The Corporate Finance Jobs Hierarchy at a Fortune 500 Company: From Analyst Monkey to CFO
You’re sitting in front of your computer reading your 102nd rejection email:
“Thanks for your interest, but we have already hired for this position.”
You start to feel desperate, when out of the blue a friend calls. “I have a job for you, it’s a Corporate Finance Analyst position at a Fortune 500 company, what do you say?”
You answer without even thinking: “Are you joking? You know that it’s banking or bust for me!”
If that’s you, you need to rethink what you just said.
No, Corporate Finance is NOT as “prestigious” as investment banking, and it doesn’t give you as many exit opportunities.
It’s a different world altogether.
But it’s also a world where you can still make hundreds of thousands of dollars, and even into the millions if you’re at the right company in the right role.
Here’s what you’re going to learn in this comprehensive breakdown of the Corporate Finance world:
- How the finance department is organized at a Fortune 500 company
- What you do on a daily basis in the Financial Planning division
- Why accounting is not (always) just a 9-to-5 job that bores you to death
- Why Treasury roles are crucial and why they can mean life or death for a company
- How you can become a CFO and make it to the top of the ladder
CFO: The King of the Castle
Let’s start at the top. In every finance department the “King” is the Chief Financial Officer (CFO). You could argue that the CFO is ordered around by the CEO, but at the end of the day if you work in a finance department you are doing whatever your CFO asks of you, period.
We’ll focus on the CFO and the team directly under him first.
Every Corporate Finance department is different, so the exact team depends on the organization, the size of the division, the industry, and plenty of other parameters.
But despite all that, most corporate finance departments at large companies are similar. Here’s who reports directly to the CFO:
- The FP&A Manager: Heads the management accounting department
- The Controller: Heads the financial accounting department
- The Treasurer: Heads… the treasury department!
FP&A: Got Strategy?
FP&A stands for “Financial Planning and Analysis,” and some companies also refer to it as Management Accounting.
This department is in charge of the company’s Profit & Loss Statement (P&L), and forecasts the all-mighty “bottom line”: Net Income, which is literally the bottom line of any company’s or division’s P&L.
If you work in FP&A, your job is to give the CFO a good idea of what will happen to the different line items of the P&L during the quarter, year, and next five years. For example:
- Based on your projections, will Net Sales grow more quickly or more slowly than expected?
- Is the increase in Cost of Goods Sold (COGS) or Sales & Marketing expenses out of line with the increase in revenue over a certain time period?
- Will there be certain “one-time” expenses that you anticipate and that will throw off the bottom line in a certain period?
You also give every operational department, including Sales or Production, a target to reach in terms of revenue and expenses. Then you collect information along the way to see how far away the departments are from their targets.
Working in FP&A involves a lot of data consolidation and variance analysis to see what went wrong or right in the previous quarter.
You also produce ad hoc reports on key metrics such as sales volume compared to the plan, or the employee compensation expense compared to projections. This is one of the most strategic departments because you define where the company is going to be in five years.
Organization
3 or 4 analysts are led by a senior analyst, who is in charge of a specific product. The senior analyst then reports to the FP&A manager on their respective product.
The FP&A Manager is at the top of the pyramid and reports directly to the CFO.
Lifestyle
During normal weeks, expect to work approximately 60 hours per week with weekends off. Quarter/year end closes and planning sessions are your busiest weeks, and hours can jump up to the investment banking range – sometimes close to 100 hours of work per week.
Pay
Compensation varies widely depending on the size of the company and the size of the P&L. Here’s what you might expect at each level:
- Entry-Level Analyst: $60-70K USD base salary
- Senior Analyst: $90-130K USD base salary, with a 10% bonus in a good year
- FP&A Manager: $200K USD for a smaller P&L (e.g. the German division of a global company); can range up to a 7-figure salary for a Global FP&A Manager
Bonuses are heavily tied to the health of the company and the managers’ ability to forecast performance accurately.
Controllership: Accounting Without a CPA?!
Controllership or financial accounting usually has the worst reputation in the world of finance: many people think that working in financial accounting means a boring, mundane, accountant job where you’re inspecting journal entries all day.
But that’s only one side of the story.
The other side – the interesting one – is where you are in charge of the integrity of the Balance Sheet.
Whenever an accounting problem arises, you have to make a decision so that your financial statements clearly and accurately reflect the state of the business. Your work as an analyst is to be a liaison between the accountants’ world and the other financial departments.
Here’s the difference between what an accountant might do and what the CFO might do:
- Accountant: Avoid screwing up and making errors so that the company doesn’t have to restate its financial statements afterward.
- CFO: Hit his Net Income target… even if he has to “take some liberties” along the way.
A CFO is incentivized to be more “aggressive” with his accounting in order to hit that Net Income target. So he might argue for policies that result in potentially misleading financial statements:
- He might try to classify more spending as Capital Expenditures so that it doesn’t hit the Net Income line (e.g. Capitalized R&D spending)
- He might try to change the timing of certain expenses, or the company’s revenue recognition policy, so that Net Income looks better
As an accountant, you have to manage both sides and make sure that the CFO is happy, but that the financial statements are also accurate and don’t mislead investors or company management.
You have to make sure that when auditors review them, they can understand everything and won’t ask you to restate results.
Audits are also a big part of your job since you’ll be providing auditors with the necessary accounting documents.
Organization
Traditional Accountants are divided by product or region, and you have to coordinate their work so that they book entries properly.
The “finance-oriented” side, where non-accountant profiles work, is made up of 3 or 4 analysts led by a senior analyst. Financial accountants are in charge of producing the financial statements and dealing with all the tasks and responsibilities discussed above.
The Controller – the head of this department – reports directly to the CFO.
Lifestyle
If you are on the traditional accounting side, congratulations! You’re the very definition of “work/life balance.” You work 40 hours a week – no more, no less – and you’re paid accordingly: $40-50K USD for an entry-level position.
If you are reading this article, though, you are probably more interested in the “dynamic” side of controllership: the royal path to becoming a CFO.
In that case, your hours and your salary will be very similar to the figures quoted above for FP&A roles.
An annual closing can turn into a nightmare and make investment banking hours look like a primary school teacher’s schedule, though! (On the upside, at least you won’t have to deal with quite as many crazy people)
Treasury: The Most Important and Overlooked Department?
Treasury deals with everything related to cash and cash flow.
If you’ve studied accounting, you know that Net Income can be manipulated in many ways: you can change revenue and expense recognition, re-classify expenses as capital expenditures, and so on.
But you can’t fake how much cash you’re making or losing.
If, at some point, you have no cash left and no credit line available, your company is dead. That’s why Treasury is so important.
As a Treasury analyst, you forecast how much cash your company is going to need in the future. You then have to make sure that this amount of cash is available when it’s required.
In order to do that, you have many tools at your disposal: you can emit bonds, raise equity, borrow through commercial paper, or negotiate credit lines with banks.
You’re in contact with banks and investors on a weekly basis to secure funding and support – and this is one of the reasons why you work so closely with Debt Capital Markets (DCM) groups at banks.
You are also responsible for equilibrating the cash position of all the company’s accounts to make sure that none are negative and costing you extra in fees.
On the other side, you also have to invest short-term funds so they don’t stay idle in your accounts and so that you get at least some interest income out of them.
Organization
The size of the Treasury team depends heavily on the industry. It’s more important for a bank to have a larger Treasury team because you have to deal with liquidity ratios and heavy regulations.
But an industrial company would have a much smaller Treasury team, since managing their liquidity and cash positions isn’t quite as important.
Each analyst has a specialty, ranging from bonds emission to cash position forecasting, and the Treasurer coordinates all of them. The Treasurer is also the main contact for investment banks and investors.
Lifestyle
If everything goes smoothly and the company generates a lot of cash flow, being a Treasurer can be a breeze.
On the other hand, if your company is in a tight spot from a cash point of view, the Treasury team will meet with the CFO daily to find solutions.
So hours vary widely and depending on the state of the company, you could find yourself working anything from a normal 40-50 hours per week all the way up to investment banking hours if you’re in “crisis mode.”
Pay
People working in the Treasury department are usually more senior than those in FP&A and Controllership positions due to the intense contact with investors and banks – and salaries reflect that fact. Here’s a run-down:
- Analysts: $70-90K USD
- Senior Analysts: $100-170K USD with up to a 15% bonus
- Treasurer: He tends to be one of the better-paid members of the Corporate Finance department, and often earns the next most after the CFO; that translates to a range between $200K USD and $4MM USD.
What About the Rest of the Corporate Finance Department?
There are a lot of “core” functions I didn’t mention here because they are not always part of the CFO’s team.
For instance, Pricing can be a marketing role or a financial role depending on the company.
Internal Audit and Risk are usually part of the CEO’s responsibility to avoid any conflict of interest (COI.)
I didn’t mention Tax because it’s a very specialized job, and I have never witnessed someone moving from a Tax position to another corporate finance function.
So How Do You Become a CFO?
Good question! The chief financial officer (CFO) of a decent-sized division manages between 25 and 200 people and earns $300,000 USD and above (bigger company and bigger division generally equals higher pay).
At the end of the day, 80% of the people in the finance department want to become the CFO… and, of course, very few succeed.
Being a CFO requires a wide range of skills and some heavy internal networking. At a Fortune 500 company, you don’t get promoted to the CFO role just because you’re doing “a great job.”
You also have to know the right people (and play the office politics game well), and make sure that they like you enough to trust you with a P&L.
In that way, it’s very, very different from what it takes to succeed at a hedge fund or asset management firm (or prop trading and so on), where advancement is more merit-based, and it’s arguably quite different even from investment banking.
Ten years ago, the standard “path” to becoming a CFO was to be an FP&A Manager for a while to learn everything about hitting your Net Income target – and how to coordinate with other groups.
But things have changed a lot, and regulators are now the CFO’s main focus. Thanks to the Sarbanes-Oxley Act in the US and similar legislation in other countries, CFOs can now go to jail if they certify incorrect financial statements.
So now and for the foreseeable future, strong controllership skills are essential if you want to reach the CFO level. Controllership isn’t the sexiest department, but you’ll have to get used to it!
If you have a Big 4 background, you will have a serious advantage.
Once you’ve learned how to manage a P&L by working in Management Accounting for a few years, you have a good shot at moving toward the CFO role as you move up the ladder… as long as you get everyone there to like you.
What About the Exit Opps?!!!
There’s a lot of “controversy” over exit opportunities within corporate finance. Here’s the rough breakdown of where people go afterward, based on what I’ve seen in real life:
- 60% stay in corporate finance but move to another firm;
- 10% move to investment banking or venture capital;
- 20% move to consulting;
- 10% move to sales & marketing or risk
Yes, you can transition to investment banking or private equity… but it’s also much harder than if you started out in one of those.
The skills are relevant because doing planning sessions in FP&A will teach you a lot about how to actually model revenue and expenses for a company – you’ll be much more grounded in reality than bankers who have never actually seen what all their fancy spreadsheets mean in real life.
Controllership will give you a perfect understanding of the Balance Sheet. But in a tough economy, you’ll have to be very talented and very well-connected to make the move.
If you want to follow that route, it’s almost easier to re-brand yourself with a top MBA degree and make the switch after that.
You can also transition to management consulting because Financial Planning & Analysis teaches you a lot about strategy, but you’ll probably better off in operational consulting, where you’ll be able to show-off your “execution and implementation skills.”
If you feel more like a sales guy or girl, you should definitely consider sales and marketing in a big group. Forget all the hassle of regulators and audits, and embrace the world where the bottom line is all that matters.
A background in finance won’t hurt and could even put you ahead – sales teams often have a hard time understanding the financial impact of their actions!
Any Questions?
I hope you enjoyed your tour in the world of corporate finance, and that you no longer think of it like the back office – where front office careers go to die – anymore.
If you have any questions or experiences, please share them in the comments!
Thomas Ausart founded finance-resume.com with Mike, a former Investment Banking VP, to assist you with your resume editing, interview preparation so that you land the Finance job you really want. Check out the new From Zero to Hired Coaching Plan here. Follow Thomas on Twitter to get daily recruiting tips.
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Good article. I would like to see a bit more like this in the future. I have finally got into IB as an intern and suddenly realised there are more pathways I haven’t considered yet. Articles like this help a lot. Thanks.
Hi Bruce,
Thanks a lot for the comment, I’m glad you liked it.
IB is very different from Corporate Finance that’s true. Some fields in finance are better depending on your personality I hope people will see that there are many paths to “greatness”!
Since you touched on it, is there an article summarising all jobs in finance world and personalities suitable for each job?
I see myself as passive, modest and merit-focused, but IB’ers are known to be aggressive right?
Most IB’ers would be like that yes. I’m not saying that you can only succeed in IB by being a type A fresk but most people are.
Your personality would be a good fit for an “expert” role in Controllership for instance where you are a specialist with a deep understanding of one area. People fighting for the CFO spots in Corporate Finance are pretty much like IB.
I don’t remember any article like this on the website. Brian might drop by and give you a definite answer though. I’ll think about it!
See: http://www.mergersandinquisitions.com/finance-investment-banking-jobs-tradeoffs/ for a summary of your options. If you search for other areas such as private banking some of them have been covered since then.
Thanks. I read the article. It is very informative.
To a very different direction, what do you think about academia? I used to think it’s a boring field and they are the people who couldn’t get an offer from top banks. But after reading so much about go-to monkey and repetitive pitch book I start to think again. What is academia like in an IBer’s eyes?
It just depends on your personality. If you don’t mind slower-paced work and more bureaucracy it can be good, especially if you like teaching. Pay can actually be quite good for tenured professors, but tough to make it there.
Really glad you wrote this article. Corp Fi. gets a bad rap since it’s not as glamorous as ibanking but it’s still a very interesting and influencial field to be in.
Thanks! Agree that it’s a great field to get into and a solid alternative to banking.
Is the storm as awful as the media’s making it out to be?
Where I am in NY currently, no, Internet and power are still working but everything is closed so it’s annoying. My answer may change if I wake up tomorrow and my building has collapsed.
I spoke too soon – power out completely through much of the city and massive flooding downtown. Giant pain in the ass as I have to run all over to find open coffee shops now…
As someone who has made the jump from BB investment banking analyst (with deal experience in LBOs, M&A, and capital markets products) to a hybrid role of FP&A, corp dev, and strategy associate, I can say with confidence that the financial data you attempt to interpret and model as a junior investment banker are extremely neatly packaged.
If you think you’re “getting granular” just because you’re forecasting revenue growth and EBITDA margins for multiple business units and 100+ retail sites, think again. There’s a whole other world of complexity that determines what shows up in your historical P&L.
Yup that is very true and a great point. If you want to see a horrible mess of financial data, you should see my own P&L for this site…
This is so true. If you have a crazy FP&A manager, the granularity of the 5 years outlook model is going to be ridiculous (think “hours of training cost forecasted on an employee by employee basis”).
Great article! Thomas, how would someone from an engineering background be able to make a switch to a corporate finance role?
Thomas may drop by later to answer that one, but I think he would probably say, “Focus on tech or engineering companies that match your background and try to move into more of a product management / marketing role first and then move over from there.” But he’s the expert, so we’ll see what he says.
Hey Nilay,
Depends on plenty of parameters like which type of engineering etc. But in general if you want to make the switch like Brian said focus on products/fields/companies that you know because they match your background.
If you want to make the move internally, get involved in cross-functional projects. FP&A is always looking for people in the different functions to design new models etc. If you are that “key” person, the useful contact, then they’ll start using you for bigger and bigger projects until you have a solid network in Corporate Finance.
Hope that’s useful, if you give me more details I might be able to help more.
I’m working as a process engineer in a refinery at a very reputable company in canada that specializes in plastics production. Is that better?
That was a great article. Could you also share an article about the Corp Finance department in a bank?
Thanks! I’ll speak with Thomas and see if we can cover that in the future.
Hey Mayank,
That’s a great idea thank you. This is definitely going on my “to write” list.
Thomas
I currently work as an analyst in FP&A and I think people would enjoy an article on how exactly to “exit” into IB/PE/VC. How easy is it to get into top 10 MBA with a corp fin job (Compared with an IB analyst)?
Thanks for your suggestion, I’ll see if we can cover that in the future. I think you would still have a good shot at top 10 MBA programs but it would be significantly harder to get into IB/PE without prior transactional experience, VC would probably be more do-able.
Hey Mike,
Thanks for the idea. It’s a tough subject since it’s definitely not the biggest “exit” in Corporate Finance but I like the challenge.
Regarding MBAs this is definitely possible if you were a good performer and worked on interesting projects. It all comes down on how you sell it.
Thomas
Great article. I just accepted an offer in corporate finance with a large consulting firm doing internal controls and P&L. Since I have a corporate finance role in consulting and not banking, will that greatly change my exit opportunities as well as my path up the corporate ladder?
Hi Daniel,
Thanks for your comment.
The article wasn’t about Corporate Finance in a bank, it’s about Corporate Finance anywhere (industrial companies, services companies…)
So yes, exit opportunities are pretty much the same if you’re doing Consulting. The only difference between the industries would be that if a lot of Mergers are going on and you’re involved in the process, you’d get a better shot at M&A/PE.
Good luck with your new job!
Loved the article, guys – thanks Brian, I’ve been hoping for a primer on corporate finance!
Thomas, would you mind telling us the likely career progression in terms of years worked? For example, how long does it take for an entry-level FP&A analyst to become a senior FP&A analyst?
Also, does promotion at any level require business school? And does one have to work at one company their whole career? Or do, say, good senior treasury analysts get poached to become the head treasurer by other firms? Lastly, is there mobility between these three divisions?
Hi Jay,
There’s a lot of mobility between the divisions (Treasury, FP&A, Controllership) which means you do 2 years as a FP&A analyst, then become a senior analyst in Controllership, then come back to FP&A as a Manager etc. If the company is big enough you can move every two or three years and stay at the same company for 20 years. Very few people switch firms every 2 years because your internal network is the most important factor for your career.
In terms of progression, I’d say 2/3 years to become a senior analyst, then another 3/4 to become a manager and then 4/5 at least to become a VP/CFO. It varies a lot depending on companies though.
Hope that helps,
Thomas
Thanks!
Another great article! Thank you for sharing.
Brian, how transferrable are the technical skills from corporate finance to investment banking and/or PE?
Is it easy to leverage learned/studied excel modelling to land IB/PE offers?
The skills are somewhat transferable but not especially so because you don’t work on deals in the same way in corporate finance (corporate development is different and you do work on M&A deals there). So I think in general, it would be fairly difficult to switch over directly without gaining deal experience or studying on your own first. The skill set is probably more relevant for PE since a deeper operational understanding of companies can be essential there depending on the type of fund.
Cheers, Brian
Great article, but I’d like to know where corporate strategy and where I am, investor relations could go. Are there any IB exit opportunities in your experience?
Hi Nick,
Corporate Strategy is big for consulting, because that’s what it is: internal consulting. If you happened to work on M&A deals as part of the external growth than IB is also on the table.
I must admit I don’t know much about investor relations though. Could be interesting because you have the shareholders perspective and probably are a pro at creating pitches etc. Depends a lot of your orientation, finance vs PR, I’d say.
Great article! I been looking to read one of these! I have a few questions in regards to entering the field:
1) How does one break into this field, since most of the job postings I see requires 3-5 years of “financial analysis experience”?
2) Would starting in private accounting, and moving into a FP&A role be doable? Or would working in public accounting and getting the CPA be the best path?
Thanks!
Hi KL,
Thanks a lot for your comment.
1) Of course they require 3-5 years of previous experience in the field. It’s a good way to filter people + you can make candidates feel guilty during the job interview and negotiate the salary down. So apply anyway, if you have a finance/accounting degree and some relevant experience you’ll be considered. Rotational graduate programs are also a good way to break in if you can get a good one.
2) Public accounting would definitely work best: more exposure, more stimulating environment. If you do private accounting, people will tag you as “the accountant” during interviews and as I describe in the article, pure “private” accounting is another world…
Hope that helps,
Thomas
KL and Thomas,
Very accurate response. I started in a rotational program at a F100 manufacturing firm out of undergrad geared towards “private accounting” but I networked my way into a FP&A analyst role out of the program, because you most certainly do get titled the “accountant” in those roles if you stay there. So KL yes it’s very doable to make the move.
Also, my company pushed the CPA during the program so I did that as well. Although, now that I’m in FP&A and Corp. Finance it’s not much more than a feather in the cap, oh well.
Thanks again for a great article.
Oh also, almost all the positions in our Corp. Accounting department do prefer Big 4 Public Accounting experience to reiterate Thomas’ point. So that is just something to keep in mind. But if FP&A is the goal, I would just go straight for that from Big 4.
I worked in FP&A for 3 years before getting my MBA and moving into strategy/business development.
I can attest that everything in this article is almost 100% spot on with my experience.
I would disagree that with exit opps numbers though. I’m speculating they are much, much lower – particularly for banking and consulting.
Also, one big thing the article fails to note: to move up in corporate finance is an unbelievably slow process.
When businesses grow, they typically ramp up sales, operations (i.e. “line” roles), and maybe marketing. As a result junior people can potentially move up fast as the business grows just because they were there first and they know the game.
In a finance group, as the business grows, you just increase the number of zeros to the numbers in your spreadsheets, not headcount. There is more paperwork, but you hire A/P and A/R clerks to handle that. Bottom line — you won’t get to participate in the companies growth the same as people in the business units.
Ultimately, you will be waiting in line for the people above you to burn out, retire, or die before you are promoted. If you’re lucky there will be a regime change (heads roll, especially senior people) and you can align yourself with the new CFO and make a big jump (which is how I became an FP&A manager) — in the end it was just too much of a grind. Waiting 10, 15, 20 years to become a CFO — not for me.
My advice — do it for three years MAX learn the game and bail. The skills you learn will be valuable. Thinking like an analyst is a great skill to have in “line” roles if you can combine it with people skills, and domain knowledge.
If you’re going to shoot for CFO prepare to be between 45 and 52 before you get the title (unless you’re at a start-up). Which, brings up another point — most continuity committees have specific age ranges they look for in CFOs along with experience. Therefore, no matter how good you are — you’ve got almost zero chance of becoming a CFO unless you meet “The Criteria” (age 45-52, CPA, MBA, 20-30 years experience, previous CFO experience, Sarbanes Oxley, Big 4 pedigree, transaction experience, … good credit, a wife, two kids)
Hi George,
Thanks a lot for your very detailed comment.
I’m glad we agree on most of the points.
Regarding the progression in Corporate Finance though I think it heavily depends on the company. Yes it can be painfully long but in some companies which have accelerated programs for top performers some CFOs are as young as 30-35 and earns above $300k (some even get $1MM or more). Sure, they’re not CFOs of the biggest divisions but it’s possible.
You just have to find a company that’s the right fit for you in term of career expectations.
Awesome, thanks for adding all that and glad to hear that the article is accurate for the most part.
Fantastic article and responses to questions. It’s very refreshing to hear all of this explained in one comprehensive article, even though I work in FP&A.
I agree with both the original comment and response well.
My experience as an FP&A analyst would align more closely with George’s experience, but as Thomas mentioned, it could be very dependent on the specific company.
Thanks for your input Jim!
A lot of members on WSO talk about Corp Fin and Corp Dev. What exactly is the difference, will you do an article on Corp Dev?
http://www.mergersandinquisitions.com/corporate-development-recruiting/
http://www.mergersandinquisitions.com/corporate-development-on-the-job/
http://www.mergersandinquisitions.com/engineer-to-corporate-development/
Most discussions on that site are about topics we’ve already answered many, many times here…
Thanks Brian for sharing the links.
In a nutshell:
Corp Dev= Internal M&A
Corp Finance= Everything in this article: financial planning, controllership, treasury
Hi Thomas,
Very informative article.
Could you “paint” something similar for the Risk Management world. What’s the hierarchy? possibility to jump into other industries?
Hi Ilir,
Risk is a bit different since there are not as many functions inside the department. It’s harder to jump around jobs and companies because you have more of an “expert” profile.
Depending on your specialty you could move to a HF but consulting/IB would be a lot harder.
The hierarchy would be pretty similar with a CRO on top instead of a CFO.
If you have any specific question let me know but I’m not a big risk specialist!
Thomas
Very interesting topic. What ib role would you suggest for a personality like ; less talkative, less effective in client meetings ; but with immense drive to succeed.
For someone more introverted I’d go for things like Equity Research or Risk Management. Corporate Finance could also be a good fit.
I wouldn’t limit myself to IB if I were you. Keep your options open and find a job that suits your personality.
Hi Brian,
1ST of all youre doin such a good job with this website- thanks a million.
my major fear is case studies during interviews, I’d lyk you to do case studies for entry level IB interviews. I’d like you to give examples or even exercises we r likely to meet during interviews…
Regards
If you sign up for the interview guide, you’ll receive several examples of case study questions via email. Also, in the modeling courses we provide several case study bonuses that will be useful for more modeling-intensive tests.
Hi, Sorry this comment is a little off topic; but i was wondering of your say regarding FT IB recruiting from undergrad at this time. Do you think its too late to look around for such opportunities or there is still a chance of landing a gig? I know some BB are not recruiting, but i was wondering what you think about this and what to focus on at this time. I did a summer at a BB bank of over the summer and graduating next year.
Thanks for the great articles,
Maybe a bit too late for some deadlines if you are a senior but you can still network and see if something out there fits you.
First of all, thanks for the AMAZING article. Only last year, I came into the MBA program with the “IB or bust” attitude. It was also when I started following the articles published on your website. IB certainly is “sexy”, but thanks to the articles on this website coupled with a little introspection, eventually I was able to realize that I just was not cut out for the IB world. The next step was to figure out how I could integrate my accounting skills with the MBA to make it “big”. This article is pretty much confirms what I found through my own research. I just wanted to throw in few add-ons to this topic from a Canadian perspective. My observations indicate that the slow professional growth in corporate finance (specially in Canada) is partly/mostly due to the slow turnover rate in the departments themselves. People who get into corporate finance usually do not come in with an aim of retiring by 35. They are more in the “marathon” mindset and keeps chipping away at it till they reach the top. However, as the article mentions lateral movements do tend to happen but not usually after reaching a mid-management level. Also the latest trends in FP&A recruitment has been greater emphasis on database skills (MS Access, SQL etc.) and familiarity with well-known ERPs in the market, SAP to be more specific. To put it in a nutshell, nowadays just knowing accounting (or having a designation CA/CPA/CMA) isn’t usually good enough. Currently accounting knowledge is treated more like a basic requirement and then the odds for getting hired gets reduced with additional software skills and familiarity with the specific industry. Everything said, knowing the “right” people still helps more than anything else!
Yes networking is very important. Thanks for your input!
Great article! I was wondering about the FP&A salary as it seems a tad bit high than what I have encountered in the recruiting process for F500s out of undergrad. It seems you are typically starting off at 50-55k as a financial analyst in F500 regardless of department. If you are in tech or health care you can earn 60-70k. From what I’ve seen though entry level FP&A positions were paid as much as the other functional finance and corporate finance positions to start.
After a rotational program (1.5 yrs) with same company: FP&A analyst salary of 68k with 8% – 12% of annual salary as bonus (mixture of companies and your personal performance). F500 in chemical industry.
So technically not entry level – although it’s difficult to get into F100/F500 companies FP&A departments as an analyst straight out of undergrad, or at least these rotational programs seem to be a common method.
For the program right out of school though, it was 55k and 5k signing bonus with same 8% – 12% of annual salary as bonus.
Hope that sheds some light.
Thanks for sharing!
Thanks for your input!
Ok makes sense, the program I am looking at is entry level FA position with a F500 and there is the option to join FP&A right out of undergrad as well as other areas of corporate/functional finance. Salary is right around what you mentioned.
60 hours a week is definitely too high, certainly from my experience working for one of the big oil & gas majors. almost no one works a consistent 60, and the hours are fairly even across the different groups. in fact, the accountants are more likely to stay late due to month ends etc. though they’re schedule is extremely predictable.
in the uk at least, you’re looking at $40-55k for true entry level roles
Thanks for your input!
First of all, really great article – thanks for writing about corp fin!
Just a quick question, but would the corporate finance division of a large investment bank have jobs/roles that basically fall under the same categories? Just curious since I’ve seen a number of finance rotational programs (like at JPM and Citi) that seem to be very similar to a lot of F500 FLDP programs.
The programs are probably structured a bit differently since F500 programs are generally not finance-focused.
Just to add to that: yes, large banks do have these roles as well, but the focus is probably a little more on Treasury since liquidity and capital ratios are so important for banks.
Not sure how the pay would compare, but it’s probably about the same; the type of work might be different because of the Treasury focus, though.
Thanks a lot!
From what I’ve seen (only a couple of 1st year analyst salaries) the pay seems similar. Around 60k first year with a 10k signing bonus. Not sure about actual year end bonus though.
Wonderful article; thanks Thomas/Brian!
It is great to find some material on Corporate Finance @ M&I. Hopefully this shall mark the beginning of more to come!
Personally, I am probably not cut out for IB (maybe PE in later years if I play the cards right). However, at some point in time, I came to M&I and have been hooked for the sheer No BS Candidness and depth of its content–and for that, I have always found it offer some takeaways that could be applied to other professional scenarios as well! So it is only exciting to learn of such new content being developed in topics that are (further) aligned with one’s professional interests!
Now, only recently did it finally dawn upon me that Management Accounting (MA) is what I should have been doing all this while, given my interests+competencies. So wish me luck getting into FP&A folks!
A point that I would like to stress upon in terms of MA is that if you really want to enjoy and perform in that role, it seems imperative that you do possess good people skills and inquisitiveness. This is because, a lot times, when it comes to addressing those variances, you need to consult as well as work with people from across divisions and spheres. This is when the role–in many a organizations, esp. in European ones–treads on borderline internal consulting for performance (of sorts). So communication as well as strategic management skills are important–and not from networking and getting-ahead perspective alone. (Or at least so is my understanding!)
Cheers!
Thanks for adding that, I definitely agree that the people skills are important even in MA. Good luck!
Hi Thomas,
I am an MBA/MSF candidate at Boston College (expected May 2013 graduation) in corporate finance that is looking to transition to private equity. First, I wanted to let you know that this is by far the most helpful article I have read at outlining potential exit ops for corporate finance (and I’ve read, A LOT). Most articles about transitioning to PE or IB gloss over the corporate finance transition as one lump group of people, if even addressing them at all (which is annoying but admittedly somewhat fair since there are only a few of us trying to make the jump).
Anyway, aside from letting you know I appreciate the article, I am also wondering if you have any advice on how to make the jump. As I stated, I am a MBA/MSF candidate for 2013. I am doing school part time, however, and I currently work in the controllership (which is also a very heavy FPA role) of a $3B privately held company in the consumer electronics/home audio space in MA as the Sr. Financial Analyst for a large operating division. My prior work experience includes 2 years in FP&A at a high growth consumer electronics/home audio company (~100% YoY from $80M to $350M while I was there) that got $150M in PE funding and was headed for exit when I left.
I will spare you the generic “how difficult will it be to transition to PE” question, because I know it will be difficult and I’d rather just get specific. My thought is that if I target PE funds investing in consumer electronics companies, I may have a shot, given my background. Is this a reasonable expectation?
Further, in your article, you say that Mgmt/Operational Consulting may also be a viable option for someone coming from the Controllership or corporate in general. My end goal is PE, so might a more logical step be mgmt/operational consulting -> PE?
There are also treasury roles that I’ve thought about pursuing. Would it make more sense to work in the treasury for a year or so, then work to move into PE?
Apologize for the long email, but wanted to cover all the bases. Overall, the most direct and immediate path to PE is what I’m looking for… Appreciate your thoughts.
Regards,
Pete
Yes, you can have a shot if you target the right funds, network your but off, and attempt to get some time of part-time / unpaid PE internship first.
Consulting to PE is possible but it wouldn’t help you much unless you get into one of the top 3 consulting firms. Do not think treasury would help much more either.
Thank you very much for this article, it is nice to finally see the finance division getting some recognition! I am currently on one of the aforementioned finance rotation schemes at a BB IB in London, and this has certainly shed some light on future options for me.
My question would be whether working in this role in a bank would make it any more likely to transfer to an IB role? And given the skillsets in the FP&A teams whether there would be a particular IB role that would suit more than others? I am thinking in particular about equity research, potentially sales.
Thanks,
Tom
I think it would be relatively tough to move straight into IB at the same bank because the skill sets are somewhat different, though it is possible. You would probably have the most luck with research because you’re creating projections and analyzing the internal workings of companies in both cases.
Thomas / Brian,
Thanks for the great article! I have a quick question. In a public company, what does the CFO usually care about the most when making decisions that will impact the Company’s forecast? NI, EPS, FCF, EBITDA?
Thanks!
Net Income and EPS are most important because public company investors pay so much attention to EPS and P/E, even though they’re actually borderline irrelevant in my opinion (due to tax rates, one-time charges, capital structure, etc.).
Preface: I am a tech marketer but a recovering accountant. I do not understand an iota why in a company exit CFO´s are so highly compensated. In the last exit I was a part of, the CFO and head of sales each made seven figs on a $100M+ deal and no one else made any real money… CFOs I have seen do not add value commensurate with this kind of payout.
Since corporate finance largely consists of accounting roles, can you provide some distinction between “having a career in corporate finance” and “a career in private accounting?” Right now, it seems to me that the career descriptions are extremely similar, except that corporate finance may be a little broader, and accounting also encompasses public accounting and auditing.
Also, how does corporate finance differ from corporate development?
In corporate finance, you’ll be focused on transactions and be very involved in the pitching process – drafting presentations, building models and attending client meetings. I think the two are actually pretty different, and work in corporate finance will be a lot more faster paced and hours will be longer
http://www.mergersandinquisitions.com/investment-banking-analyst-life-worst-day/
http://www.mergersandinquisitions.com/week-in-life-investment-banking-analyst-sunday-monday/
In corporate development, you work for a corporate, focus on M&A and acquiring other companies as well as setting up joint venture deals. You’ll still be doing M&A in corporate finance (for a bank), but you’ll be working for a bank so you will be focused on helping clients like a corporate make acquisition decisions
http://www.mergersandinquisitions.com/corporate-development-recruiting/
http://www.mergersandinquisitions.com/corporate-development-on-the-job/
Thanks. But I was more wondering about corporate finance jobs at a company (hence the title of this article “Corporate Finance Jobs Hierarchy at a Fortune 500 Company”), not corporate finance as in investment banking roles. Could you make the distinction between corporate finance and corporate development at normal company?
Hi Bryan,
I’ve spent some time in many “private accounting” roles and now work in corporate finance or FP&A, both at a F100 company. The roles are very different – FP&A is very much as described in the article and you’re essentially responsible for understanding everything about one or more of the companies businesses P&L. Forecast, budget, variance analysis, and “steering” the business. You need to understand accounting concepts but its not really an “accounting” role to be honest. (However be prepared for some engineers and PhDs to roll everything in this article into “accounting”).
Private accounting or corporate accounting is more high level, responsible for the balance sheet for a whole region, you will be the main point of contact with external auditors come year end, hence this area attracts a lot of ex-big4 ppl.
Corporate development will be internal M&A for a company and I’m sure the experience there can vary wildly from company to company and industry to industry.
Jim, thanks for your detailed response and insights. Greatly appreciate your support of M&I.
Thanks so much! To me, it sounds like your FP&A role deals much with the topics in managerial accounting. Is it alright to link together FP&A with managerial accounting, or is FP&A broader than that?
Furthermore, would it be ok to group together your definition of private accounting with financial accounting?
(I’m still a student in school)
Hi Bryan,
Yes, if you were to try and map your courses to the lines of work described in this article.
Financial Accounting would most closely resemble Private/Corporate Accounting.
Managerial Accounting would most closely resemble FP&A style work.
As with most courses though, they will typically cover more material with less depth than you would find in an actual FP&A role.
Especially as the firms get larger, each FP&A Analyst or Private Accountant can become more specialized in what they’re doing.
As an example, you could work for one business, of one division, of a large company, focus on one of their 2 main products and work with sales, manufacturing, engineering, and capital spending groups related to that one product to create, analyze, and understand that specific products P&L forecast (and understand deviations from forecast, etc).
Or you could perform FP&A duties for a whole region (i.e. North America) for a large firm, and have 6 or 7 businesses that operate in that region “roll up” their forecasts and analysis to you so that you can perform FP&A work for the region as a whole.
It really depends on the layout of the organization, it’s size, the industry, and what layout makes the most sense to help the businesses (revenue generating activities) make/steer/understand their business making decisions more effectively.
Remember, in these roles, you’re “customers” are the internal management teams at your own firm. You don’t necessarily have external clients that you’re performing your work for. You aren’t making the firm money per say, just helping them to make it more efficiently or to save them money.
It’s similar to how people in different industry groups for IB focus on different metrics and financial ratios for modeling and valuation – some mean more to certain industries and do a better job of telling the story of the businesses. It’s the same concept in FP&A roles, and that’s why they can be very different and varied depending on the firm itself or your role within the firm.
Private Accounting work can get slightly varied and detailed too, but you find less variance here because this area is tied so closely to regulations and external reporting (especially if you’re working for a company that is publicly traded).
Thanks for your detailed input!
Hi Bryan,
I’ve spent some time in many “private accounting” roles and now work in corporate finance or FP&A, both at a F100 company. The roles are very different – FP&A is very much as described in the article and you’re essentially responsible for understanding everything about one or more of the companies businesses P&L. Forecast, budget, variance analysis, and “steering” the business. You need to understand accounting concepts but its not really an “accounting” role to be honest. (However be prepared for some engineers and PhDs to roll everything in this article into “accounting”).
Private accounting or corporate accounting is more high level, responsible for the balance sheet for a whole region, you will be the main point of contact with external auditors come year end, hence this area attracts a lot of ex-big4 ppl.
Corporate development will be internal M&A for a company and I’m sure the experience there can vary wildly from company to company and industry to industry.
Thanks for clarifying. I think Jim has already answered your question, and I don’t have anything to add to that. Please let us know if you have other questions though.
Great article, and definitely one that resonates with me. I have a relatively niche question but that might be of interest. I am currently in the corporate finance division (corporate finance to be taken as it is in this article) of a bulge bracket IB in London, but would be looking to move to the investment banking teams, in partiuclar DCM. What are your initial thoughts? Is this possible?
Moving from banking to DCM – yes it is possible you just need to demonstrate your knowledge of debt products, the capital markets and why you want to move