What is Financial Modelling and why is it so important?

Financial modelling (also called excel modelling or business analytics) is a structured approach to decision analysis in order to understand the drivers (inputs) and outcomes (outputs).

Why is Financial Modelling useful?

As individuals and businesses, many decisions we face regarding money are much too complicated today to do accurately on the back on an envelope.  There are too many inputs and most importantly, many of these are uncertain, in other words there is a range from minimum to maximum on each of these inputs.  This means there is a lot of uncertainty or risk.  Understanding this risk is critical for business success.  Otherwise you end up offering loans to people that can’t service them and potentially causing global financial melt down. In short, financial modelling brings clarity to business decisions so that you can make the best decision available.

Sounds great in theory... But does it happen in practice?

Yes! 

In markets that are exposed to high levels of complexity or high levels of risk or both, successful companies are making financial modelling a core and differentiating skill.  Greater identification and understanding of the risk drivers enables focused work in the most value adding areas.  Also, and perhaps more importantly, those organizations that aren’t leveraging the power of business analytics will never price the risk as accurately and will therefore make worse decisions on average that those businesses that have taken the time to understand the risks.

How do successful organizations use modellers?

Successful organizations recognize financial modellers for what they are.  They are analytic and commercially minded staff that know the ins and outs of a business decision better than anyone else.  They’ve read every documents, they’ve understood them so well they can model it, and they know how all the aspects of a deal relate to offer value. Increasingly modellers are recognized as being among the most commercially minded and judicious resources an organization may have.  Consequently they are coming out of the back office and taking a central role in day to day operation and business strategy. Should I consider a career in Financial Modelling? Financial modelling can be an excellent place to start a career.  You learn the nuts and the bolts of a business and so understand the key drivers of success better than anyone else.  You’ll also get great exposure to all the other departments and so be able to make an informed choice about where you are most interested in working.

What is a good modeller?

Modellers are an interesting mix of being highly analytical, numerate and detail focused but also excellent communicators as 50% of their job is talking to subject matter experts (lawyers, accountants, engineers) and working out how to model that aspect of a deal.

What is good modelling?

Good financial modelling in Excel has a number of components: Good financial modelling in Excel has a number of components:

1. Ability to represent a real life problem in excel at an appropriate level of accuracy
2. Ability to build and structure an excel model so that it is robust and flexible
3. Ability to use their model to determine and communication value and risk drivers
4. Ability to format and structure a model so that it is a useful communication tool

Can I get some experience of financial modelling in Excel?

Over the last 20 years, a best practice approach to modelling has been developed to help modellers get the most out of excel for the minimum effort. The guidelines are fairly simple, but the application of them can be a bit more complicated. 

If you want to learn more about best practice modelling check out www.indexmatch.co.uk  who are run by modellers for modellers. We know that a SHOCKING 80% of candidates fail modelling tests.  

IndexMatch offer excellent training that will help you be in teh 20% that succeed

To Bank or Not to Bank               

So the people that have brought the country to its knees are essential to getting us moving forward. What should the government do? Tax them too much and they may up sticks and leave or star performers might simply move to “non-government” owned banks; however there seems to be an appetite for public/electorate revenge on these people that caused all the problems.

I don’t have all the answers but as a recruiter I know the value of people to any organization and Mr Darling and Mr. Brown need to strike the right balance ensuring the excesses of the last 10 years are stopped but not starting a reactionary backlash that will ensure London looses its place as a world leader within the Financial Services industry. We need our part owned state institutions to stay competitive and successful for many years to come..  

Any thoughts let us know

The last month has seen the papers full of comments concerning Bankers and their bonuses…..how many column inches can one subject fill? Few people would argue that in recent years a % of bank bonuses have been over the top and in some cases downright disgusting, however how many people would argue that the vast majority of bonuses are justified and the issue is the value of these bonuses?  

The next 12 months are going to be key to UKPLC and the issue of bonuses will not go away especially when the now government owned and funded institutions are refusing to pay bonus or if they are they are paying them over three years in shares. As a recruiter I have seen a flood of CV’s from extremely talented professionals looking to leave these institutions…It seems simple, there are two choice’s one is a political digestible and political correct institution void of quality that will struggle to pay the government back the money it is owed because many of its best people have left or some kind of middle ground that rewards people responsible for doing a great job and by doing so retains these quality individuals and in turn helps re-pay the debt quicker.  

Unfortunately these institutions have already made the decision and I would suggest that “WE” will regret for many years to come.

Top 10 CV Writing Tips 

In this competitive job market everything can help…  

1- Spelling and grammar

The most common mistake and yet the most important thing to get right to make a good first impression. Get your CV checked and checked again  

2 - Where to start…

Recruiters want to know what you’ve done recently, so list your work experience in reverse chronological order and place your educational achievements after your work experience.  

3- Keep it concise

The average recruiter spends only a few minutes scanning a CV, so keep it to two pages or three at most for those in senior positions and attach a deal sheet if possible.  

4- Formatting

Remember what looks great on your PC screen might not display well elsewhere so keep formatting to a minimum. Recruitment consultancies often use their own templates, so make sure your CV is easy to copy and paste, and preferably in Word.  

5- Specify the key details

Great project manager, good communicator, dedicated employee – all great skills but worthless unless you demonstrate what you achieved. Ensure everything you say is quantified by specifying the actions you took and the results and/or benefits.  

6- Explain gaps in your CV

Your CV should read as a continuous, chronological flow of activities, so make sure you explain any gaps such as travelling, maternity leave, sabbaticals etc.  

7- Redundancy

In the current economy, stating that you were made redundant doesn’t reflect badly on you. And if you don’t include it the reader might assume you were fired.  

8- Exclude irrelevant information

If you’re unsure whether to include something, ask yourself: does this impact my ability to do the job? If no, leave it off. This includes: age, gender, marital and parental status and religion.  

9- Interests and hobbies

Although your hobbies and activities may be really interesting, unless they’re relevant to the role or demonstrate a particular skill, keep this section to a minimum.  

10- More than one version of your CV

Best kept secret - every role is different, so tailor your CV to that role. Go through the job spec and emphasise your relevant skills and experience on your tailored CV.

Best of Luck!

We hope our Top Ten CV Writing Tips helps

To search our current Finance & Banking Jobs / Accountancy Jobs

To contact one of our specialist consultants call 0207 492 0700 

or email: enquiries@circlesquare.co.uk

To download the Finance & Accountancy Salary Guidelines 2013              

If you would rather view the salary guide online:

 Accountancy & Finance Salary Guide 2013

SO Baroness Scotland falls foul of immigration law and is fined £5000.00. Her cleaner did not have the correct visa therefore she was not legitimately allowed to work in the UK. People often criticizerecruitment consultancies with good reason; however such checks are standard practice for agencies in the UK along with checking both professional and educational documentation and taking a reference…..

Moral of the story Baroness Scotland- Use an agency and don’t get fined £5000 as the responsibility is all ours under the 2003 Agencies Act to ensure all these BASIC checks are in place

With the staff attrition rates we have seen in real estate teams and related products in the last year you would be totally in your right to think real estate is over. However since January, we have seen there have seen ‘green shoots’ of real estate returning. They’re doing so not in the traditional format of the Big Banks and the traditional Advisory and PE businesses, but in new and exciting start-ups and other businesses.

They have looked at the market, seen the gap, and are now expanding into it. This is not only in debt restructuring but general real estate advisory. Will these start ups and new businesses really be able to take advantage of where the market goes and will it go the way they are expecting?

The debate seems to focus on when debt will come back to the market, where it will come from and who will be in a position to arrange that debt (client side). Right now, banks are unwilling to make loans and lack the associates and analysts to structure finance for their clients (I heard a rumour that one particular bulge bracket missed a deadline by two week due to lack of resources).

At the same time, the clients and PE houses do not have the resources (or the desire) to pull all the information together (the due diligence, the memos and the term sheets). Both these areas are ripe for start-ups to exploit. Equally, the source of funding has changed from the European Banks to the US Banks (admittedly only a few), the sovereign wealth funds, newly raised funds and private investors (due to the low value of sterling and subsequent decrease in the price of Central London Property for overseas investors). This is all creating demand for a new breed of real estate professional.

The new market needs people who can not only understand the financing and the numbers behind the funding, but can also operate from a cost saving perspective. In my opinion, therefore, real estate is coming back: New businesses out there that are going for it. And I suspect that established banks which have cut to the bone will be hiring like crazy into their real estate teams in Q1 2010.  

...Yes of course we do!

The last three years has seen massive growth in recruiters using the net but the last two years has seen an explosion in the use of social networking sites. Every consultant at Circlesquare has a LinkedIn account with which we use to network clients and candidates a like, indeed it’s becoming increasingly common for consultants to be targeted on the number of candidate referrals they can make on a weekly basis, and has become an integral part of a recruitment process.

This means that as a candidate you really need to be joining and updating your profile on a regular basis to ensure that potential employers or recruiters are seeing a real-time profile that clearly states what you are looking to do and what kind of things you would be interested in talking to them about. It sounds very silly and simple but you also need to respond to any of the invites sent to you by recruiters via the site!

I cannot overstate the importance of these sites I would suggest that over the last 12 months around 40% of our placements here at Circlesquare have come as a direct result of using a social networking site.

So keep updating and keep talking to your recruiters.

“Sony Music Entertainment is suing smaller rival EMI Music and one of its executives after he allegedly broke his promise to join Sony on a new $3m contract. The suit alleges that Ron Werre used his deal with Sony as leverage in negotiating a promotion at EMI. Sony charged that Werre, who had been EMI’s president of music services agreed in February to join Sony on a three year deal after his contract expired in 2010, according to documents filed at the NY Supreme Court.” (Reported City AM)

News of Sony Music suing EMI in the US could have a massive effect on recruitment in this country.

Sony's lawsuit revolves around one of their prospective employers who promised to join Sony from EMI. However he broke his agreement remained at EMI and got a pay rise! Ron Werre is accused of using the whole interview process as leverage to get a pay rise!!!  

Sony is now suing EMI and Werre, claiming that he used his Sony contract as leverage to score a promotion at EMI. What a crazy world.....  

                  Remember if you say YES it really needs to be a YES!

I would like to think that this will not become the norm on this side of the Atlantic, but it does throw up some interesting points....are candidates allowed to change their mind?

-Is it ethical/legal to use a recruitment exercise as leverage to ask for a pay rise?

-Is the counter offer dead?

-What was the recruitment consultant doing during this process?

-How binding is a "verbal promise?"  

Any thoughts let me know...  

British financial meltdown has sparked massive layoffs among Canadians, Americans in London's once-gilded City

London-The good old days are over for Canadians working in the City, the fabled London district that once gave Britain the world's most powerful international financial sector.

Tens of thousands of Canadians and Americans have for years been drawn to London to take jobs in banking, many of them working for the gilt-edged British operations of U.S. investment giants. But the appeal of the expatriate careers has been tarnished by the meltdown of the British banking industry as the recession that started on Wall Street 18 months ago spread around the globe. Estimates of jobs lost in London's financial businesses between 2007 and March 2009 run as high as 130,000.

"Yeah, and I think half of them are in my inbox," joked employee recruiter Josh Wright. "Every day you open the paper, it's doom and gloom," said Wright, a 25-year-old from Waterloo, Ont. "It's a completely different market than two or three years ago."

The grim job situation reflects an epic reversal of fortunes in the City. Fed by cheap debt, a housing bubble and freewheeling markets, bankers racked up dizzying profits and bonuses as financial companies led a giddy run-up of wealth during Britain's 15 years of steady economic growth. But no one's looking for sky-high payouts now.

"The bonus this year is that you kept your job. If you're working, you're grateful," said a young Toronto MBA graduate who asked not to be named. He himself has been looking for a full-time position since being laid off by a large finance company in London nine months ago.

"It's been an uphill struggle to find work. It's pretty bleak out there. And it's getting worse. In the last two weeks, I had four friends who lost their jobs."

It's not just the unravelling of big-name financial houses like Bear Stearns, Merrill Lynch and Lehman Brothers that has drained jobs from the City. Dozens of other shell-shocked British operations – as well as companies from continental Europe, Canada and the United States – have reduced their presence in London to cut costs, observers say. And a new survey by the Confederation of British Industry predicted another 15,000 jobs will disappear by summer.

In the boom years, banks were in such need of personnel they would take on employees with a minimum of training or skills. But now financial institutions can have their pick of highly qualified job seekers.

"Some think the worst is behind us but that doesn't mean that there won't be additional layoffs," said Ryan McGaw, 33. Many Canadians and Americans working in banking in Britain are young and their plans are changing as the lure of the City fades, the former New Brunswicker said. "Some people are thinking of travelling for six months, and, especially in the expat community, some people are just thinking of going home. "I knew someone who always wanted to move to Australia. So after he got laid off, he did."

The urgency of the job search is compounded by the cost of living in London, one of the world's most expensive cities. On top of that, working in the City has lost some of its traditional cachet. One senior executive saw his house vandalized and protesters tried to break into a downtown bank branch recently as the backlash against the financial community peaked.

With many Britons accusing financiers of wrecking their economy in an orgy of greed and risk-taking, bankers here have been appealing for an end to the "public flogging" of their industry. Until 2007, banking had been the driving force behind Britain's growth. But Russell Jones of RBC Capital Markets says the sector's economic potential has been reduced by a third in only 12 months.

The lucrative merger mania of recent years is over and investors have been spooked, said Jones, RBC's global head of fixed income and currency research. Referring to the risky securities that played a key role in the international crisis, Jones said, "For some of the more esoteric products which developed over the last couple of decades, some of those markets have just ceased to exist and London was at the forefront of them.

So it's a sector of the economy which is under acute duress." Looking ahead, British leaders wonder if the City will some day resume its former stature or whether major centres such as New York or Frankfurt will erode London's pre-eminence as a global financial hub.

"The financial world has changed beyond recognition over the past couple of years," said Richard Lambert, director general of the Confederation of British Industry. "No one knows quite how this story is going to end. But one thing we can be sure of: We are not going back any time soon to those balmy days of yesterday that ended with such a loud bang in the summer of 2007.

"Still, while the jobs picture may not be the same for expatriates after the slump, it will continue to have a strong appeal, said Wright, the financial services headhunter. "London's not going to die as a competitive city," he said. "It may take a while but it will come back."

I have worked in temporary recruitment for over ten years and still today I hear horror stories about recruitment consultancies not passing on to their temporary staff their full holiday entitlement? Why does this still happen? Are recruiters still scamming their candidates, unfortunately this does appear to be the case which is really bizarre as recruiters would never dream of trying "to hide or steel" anyone's National Insurance contribution or perhaps more relevantly trying not to pay their own consultants holiday pay. Under recent changes in legislation all temporary workers are now entitled to 28 days holiday and your agency should set the money aside until you are ready to take that holiday...it doesn't cost anyone anything its your money and has already been accounted for and paid for by the client you are working for.  

SO TAKE YOUR HOLIDAY AND ENJOY YOUR CASH! DON'T STAND FOR ANY EXCUSES AND DON'T ACCEPT THAT ITS "INCLUDED IN YOUR RATE" OR ANY OF THE OTHER VAGUE EXCUSES AGENCIES COME OUT WITH