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General Electric’s Financial Management Program: An Insider’s Guide on How to Break In

General Electric FMP InterviewNicolas was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

Have you ever found yourself applying for a job, but also having no idea why you’re applying?

I’ve seen it a lot.

Sometimes, if the company is seriously understaffed and needs people ASAP, you can get away with it.

But you really can’t get away with it when you apply for corporate finance rotational programs, such as GE’s Financial Management Program.

Unlike banks, which largely have the same set of “values” (make money!), normal companies have different values and cultures… and they prefer different candidates.

You can learn the process of applying for a job perfectly, but if you’re not the right person for the role, none of that matters.

In Part 1 of this series, we looked at what it’s like on the job in the GE Financial Management Program, including pay and exit opportunities.

In Part 2 today, you’ll discover how to break in, including:

  • What the “perfect candidate” for FMP roles looks like, and how to figure out if it’s for you.
  • What the recruiting process looks like, and why assessment centers are even more critical than in IB interviews.
  • Why making corporate finance your “Plan B” if banking doesn’t work out is a recipe for disaster.
  • Insider information on the recruiting process from someone who went through the whole thing successfully (me!).

These tips are intended for the Financial Management Program at GE, but the criteria and the process are very similar for corporate finance graduate programs at other F500 companies.

So if you’re interested in corporate finance at Apple, Exxon Mobil, Wal-Mart, or any other company that size, here’s what you need to know:

Part 1: Are You the Perfect Candidate?

Before you submit any applications, you need to figure out if your profile matches what the company wants.

Here are some of the points that GE cares about:

Academics

The royal path to the FMP is a finance or accounting degree at one of GE’s “target schools” with a GPA above 3.5 (or equivalent, such as 2:1 or better in the UK).

You can compensate for a lower GPA with networking and impressive leadership experience, but if your GPA is below 3.0 it will still be extremely-difficult-to-impossible.

GE regularly recruits people with engineering degrees, so you don’t necessarily need accounting or finance classes, though they certainly help.

If you are coming in with a non-finance degree, though, you need to showcase your interest in finance somewhere on your resume – if you look like a pure engineer who wants to code all day, you will not get interviews.

Leadership

GE is looking for candidates who are “made of more.”

Corporate finance team members are typically less “Type A” than investment bankers, but FMPs are the most “Type A” of the corporate finance bunch.

They are more ambitious and outspoken than average, and they usually have at least one leadership entry on their resume that makes them stand out.

FMPs also tend to be willing to work more than average, so if the thought of a 50-60 hour workweek scares you away, you’re not a good fit for the program.

International Background

Being “international” is a just a plus in the US, but in Europe this is a key requirement. You’ll have to travel a lot and interact with people from different countries, so not having any experience abroad is a big drawback.

You need to have excellent spoken and written English since this will be your main language wherever you are in the world.

But speaking another language on top of English will give you more of this “international” flavor they’re seeking.

It can also be a huge advantage to speak Italian when you are trying to convince the Italian controller to send you data!

Excel and IT Skills

As an FMP you will be doing a lot of work with Excel and IT systems, so you need to be good with both.

Interviewers won’t give you a hardcore Excel test, but they might ask you questions about the projects you’ve completed using Excel.

Commitment to Your Country

I’m not talking about patriotism here!

If you come from a “developing” region like Eastern Europe, Africa, South America, or Asia, you need to be committed to going back to work there.

GE is not recruiting you so you can get a job in London after the FMP – they want you to go back to your country and build a pipeline of future local leaders.

Still Here?

If you have most or all of these qualities, great… but the job still might not be for you.

So before you hit the “submit” button on your application, consider the following points first:

Is This Your Plan B for Banking / PE / Something Else?

If you’re only using FMP as your backup plan, you are going to hate it.

FMP is for people who can picture staying in corporate finance, or a related area like risk, for the next 10 years.

So if you’re applying just to get a better eventual job in corporate finance, or to get into a Top 10 MBA program and then to get into banking, you should reconsider your plans.

Are You Flexible?

Flexibility is key for future FMPs.

Not only will you relocate every 6 months, but you’ll also have to relocate quickly.

If you are in a relationship, it’s tough to have no visibility at all on where you’ll be next month – so make sure you are OK with that.

Besides the location, you’ll have little control over what type of rotation you do next, so you have to accept what comes your way and make the best of it.

Overall, FMP is not for you if you’re a control freak who needs to have the next 24 months all planned out.

Can You Persuade Other People?

As an FMP, you have exactly ZERO formal, hierarchical clout.

This means the only way to get data or get your projects implemented is to convince other people to do it.

That’s why you need to be great at pitching your ideas and nagging people until they cave in and do what you need. If you don’t have that skill set or you hate doing it, FMP is going to be a very long 2 years!

Do You Have a Big Picture View?

A lot of your tasks will be “monkey work”: you’ll be doing reporting, consolidation, data reconciliation, etc.

So if you just focus on that unsexy perspective, you’ll be miserable.

You need to understand the big picture and how your “menial” tasks fit into the whole process: it’s the only way to have a good time and become a better analyst.

Do You Love Networking?

Networking is very important for landing the FMP offer (see below), but once you’ve won your offer, you need to keep it up because you’ll have many opportunities to meet finance leaders.

If you enjoy meeting people and building relationships, FMP is great because every 6 months you’ll work with a different team. If you can stay in touch with everyone, you’ll build a strong network by virtue of those rotations.

If networking comes naturally to you, you’ll thrive; if you’d rather sit in a cave and work by yourself all day, not so much.

And Do You Love Excel Even More?

You will be spending 60%+ of your time in Excel, so you need to love it.

Excel and VBA macros are the best way to add value early on, and if you can build solid, automated processes, people will be very impressed.

Part 2: The FMP Recruiting Process

So you’re convinced that the GE FMP is in your future, and you’re close enough to the “ideal candidate” to have a good shot… what’s next?

Here’s a rough outline of the process:

  • Step 1: Network with current FMPs in advance.
  • Step 2: Apply online or on-campus – yes, you still need to do this. And you still need a customized resume/CV and 3-4 short essays.
  • Step 3: Do a 30-minute first round interview with HR to determine whether or not you’ll advance to the assessment center and/or next round of interviews.
  • Step 4: If you’re in Europe, Africa, or Asia, do the assessment center, which might consist of 4-6 interviews with finance managers and HR, along with group games or group case studies; if you’re in the US, it will just be additional interviews.
  • Step 5: Win the offer… if you’ve done well in Step 4.

The biggest difference is that more of your success depends on the assessment center.

Unlike in IB / S&T / other interviews at the big banks, you will not go through multiple rounds of interviews before the AC – so you really need to be on your “A game” that day.

Also, doing an internship at GE gives you a big advantage in winning these roles – more so than if you completed an IB internship at a bank and wanted to convert it into a full-time offer.

If you can do an internship in a division with an ex-FMP manager, you’ll have a much better story for interviews (“I’ve worked with people who did the program”) and you’ll get to attend a ton of networking events to meet leaders in other divisions at GE.

I’ll focus on the key differences in the recruiting process for FMP in each step below:

Step 1: Network Your Way into the Financial Management Program

You already know from the hundreds of articles on this site why alumni / LinkedIn / other networking is so important, and it’s still important for FMP roles – and the only way to get interviews if you’re not at a target school.

Networking actually works better for these roles because:

  1. FMPs receive fewer “networking” emails than investment bankers and they have more free time, so you’ll get a higher response rate and more time on the phone with them.
  2. You don’t necessarily need to come up with “creative” questions because FMPs take fewer networking calls; asking about the job itself, typical career paths, etc. are all fine.
  3. If the FMP is any good at his/her job, he/she will have more influence with the head of FMP than a junior banker would have with his/her MD.

So once you have spoken with least 10-15 solid contacts, start reaching out and asking directly for referrals to participate in their recruiting process.

Of course, you also still need to apply online, which leads us into Step 2:

Step 2: Customize Your Resume and Write Your Essays

I’m assuming you already have the resume templates and all the resume advice offered on this site; here’s what I’ll say beyond that:

  • Focus on Money Saved – Your job as an FMP will be to improve, automate, and simplify processes, so you should highlight anything similar from your past work experience.
  • Insert GE Values Everywhere You Can – The 5 GE values are “External Focus,” “Clear Thinker,” “Imagination & Courage,” “Inclusiveness,” and “Expertise.” So you should rephrase work experience entries and insert these words wherever you can.
  • Be Prepared for HEAVY Background Checks – Don’t even think about “hiding” your GPA, padding your resume, lying about dates, etc. – it is guaranteed to backfire. A F500 company does far more thorough background checks than a 5-person boutique bank.

After you have your resume, you’ll need to write short essays answering questions like “Why should we choose you for the program?” or “Describe a time where you had to step up and lead others.”

These are very similar to the competency questions given by banks, and the same ‘STAR’ (Situation, Task, Action, Result) structure applies.

My #1 recommendation is to reference the discussions you had when networking to write these essays, and, if possible, to get a current or former FMP to review your essays as well.

Step 3: Prepare for Interviews

Previously, I wrote about how to prepare for more “general” interviews on M&I with a six month plan.

Here’s how FMP interview preparation is different:

  • Your Story: Instead of saying, “Tell me about yourself,” they’ll say, “Tell me how your whole life has prepared you to be an FMP,” or something else much more specific. So you CANNOT use a generic ending like “I want to become a trusted adviser or an investor.”

That might work for some roles, but for FMP you need to explain why you’re interested in working at GE for the long-term and improving the company.

You might say something like, “I spoke with 5 current and former FMPs, and they mentioned work projects such as X, Y, and Z which really interested me – I want to work across 3-4 business lines, such as A, B, and C, and improve the company’s performance with those assignments, also getting to know different teams in the process.”

  • Your Supporting Anecdotes: You should always reference people you’ve spoken with networking, but you should also prepare 1 story for each of GE’s 5 core values. They may not ask a specific question on this, but they do rate each candidate on each of the values above. And they’ll expect you to know key facts such as the CEO/CFO, the strategies of different business units, and even the high-level financial statements.
  • Technical Questions: There aren’t any in the first round HR interviews, because they test you later at the AC (or in later interviews in the US) and because they expect to “train you” anyway. So you should NOT spend time memorizing how Depreciation changing by $10 impacts the financial statements, at least for first round interviews.

I would highly recommend scheduling a few mock interviews with current or former FMPs to get feedback on your story and see how well your “fit” responses line up with GE’s core values.

Your first interview with HR is a straightforward 30-minute call with questions like:

  • Why the FMP?
  • Why General Electric?
  • Why do you think that you are a good candidate?

Be careful to “adapt” your responses to Human Resources: I’m being very nice, but I think you get my meaning.

One time I interviewed with an HR rep who was only 2 months into the job, and I knew more about the program than he did.

Step 4: Rock the Assessment Center

The Assessment Center is THE place where GE really selects candidates, at least in the EMEA region.

You start the day with a company presentation and a program presentation over breakfast.

If you’ve already interned there it’s pretty boring, but it can be a good time to prepare your own questions for interviewers; they always sound better when they start with “This morning during the presentation, the head of HR said…”

After breakfast, you’ll spend the entire day on everything below – which might happen in any order:

Accounting Test

You’ll be quizzed on concepts such as debit vs. credits, the financial statements, how business decisions affect the statements, and so on.

If you’ve studied accounting these questions should be easy enough; if not, learn/review the basics beforehand.

Note that these are the only real “technical” questions in the FMP recruiting process.

Interviews

You’ll usually go through interviews with 3-4 finance managers from different business lines at GE, as well as 1 interview with someone from HR.

The questions this time around are not that much different, except now everyone is evaluating you and comparing notes.

You should:

  • Look up all your interviewers on LinkedIn that morning (you’ll gain access to the list of names then), and prepare specific questions for each person beforehand based on his/her background.
  • Write down the names of everyone who interviewed you – they love to ask questions about whom you met with, whom you’ve spoken with, and so on.

Group Activity – Outside the US Only

While the interviews are straightforward, the group activity tends to trip people up.

Note that those group activities are only part of the Assessment Centers given in Europe, Asia, and Africa.

This “activity” could be anything from building a GE scanner replica with pieces of wood to a case study where you need to convince bankers to lend you money for a business.

The task itself is not complicated, so it’s more about how you interact in a group and how well you perform when 10+ people are observing you and taking notes.

To succeed:

  • Address everyone in your group by their first names. Yes, you have to learn the names of everyone in your group for that day. And yes, they’re specifically watching to see if you do this.
  • Try to take a “structuring” role such as the timekeeper or the note-taker. Don’t be the guy or girl who absolutely wants to be the “group leader” or it will backfire.
  • Don’t forget it’s just a game. I saw people getting very angry during the group activity, which is a deal-breaker when it comes to getting an offer.

If you’re lucky, you might even get an individual “debriefing” where you have to comment on your performance and the performance of your group.

Lunch and Breaks

Lunchtime and breaks in your interview schedule are NOT “time off” – they invite current FMPs to lunch, so it’s a great chance to meet them and ask questions in a more casual environment.

They can give you tips on your interviewers, good stories to cite, and possibly even good recommendations if they like you.

Whatever you do, do NOT go to one of these breaks and just sit there by yourself.

Step 5: Did You Win the Offer?

If you won the offer, congrats!

You can’t really “control” where you end up, but you may want to reach out to your interviewers and ask them for tips and advice before you start.

If you weren’t so lucky, you could consider other options:

  • Look at another corporate finance internship at a Fortune 500 company. If you can’t do FP&A at GE for your internship, doing FP&A at Apple or Exxon Mobil is close enough. Bonus points if you do the internship in the same industry as the GE division you want to join.
  • Audit firms are also a good option. Working there shows you are interested in finance, and it helps you build a solid accounting foundation.

One advantage of doing an internship outside of GE is that GE employees who refer you will get a bonus of around $2,000 USD if you apply to GE and later get the job.

So an internship elsewhere can actually help your networking efforts if you play it smart.

Conclusion

I hope this two-part series helped you figure out if the FMP is the right first job for you.

If it is, you now have all the tools you need to network your way in and rock your interviews.

And if not, there’s always the Big 4, consulting, wealth management… or even equities in Dallas.

If you have any question or comments let us know below!

About the Author

Nicolas Doumenc was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

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by Nicolas Doumenc Comments (57)

General Electric’s Financial Management Program: The Most Prestigious Corporate Finance Gig Around?

Nicolas was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

General Electric's Financial Management Program: The Most Prestigious Corporate Finance Gig Around?

There’s a lot of debate around the “best” place to start your career: Investment banking? Private equity? Corporate finance? Equity research?

But if you go the corporate finance route, there’s no debate over the best, or at least most “prestigious,” option within corporate finance: General Electric’s Financial Management Program (FMP).

It has been around for almost 100 years (created in the 1930s), and 75% of GE’s Chief Financial Officers went through it!

The only problem is that if you try to read about it online, you run into corporate speak and buzzwords galore, but little real information.

I actually graduated from the program and then left GE to start my own business, so I want to give you a realistic, non-sugar-coated version of what you do, what a “rotational program” in corporate finance means, and just how lucrative / prestigious it is.

Plus, we’ll take a look at how it compares to IB roles and answer the #1 question on your mind: is there any reason to forget about IB and become an FMP instead?

What Exactly IS a “Financial Management Program” (FMP)?

Just like investment banks hire interns to fill their talent pipeline, Fortune 500 companies such as General Electric do the same thing to fill their pipeline, division by division.

GE was the first company to create a rotational program for recruiting promising graduates and giving them exposure to different groups; programs at other F500 companies were inspired by GE’s example.

The FMP is a two-year program with four rotations of six months each: you join a specific division, such as GE Capital, and then you might do rotations in consumer lending, business-to-business-lending, real estate, and airplane leasing.

There around 600 FMP members worldwide, including 300 in the US, and they’re split between the two main sides of GE’s business:

  • The “Capital” Side: B2B and consumer banks (Over 25% of GE’s revenue comes from financial services!)
  • The “Industrial” Side: Groups that sell products in industries like Healthcare, Oil & Gas, Aviation

On the Job: Optimal Capital Structure, or Optimal PowerPoint Slides?

When the rotations begin, you spend your time not only on work assignments, but also on classes – and you actually have to pay attention and complete everything because of a mandatory test near the end.

The work assignments follow the 3 main categories we laid out in the article on corporate finance jobs:

  • Financial Planning & Analysis: You analyze profitability, make short-term and long-term forecasts, and find risks and opportunities.
  • Controllership: You improve processes and controls, and assist during quarter closes and audits.
  • Treasury: You hedge interest rates, work with swaps, forecast funding needs for the business, and analyze key working capital metrics.

You’ll do at least one rotation in FP&A and one rotation in Controllership during the two-year program since they’re the most important groups.

All the divisions above are separate entities, so your 4 rotations might look something like this:

  • Consumer Lending – FP&A
  • Real Estate – Controllership
  • B2B Lending – Pricing
  • Airplane Leasing – Treasury

The “sexiest” rotations are internal M&A, asset management, or pricing, but they are hard to come by unless you work in the GE Capital Division.

Is Any of This Work Actually Interesting?

Yes, but you have to be really careful where you complete your rotations. Here are a few examples of work assignments in each group:

  • Pricing: You calculate Return on Investment for different initiatives, review the models to adjust the assumptions, and speak to people in sales and operations to check your numbers.
  • FP&A: You may own a P&L, and you create the financial projections for a division and then pitch them to the FP&A manager and CFO.
  • Controllership: You will comment on and explain variances in Balance Sheet accounts, and help with the technical accounting for multi-million dollar transactions.

As long as your work is related to day-to-day operations and forecasts, it’s interesting and will teach you something new (check out our article on a day in the life of a corporate finance analyst for more).

Be wary of “headquarter” rotations at the European or global level.

These sound good on paper, but they tend to get boring since a lot of the work consists of consolidating data for 10+ divisions – interesting to do once, but repetitive the 10th time around.

On the other hand, you do get more exposure to very senior people, so there is a trade-off.

How Do You Get Placed?

During the first two rotations you’re assigned to a group and a location, but you can chose both of those for your two last rotations… to some extent.

A lot of candidates assume that they’ll be “taken care of,” but you need to update your program leader regularly and then sell yourself to potential managers in other divisions to get the rotations you want.

If you just indicate your preferences online, your chances of getting the rotation you want are much lower.

The Classes: Time to Hit the Snooze Button?

Besides your work assignments, you also have classes:

  • Foundations: Accounting basics and planning sessions
  • Operations: Inventory, FX, and loan accounting
  • Controls: Audit and regulatory
  • Strategy: Operational strategy and competitive analysis

FMPs are based all over the world, so you dial in and go through exercises together and then complete group exercises and business simulations.

There’s also an exam at the end of each module – 15+ FMPs typically get together to study and work on cases during the day, and then party at night.

The classes are not too difficult, but you need to pay attention for 2 reasons:

  1. If you score less than 80% on two modules, you’ll get kicked out of the program.
  2. Your grades influence your pay raises, so you’re incentivized to study.

Overall, you’ll spend around 1-2 weekends before the exam practicing and studying and about 2-3 hours per week on the classes the rest of the time.

The Benefits: Why Would You Want to Become an FMP?

Besides getting to write about the experience on your resume/CV, the main benefits are the network and exposure, locations and travel possibilities, exit opportunities, and pay – roughly in that order.

Benefit #1: The FMP Network: How to Befriend the CFO

Of course, you meet 200+ other FMPs during exams and at events and conferences, and you keep that network with you for life.

But the biggest benefit is the exposure you get to senior executives.

Once per rotation, you get to shadow an executive – in my rotation, I spent one day with Todd Smith, the CFO of GE Capital International, a division with $130 billion+ in assets and 25,000 employees.

It’s a great opportunity to ask questions about your career strategy, how to climb the ladder to the CFO level, and to figure out if the job actually appeals to you.

You’ll also attend dinners and roundtables with CFOs, CEOs, controllers and FP&A managers on a monthly basis, and you get special attention from CFOs and managers since most of them are FMP alumni.

Finally, you’ll also probably get the chance to pitch a new project to at least one officer of GE – which rarely happens otherwise unless you have 15+ years of experience.

Benefit #2: Locations and Travel Possibilities

You’re not working investment banking hours (think: more like 60 hours per week, depending on your rotation and classes), and you also get more time for vacations (at least 2 weeks per year in the US, and up to 5-7 weeks in Europe)…

…But the biggest benefit, arguably, is that you get to work in a different city for each rotation.

So if you ever wanted to “travel” or work in different countries for short periods without taking painful flights back and forth every week, this is perfect.

The only problem is that the locations aren’t exactly glamorous if you’re in the US. Think: Fairfield, Norwalk, etc.

And if you’re on the industrials side, you work in cities with plants – not quite as bad as mining for gold out in Saskatchewan, but also not quite a 6-month “rotation” in Hawaii!

European FMPs have it better since they do rotations in Paris, Zurich, London, Dublin, or Prague on the Capital side.

“Industry groups” such as healthcare and oil & gas tend to be in more remote locations.

Moving every 6 months makes it tough to have a romantic life, but if you’re young and really want to live in new places it could be a great experience anyway.

Plus, GE pays for your apartment and your flights when you’re doing a rotation abroad – so you could spend your salary on bottles, or wine tastings if you’re doing a rotation in Paris.

Benefit #3: Exit Opportunities: Got Upward Mobility?

Just like how investment banking lets you move into many other roles, becoming a GE FMP also opens doors – but they’re different, and sometimes less lucrative, doors.

Here’s a rough breakout:

Around 80%+ of FMP graduates actually stay at GE and take on various finance–related roles.

The most popular one is audit, which attracts about 35% of graduating FMPs worldwide.

They join the “Corporate Audit Staff,” or CAS, and then rotate every 4 months all over the world, with all expenses paid for by GE.

Internal audit work isn’t terribly exciting, and you also work a lot: 80+ hours per week.

But you do get a starting salary of $80K USD, with solid benefits and ~15% pay increases per year.

CAS is also a “fast-track” to executive-level finance roles, and if you make it to your 5th year you could potentially become CFO of a division with only 7 years of experience.

Outside of Audit

The 65% of FMP graduates who don’t join CAS take other analyst roles within GE, mostly in FP&A or Controllership. Some also join the internal M&A team or the pricing department, but those are less common.

If you did great rotations and built a solid network, you can start managing a team of 2-3 people afterward – but for most FMP grads, managing a team only happens 2-4 years after graduation.

Starting salaries range from $70K to $75K USD in the US and in Western Europe.

Outside of GE

The FMP has a strong reputation, so you’ll be contacted for corporate finance roles at other F500 companies.

You could also join a top audit or consulting firm. Firms like Deloitte actively recruit FMPs, so it’s not too hard to get interviews.

If you went to a target school for undergrad and you’re willing to put in the networking hours, you can potentially jump to investment banking or private equity – but it’s still a tough move.

Overall, it’s in your interest to stay at GE because so many CFOs and managers are FMP grads; nothing is guaranteed, but if you position yourself correctly it’s one of the best ways to move up the ladder.

Benefit #4: The Pay

And now to the last, and arguably worst, benefit.

If you join as an FMP in the US or UK, the starting salary is $60K USD, with a raise of up to 5% every 6 months (depending on your on-the-job performance and exam scores).

So no, don’t expect this to compete with investment banking, private equity, or hedge fund pay – although compensation does rise more rapidly after you graduate.

GE does pay for your apartment and car if you do a rotation abroad, which helps a lot in a place like London, but international rotations are much less common in the US (to compensate, they provide a housing allowance there).

The Showdown: Investment Banking vs. Financial Management Program

So let’s answer that question you’ve been thinking about from the beginning: is there any reason to become an FMP at GE rather than an IB analyst?

Pay & Prestige

Investment banking wins on both of these – people are more impressed by “Goldman Sachs” than by “General Electric.”

And even in the post-crisis world, IB pay still trumps FMP pay by a long shot.

The Learning Curve

Rotations get more and more challenging, so the learning curve doesn’t flatten out like in IB after your first year there.

FMPs also do at least one Financial Planning and Analysis rotation, which means that they’re guaranteed to get exposure to very granular forecasts and 3-statement modeling.

Investment bankers tend to stay much “higher-level” on the modeling side, and sometimes don’t even get in-depth exposure after 2+ years.

The Challenge

The big challenge for FMPs is making projects happen. It’s easy to have tons of cool ideas on how to improve your team, but it’s really hard to convince 25 people to implement your ideas!

For investment bankers, the challenge at the junior level is “not screwing up,” and at the senior level it’s more about winning clients and access to the best deals (see: our Chief Financial Officer vs Managing Director competition).

The Exposure

FMPs have no contact with clients, which is another negative compared to investment banking. Client exposure is a huge growth factor, and even if bankers don’t see clients much at first, they sure feel the pressure!

One place where FMP is better is exposure within the company, since you get a lot of opportunities to work with senior executives. An IB analyst would never get the same direct exposure to MDs and Group Heads.

Work & Lifestyle

There tends to be less “grunt work” than in IB roles – you do use Excel a lot, but you don’t spend hours fixing font sizes in PowerPoint.

And since you’re working at a huge company, you could potentially make a huge impact if you figure out a more efficient business process that gets adopted everywhere.

The hours tend to be a lot better than those in investment banking, though you will have busy weeks in areas like Controllership when the quarter is about to close.

“Face time” is frowned upon, and if you need to be at the office 90 hours a week to do your job, your manager will start doubting your abilities.

Exit Opportunities

Investment banking wins here, since you have a wide range of different options both at banks and outside banks – and you could even move into some of the corporate finance roles discussed above.

Being an FMP lets you move around within corporate finance, but it’s much harder to make the move to areas like private equity and hedge funds.

To FMP or Not to FMP?

If your main goals are pay, prestige, and exit opportunities, you’re better off starting out in investment banking.

But if you want more interesting and varied work, with a learning curve that doesn’t flatten out as much, and lots of senior exposure, the Financial Management Program is quite attractive.

This question goes back to the points made in the CFO vs. MD article: if you like the varied work and the team-building you do as a CFO, think about the FMP.

But if you like the faster pace and the client / sales work you do as an MD, investment banking really is the only place to start.

And if none of this appeals to you, there’s always equities in Dallas consulting.

Stay tuned for the next article on how to break into corporate finance at the entry level.

In the meantime, I hope you enjoyed the article and I’ll take all your questions in the comments!

About the Author

Nicolas Doumenc was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

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by Nicolas Doumenc Comments (30)

If a Chief Financial Officer (CFO) and Managing Director (MD) Fight to the Death, Who Comes Out Alive?

Nicolas was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

Chief Financial Officer vs. Managing DirectorThe deathmatch.

It’s fun to play in first-person shooters, but it’s even more fun in real life.

And it’s most interesting when you put 2 high-level executives in the ring and ask them to toss aside the spreadsheets, the assistants, and the support teams, and simply throw down.

Today, we’re going to look at a match-up between 2 positions that you’re interested in reaching one day: the Chief Financial Officer (CFO) in the corporate finance team of a company, and the Managing Director (MD) at an investment bank.

Chances are that you don’t even know what a CFO does – so we’ll start from there and then go through everything else, from how you add value, to how you get promoted, to how much you get paid, to the best and worst parts of each job.

At the end, only one will be left standing.

Well, assuming it’s a knockout rather than a boring victory by points…

Who is a CFO, and What Does He / She Actually Do?

No one really knows.

You’ll see them on TV or pitching the company during investor calls, but it’s hard to say what exactly CFOs do all day.

The job of a Managing Director, on the other hand, seems a lot sexier and easier to explain: they run around wining and dining clients, pushing deals across the finish line, and “dialing for dollars” (or rather, their bonuses).

So let’s start with the more mysterious role: Chief Financial Officer means someone who owns a P&L and is the right arm of the Chief Executive Officer.

A CFO manages the Corporate Finance department for a company, division, or a plant or a country with a minimum size of 500 employees.

Here, we’ll focus on small to medium CFOs that manage up to 10,000 employees. These CFOs are the most common, and the rank is equivalent to a Managing Director in the M&A team of a bank.

To qualify as a “CFO,” your bonus must be tied to the performance of the business – if this is not true, then you are just a glorified “chief accountant.”

Moving Down a Level: What You Do Every Day on the Job

As a CFO you have 4 main responsibilities:

  1. Meet the Net Income Target – You define the targets for the whole company, and then your job is to make the numbers. That means coordinating with all the department heads and making sure that you execute the plan properly.
  2. Assist the CEO with Financial and Strategic Decisions – You are the right arm of the CEO, and you help him understand the financial implications of different decisions. If this is a pure accounting decision, you won’t need the CEO’s approval – but when it comes to big moves like changing the target market or making an acquisition, you’ll have to run different scenarios and projections to help the CEO and Board reach a decision.
  3. Keep the Regulators and Auditors Happy – You have a lot of people breathing down your neck, and you need to make sure they all certify your financial statements – unless you want to end up like Enron or WorldCom.
  4. Grow the Talent Pipeline – Don’t forget you are also responsible for HR in corporate finance. Part of your job is to spot the talent in the organization and make sure the right people get the right jobs so that they’re challenging themselves, growing, and sticking around for the long-term.

As a Managing Director, by contrast, you split your time between 3 main tasks:

  1. Wining and dining clients, PE firms, and VC firms to generate business – This can be done at conferences, in 1-on-1 or small group meetings, and remotely via emails, calls and video calls.
  2. Keeping your potential clients informed of what’s going on in the markets and why it’s a great time for them to buy, sell, or raise capital (because it’s always a great time to do any of those).
  3. Overseeing deal executions to make sure that everything runs smoothly, that deals get done, and that your bank gets paid.

Who Wins: If you want variety, the CFO role is better; if you prefer focusing on more narrowly-defined tasks, the MD wins.

How Do You Become an MD or a CFO?

For both MDs and CFOs, the answer is internal promotion. You rarely see someone from outside the industry breaking in at this level.

But there is an important difference: as a CFO, on top of working in finance your entire life, you’ve probably also spent a good amount of time with the company itself. Many Fortune 500 CFOs are “lifers.”

Sometimes Boards can bring in CEOs from the outside to give a new impulse to a division or to the company as a whole; CEOs mostly deal with strategy anyway.

But as a CFO, you have to know the processes, operations, and different divisions inside and out. Since you’ll also maintain key relationships with the regulators, it’s not a position you can change every 2 years.

So to become the CFO of a small division, you need to spend some time as a Controller, FP&A manager, or Treasurer for a division or a region first.

And then to become CFO of a big firm, you need to have 10 years+ of experience as a CFO of a large region, and also some exposure at the headquarters-level.

In some rare cases, a firm brings in an outside CFO because it has been growing very fast and doesn’t have the internal expertise to take it to the next level (see: Gideon Yu and his roles at YouTube and Facebook).

Or the external guy might have very specialized skills that are needed (e.g., dealing with a complex acquisition or divestiture).

Most of the time, though, being ready to hit the ground running is too important to sacrifice, and companies tend to hire internal candidates as a result.

The other issue is that the previous CFO committed to Net Income targets, and you’ll still have to hit those targets even if you get hired as an outsider. In other words, there’s no time for a smooth transition period.

If you’re an MD, by contrast, you’re more like a “free agent” in sports: you can move around to different banks more easily because you bring your full Rolodex with you each time.

The internal processes are quite similar from bank to bank, so you won’t have to spend 3 years getting up to speed.

Getting promoted to MD most likely means you had a previous position as a VP, senior VP or MD at another bank – and very often, you’re switching banks precisely because the new bank is promoting you in the process.

Who Wins: Becoming CFO is more of a marathon, while becoming MD is more of a sprint that may require hopping to many different firms first. So it depends on your personality and how you prefer to “exercise.”

“You Try to Add Value… I Straight Create It”: Value Creation 101

In investment banking, many people struggle to move past the VP-level because they need to start generating business rather than just executing deals.

This same challenge exists in corporate finance when you become an FP&A manager or a Controller with a team of 20+ people – because you need to execute less and manage more.

To “add value” in either role, you need to overcome these key challenges.

As a CFO, you have a team of 50 to 100 people and you no longer do anything by yourself anymore. You just sit through meetings the whole day and make decisions.

Meetings are key because you can’t manage a whole finance department and your relationship with the CEO via 1-on-1 conversations: you can only do so via team meetings.

As a CFO, you add the most value by balancing quarterly Net Income targets with investing enough to grow earnings 5 years down the line.

So while you may not be producing work product directly, each decision you make has to contribute to that balance – and if you get it wrong, you won’t be at the company very long.

As an MD, you add value by generating deals, managing your existing relationships, and developing new relationships. That is your only job, so you must do it well.

While it’s tough to make the mid-level-to-top-level transition in both industries, there are fewer “casualties” in corporate finance at the pre-CFO level than there are at the VP-level in banking.

That’s because your results are less measurable as an FP&A Manager, whereas the numbers don’t lie when it comes to VPs and how much in fees they generate.

So some people will get away with being bad managers for 2-3 years before reality catches up and they’re forced to exit. Underperforming VPs, by contrast, are “removed” far more quickly.

Who Wins: You add the most long-term value as a skilled CFO who stays there for years, but you create more measurable value as an MD.

Chief Compensation Officer: Pay & Bonuses

For both CFOs and MDs, the biggest component of compensation is variable and completely dependent on business performance:

  • CFO: You make the financial plan in collaboration with the CEO, and then your bonus is based on meeting those sacred Net Income targets you announced. Sure, keeping the regulators happy and growing your team are important, but at the end of the day if you meet the target, you’ll get the maximum bonus.
  • MD: Your bonus is based on the amount of business you can generate, plain and simple. This is a sales job where you are pushing “technical” products. You focus on the volume of fees (top-line revenue), whereas the CFO also has to consider the quality and profitability of business his division generates.

Now let’s talk numbers: the base salary will range from $200K USD for the CFO of a small division to $600K USD for the CFO of an entire region. And then the variable part will range from 50% of this number to 200% or more if you are doing a great job.

So, bottom-line: your all-in compensation will range from $300K to $2MM+ USD depending on your performance.

Managing Directors’ compensation is even more variable because base salaries are often lower: on the low-end, they might be between $200K and $300K USD, though you’ll sometimes see salaries higher than that at the big banks.

But the annual bonus can take MDs up to the $2MM – $3MM+ USD range, depending on deal flow.

Of course, if the MD delivers 0 closed deals he’ll also get a bonus that’s closer to $0.00.

Who Wins: The CFO wins if you look at average compensation and factor in his much less risky “worst case scenario,” but the MD wins if you factor in the # of years required to reach the position, which can be significantly shorter.

Your Greatest Weakness: What Sucks About the Job

This is one area where MDs may seem like the winner: they’re not under tremendous pressure from their bosses as long as they close deals.

By contrast, even a successful CFO is constantly under pressure from the CEO, the Board, the regulators, and even other corporate finance team members asking for favors.

And if the financial statements are wrong or you screw up your stock option plan, you’re looking at potential jail time. Even something put in place by your predecessor could get you in trouble!

It’s also tough to get credit as a CFO because the CEO will always get the praise for being a “visionary” if things go well – but if the company fails to deliver, you’ll be blamed for “poor execution.”

Laying people off is also tougher as a CFO because you’ll have to axe quite a few 55-year-old accountants who might find it really, really tough to get another job.

As an MD, by contrast, you’ll still fire people but more of them will be in the 25-35 year old range and will be in a better position to find new jobs.

In terms of crazy requests, CFOs have a slight advantage because most requests will come from the CEO rather than dozens of outside clients who call you at 3 AM asking for favors.

People like to say that extreme attention to detail is required in investment banking, but the requirements are actually higher in corporate finance.

If you make a mistake in a pitch book, maybe it will cost you the client or deal… in the highly unlikely case that someone actually notices.

But in corporate finance, if you “make a mistake” you have to restate the financial statements, which will send the stock price plummeting and might result in your head on a guillotine.

Management is also much tougher for a CFO, since you’re managing teams of at least 50 people and they’re not all machines willing to work crazy hours and give up their friends/family/hobbies to do the job (unlike IB analysts and associates).

You have to adopt a more “human” approach and you can’t just issue orders to your subordinates (while swearing at them and making snarky comments).

And you can’t just throw money at people to get them to stay, since your bonus pool is much smaller than the pool at banks.

As an MD, on the other hand, the worst part of your job is the constant pressure to get deals done. But that pressure is more concentrated in one area, so you have fewer tasks to worry about.

Who Wins: The MD takes this one – maybe not quite a knock-out, but definitely a victory on points.

Your Greatest Strength and the Best Parts of the Job: Got Prestige?

One of the best parts of being CFO is that bankers work for you.

You can go to all the MDs you know and ask for a “broad buy-side pitch” on potential acquisitions, and then make them jump through hoops to present on deals you’ll never do (not that I’m recommending this, of course).

You also get to shape the direction of a big organization for years or decades into the future, whereas everything is much shorter-term in banking.

Some people argue that investment banking is “prestigious” whereas corporate finance is a “back office job”: the second part is technically true but it’s not really accurate since, as CFO, your bonus is directly tied to business performance.

No, you’re not winning new customers for the firm… but you are managing investor relations, launching projects and doing deals, growing the talent pipeline, and traveling all over to meet customers and shape big-picture strategy with the CEO.

So it’s a lot different than a job where you’re reconciling trades or doing bookkeeping.

The best part of the MD’s job is that it’s all relationship-drivenso if you like that aspect but you hate Excel and technical details, the MD role might be a much better fit for you.

Who Wins: This one’s a draw because both roles have their advantages.

Location and Lifestyle: Both of These Beat Consulting, Right?

The good news is yes, both roles beat consulting when it comes to (the lack of) constant travel.

When you’re 25, it’s OK to work crazy hours and travel consultant-style, but when you reach age 40 it really becomes a burden.

Unfortunately, neither CFOs nor MDs enjoy a great lifestyle… for different reasons:

  • MD: Working with clients means that you travel a lot (at least a few times per month) to pitch your ideas and execute deals. That also means you need to be available 24/7 if a client has a question or wants to talk to you about the market. You have your minions for the execution, but it’s still not even close to a 9 to 5 job.
  • CFO: You’ll visit different plants and offices, but you’ll also fly to the headquarters every month for meetings. This is a “light” travel schedule compared to MDs, but there’s a catch:  There’s a very low chance that your next job will be in the same city, or even in the same country.

So as CFO, you’ll have to relocate every 2 to 4 years and move your family with you.

The relocation packages are very generous, especially if you get an expat contract on top of it… but it’s still a sacrifice to move to Kazakhstan for 3 years (though admittedly better than mining for gold in Saskatchewan).

As a regional CFO, you’ll also need to visit other CFOs that report to you and the hours can get crazy because you have to work across multiple time zones.

Who Wins: MDs win this one – they both travel a lot, but at least you won’t have to relocate every few years as an MD or work across quite as many time zones.

The Final Round: Exit Opps and Career Management

MDs and CFOs are senior people in the organization, so it’s rare for them to leave for a different industry in the same way that IB Analysts leave for private equity.

They move to the next level within the same company or the next level externally, but 95% of the time their career moves are to the same type of job.

  • CFO: Let’s say you become CFO at age 40; you have 50 people reporting to you and a small portfolio. If you do well, you’ll get promoted to a bigger P&L with more challenges and maybe a different kind of portfolio. Your job will get harder and harder every 3 or 4 years, with each promotion, until you reach your “limit.” When you hit this “limit” you’ll spend more time in each job and your assignments will vary until you retire or get fired.

Some people never reach their limit and instead become CFO of an entire Fortune 100 company; sometimes they even get promoted to other C-level roles.

Keith Sherin, the former CFO of General Electric, was promoted to CEO of GE Capital, but that’s definitely not the most common exit opportunity!

Who Wins: This one’s a draw since they’re so similar.

The Knockout Punch: Who Wins When a CFO and MD Fight It Out?

If you’ve been adding up the points all along, you’ll see that the MD has come out 2 points ahead – but that’s not the whole story.

Most of the categories were tied, so I’d argue that this one comes down to your personality more than anything.

If you’d rather specialize and use one specific skill (sales) to win new clients and do deals, the Managing Director job option is better. Pay is more variable, the work is more stressful at times, and you’re under constant pressure to do deals.

On the other hand, if you’re a jack of all trades, you like managing big teams and making long-term investment decisions, and you want to stay in one role for a long time, then Chief Financial Officer jobs are better.

Whatever you choose, keep in mind that very few people ever make it to the MD or CFO rank because the “pyramid” is very steep.

Just imagine how many Egyptians likely died building the pyramids, and you’ll get an idea of the “casualty rate” as you ascend to the top in either of these roles.

So it’s a bit of a false choice: the question you should be asking yourself is which industry you’re excited about to begin with – you may not reach that ultimate destination, so you better enjoy the ride.

Let us know what you think about this CFO vs. MD debate in the comments!

Bonus points if you’ve ever witnessed a CFO and MD get in a physical fight after a train wreck of a meeting…

About the Author

Nicolas Doumenc was a Financial Analyst at General Electric where he explored the world of Corporate Finance. He is now a CFO and Partner Wild is the Game.

Break Into Investment Banking

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

We respect your privacy. Please refer to our full privacy policy.