A chartered financial modeller is the next step up from an advanced financial modeller. Someone conducting AFM will have the skills to design and build integrated financial models. However, they may lack the proficiency to identify and resolve problems. In these scenarios, you will need the expertise of a Chartered Financial Modeler (CFM).
The chartered financial modeller is an expert who can look at financial modelling, financial analysis, and Excel-based modelling to build on existing models and resolve problems. A chartered financial modeller has a huge role in helping forecast a business’ overall financial performance for the future. This is done using:
- historical performance
- making assumptions based on evidence
- re-examining income statements, balance sheets, cash flow statements & supporting schedules
There are endless variables that factor into financial modelling. Someone in this role must be creative and have an eye for detail. Let’s learn more about the role of a chartered financial modeller in an organization:
A financial model is used to inform decision-making. It could be to raise capital relating to debt and equity. It could be used to acquire another business or asset. The model could test concepts relating to growing a business, such as entering a new market. Financial modelling is also frequently used for budgeting and long-term forecasting, capital allocation, selling and divesting assets, business valuation, and management accounting.
A chartered financial modeller will be going through some highly advanced models. From discounted cash flow analysis to leveraged buyouts, mergers and acquisitions, and sensitivity analysis, each model has dynamics and a common list of variables complicating the results. A background in building and developing these models is necessary for this kind of work long-term.
How to Learn Financial Modelling
As a financial modeller, you will be engaging and interpreting models developed by others. These may be less than organized in some cases. They may not be built like you would have built them, but ultimately, chartered financial modellers are the people who go in and enhance these pre-built models. You’re expected to use best practices to help develop and redevelop, in certain cases, robust forecast models while applying specific methodologies and financial modelling techniques.
To get an in-depth knowledge of what a chartered financial modeller does and the skillset required to fulfill the role, it’s key to register for CFM courses and obtain the certifications that reinforce your expertise. The only way to obtain a chartered financial modelling background is to do it. There are many courses that provide the opportunity to run scenarios and build financial models. These courses provide guidance to eventually bring your information base up to snuff.
What Does a Chartered Financial Modeller Do?
Much of the work in financial modelling is done by inputting variables into Excel and breaking down complex calculations into simple formulas. A chartered financial modeller has to be an expert at using Excel, understanding best practices for building a model. There are many formulas and functions in Excel, and how you use them will become very important in testing models, verifying that they are functioning as intended.
As a chartered financial modeller, you regularly solve Excel and models problems. Problem-solving requires skill, technical prowess, and creativity. There may be complex issues needing addressing in many cases, including real-world challenges. A chartered financial modeller’s the person assigned to analyze the details, identify the underlying cause of the problem, and more.
Areas of Expertise
Someone starting as a chartered financial modeller is expected to have a background in several areas and understand common problems around these concepts. Chartered financial modellers could be pulled into analyzing issues around debt, subsidiaries, supporting schedules, data management, sensitivity analysis, and revenues and working capital. This is where an accredited certification can offer immeasurable benefits.
In addition, there are various aspects of revenue-building and business development that a chartered financial modeller is used on. You may be asked to deliver sales projects, help with creating an international expansion strategy or costing one, help develop a presentation to apply for financing from a lender, or choose a financing option or strategy to purchase an asset or investment.
Who Should Become a CFM?
Anyone can become a chartered financial modeller, obtaining the skillset and certifications required. Some people, however, are more inclined and can make more use of such a skill:
- middle-to-senior level managers relating to finance
- professionals with interest in financial modelling
- consultants and advisors with interest in financial modelling,
- middle-to-senior level managers from the investment banking or financial world
These individuals who are more likely to benefit from certification as a chartered financial modeller.