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.
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:
- If you score less than 80% on two modules, you’ll get kicked out of the program.
- 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!
“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.
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 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).
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.
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!
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