Is the CFO Route a Rewarding One?
My friend's father is CEO of mid-sized public company. Since it's a public company, I decided to do some totally legal snooping and checked out online how much a CEO like that makes... and was shocked to learn that my friend's dad made $5.2 million last year!
I was shocked for a few reasons, but mostly because the family lives very modestly... hell, the dad drives a Ford into work every day. I asked my friend what the dad's path was to CEO, and he said that his dad was the CFO of the company for 7 or 8 years, then was promoted to CEO when the former CEO retired.
So what's the deal with the CFO route compared to investment banking? I read an older post about how to maybe start off on this path (CPA, FP&A, Big Four), but I'm looking for opinions regarding how gratifying this career path may or may not be for some of you.
I'm a CPA on the CFO route. There's no one way to get there honestly, but it is considered to be top of the food chain as far as financial roles go within an organization. A lot of responsibility, but mostly oversight and strategy-related rather than operational (at least in mid-size organizations and up).
So yea, there really is no particular route to CFO, but most CFOs are typically promoted from within and have a diverse background in finance. This means the best way to get to CFO is to stay with a company long-term (like your friend's dad did) and hope to eventually get that promotion!
My best recommendation would be to start out in Big 4 or a BB out of college and pursue opportunities that will round you out. An MBA would help, but professional licensing in my opinion is a must (CPA or CFA). Then with roughly 5-7 years of diversification, exit to a company you want to stay with long-term and work your way up.
You're not thinking about it correctly. One doesn't enter a company and begin on the "CFO" route. If you properly research a lot of the CFO's out there, you'll find that many of them have diverse backgrounds and were often not the FP&A ladder-climbers. To say whether being in the CFO route vs the investment banking one is also a bit perplexing. Getting into the C-Suite is ridiculously difficult. It is not always talent-dependent and is often luck-based and who "takes you under their wing". There is much much less of this in investment banking (though still applicable). Starting off in banking vs the positons you mentioned in FP&A / Big 4 etc will get you just as fast, if not faster, to a c-level positon as being an excellent banker shows the financial acumen and rigorous work ethic expected out of a top corporate performer. So if being a CFO is a goal of yours, yes a corpfin job or accounting job would suffice but I wouldn't rule out investment banking, in fact I would encourage it. It will give you the optionality you may seek later in your career and allow you to be viewed as a stronger, more viable candidate for a "fast-track" career up the corporate ladder.
Haha, there is clearly bias in this response for IB. Yes, IB can transition to CFO, but statistically, more companies will be looking for someone with a Big 4/CPA background.
Traditionally, the Finance Managers and Controller positions were first up in running for the CFO role. However the role of CFO has changed in recent years to be much more responsible for risk management, treasury/banking, fundraising, and other strategic type responsibilities outside of accounting.
The exit opportunity for IB to CFO is limited. Typically companies seeking a CFO with a banking background will be highly niched (financial services for example) or in a rapidly expanding industry/organization where highly skilled fundraising is desired (pretty much just Tech in recent years and the foreseeable future).
Not completely disagreeing with BuellerBanker, just adding a caveat here.
With that said, Chief Investment Officer would be more fit for bankers. But again, these are generally limited to niched industries as well.
The CFO role is typically at every decent sized company. If you know finance and understand how their 'widgits' work in a business, whether its services for consulting or deal revenues from M&A, or building planes, or making Pepsi, you can figure out a way to maximize profits and pave the way for sustainable growth for the company.
CIO is a specific position only in a certain industry (I see you did note this). Some bankers may be suited for CIO, but qualify for CFO, which comprises vastly more positions by the numbers.
I've interviewed for CFO at two small companies and it is different than just 'getting a position'. If you take on any 'C-class' role, you better make damn sure that you can perform, because it is on you. Something fails in finance, its your problem. I had one company that seemed like they had exceptional financials versus another where their whole accounting and finance department was in shambles and operating on a largely reactive basis. My role there would be 'help' and it was risky taking the role and I ended up not taking it for different reasons.
For one company in Silicon Alley (NYC), I overdressed or something in the interview and the CEO was bashing me seriously about my lack of trendy attire (not joking). It was a very relaxed atmosphere. I wore a dark suit. I should have just worn all Urban Outfitters and my Vans Half-Cabs. He didn't give me a heads up or anything. It seemed trendy, but I'm not just going to show up in jeans, you know?
In the future if I ever entered the CFO position, I would want a strong accounting team to back me up. My accounting has always been weak (hated CFA FRA/FSA). But, as far as looking into a business and identifying the drivers to push revenues and profits and mapping it all out on excel or making a financial strategic roadmap, sure. I just have never really worked the nitty gritty accounting side of it and have typically had a team do the back end of whatever I submit and it has worked out well that way. If I could have some geeky masters in accounting dude at my side to tell me the accounting implications of certain financial decisions, that would be perfect. I'm not sure if anyone else has felt this way in seeking an optimal environment to perform as CFO.
But, it has to be a cool company. I don't want a desk or an office. I'm not into any lame stuff from here on out. If its not cool, I don't want it.
Never ever a big public company. I wanted that in 2006 or so. Not anymore. Nope nope nope.
I'm taking the banker over the CPA if I'm a member of the board tasked with finding an executive replacement. The level of proficiency needed in both accounting and finance to excel in banking coupled with an understanding of capital markets, financing, M&A activity, a rigorous work ethic and the banking contacts are all appealing.
Source: I'm a banker, with an MBA, a CPA and Big 4 experience.