Strategic finance?

I'm looking at getting out of banking finally and am still trying to get a sense for what all these corporate roles actually entail. Think I have a good enough sense for FP&A and Corp Dev.

But anyone care to explain what the hell Strategic Finance means? Euphemism for FP&A?

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Comments (22)

Most Helpful
Nov 9, 2020 - 12:29pm

I'm in what you would call a "Strategic Finance" role. In short, yes, it is a euphemism for FP&A, but keep in mind that FP&A roles vary significantly across companies, so don't get caught up in the titles. I'll give you my experience in evaluating FP&A roles. 

A little on my background, I graduated from a target school and jumped directly into a corp dev role out of undergrad (feel free to check out my post history). Decided to transition into a more operational role where I could leverage my finance skillset. In my search, I would characterize FP&A roles into two buckets: (1) "vanilla" FP&A roles where the role seemed to be more focused on monthly reporting and accounting and (2) "strategic" FP&A roles where it seemed like the finance team was driving the decision making process in the organization. Here's what I noticed about the roles:

Companies

  • Vanilla: The larger the organization, the more vanilla it would get, but YMMV. For example, one of my friends works in FP&A at a F500 industrials company and his work is focused solely on long-term strategic projects and value-add initiatives. 
  • Strategic: Trended towards startups and companies in "high-tech" industries

People

  • Vanilla: teams tended to be more accountant heavy or lifelong FP&A folks (you might see some 10th year "Analysts" in these roles)
  • Strategic: I was on the lookout for people who were ex-bankers, ex-consultants, etc. For example, my CEO is former PE investment professional and was CFO of one of his PortCos, so he makes it a point to put the finance team in a decision making position. CFO is HSW MBA, ex-BB IB exited into FP&A. VP is M7 MBA, ex-MBB exited into FP&A

Job Descriptions

  • Vanilla: a lot of focus on month-end reporting, variance analysis, accounts payable, etc.
  • Strategic: there will be the same month-end reporting and variance analysis as the above, but the job descriptions that really interested me were the ones that talked a lot about "cross-functional collaboration", "driving strategic initiatives", "long-range planning", "evaluating new products and M&A opportunities"

Again, this does not apply universally to all corporate finance roles, it is just what I observed in my job search. Happy to expand on it more or hear what others have to say.

  • 15
Nov 9, 2020 - 11:11pm

At a tech startup actually. We run pretty lean - 4 people on the FP&A team (incl. CFO) supporting an organization of ~500

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Nov 10, 2020 - 8:21am

Similar to the above poster, in my short time in FP&A / corporate finance I found the finance team was split into two main groups: 1) traditional FP&A and 2) strategic finance. The folks in group one focused moreso on month end reporting, variance analysis, short term projections (e.g., rest of year, next year, etc.). I was in the second group, which was smaller and focused on more long-term and ad hoc finance projects. That included working with operational leaders to maintain a five year model, industry specific M&A, WACC analysis, etc. The second group usually looked for ex-bankers, corp dev professionals, consultants, etc. 

  • Analyst 1 in CorpFin
Nov 17, 2020 - 2:14pm

What are typically salary progressions/ranges for positions in strategic finance? I assume they are in line with typical FP&A roles, but slightly higher?

  • Analyst 3+ in IB - Cov
Nov 17, 2020 - 4:27pm

Thanks for this thread. I was just about to post about this. I always hear about strategic finance working in TMT IB and it seems most tech companies call their finance teams this even though their teams may just do FP&A type work. 

Along with compensation at each level, what is the lifestyle like compared to vanilla FP&A and IB (including hours and culture)? Also, is it generally "easier" / easier to succeed compared to vanilla FP&A and IB? I sometimes have found the technical aspects of IB challenging, but it's mostly due to the lack of direction or guidance I get. Finally, how high is the bar to be promoted / stability of your job? Just wondering as I've noticed even as an Associate, that there are a lot of areas for mistakes and people can get judged pretty harshly for even small mistakes, which I know does not do them any favors for performance reviews.

Nov 17, 2020 - 11:58pm

Great questions and I'll try to answer them based on my experience and observations. 

Team Names / Titles - As you observed, team names / titles do not matter. A "Strategic Finance" team could be a typical "vanilla" FP&A role and an "FP&A" team could be the "strategic finance" team. You honestly won't know just by looking at titles / job descriptions. The best way to ensure that you don't trap yourself in a "vanilla" FP&A role is to (1) research the backgrounds of individuals on the team and (2) networking with teams that you're interested in. The strategic finance roles that you want to be in are the ones where you own the P&L and are in the driver seat of the company. At my company, ultimately we are making decisions on how we allocate capital and derive the greatest return on that capital. We decide whether new products or projects are worth investing in, drive hiring decisions to optimize workforce efficiency, and determine the long-term financial "story" that we want to follow. 

Compensation - I can't comment on what "typical" compensation looks like, but can share my experience. I came into this role with 2 years of experience out of undergrad. Comp for my first year in this strategic finance role was $110K all-in ($90K base, $10K signing, $10K bonus).  

Lifestyle - This varies a lot, but it's much easier than IB that's for sure. My hours range from 40 - 50 hours a week when things are easy to 70 - 80 hours a week when things get really busy (e.g. upcoming board meetings, leadership strategy sessions, etc.). However, during those hours, I have very little downtime. 

Advancement / "Ease" - Again this really varies, and I think you can judge by the team composition. If your team is full of ex-bankers and consultants, expect the bar for advancement to be high and the tolerance for errors to be low.

  • 8
  • Analyst 3+ in IB - Cov
Dec 5, 2020 - 7:28pm

Wanted to also pose this question so everyone could see rather than getting hidden under replies.

How complicated is the modeling / do you think the work you do is very repetitive / monotonous (or can be after a few years)? 

Given the high expectations and low tolerance for errors, do you see either yourself or other colleagues (esp those who came from IB) working much longer hours to make sure their work is the best it can be (like 80-100 hours)? Maybe even coming in on weekends to continue working on their workstreams and projects?

Dec 7, 2020 - 10:40am

As with everything, it depends. Most difficult modelling I've done was in a treasury/cap markets role or project, but generally you're not creating anything earth-shattering. I think it's important to realize that strategic finance groups are expected to wear many hats and be capable of producing models for any sort of assessment or scenario analysis, so you generally need to be a strong modeler and be a capable and creative problem solver to stand out. Good finance orgs at F500 operate like a well-oiled machine, whereas at smaller orgs finance groups are going to be much smaller, and may only have a few people working on company-wide initiatives - not uncommon that you're on a project with no one else to rely on that has done it before.

Monthly reporting does get repetitive, but you get less involved as you gain seniority. The work is also highly influenced by where the company is in their strategy, but this group is well-positioned for the most interesting work (capital markets activity, M&A, contract negotiation, IR initiatives & long-term planning). 

I've seen people from non corporate backgrounds (IB/ER) both do well and struggle. To your point around putting in hours.. I've seen and worked for ex-bankers that have never pushed back on deadlines and will say yes to all work to the point that they HAVE to work a lot of hours. While they're always commended for getting work done, there are many times that things are presented too soon or what's presented could have been done better. Also have seen ex IB people struggle with understanding internal systems and managerial accounting concepts.

Dec 9, 2020 - 12:04am

trippycannon is on point with their response +1. Wanted to piggyback off their comment with one of my own thoughts:

Modeling here is just different than the modeling you're doing in banking so it's hard to compare it. The difficulty in modeling in a corporate setting comes from translating complex business issues onto an Excel spreadsheet. As trippycannon mentioned, you'll have to rely on your creative thinking and problem solving skills to succeed in this area. I'll compare this to the modeling that I did my corp dev role. Most of the modeling I did back then consisted of your typical DCF valuations, LBOs, accretion/dilution analysis, SotP, etc. At the very core, you just know how to construct one of those models when asked because it's been done so many times before/been taught in classes/existing templates. However, in my new role, I'm modeling out something like "what would happen if we were to change X policy for our customers or add Y feature to our product?" I'm usually starting from a completely blank slate and have to think creatively and work with stakeholders across my company to understand the scope of the problem. 

  • 6
Dec 14, 2020 - 10:21am

Completely agree with everything that is being said here by Big Hero 6ix.  The modeling varies significantly and the problems are much more unique than just valuation methods.  One area that I think is downplayed in strategic finance roles is the idea that you need to be able to communicate complex analyses very simply.  This is something I have seen even the best modelers in my PE and Corp Dev experience struggle with.  In PE and CorpDev, everyone has a high level of financial knowledge, but as you drift toward working cross-functionally it becomes less of the skill of stakeholders and they will rely upon you to provide the information in a way that is clear and actionable. 

Mar 7, 2021 - 3:52pm

The answers above were so helpful and educational. I'm also considering strategic finance and wondered if I could tack on a question as well - what does career progression/ promotion cycles look like in strategic finance? Is it a lot less defined? Do people stay in essentially the same role for a long time or because it's at growthy companies is it relatively easy to get promoted (e.g. to leading a team)? Does the nature of the work change as you get promoted? Thanks!

Mar 8, 2021 - 11:04am

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