I recently sat and passed the Advanced Financial Modelling qualification. Here are a few of my thoughts about the qualification and what I learned.
What is the Advanced Financial Modelling qualification?
The AFM is run by the Financial Modelling Institute and is an internationally recognised qualification in financial modelling.
The exam is four hours long, in which you have to produce a complete three statement model. You actually don’t have to do any complicated modelling; there are only limited variables that can come up. It’s more about the ability to produce a model where the assumptions, workings, scenarios and results are clearly shown. And to show that you understand how the elements of the financial statements come together.
The Institute provides training material. As well as this you get access to further webinars and a wider community.
You pay for a year’s membership which includes one exam sitting in that time.
Why did I do it and what did I learn?
I’ve been offering financial modelling and excel consultancy services for many years, but up to this point I’ve been self-taught, so I wanted to make sure that what I do is in line with best practice. Plus it’s always useful to have an internationally-recognised qualification.
There is a lot of Excel in the course materials, most of which was not new to me. In fact in places, it struck me as slightly outdated (learning HLOOKUP instead of XLOOKUP, for example.) That said, I did learn a lot of new keyboard shortcuts!
The webinars that the Institute put on cover a much wider range of subjects including newer formulas so I did learn new Excel elements from these.
I learned a lot more about good practice in constructing models. In particular, considering and structuring scenarios mechanisms. I’ve often created models where there are lots of variables and the user can change whatever they want. After doing this course, I realised that not everyone wants to mess around in Excel as much as I do. However, they do want to understand the impact that key variables have on the results. It’s up to me as the modeller to understand what the key variables are and communicate the impact that different assumptions have.
The course also teaches you a really neat way to lay out your debt / equity / cash workings. Prior to doing this course I’ve tended to create something new for each client but now I’ve got a good simple template I can adapt for more complex uses.
All in all, I’d definitely recommend this training programme.
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