and currently holds the role of wellbeing lead for the Financial Advisory business.

In this episode, expect to learn:

  • Why understanding the stakeholders involved in a project is vital

  • Why it's essential to listen actively to clients, understand their needs, and ask the right questions

  • How to analyze the success and effectiveness of the financial modeling process

  • What are the tools and technologies available in the market

  • What are the new technologies and methodologies for financial modelers to stay effective and successful in their roles

Quotes:  

“You need a desire to understand the power of the things you have in front of you and not be scared.” 

“Every model tells a story, and that story is known at the start of the project, and the questions that the model will be able to answer.” 

“Models are built for a single primary purpose at the time that they are conceived”   

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.  

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In today’s episode:  

(00:20) Introduction;

(01:10) Problem that bettered Ian;

(03:00) Ian’s insights on financial models;

(05:18) Ian’s story;

(07:13) What is MFM and why did Ian pursue it?

(08:35) Ian’s experience in the Global Excel Summit;

(10:49) Why Ian is passionate about financial modeling;

(11:52) Ian’s favorite industry that he likes to model;

(13:13) What makes a good financial modeler?

(16:49) Things beyond the model that help in a project;

(22:05) Approach and methodology;

(27:00) Tools beyond Excel;

(34:40) Technical nugget when building new models;

(36:50) Rapid fire;

(39:08) Ian’s favorite function;

(45:00) Ian’s advice to become a better financial modeler;

(45:36) Wrap up;


Full Show 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.

Host: Paul Barnhurst

Welcome to Financial Modeler's Corner. I am your host, Paul Barnhurst. This is a podcast where we talk all about the art and science of financial modeling, with distinguished guests from around the globe. The Financial Modeler's Corner podcast is brought to you by Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling. I'm thrilled to welcome our guest to the show this week. This week we have here with us on the Financial Modeler's Corner Ian Bennett. Ian, welcome to the show.

Guest: Ian Bennett

Hi Paul, it really is great to be here.

Host: Paul Barnhurst

Yeah, really excited to have you. So we're going to start off with our first question, ee ask every guest. And I'm guessing you already know what this one is, because I know you've listened to some episodes. Tell me about the worst model you've seen. I'm sure you have a horror story from your career.

Guest: Ian Bennett

So there are many. And I'm tempted just to talk about the one I saw yesterday when a client was demonstrating a challenge they were having, and it broke every one of the best practices. And I had to let them know that was the case. But I think that was probably well understood by them already. But actually, I'll go back maybe ten years to a model, which I was introduced to because it was being relied upon by quite a lot of large organization for valuation and such like, and it was really struggling and they were really struggling. It was an extremely large model. I think it was 40 to 50MB, took about ten minutes to open on a normal laptop. We ran our tools over it. It took over a day to get all of the analysis. It had had many, many owners, and each of them had left their fingerprints, their footprints, their personality in the model. And at that point, it had become a bit of a, I think, a Frankenstein, if I've got that metaphor right, of all the different people that had used it and the different things that had been built for, it was relied upon very heavily. But no one person really fully understood how it worked or could trace through. And trying to give people confidence that it worked was extremely hard. And in fact, I think we predicted that the cost of doing a full integrity audit would have been double the cost of rebuilding it from scratch, but there was no appetite or time for that, so we would just help out in any way we could with this beast of a model. It just lived on roll forward eight years, I think it was. We did rebuild that model. Uh, but we learned a lot about models, and I think everybody involved in that model learned a lot.

Host: Paul Barnhurst

I can imagine. That's a long time before the model being rebuilt. I can only imagine the monster that it was. So is there 1 or 2 key takeaways from that experience that you've taken with you in your work?

Guest: Ian Bennett

I think the main thing is that models are built for a single primary purpose at the time that they are conceived. They may have some, but there's a primary reason that model is built. And this model, that purpose had evolved and new purposes had been added. And you could see that in the model. And that was its downfall. And of course, when you rebuild a model like that, you go back to it with fresh eyes, with today's purpose. And the same model is significantly simpler, is significantly more easy to use. It's also built the way that the organization is currently thinking, and the way that the people that are using that model or relying on that model are thinking. So it fits that purpose, too. And that's a really important part of financial models and how they go on and be successful in the organization. So I think two key things, but both around the purpose of the model.

Host: Paul Barnhurst

Now that's a great thing. And, you know, as you were telling that story, I couldn't help but reminded of probably the most complex model I worked with was an FP&A model where we had a ton of different products splitting out to two different businesses, all these cost centers, and just a monster of a model because there was a lot of timing things, mix of subscription and transactional. And when we first built it, we were trying to understand the billing data. The billing data was a complete mess. None of the codes made sense. And so we built this model and it wasn't serving the businesses need. I couldn't hold them accountable. And, you know, we had it for about a year and at least had it working. And I finally said, I have to rebuild this thing. And it was so much better when I was done, but it was such a nightmare trying to untangle it and go through each line, and you just spend that time to go, what do we really need to be making smart decisions in a business and to use this to really forecast what's important. And yeah, I learned a ton from that one. But it was not fun by any, any stretch. So why don't you go ahead and just tell our audience a little bit about yourself? I know you've had quite the storied career, a lot of modeling and different things, so go ahead and introduce yourself to the audience.

Guest: Ian Bennett

Yeah. Hi everyone. So I live in Sydney with my wife and my two daughters. Been here for 14 years. I was ten years in London before that, and I'm a professional financial modeler and I have been for 24 years now. I started my career as a financial auditor, was doing audits of companies in Manchester and England, and it very quickly became apparent to me and the people I was working with that that was not the right career for me because I really enjoyed spending my time and I'm going to show my age now. Paul. But there was one laptop in the middle of the audit room, and it was primarily there for printing. It connected to a physical printer, and there was this thing called Excel on it, and I'd never seen that before. And I realized that I could sort of test working capital with it. And so I'd built some little calculations, and I used that for the next audit that I did, and I expanded it and made it more complex. And again, for the next one. And other people heard about this and wanted to use it for their audits. And I realized I much more enjoyed building these little tools that people could use to solve their problems than taking cash or whatever it was I was doing in my audit world. And, at around about that time, I heard about this team in London that had just started, was doing financial modeling and moved down to London. And the rest is history. Professionally, I really lucky to lead a team here in Australia, a team of about 50 people based around Australia and an amazing team in our offshore centre, Kolkata, and I am advisor to a number of different areas of financial modeling. And I guess one of my proudest things is that I became a master financial modeler and MFM in the last 12 months with FMI, and that was a really wonderful moment.

Host: Paul Barnhurst

Thanks for that background. You know, since you mentioned that, let's talk a little bit about that before we get into the rest of the questions, can you just tell our audience a little bit of what the MFM is, why you did that kind of why it was such an accomplishment for you?

Guest: Ian Bennett

So the first two levels are sat and really enjoyed their highly technical, uh, the learning process for most is as valuable as sitting the exam itself. And that was a great experience in the financial modeling skills and that greater awareness of what it is to be a good financial modeler. The MFM is a little different. It asks you to prepare a proposal, if you like, of your career, your CV, your history. But most importantly, your contribution to the financial modeling industry. So I was encouraged to, uh, to prepare that document and, uh, a little humbled to be accepted.

Host: Paul Barnhurst

That's great. Now, congratulations on that. And, you know, speaking of the AFM, I posted this on LinkedIn today. The show will come out after that, but I'm, uh, taking the first level test Saturday, so I've been trying to spend some time studying for that to make sure I can do all my building and linking and schedules and all those things, and it's been really good. It's helped me, you know, polish up some of my skills and learn some things because I haven't been much of a three statement modeler. I work big companies, a lot of PNL, so it's been really good exercise for me. So thank you. All right. So recently you had the opportunity to attend the Global Excel Summit that just ended in London. Tell us a little bit about what you were doing there and what that was like.

Guest: Ian Bennett

So it was a great time. I guess there were three things I took away from that. So the first one was just how wonderful it was to be in a room full of people who loved the things that I love. These were my people. They were celebrating things that I super enjoy, that people that I followed from afar. Heroes if you like, but also people that I've been working with or known for years for. Never met in person, which was a really lovely time. The second thing is they were talking about things which are new. So I think Excel has evolved more in the last 18 months than it's evolved in the last, well, certainly the last 24 years that I've been using it on a daily basis. And there are some super exciting things in there. Now, we might come back to what some of those things are just to get a sense of that evolution. But you could feel that in the room. This is new stuff. But this is my third takeaway for it's not just shiny new toys that we can't find a purpose for. It's like Microsoft has been listening to us and they're building the things that we need. And I can already see. The global financial modeling leaders at PwC can see how these can be used to make our client's lives easier, and more efficient, to solve problems quicker, better and more stable solution that will live in a business longer with less risk. That this is real stuff now and it's a really exciting time to be a financial model.

Host: Paul Barnhurst

I agree it's an exciting time for Excel and the subject we chose for this episode is around what makes a good financial modeler, and we're going to dive into that here in just a minute. But before we do, kind of two fun questions I'd like to ask you. You've spent pretty much your entire career modeling outside of the brief time in auditing when you realize, yeah, this isn't what I want to do all day. Ticking and tying is not the best option for me. What is it that caused you to fall in love? What is you love about modeling? About building something, helping people with financial models? What created such a passion for that?

Guest: Ian Bennett

So I think it's the thrill of the problem solving, and then the pride of building something which is loved and embraced and enjoyed by the people that are going to use it, that problem solving piece that's core to financial modeling. And it's definitely something that sits really deep inside me. And I'm relishing that opportunity to understand the problem. And then using the sort of wealth of tools and experience at my disposal to solve that problem. And these problems, they're commercial, you know, they are business, but they're also really human and trying to understand how that problems evolved in the mind of the people that you're solving it for, not just one, but also a complicated relationship of humans, probably. I’ve really enjoyed that component.

Host: Paul Barnhurst

And so speaking of modeling, I'm curious, do you have a favorite industry that you like to model? And if you do, why is that? Why is it your favorite?

Guest: Ian Bennett

So I have there's so many industries that I've worked in over the years, and I am really enjoying working in renewables because it has. So it's got some great complex modeling in it. Project finance is that in many ways the pinnacle of complex modeling in the way that it produces the numbers and solves complex commercial problems, but also because it's part of that energy transition. And I really do identify with the importance of that. But I think maybe I'm going to say hotels and I haven't built a hotel model for a while, but I just love how driver based and vertical they are. You know, many businesses are very boring. They're like this thing, this will grow by 3%. This thing, it'll grow by 2%. And you just sort of push all these lines out over the timeline. Hotels, just you start with a number of rooms and then sort of occupancy and it just drops down the PNL, it drops through the balance sheet, it drops through the cash flow in a really elegant way. And there's just something about that I really like.

Host: Paul Barnhurst

Fun. And I can see, yes, very much driver based and kind of how that would flow. So fun on that one. All right. So let's jump into the kind of focus here of the interview. Let's start with the question here. From your perspective what makes a good financial modeler? You know, what is someone needing to do to be a good financial modeler? Let's start there.

Guest: Ian Bennett

So I guess there's a few foundations if you aspire to be a great financial modeller. So you do need financial modelling skills. The technical skills you need curiosity. So you need a desire to understand the power of the things you have in front of you and not be scared. In fact, actually be enthused by the new things that turn up the new ways the alternatives that are presented. You're going to be solving problems. So you need to be able to think about the best ways that you can solve those problems. So I think curiosity and problem solving are those core things. And then of course, really good financial modeling skills.


Host: Paul Barnhurst

That makes sense. So I'm curious, you know, we talked about importance of those financial modeling skills and other things. What makes a good modeler from the client's perspective? What is the client looking for when they're trying to find someone to build that model?

Guest: Ian Bennett

That's a tricky question as well. I guess a key part of being a great financial modeler is understanding that for each client that you come across, I think so first thing is if they're going to kind of outsource that, if they're not going to build it themselves, then there's a trepidation about asking someone else to do it. And the first thing they're looking for is someone who's not going to let them down and build something that's not right, or somebody who's not going to listen to them, or is going to build it in their own way, or it's going to be super, you know, financial modelers have a reputation of building things very complex, aspiring even to build things very complex, which I think is unfair, but that is a reputation. So they're nervous about that. So they need to be allowed to understand that you're going to have their best interests at heart. And after that, they really just want to know that you've got an approach and a methodology, as well as the skills and experience that's going to get them to the place at the end where they need to be. That outcome, that definition of success is, is the most important thing to them, and they're looking for someone who's going to understand that.

Host: Paul Barnhurst

Sense when you talk about understand, I mean, it sounds like a big part of that is really being able to listen to the client. Right. How do we become better listeners as modelers? What does that mean to be a kind of a great listener of your client? Any thoughts on that?

Guest: Ian Bennett

Yes. I talked about this at the summit in London. Um, so as a financial modeler, listening skills are universal listening skills. And so the key thing is you're not waiting to speak. You're not waiting to tell them how you've done something before five times. And this is how you did it. You're looking for those and listening for those cues around what's really important and leaving spaces for the client to fill. If there's something on their mind, which is the most important thing to them. But but isn't about the model. If you ask the question, what does this model need to look like? They're going to go and tell you about the Excel spreadsheet. But if you ask them what's the definition of success for this project, you might hear something about the spreadsheet and something about the business. But if you leave your space, silence, then they will hopefully fill that with something a little bit more meaningful for them. And that's the gold. That's the stuff that really allows you to create a successful model and a successful project.

Host: Paul Barnhurst

I like that. Can you maybe share an example from your career where, you know, kind of that listening really helped you realize something beyond just a model that allowed you to be successful in a project? Can you think of maybe an example there?

Guest: Ian Bennett

Yeah, I can think of some I can think of a lot of examples. I think the main one, and I'll characterize it as the secondary objective, is where and maybe I'll share an example of one that didn't go so well actually quite a long time ago, but a model that was being built with a very specific purpose in mind. We understood about the model really well what it had to do, and there was some complexities around the stakeholder group that we didn't understand and hadn't taken the time to understand. When the model was built, it was presented to our primary stakeholder, who was a very senior executive and the rest of the senior executive, and we got about 5 to 10 minutes into that presentation where the CEO said, hang on, does the model do? We said no, but we said no in a way of or no, because no, it doesn't do that. We weren't asked to do that and that wasn't important. That wasn't mentioned. So it's no use then. And we really misunderstood. Primary stakeholder was the CEO and that he had a very clear purpose. And if I'm honest, and then with the benefit of hindsight, you go back over that project and the clues were all there, the hints were there, but we were probably so focused on the spreadsheet at that time. I think I'm going back 20 years now that we didn't stop to ask those questions. And it has a very real impact in my business pool because that client didn't pay for that model. So it's, uh, that's a really important lesson I think I learned that day.

Host: Paul Barnhurst

Yeah, that's a kind of a painful lesson to learn when you don't get paid for that model, because, I mean, at the end of the day, as much as we love doing this, there's a component that needs to be met. And that's the, you know, financial needs. Right. And so I can see where that would be a hard lesson to learn.

Guest: Ian Bennett

I'm sure you felt that too, though, Paul, with the models that you've built, it's that payment is not so much the money. It's the fact that it validates done for somebody. They value what you have done, which was the idea at the outset. So for them not to value it, that is really painful.

Host: Paul Barnhurst

I agree. I still remember, you know, kind of two experiences with that. I'll share a quick one. I had a boss, he had worked in investment banking and was a very good modeler, had spent years building models. You know, I hadn't done that and I wouldn't consider myself a good modeler at this point. I remember I built one model and this new idea and just really didn't know how to do it. You know, you're trying to figure it out. What does it look like? It's a new idea. I get it all done and we're reviewing it with my boss. And he pauses at one time and he kind of makes a comment. He goes, this looks like government work, which was his way of saying, this is not a good model. You know, he's like, you should have done this and this and this. And, you know, we finally got there. But at that moment it was like, all right, I blew it. He obviously doesn't think this model is worth much of anything. And you know, it was a good lesson to learn. But at that moment there definitely wasn't validation. There was anything. But so, you know, that's one experience I had. And that same boss I can still remember when he first took over, he had all this build brand new models and you want them built a certain way. And one of the things he want done, I just didn't even know how to do. I'd never built a model that way and brought in someone else to help work with me. And I learned a ton over that next year around modeling and building more robust models. And it was a good learning experience, but there were definitely some humbling moments where there was not validation.

Guest: Ian Bennett

And there's a financial model. You run that risk every day because every person you work with has a different perspective on what is a good financial model, and they're entitled to that view. If there's an issue, there's a prevailing view sometimes in our industry that when you are in our industry, you know the best way to model. And then collectively we know the best way to model. So it's a bit of an echo chamber, but really the best way to model any particular problem is how the individuals who are going to receive that model feel about it. They have all sorts of different opinions. And if they say best practices need to be followed and they are this and they're different, are the ones that you're used to, you can have a conversation about that, and you might be able to sort of find a happy medium. But ultimately, their view on best practices is the thing that you're going to have to adopt for that project. Yeah, and.

Host: Paul Barnhurst

That makes a lot of sense, right? Because there's a lot of different opinions. Obviously, there's a few things. It's like, hey, I want you to do this. You can be like, that's that's a real problem. But for the most part, there's a lot of subjectivity in the sense of, hey, do I build the depreciation this way or that way? Do I use this formula? Do I do a waterfall or do something else? There's plenty of areas where judgment can be used on what's the best way to do it, right beyond the standards like don't hard code, right. Obviously that's one where it's just like, yeah, no, that's just a bad idea. Don't do it. But beyond that, there really is a lot of subjectivity there. And different ways you can build a great model still following similar procedures. So, you know, next question here I want to ask you, you know, for a great modeler, in your opinion, how much of the process is actually spent in Excel? Like how much time do you think they should be spending in Excel?

Guest: Ian Bennett

So I think there's two answers to that question. So the first one is about approach and methodology. So in that regard, we have a very well defined and deployed, used, and experienced methodology in our team, in fact in our global firm. And that takes you through a process of scope. Specify design, build, test and then finally handover. Those phases need to all occur within the time that you've got to build that model and hand it over. We would allow 40% of the project time to those first 2 or 3 phases scope specify and design. So one answer to your question is 40% of the time before we get into Excel. And if you have two weeks to build a model, sometimes a luxury, but let's say you have two weeks to build a model and let's say you don't work the weekends. That means that Friday morning of week one is when you're picking up the Excel file and starting to code. Now, that's a hard thing for people to understand and adopt because you've been asked to build a model. And so on day one, you're kind of inclined to do that.

Guest: Ian Bennett

But if you can resist, there are many benefits, mostly around the fact that you won't have to make changes to the model later. And it's making changes to a model which causes errors. That's the primary benefit. But the second answer to that question is that I guess we cheat a bit poor during that scope and specification phase. We're building artifacts which we share with our clients to get their buy into that specification. So it's going to be an input template and that'll be in Excel. And it's going to be an output template. And let's give you an Excel two. And we'll build a prototype model which is our little calculation of something particularly complex. And that prototype model might go down the page. Whereas the final model will go across the page. But it's just there to help people understand and agree to the complexity. And of course that's in Excel two, and that has formulae which the client is over the moon about, of course, but we're still specifying at that stage. But we are in Excel using Excel to do that specification.

Host: Paul Barnhurst

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Host: Paul Barnhurst   

Modelers, obviously, it's a real challenge to find that kind of balance between making sure you spend the time on scope and process and design versus building. You know, we like to build. We want to get our hands in there and get started. What does a good modeler do to find that right balance and make sure they're doing their homework and doing those things that will pay dividends in the end in the whole modeling process? Any thoughts on that?

Guest: Ian Bennett

Yeah, that's a that's a tricky one because you've kind of got to go through that experience a few times to really understand that. So it's all very well me saying to my team, here's the methodology. But unless they've been through that, it's hard for them to really buy into that approach. So I understand your question. So how do we learn to actually do that? Well, you could start by putting post-it notes on your on your monitor that say don't start building. Um, but I think because we all have that temptation, don't we? We just want to dive in and start building that model. We want it to bring it to life. We want to show that we've understood, but there's all sorts of really good reasons. I think the measure is that at the end of the specification phase, you have an unambiguous understanding of the model of its purpose, of how it will be used by the one, two, three, four users of that model, what that outputs will produce the story that that model will tell. Every model tells a story, and that story is known at the start of the project, and the questions that the model will be able to answer. So when someone interacts with it and maybe, uh, maybe this will be the future. Paul, we won't open up the Excel so much as talk to it, but we'll say to it, I really need to understand what happens if we do this in the business, and the model should be able to answer that, because you've understood at the start what those questions are going to be. So that unambiguous understanding tells you you're ready to go. Time to start building.

Host: Paul Barnhurst

So that leads to two questions. There. You kind of piqued me, uh, thinking when you mentioned, hey, we'll be talking to the model. So first let's talk about what are some of the tools beyond Excel. Right. We always talk about Excel. And everybody loves Excel. But we know it's not always the best tool for everything. And there are other tools we can use in modeling. So what's maybe some of those other tools that a good modeler should be aware of or consider using that helps them in this modeling process from your career?

Guest: Ian Bennett

Okay. I'm going to put that into three categories. So the first one is the non-microsoft cloud based modeling tools and such. The light that came about around eight, nine years ago and grew to quite a lot of popularity. We invested a lot in those. We trained a lot of our people in those. They haven't taken off as much as we had hoped. But there are good alternatives out there for cloud based multidimensional modeling. I'm not going to replace Excel in most use cases, unfortunately. Maybe we'd hope they would. Secondly, there are all that wonderful add-ins that you can find which other people that have had the same problem as you have put into an add-in that you can then deploy, and there's more and more places that you can find those, because there's more and more ways that you can deploy them. But there's some amazing third-party add-ins out there that you can you can use. And we'll use a numbering in our team every single day. And I think the third category, and probably the most important one, is to now understand the full potential of the Microsoft Suite. That power, or I'll call it the power stack, which is not on all of our laptops yet. But if I describe what it's going to look like relatively soon, it's going to be Excel as the control center.

Guest: Ian Bennett

It's the cockpit. It's our entry point because we're familiar with it. We love the grid. We love the way it looks when we have a confidence level, when we open it up first time. From there, we can already access Power Query and Power Pivot. And we can access M and Dax, and we can add the languages, and then we can access Power BI to dashboard and display those things. We can then start to use Power Automate to make things move and make things happen overnight when we're not there to automate things which have been very manual in the past, and power apps to make the way that we do that easier, more meaningful on the run, quick and easy. And then overlaying all of that is fabric. And I honestly believe that is going to be a massive game changer. So in answer to your question, and it's hard because some of these things aren't really readily available yet, uh, is to be curious about those. There's enough around enough content available for those sorts of things. If you can understand how that stack works and how it can be deployed to solve problems. I think that's a great way of thinking about the breadth of offerings, the different ways to solve problems that are now available.

Host: Paul Barnhurst

And I like how you broke that down into three categories, right? Those cloud based multidimensional modeling tools. We have a lot of them we've seen that grow. They're more common in FP&A than probably other places, but they definitely have their benefits. I've seen a lot of them. And then the add-ins right sometimes can be overwhelming, but I've heard a lot of people swear by add-ins and there's ones that they love. And then I really liked the third category, because Microsoft has done a lot on the tech stack front. Like you mentioned, Power Automate, Power Apps, Power Query, Power BI, right? There's a trend there. Power power power power except for design fabric. Fabric went a little different. But that's all right. So let's go back to Excel within that tech stack. You mentioned a couple of times when we've chatted that you know, what's been done in the last 18 months in Excel is probably greater than the entire time of your career. Why is that? And what has you so excited about the future of Excel? What are they doing?

Guest: Ian Bennett

What are they doing? So I think they're listening. I think they've realized how important Excel is, like we've always known it, right? Like it's the most important software in the world, like it runs every organization. And we don't like to admit this. Right. But it runs every finance department, it runs every government. If we woke up in the morning and Excel wasn't on our laptops, I don't know what the world stopped. Maybe. I think it's an extraordinary it's an extraordinary dependence we have on this wonderful little grid, and it has been mostly ignored. And now it has all these new things coming in. And the people that use Excel have all these new tools that they can use, and Microsoft are adding them all all the time, and they're integrating their work together. A good example of that dynamic arrays came out actually quite a while ago. We weren't quite sure about it, adding lambdas, it becomes extraordinarily powerful. Dynamic arrays with lambdas is a really important new feature. We have copilot, which at the moment is relatively limited in Excel, but I'm convinced it will expand and become more useful. But it's also really useful for other things which might come back to some of that. We've got Python in the grid and we've got Python in labs as well. Different way of accessing Python. We've got the advanced Formula Explorer, which is in labs, which is really neat way of exploring formulae like lambdas. Office scripts is coming. Well, it's here, but it's coming and it's coming to take your VBA. And I think another one is and it was demoed on LinkedIn, I think, by Joe McDade from Microsoft is the Stale formulas concept. Have you seen this?

Host: Paul Barnhurst

Yeah, I did see something about that. I've heard. I think it might be in early beta or whatever. I have heard a little bit about it. I'm not real familiar, but I saw something on LinkedIn this past week on it.

Guest: Ian Bennett

So it's so simple, but it basically shows you which formulae have been calculated and which haven't. So if you're if you've got a model in manual mode and that's probably not best practices, but for any reason and it has other benefits, but just for the for the moment, if you're using it in manual mode, some formulae will have calculated, some haven't. The ones that haven't have got a little strikethrough through them. So you can see immediately, which I love it. What a beautiful addition to Excel. It's things like that for that make me super hopeful about the future. Yeah.

Host: Paul Barnhurst

No it is exciting. And you know as we're talking about Excel, I'm going to ask you a question here. I know this might be like picking between your kids, but I'm going to make you pick here. What's your favorite shortcut in Excel? Do you have a favorite?

Guest: Ian Bennett

24 years ago, Paul, the shortcuts were quite different. I am somewhat embarrassed to say that I still use alt ESV, and one of the things I love about Excel and Microsoft more than anything else is that they preserved the shortcuts that technically shouldn't work anymore because of the ribbon, but they still do. I still use that. Okay, I've been weaning myself off that. I now use Ctrl shift V, and that's coming in most Microsoft platforms. It's not an all yet, so it's a bit confusing. I'm reading, but at least for formats, Alt SF for formulae for people. Just to be clear, that's paste special values, paste special formats, paste special formulae. I still use those keyboard shortcuts.

Host: Paul Barnhurst

So funny. The last interview I did, I asked what their favorite was and they said Ctrl shift V and I mentioned I'm still using alt ESV. And so as I've been prepping for this test just today, I was like, well, let's try starting to use Ctrl shift V a little bit more and I can see where it's a little quicker, but old habits die hard. So I'm with you. I'm not there yet, but I'm dabbling in control shift V so I can appreciate that one. So I thought that was great. You chose that one because yeah, just today I was thinking about that.

Guest: Ian Bennett

So now I feel your pain trying to re teach fingers to do something they've been doing for decades.

Host: Paul Barnhurst

Right. So one last question here before we move to rapid fire, when you're, you know, when building a model, what's a technical nugget you could maybe give our audience that you wish more people incorporated when building models like, you know, it could be something around the waterfall schedule or the debt and the revolver or whatever that may be, but something you wish more people would use, kind of a technical nugget that could help them when building models.

Guest: Ian Bennett

So so many. Let's go with error checks. So error checks are often a last minute thought in addition. But in reality, error checks should be there from the start. As you build the model, you should be building them as you go. Use an absolute function. So an error check is checking that two things are the same. So use an absolute function to take the difference between the two and then check it against an error tolerance, just in case you've got one of those crazy floating point ten to the -15 errors in your model, use that absolute with the error tolerance and then give it conditional formatting. If it turns true, then it's green. If it turns false, then it's red. And add those everywhere in your model where there's two numbers which should be the same. So the most obvious one being the balance sheet. Does it balance? But let's check that the PNL equals the moving in reserves, that the cash flow equals the moving in cash, that the sum of my four quarters equals my annual, that the sum of all my cash flows across all of my business units equals my consolidated anywhere where you can do a check, put the check in. And it gives such a lot of confidence. There's green lights all over the model. And when something goes wrong, there's red lights to chase.

Host: Paul Barnhurst

Good advice. error checks is definitely an area I could get better at my models. I sometimes neglect it. I was just thinking that the other day on something I built going. There's no really good error checks here. Outside of that, the balance sheet ties, right? You know, but that doesn't mean your model's right. There can be plenty of issues with your model and your balance sheet ties. So I think that's really good advice. All right. So I know this is going to be your favorite section because I get to put you on the spot right. You're probably like I'm dreading this. So I think you know the rules. But I'll repeat them. I got about ten questions here. You get 10s to answer. You can't tell me. It depends. So you got to pick a side and then at the end I'll allow you to elaborate on 1 or 2 why you pick an answer. Because I get there's nuance to all these, but the fun is just kind of seeing where you where you think about them, where you sit if you have to pick. So when building models, circular or no circular references.

Guest: Ian Bennett

No no no no no.

Host: Paul Barnhurst

Okay. Where were you again. Why’s that no?

Guest: Ian Bennett

No I'm pretty sure that's a no.

Host: Paul Barnhurst

All right. Vba or no VBA.

Guest: Ian Bennett

Yes. For now.

Host: Paul Barnhurst

All right. Horizontal or vertical?

Guest: Ian Bennett

Uh, horizontal.

Host: Paul Barnhurst

Should I be using dynamic arrays in your models? Yes or no?

Guest: Ian Bennett

Yeah. Embrace I wasn't sure, but yes.

Host: Paul Barnhurst

All right. External workbook links. Yes or no?

Guest: Ian Bennett

No, no.

Host: Paul Barnhurst

Yeah. I could tell which ones you have a strong opinion on. You get more than one. No name ranges versus no name ranges. Where do you sit on that? In a model.

Guest: Ian Bennett

Yeah. Name Rangers. I like name Rangers.

Host: Paul Barnhurst

Great. And so when building your models, you follow a formal standard like one of the boards out there. Smart or, you know, some of the others, they're out there fast, etc..

Guest: Ian Bennett

Uh, we use PwC's global financial modeling guidelines that we authored just a few years ago is publicly available. Uh, it's a really good set of guidelines, which you can dissolve to a standard if you want to look at it that way. But it's a really great way of designing a model.

Host: Paul Barnhurst

Great. Yeah. No, that's that's good. Now we'll call that a yes. We'll excel. Ever die yes or no? No. All right. We've we've had a few different ones on that one. Always fun to see the opinion. I know this one will be a little bit of a controversial one. We talked about it. Will I build the models for us in the future?

Guest: Ian Bennett

So it is a difficult one to answer because it might not be the right question. But yeah, it almost certainly will build models for us at some point in the future. Okay.

Host: Paul Barnhurst

Fair enough. So sheet sell protection your model, should you use it? Yes or no.

Guest: Ian Bennett

Oh yeah. If everybody's happy with it. Yes.

Host: Paul Barnhurst

Makes sense. And then this is a question I like to ask people. Do you believe financial models are the number one corporate decision making tool? If no, what do you think is?

Guest: Ian Bennett

Categorically yes. Excel is the number one decision tool.

Host: Paul Barnhurst

I like it. All right. So last question. This is just kind of a fun one. We asked everybody what's your lookup function of choice. Do you like choose Vlookup, Xlookup, index match or something? I didn't mention.

Guest: Ian Bennett

Plenty of good, plenty of good ones there. I try to default to Xlookup these days. I think it hasn't taken off as much as I thought it would. I wrote an article on that some years ago, and there are some use cases where it doesn't quite work for, but I think we should default to Xlookup, now.

Host: Paul Barnhurst

I would agree with you. I generally tend to default to Xlookup. I think there's use cases you can make in arguments for all of them, but I do like Xlookup. I think it's very flexible. So which one would you like to elaborate on? Go ahead and pick one there.

Guest: Ian Bennett

So why don't we go? Well, there's a couple, but we should probably talk about AI because it's really an important conversation to be having. And everybody wants to talk about it at the moment. And I think I'd summarize the situation by saying that. And a number of your guests over the last few months have said similar things. It's here to help us. It's a friend. It's someone you can delegate things to. It's someone you can ask advice from. It's going to help you at every stage of a model build. So those scopes specify design, build, test and handover. It's got a role to play today in all of those. We have a chat gen AI tool within PwC called chat PwC, and the expectation is you'll be using that multiple times a day to support you in the work that you do inside the grid, inside Excel. It is currently relatively limited in terms of what Copilot can do. It's fun. It's exciting to see you're doing those things, but it hasn't really changed the way we do things in the future. Will it have a bigger role as its use case expands? As the technology expands? As we teach it things about financial models, and it can teach us more about the financial models that it sees that it will it'll help us to review models. It'll help us to understand them more quickly. It'll help us to build the driver trees. It'll help us to build the input templates and the output templates. It'll help us build the prototype models, and maybe in the end, it'll build the model for us. But. And you reflect on everything we've talked about today the human needs, the priority objectives, the secondary objectives, the people that are like, how can it know all of those things that are actually critical to the success of a project? That is the bit I'm still trying to understand.

Host: Paul Barnhurst

Yeah, no, I agree with you. I think there was a lot you said there. And one of the ways I've heard it said is it's not human versus technology. The way we need to look at this AI and other things is humans with technology, it's there to make us more effective. And the example I give from just this week of generative AI, I think last week, but I had to do this indirect. I just don't write indirect formulas very often when you're referencing sheets. And yeah, I know you're like good different rows and columns. They can get really complex in the syntax to get it right. And I'm like, I'm going to be sitting here forever figuring out the syntax. So I just told ChatGPT what I wanted and just kept asking the right, okay, give me the next part, give me the next part. And 10, 15 minutes later I had it working beautifully and I probably would have spent an hour going, all right, why? I forgot the stupid quote here. Or the ampersand in the quote aren't in the right order or whatever. And so it's just an example of where generative AI can help us in that process, whatever it may be. And it's that much more powerful if we understand what we're doing, if we have a good grasp of things where we can really ask the right questions or be smart enough to validate what it's giving us, I think AI is the most deadly in the hands of the competent, the ones who know their career. Like we get this fear that we don't need to learn anything now that we have AI. I think those that have learned and put in the time, if they're using AI, will be the most effective people with it.

Guest: Ian Bennett

There's no doubt about it. And there are very real use cases of that right now happening in our team, where people are using it to do exactly those sorts of things. A couple of examples that people can start doing right now. If you've got copilot, it's in PowerPivot, it's writing Dax. That's a really useful place to have it. It can have a pretty good go at coding VBA, and it's got a pretty good go at while it's learning to code VBA into office scripts. And as I sort of hinted at, I'm going back to one of your quickfire questions. I apologize, but I think that VBA will be replaced, I believe, and it'll be replaced because it doesn't work in the cloud, and the cloud is going to become the most important place for our financial models. And we need a language that does. And that software script offers JavaScript. Um, it's relatively new. The general tools are still learning how to code in that language, but you can see a world where we upload our VBA macros and they turn up in a whole new language, and we can just copy and paste, and that'll be a really important part of the transition, I think, from desktop Excel to the cloud Excel.

Host: Paul Barnhurst

I agree with you, and I think we could spend a whole episode on that subject and VBA and the cloud and how we make that transition because there's no way around it when that transition happens. And if they do decide, look, we're going to really not support VBA and slowly take that away, that's going to be a painful long process. There's no way around that. So that will definitely be interesting to watch. But maybe we'll hold that one for episode two to get into a little bit more, because I think there's a lot we could unpack there. So, you know, we're coming at the end of our time. I've thoroughly enjoyed having you. We just have two questions left as we conclude here. So the first is we ask everybody this. If you could give one piece of advice for our audience to be a better financial modeler, what is that one thing you would tell them or remind them to do?

Guest: Ian Bennett

Be curious as you're facing problems, as you're seeing things of content on YouTube, you've got a new problem to solve. Be curious about how you might solve that in new and interesting ways. Uh, and learn. Learn the trade through that curiosity.

Host: Paul Barnhurst

If our audience wants to learn more about you or get in touch with you, what's the best way for them to do that?

Guest: Ian Bennett

Just reach out to me on LinkedIn. I'd be happy to hear from people.

Host: Paul Barnhurst

Great. So we'll put that in the show notes. And thanks so much for joining me. I know it took us a little while to get this scheduled. We've had some great conversations and I'm really excited to share this with our audience. So keep doing the great work you're doing in modeling. And thanks for joining me.

Guest: Ian Bennett

Paul, thank you. Genuinely. Thank you for everything you've done for this industry, for profiling it. I so enjoy listening to your podcast. Thank you very much.

Host: Paul Barnhurst

Thanks.
 

Financial Modeler's Corner was brought to you by the 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. 

 

 

Ankita Ghosh
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