There’s many aspects to being a good financial modeller – key skills include having a strong understanding of the commercial and physical reality of your projects, being able to deliver to deadlines and working well with others.
However, if Financial Modelling Skills were a “Pointless” category, “Good Technical Skills” would probably score higher than any of the above. What’s less clear is how many people would know what “Good Technical Skills” in financial modelling looks like. As a handy guide, here’s our ABC of what to look for in a financial modeller:
- Adopts best practice techniques;
- Builds robust checks to future-proof their models; and
- Communicates a model’s intent clearly (in structure, formulae and words).
Operis’s processes are optimised to select individuals with great technical aptitude and then teach and hone these skills. As a result, our team is renowned for its clarity of thought and its ability to find elegant solutions to the trickiest of modelling challenges.
Read The Book? We Were There When It Was Written
The ICAEW (Institute of Chartered Accountants in England and Wales) has released a “Financial Modelling Code” which is generally recognised as the benchmark for whether a modelling approach is best practice or not. David Colver, Operis’s founder and CEO, was part of the team that consulted on what principles should be set down within that code. Operis’s own pioneering standard approach to modelling (which we use internally and is taught externally by our training arm) far preceded the Code and has always been fully in line with all its requirements.
The Operis approach uses the power of named ranges to make immediately clear and readable what a calculation is doing in the cell itself. We avoid the spreadsheet bloat that can occur if line items are repeated nearby every time they are called. Clarity and elegance are the hallmarks of Operis modelling.
Models That Stand The Test Of Time
All financial models worth their name will have some sort of structural checks – that the copy-paste macros are converged, that the balance sheet is balancing etc. Operis’s work as a model auditor means that we take these rather more seriously, typically building many times more checks than other models that we see.
An example impact of this? If a new cost is added to a non-Operis model, it typically will let you know if the double-entry accounting doesn’t add up. An Operis model will also remind you that you also need to add this new cost to the VAT and working capital sections, and that it needs to flow (or not) through the tax, ratio and return calculations sensibly. It will do this in plain English at the top of our audit sheet. As a result, Operis models are better protected against the accidental introduction of future errors as the project and model develop, meaning you can continue to trust the model’s outputs and make better decisions.
Operis also recognises that there is a huge difference between “the model is broken” and “the project is broken” and they require different actions. An input set that leads to cash shortages and overdrafts might be running through a model technically very accurately – but you probably want to know about it nonetheless. This is why we split our tests into audit checks and commercial warnings, to ensure due consideration is given to economic as well as modelling concerns.
A Trusted Voice
Clear communication is part of Operis’s DNA and is a key consideration in all areas of the business. Our models are known for their elegance and simplicity, because we focus on layouts, formulae and outputs that make the model readable and useful for decision making.
Operis works across many sectors and geographies, which allows individuals to develop deep specialism in particular areas. For example, Michael Jarman leads many of our assignments in the US which involve tax equity financing, Holly Kirton often oversees building operating models, and David Rosel knows all the finer details of OFTOs. They each speak and understand the sector specific terminology that is necessary to communicate with other parties on the deal. With our teams based in person in our offices in London and Toronto this expertise is easily shared – Operis has an open and friendly culture that values questions so learning opportunities abound. The quality of the work we do for our clients reflects this efficient knowledge transfer.
Our analysts work on model builds under the watchful eye of Michael Jarman, our Head of Model Development, and with training from Hilary Smart (Operis’s two resident Financial Modelling World Champions) – and are guided by our brilliant team of managers and directors. Detailed feedback is given to our analysts to ensure their full understanding and guide optimal clarity of expression.
The value of the expertise of our senior team is not just recognised within our own walls. In recent times members of our team have been invited to take part in fireside chats with CFA institute, panel discussions at the Financial Modelling Summit, and to deliver a webinar to students studying with the Financial Modeling Institute. We have even been asked to speak on financial modelling on ITN’s News at Ten.
If you would like to discuss your financial modelling needs with us then please do get in touch, email info@operis.com or call us +44 207 562 0400
