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.

Comments (29)

Jul 25, 2018

interested as well

Jul 25, 2018

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.

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Jul 25, 2018

Thanks, appreciate the info.!

Most Helpful
Jul 25, 2018

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.

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Jul 25, 2018

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.

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Jul 25, 2018
Neutrino_CFO:

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.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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Jul 25, 2018

This was actually a follow-up question I had -- do I make myself qualified for more finance jobs bY concentrating in accounting and maybe get my CPA?

Aug 8, 2018

You're giving very sensible advise. @TheBuellerBanker isn't completely wrong, but not the best advice (in my opinion).

Of course there will always be special situations where being an expert in something - dealmaking, turnaround, tax, etc... is certainly preferred, but this is generally atypical. Most non-distressed companies are looking for well-rounded finance/accounting professionals to be CFO.

Banking is a great way to start a career and you can certainly get a diverse experience after banking and be a great CFO candidate. That being said, if your sole goal is CFO then I would recommend starting in Big 4, CorpFin FLDPs or even consulting before banking. None of these is a guarantee or the perfect path, but that'd definitely be my recommendation.

BuellerBanker was right, a new college grad can't really be on the CFO path. My opinion is that you should work as hard as you can to get great experiences and get to Director and see where it goes from there. Director generally might take some luck, but is achievable for many. From there, luck and politics become a bigger factor.

I certainly haven't done an extensive study on this, but I'm a CFO at a F500 (in a smaller business unit) and know a reasonable amount of CFOs of pe-backed and F500 companies. I feel very comfortable in saying that the more traditional Big 4 and/or corp fin roles are the traditional path to most CFO positions.

twitter: @CorpFin_Guy

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Jul 25, 2018

Thanks for clarifying thinking process -- sounds like there's not so much a "path," but that I should just make sure I develop, strengthen and hone my modeling, financial and analysis skills, regardless of which area of finance I enter. Thanks.

Jul 25, 2018

Thanks for clarifying thinking process -- sounds like there's not so much a "path," but that I should just make sure I develop, strengthen and hone my modeling, financial and analysis skills, regardless of which area of finance I enter. Thanks.

Jul 26, 2018

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.

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Jul 26, 2018

Agreed with the above. CFO needs to know his shit for accounting purposes. Personally, if accounting is a mean to an end I don't mind spending time on it but overall getting pigeon holed in an accounting role without getting to the top (99.9% of the accounting staff) would be the death of me...

Jul 27, 2018

A vast majority of the CFO's that I've worked with have strong finance backgrounds, and not so much CPA and technical accounting experience. They seem to rely on the Controller/Director of Accounting/etc. for that type of knowledge. Fwiw, sample size is ~11 CFOs, ranging from medium & large regional business unit CFOs, global private company CFOs, to F100 public CFOs.

When I say strong finance background... a majority have worked their way up through various finance functions at the company (fp&a, business unit, supply, marketing, sales, strategy, etc) or similar companies, 50% MBAs, a few ex-MBB consultants or IB --> corporate finance --> cfo, 1 ex-equity research --> corp fin, etc.

Jul 27, 2018

Join a Finance Academy and do as many rotations as you can- companies such as GE, Honeywell, PepsiCo, GM, etc. have programs that rotate their finance professionals into strategic and operational roles to give them a much broader understanding of the company-and prepare them for exits into leadership roles. Finance academies have stocked the lions' share of CFOs for billion dollar companies.

That's another path to consider if Big 4 isn't your thing, though if I could go back I'd have def. done a stint and picked up a CPA. Big 4 people just come in pre-branded. We tend to view them strictly as auditors or diligence folks but that skillset comes in handy when you've got to oversee multiple close processes each month. It also opens up the path to Controller, which has also traditionally fed heavily into CFO roles.

Jul 28, 2018

If you want another data point for the CFO route, my dad is one for a mid-sized firm. Started out trading corporate bonds in the early and mid 80s, b-school then FP&A and corporate strategy from there on out (wanted a more stable income/life style after I was born). He doesn't have a CPA and never worked in accounting and has told me he leans heavy on his accounting and tax teams but he's much more knowledgeable in treasury, capital budgeting, working capital management, etc. Really just a round about way to say there isn't really a set route to make CFO.

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Jul 28, 2018

I currently work at a F50 company and what I've noticed is, there's an incredible amount of luck and uncontrollable factors that play into someone becoming CFO of a global business unit, let alone CFO of the whole company. From that perspective, you can't just "go on the CFO route."

And similar to what others have said, most of the CFOs I've seen in meetings understand accounting but they're not CPAs. Most are MBAs or have worked their way up in corp fin.

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Jul 28, 2018
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Jul 28, 2018

6 years to VP.. what. the. fuck.

Jul 28, 2018

The guy was born in Brazil and was probably connected to the 3G crew. Hence, they placed him at Kraft Heinz and moved him up quickly

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Jul 30, 2018

As soon as you see Brazil you know...

Jul 30, 2018

Hm, I had a different way of thinking the CFO route. I would imagine taking on a role that's close to CFO at a smaller company and moving up in size over time would be a better pathway. My understanding of executive hiring was that these roles are far more track record based than other corporates so being able to have a history of actual CFO experience is more valued. The big caveat here is I think this approach isn't relevant in the F500 but moreso practical in small to medium enterprises. Any thoughts?

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Aug 2, 2018

This is a good point. I think it all depends on what kind of CFO you want to be. I have seen some instances of smaller companies hiring ex-Big 4 Sr Managers+ to be the CFO, but I suspect that the CFO role at that type of company is more closely aligned with the Director of Accounting or Controller at larger companies. So, more involves with tax, audits, GAAP, etc.

In the case of VC or PE-backed companies, I could see the opposite happening. Meaning that the CFO hired is someone who has more of a strategic background in Finance/Consulting because the primary objective of the role is to help drive growth and plan for an exit, and not bookkeeping.

Highlights the point that there's various paths to a CFO title, but the day-to-day can vary quite a bit based on a number of factors (eg size of company)

Jul 30, 2018
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Aug 8, 2018