Comparing Apples to Oranges: CFI vs. FMI (Part 1. FMVA Review)

By Andrew Grigolyunovich, CFA, CFM and now FMVA

“Has anyone completed FMI certification? What are the differences and similarities compared to the FMVA certification? Thanks”. Over and over I see posts like this one on LinkedIn. The financial modeling groups did have some collective knowledge to advise. Still, most of the comments were concerning either one or another certification. You can get either an FMI review or an FMVA review but not both. Up until recently, there was no one who has taken both certifications and could compare them.

I was among the first cohort of financial modeling professionals to successfully pass the Advanced Financial Modeler (AFM) and then the Chartered Financial Modeler (CFM) levels of the certification by the Financial Modeling Institute (FMI). Then, a couple of months ago, I decided to try the Financial Modeling and Valuation Analyst (FMVA) qualification from the Corporate Finance Institute (CFI) as well. Now, after completing both of them, I am probably in the best position among the financial modeling professionals to make a qualified comparison.

A quick disclosure before we proceed. I am trying to be as objective and as honest as possible with this series of articles. Still, please be aware that occasionally I grade AFM and CFM (Chartered Financial Modeler) exams for FMI. I have also created a couple of questions for the CFM qualification. Anyway, I’ve just double-checked that my revenues from these activities were as little as 0.6% of total revenues last year. In my opinion, the extent of my possible conflict of interest is negligible, but still please be aware of it.

EDIT: Since September 2020, my team and I have launched a monthly financial modeling competition called Financial Modeling World Cup (FMWC). It’s a great opportunity not only to compete for the Prize Fund ($20,000 for the year 2021) but also to train your financial modeling skills on monthly basis. The case topics vary from month to month, that way covering as many financial modeling applications and use-cases as possible. The feedback from current participants indicates that no matter which certification exam you are preparing for, the training opportunities are relevant for everybody. And of course, I’m more than happy for such feedback, because that was the very reason I started FMWC in the first place.

FMVA Program Review – Great Online Learning Course

In my opinion, CFI did a very good job in creating an online training program. It is a bundle of 24 financial modeling courses that cover various topics – starting from accounting fundamentals up until advanced valuation, M&A and LBO modeling. Each course provides nice examples and financial model templates. The courses are split into 3 levels – 5 prerequisite courses, 9 required courses and 9 electives – a total of 23 (+ there is the 24^th module covering some financial modeling templates).

The prerequisite courses cover the very basic concepts of finance and Excel and help students with little previous experience to bridge the gaps in their knowledge. The required courses are intermediate level and they make the core of the FMVA program. The elective courses typically cover advanced financial modeling topics like M&A modeling, real-estate modeling or renewable energy modeling. To receive the FMVA qualification you need to complete 9 required courses and any 3 of the 9 electives.

 

FMVA Review: The “GOODs”

1. Video Lectures

There are several things that I liked about the program the most. First of all, it is the video lecture format. All the topics are clearly explained and typically (depending on the course) students are guided through the process of creating a financial model. The instructors give useful tips and hints not only for the model structure but also for the Excel shortcuts and chart design elements.

2. Financial Model and Presentation Design

Second, CFI gives a lot of attention to financial model design. There is a whole course “PowerPoint & Pitchbooks” under the required section of the FMVA program that gives great advice on setting up the presentations and the charts the right way. This course gives a lot of nice little formatting tips. Besides that, all the other courses pay the necessary attention to charts and formatting. In every model that is covered in the course, there will be a little dashboard section and instructions on how to create the charts in the most visually appealing way.

CFI has its own design guidelines and strictly keeps to them. Their colors might seem to be too varicolored to more conservative analysts, but, in my opinion, the varicolored financial models by CFI look much better than black&white models that were widespread in the early days of financial modeling.

3. Focus on Wall Street

Third, it is very Wall Street and US-focused. All the courses provide students with the relevant industry jargon and deal structure that is typical to the US market. Different countries have different industry standards, different labels and different types of capital markets. While companies in continental Europe rely on bank financing more heavily, equity financing seems to be more developed in the US. For example, in my case, the real estate modeling course was useful to better understand the multiple levels of equity partners (GP and LP). In my country, up until recently, this is the Real Estate development company that needs to provide the whole bunch of equity co-financing to the bank loan from its own funds.

In that respect, I find the FMVA program as a great supplement for the professionals like myself. If you are an experienced modeler working remotely with US clients, FMVA is a great way to quickly get the right jargon and start speaking the same language with your US clients.

4. Instructors

Fourth, I liked the way CFI created the program courses. Tim Vipond, the founder of the CFI, narrated most of them himself. In one of his interviews, he mentioned that in the early days CFI was a typical new business with the founder having to wear multiple hats. I liked the way Tim delivers the material and explains complex concepts. Probably in the future with the CFI growing fast, we could hardly expect him to have time for creating courses. That’s a great thing to enjoy while this content doesn’t get outdated.

5. Badges

Another small advantage is the badge that you get for every course completes. If you regularly post something on social media and run out of ideas, working through the FMVA program could help. You might have as many as 25 posts as a result of enrolling and completing the program (a badge for each course completed + the overall FMVA completion certificate).

 

FMVA Review: The “BADs”

1. Exam too Relaxed

Besides the advantages, the FMVA program has some drawbacks. The most significant drawback is the very nature of the program which is fully online. Having an online program makes it accessible all over the world, however, the online format means online exams as well. In order to grade exams automatically, your only option is the multiple-choice or type-in-the-answer format. Only in the advanced courses you have to create a more or less complicated financial model. Then you use it to calculate the answers and type in the correct result. Still, in most of the preparatory-level and required courses it’s just a multiple-choice test.

The passing score is high, 80%, but the number of retakes is unlimited and there is no time limit to pass the test. I believe that even a person with very little knowledge of finance could take the exam several times, memorize the right answers and pass it with multiple retakes. All retakes are possible on the same day. Finally, the exam is open book and open whatever else (as you can’t realistically control cheating in a fully automated exam).

In my opinion, it is easy enough for the students to get the right answers even to the most complicated questions that require financial model creation. Just open a similar complete model provided by CFI at the end of each course and replicate the formulas in the exam model to get to the right answers. It’s really not the same as having to create the model from scratch on a closed-book exam. 

While the quality of the educational part of the FMVA program is great, the online nature of the testing system downgrades the value of the designation in my opinion. While many FMVA charter holders are experienced financial modelers, any person with the right amount of persistence could pass the exams. 

2. Minor drawbacks

Probably this is the major drawback of FMVA. A minor drawback was that I personally didn’t like the Budgeting course. In my opinion, it was too theoretical. There could have been much more practical cases. Other courses though were very good, especially the course on Presentations.

The final thing I’d like to mention in my FMVA review is the depth of material. CFI designed the program at a very good intermediate to upper-intermediate level. However, there will be no hardcore advanced-level problems/brain-teasers like you get in ModelOff (Financial Modeling World Championships). Still, the majority of modelers probably don’t even need it. The very advanced topics will probably be better grasped on the job.

So, summing up my opinion about FMVA: a great online program to actually learn financial modeling and valuation but there is limited value to the designation as anyone can pass the online exam.

 

… To be continued.

P.S. After completing the article I see that there is too much feedback I could give on both programs. What a surprise to see the article growing to 6 single-spaced pages in Word. The blog post will just be way too long.

As a result, I decided to split it into 3 parts. I published the first one today and it is an FMVA program review. I will publish the second one next week and will provide my review on FMI. Finally, in 2 weeks I will reveal why comparing both programs is similar to comparing apples and oranges. They are just too different and you’d rather decide what suits you best.

Stay tuned until the next week. Follow me on LinkedIn or invite me to connect so that you don’t miss the next part of this article or some other interesting blog posts on financial modeling that I publish.