Should I choose a career in FP&A? Consider these skills and traits.
Attendees of my financial planning & analysis (FP&A) and university programs commonly ask about different roles in FP&A. They may be CPAs, Controllers, financial analysts, investment bankers, private equity associates, and finance/accounting majors and don’t fully know what an FP&A career looks like.
In this article and those forthcoming on my blog, I’m going to share with you my answers to some of the most common FP&A questions I receive:
What is a career in FP&A like?
Do I have the right skills to be successful in FP&A?
Is an FP&A role a good job?
How much money can I make in FP&A?
What are the steps to advancing in FP&A and will I like it?
How do I get a job in FP&A if I have no prior experience?
How do I move into FP&A from a non-FP&A finance or accounting position?
And more...
What makes FP&A such an exciting field to be a part of right now
We’re at the forefront of an evolution in finance. In FP&A, specifically, we have never been to the place we’re aspiring to go. Everything we’re trying to achieve has never been built before in the history of business. Just weeks ago, I was on a call with the Head of FP&A for one of the largest and most reputable beverage companies in Europe and the world. She shared with me she was looking to further develop her FP&A team in data analytics and FP&A. She attested that they’re exceptionally good at their jobs, but yet there’s still so much they don’t know. She admitted: “this is what we’re trying to do, this is what we need to do, we’ve just never done it and don’t know how to do it yet. Don’t just tell us...show us...teach us how.”
It’s not just this one company that’s dealing with these challenges. It’s almost all of the companies I come across.
Success in FP&A is not so much about building processes and finding people who are the best at what’s already been done -- instead, it’s about building processes and finding people who CAN be the best in a future that hasn’t yet been created.
A transparent admission and why I’m qualified to offer this advice
Having built a reputation as an FP&A leader, you might assume I have decades of experience working as a Vice President or Director of FP&A. But I don’t. I’ve actually never held any formal FP&A title as a full-time, W-2 employee in any corporation. In the absence of a formal FP&A role at a single company, it actually puts me in a distinct and valuable position.
My career in FP&A advisory has spanned two decades, two-dozen industries, and hundreds of companies aspiring to be better at financial planning, forecasting, cash flow management, analysis, digital transformation and data management. I’ve seen what works and what doesn’t work across a wide array of organizations, not just within a limited few. While I may not be THE industry expert in niche fields like electronics recycling, cryptocurrency, or wastewater management, I’ve seen more than most when it comes to institutional FP&A, financial strategy and organizational financial processes. I have insights and experience that others with insular experience just don’t have.
Everything I will mention herein is based upon my experience and exposure. I make this disclosure because no one has the perfect answers -- not me, not anyone. If you are exploring a career in FP&A, take what I say as data points, provided by someone who’s witnessed functions and advised hundreds of companies, to help you evaluate your decisions and your chosen career direction. These are my responses and opinions regarding the questions people most commonly ask.
3 Qualities of a Successful FP&A Professional
1) Excellence in Numbers
This should be obvious right? But it’s more nuanced than that. An ideal FP&A candidate should have a combined set of skills. First, solid accounting and finance knowledge and, second, analytical skills. It is generally a given that someone coming into FP&A is going to have a foundational understanding of accounting and finance. They don’t necessarily need to have degrees in both, nor have a credential such as the CPA or FPAC (Financial Planning & Analysis Certified), but they do need to understand how business activities relate to the numbers and vice-versa.
Work days in FP&A are filled with finding meaning -- not just in the financial statements, but within lines within lines within lines of the financial statements. Some FP&A Directors I’ve worked with have spent the entirety of their careers on one part of the business within one line-item. There’s an extremely high-degree of focus on financial data and an ever-increasing amount of non-financial information. Beyond just core accounting and finance knowledge is a required understanding of how non-financial activities translate into numbers and what all these numbers mean for an organization.
When I work with companies grappling with FP&A effectiveness, I often find extremely smart junior staff who are excellent in foundational finance and core financial modeling. But they aren’t making the right connections between finance, analytics and critical thinking. They sometimes struggle to understand what the numbers mean and how to influence them, thus guiding other partners in the business. That talent comes with time and experience, but also with an intentional pursuit of business curiosity.
2) Thorough Institutional Knowledge and an Understanding of Business
An analyst, manager, or director in FP&A needs to bring both basic and advanced business skills to their work. Spending time and collaborating with representatives from every department means having a good understanding of operational dynamics outside of finance like purchasing, fulfillment, delays, hiring, bonus structures, capital expenditure planning and forecasting, the competitive landscape, sources and uses of outside financing, sales and marketing strategy, and local and global markets. This breadth isn’t an exaggeration -- it’s what FP&A does and why it’s so important to the entire business.
What’s also remarkable about FP&A today is that it varies widely across industries and companies sizes. In some mid-sized organizations, FP&A works closely with HR, sales, manufacturing, and marketing so having an understanding of each expertise is crucial. While in other (often larger) organizations, FP&A might be entrenched within a single function such as marketing and serving as a liaison between marketing and the corporate finance group. One thing’s for certain, FP&A should have a broad awareness and understanding of the business and not just the silo of finance.
3) Communication
I’d argue this may be the easiest skill to identify but the hardest skill set to develop. Everyone knows that communication skills encompass writing, emailing, and public speaking but it goes beyond the simple mechanics of transmitting thoughts and ideas across the mediums of paper, computers, and airwaves. Communication skills are more about how communication occurs, the management of information, and spreading of influence than merely the mechanics of transporting words.
Few communications courses can offer the real-life skills needed to communicate effectively within each department and. Even fewer courses offer the skills to communicate insights into date and finance, ultimately to the CFO or financial heads of a company. Leadership and communication skills -- like active listening and delegation -- often come with experience rather than via a textbook or video courses. Development requires deep emotional and self-awareness, and understanding of personality types and cultural dynamics, and a mastery of communication skills within that unique context. Ironically, it also requires malleability and creativity among professionals who are accustomed to following standards and rules as a core feature of their job responsibilities.
Personal tip: well before I shifted course to a career in public speaking, I started off by joining a local Toastmasters Group where I was able to hone my communication and speaking skills in front of other professionals. It was this experience practicing different methods of communication that allowed me to refine my skills in a safe environment rather than each time I was in a high-stakes presentation. In addition to joining Toastmasters, I embarked upon a 2.5-year stint through Chicago improv-comedy scene at The Second City and IO (f/k/a Improv Olympic). Learning to get out of my head, letting go, and establishing chemistry with others helped me evolve my communication style from one that was dry and rigid to one that was intellectual and authoritative yet warm and relatable. For those who aspire to improve their communication skills, development comes in many not-so-obvious practices.
3 Bonuses of a Career in FP&A
1) Salary
We’ll skip right to the chase on this because it’s often the first question from job-seekers. What’s the income and potential like? The earnings vary of course, depending on position and industry, but a starting Analyst can expect to earn between $45-70K a year, including bonuses and a Senior Analyst can reach $75K-$90K or into the lower six-figures. FP&A professionals at the Manager levels will likely see based compensation (without bonus) in the range $100K-$130K while an experienced Vice President and Director can expect a salary of between $100K to $250K and even above plus bonus, benefits, and options.
Wall Street Prep, one of my partners, provides a nice summary of salaries and advancement*
2) Advancement
Questions often arise asking “what’s the career progression of an FP&A professional? And how can I get into FP&A with limited-to-no experience?” In addition to lucrative potential in salary and compensation, advancement is a huge draw of this field.
Even though an MBA isn’t required, it has the potential to transition someone from Analyst to Manager or Manager to Director with an ultimate goal of attaining a Head of Finance, Head of FP&A, or CFO position. The same goes for pursuit of credentials such as the Certified Public Accountant (CPA), Certified FP&A Professional (FPAC), Certified Managerial Accountant (CMA), and Chartered Financial Analyst (CFA). Among all these credentials, I believe the CPA still holds the most clout because of its reputation, long history, grueling exam, and representation of thorough accounting competence. Outside of FP&A, few organizations have heard of the FPAC but to senior FP&A practitioners, it is a valuable representation of someone’s planning and analysis acumen.
As I’d highlighted before, while a foundational understanding of accounting and finance is vital to this field, it’s often a combination of education, skills, ability, experience, and institutional knowledge that facilitate further advancement upward in the hierarchy of a company. Directors of FP&A and CFO are rewarded with generous compensation because of their experience and expertise within the environment, not just because they have education and skill. These core qualifications are certainly important for early-to-mid career professionals’ advancement; for mid-to-senior level professionals, it’s a given.
Few Directors, Heads of Finance or CFOs reach those levels without exceptional skills and a deep understanding of their business or industry. FP&A professionals certainly can move horizontally, vertically, and diagonally across industries and companies, but it’s more likely than not for the majority, that upward progression will come from growth within a company than moving from one company to another.
To provide an example: A couple years ago I’d offered the resume of a colleague of mine who spent nearly a decade-and-a-half in retail, most recently serving as Director of FP&A. Looking for a new role, she’d asked me to refer her to the Head of FP&A at Fortune 100 I have a relationship with. The Head of FP&A commended her experience and noted that she’d probably make a great director at the Fortune 100; however, the corporation primarily hires Directors from within, given the importance of institutional knowledge and experience.
3) Creativity
One major benefit, and perhaps the most compelling for some, of a career in FP&A, is that ability to be creative. It’s a bit contradictory, because so much work in accounting is rule or principle-based. However, when compared with accounting, FP&A allows for the application of more practical ideas. Each day holds its own intellectual challenge, everything from building models, to forecasting the unknown, to enrolling the company in digital and technological transformation and more.
Some of us in finance sometimes joke light-heartedly with our accounting counterparts about the rigidity and sometimes humdrum nature of accounting work -- in part because FP&A offers variety, imagination, risk management, and a constant opportunity to bend the rules. Even though we tease, don’t overlook the importance of understanding accounting. It’s foundational to almost everything we do.
3 resources for learning more about FP&A
Sound interesting to you? There’s a lot of information out there. Check out my website and the links below from the Association for Financial Professionals, FP&A Trends, Wall Street Prep and more. But remember, the best way to learn about a specialized career like FP&A isn’t just reading about it, but talking to those who are doing it for a living.
*Disclaimer: I am a partner or subject matter expert to all three (3) of these organizations, have developed various FP&A content and courses on their behalf, and in some instances facilitate or license to them various professional development programs.
The Association for Financial Professionals
FP&A Trends
Wall Street Prep: FP&A Job Description
FP&A Career Path and Salary Guide
https://www.wallstreetprep.com/knowledge/fpa-career-path-salary-guide-analyst-director/