AI Can Build the Model, But Can You Trust It? with Ryan Humphrey

What would you say to people who are worried AI will make the financial modeling job profession obsolete?

If anyone tells you that they know what the financial modeler is going to be doing in 20 years, I will call them out right now. They are lying 100%.

What is one skill that you have developed as a modeler that most people would be surprised by?

That's a great question. Today we're joined by Ryan Humphrey, a partner at Forvis Mezzars in the UK and one of the leading experts in financial model auditing. From reviewing high-stakes financial models to co-authoring research on model audits in the AI era, Ryan brings a unique perspective on building models you can actually trust. A good financial model, in my opinion, should really be doing a single thing. If you want to do multiple things, we'll build multiple models. Otherwise, you have a confusing story. It's difficult to understand what's happening. Decision makers do not have time to trawl through a model which can have tens of, and at times hundreds of sheets, and to understand everything that's going through that. So—

What would you say are the most important skills for model auditors? It probably depends on how you I mean, Financial Modelers Corner is the world's premier modeling podcast. It is brought to you by Financial Modeling Institute, the world's leading financial modeling accreditation organization. Welcome to Financial Modelers Corner. I'm your host, Paul Barnhurst, the FP&A Guy. And this podcast is all about the art and science of financial modeling with distinguished modelers from around the globe. Not those kind of modelers, financial modelers. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditation in financial modeling, and I would argue it's more important than ever in the era of AI. Fundamentals, foundations, are more, not less important. I completed my Advanced Financial Modeler because it's a great foundation. All right, on to the show. This week I'm thrilled to welcome Ryan Humphrey. Ryan, welcome to the show.

Thank you so much for having me. Great to be here.

Excited to have you. So now, Ryan, you got to tell your audience, what do you listen to when you're running? This is going to be an ad for me.

If we just spoke about that, Paul, my new running podcast has been all about Financial Modeling Corner and everything that you put out there. I absolutely love it. It's, I was on the YouTube channels before. I've been a fan for a while, in particular of the Mod Squad. And I'm disappointed I didn't get an invite to a Mod Squad video, but maybe this is my plug to be included next time.

We will have to mention that to Giles and Ian because we do a monthly episode. So we may have to bring you on there as well. So I love the plug and thank you for giving me that commercial. I appreciate it.

All right.

So a little bit about Ryan's background before we jump into our interview. He's a partner at Forvis Mazars in London. He's an expert authority in modeling, in particular specializing in accounting and tax reviews on financial models. We got to have people that love it, so I'm happy. Ryan acts as a signing partner on financial close, operational, and refinancing model audit engagements, as well as more atypical model due diligence engagements. He originally trained as a chartered accountant. He became fully qualified in 2017. He was a named contributor of the paper, How to Review a Spreadsheet, that was published by the Institute of Chartered Accountants in England and Wales, and has more recently co-authored the white paper, Credible Model Audit for the AI Era, which is something we're going to talk about today. He is also currently carrying out research with Cambridge University in the field of sustainability leadership and is a passionate advocate of the Energy transition. Love it. So thank you for a little bit of your background. Ever wish you could get career advice from the best financial modelers in the world? Well, now you can. That's why we created the Career Corner. Let's go ahead and see what today's guest has to say. So how did you get into financial model audit in particular? You know, was that intentional or did it just kind of happen?

I don't think anybody who's kind of landed in this was, when they were at primary school or elementary school, was thinking, you know, I could be a footballer or I could be a model auditor. I think everyone's kind of found their way into it. From my perspective, I kind of followed quite a typical path. I trained as an accountant originally in a sort of more typical field of statutory audit. And what happened was kind of strange, actually. I'd qualified and I was speaking to people in the organization that I work at, and I heard about this team called Project Finance at the time, and I heard they specialized in renewable energy projects. Which at the time was perhaps not popular, is now, and they also loved Excel. And in my team that I previously worked in, I'd heard about these people and they were told to me as being kind of a bunch of nerds. And that was the words that was used. And I think that was to try and put me off joining them. I'd sort of had a few conversations. What they didn't know is that I, I'm kind of a bit nerdy and a little bit, I have a kind of hippie tendency as well. So I was thinking, hey, this sounds really interesting. I love renewable energy. I love green transition. And I've been doing that for the best part of the last decade now in that team.

There you go. Funny how it works. So, you know, my last interview, which I think actually will come out after this one, but I recorded one right before we were talking. Dim did refer to it. He goes, you know, I thought finance people were just a bunch of nerds that sat in the corner before he learned about financial modeling. So you use nerd and hippie. It seems to be a trend.

Yeah, reclaim it. Definitely. Yeah.

That's what I say. I own it. Although I told somebody I was a nerd and they're like, no, you're a dork. Yeah, I actually understand the difference.

Where do geeks come into that? Yeah, I've never really understood. But anyway, I speak about all of it in an affectionate way.

Same here. All right. So what is one skill that you have developed as a modeler that most people would be surprised by?

From my perspective, you know, one of the most important skills is actually communication. You know, when we probably talk about technical skills later, I really feel like interpersonal communication skills are really what's critical. So Understanding what the client wants. Now, I effectively, I actually review models more than build. In that capacity, I'm always working with a third party to really understand how can we help. You know, when it comes to modeling, I know you speak a lot about scoping and specification in your podcast, and I completely agree. And so clear communication skills are actually essential. And again, in this field of coming back to the nerds and hippies, fairly offhand comments, I think the best modelers are people who are actually able to really communicate and understand clients. And that's something I've really noticed.

It's amazing how often communication comes up. I think that's probably the one that I agree with you, people realize the least is, no, modelers really have to communicate. It's not about just technical skills.

I mean, the model really is, in Excel, is effectively a communication vector more than anything. It's about telling a story. That's fundamentally what a model is meant to do. And I think that the modeler who's developing that model has to understand what the story is. So again, that's communication.

All right, so one more question here in Career Corner and then we'll kind of move on. What would you say to people, I'm sure we'll have some, especially early in their career, college students listen, who are worried AI will make the financial modeling job profession obsolete?

A very big question and it's a question I've heard a lot of people ask me. You know, in my capacity, we have about 100 people in the team that I run at Fortune Bazaar. Um, and it's, to be honest with you, it's difficult to map what that career looks like. And if anyone tells you that they know what the financial modeler is going to be doing in 20 years, I will call them out right now. They are lying 100%.

So the BS meter goes off is what you're saying?

100%. The radar's pinging in my ear when I hear that. But I do think that, that, that there is, there is still a role because ultimately what cannot be replaced is judgment. And, you know, ultimately the, the coding skills may become less valuable with time because ultimately AI is already very good at that, in my view. But the ability to understand and apply commercial judgment to a model is something that's becoming more important. And what we're already seeing is that I think the role of actually the more junior financial models is becoming more interesting, to be honest. I think there's actually the opportunity to be having more value-adding conversations earlier on in the process. Because as the tools develop, um, and you, you have to kind of develop different skills earlier on. Um, and again, I'm not sure if that's something you've heard in your money conversations, but, you know, I, I'm yet to believe that, that, that layer of judgment is, is going to be replaced anytime soon.

That's probably the most common thing I, I hear is people are, look, the human judgment isn't going to go away anytime soon. And, you know, as I like to say, if we had AGI, all bets are off. You could find me on the beach.

Definitely. I mean, I'll be there with you, as will everyone. AGI, again, I think it's just something we need— everyone needs to park, park to one side.

And I agree with you. Whether we get there, that— it's a whole different world if we get there. If, when, however you want to look at it. Until then, let's talk about what seems realistic. So I think you and I are on the same boat there. And we've had that conversation, you know, Mod Squad, and I always kind of joke about the AGI thing. All right. So now we're going to get to the question I usually start every episode with. Since you already know what it is, tell me that nightmare. I know you have one.

I have prepared this one. I had to think about it quite a lot. I mean, one of the things that ultimately I'm really reviewing other people's financial models rather than building them myself. So I can happily comment on lots of awful models I've seen over the years. But I think the one story that sticks with me is it was actually very early in my career and I was reviewing a model that was sent to me and it was built vertically. The timeline, instead of being horizontal, was completely vertical. I know that some people like to model that way, especially in non sort of professional financial modeling environments. But this was very unusual to me. I was relatively junior. Maybe I've been doing it for a year or two. So when I opened the model, I thought, okay, let's—

Was this by month? Because I could see years, like just maybe a couple of years.

There was a monthly timeline going. Yeah, exactly. We're talking like monthly, quarterly, semi-yearly.

Oh, that'd be rough.

Everything was vertical. And at the time I was thinking, this is unusual. I haven't seen it before. But I'm pretty, I'm relatively new in this field as well. So, okay, I'll go with it. We spent a lot of time understanding this model. The first thing we did with the client was just asked why they'd done it. They didn't really have a good answer. I think they had a relatively new, let's say, modeling team that built this model. And one of the first things we said is, are you sure? Are you sure this is, is this something that, you know, banks are gonna be able to rely on? And we didn't hear from them. We gave them our findings. We tend to work iteratively, so we'll review a financial model, give them a list of findings. They'll come back to us with sort of an updated model. That's how the process works. In this case, we heard nothing from them, and a month later we came back with a horizontal model. So we had to do all of our work again from scratch. The model was obviously in a better place and somebody had had a conversation, but for me, that was probably my nightmare story just because it took so long. It took us a huge amount of time to effectively reperform. all of the calculations. You know, some financial model reviewers will review a model kind of in isolation, cell by cell. So they'll go down row by row, they'll look into every formula. The way we do it is we effectively recompute all the calculations. So we rebuild a model entirely. And it's taken us a long time to effectively transpose that logic into a way that we do things. So we spent all this time building this kind of very fancy transposition, for it ultimately to be completely pointless because they went and rebuilt the whole model and didn't tell us. The main thing is they didn't tell us.

They just told us. So what was that? So it's important communication.

Was that something that would have been greatly appreciated to my, my former self when I was reviewing that horrible model? And maybe I'll just say one other thing as well. You know, I guess the theme of a bad— like, generally that really was a one-off. And, and now I do— we do occasionally see kind of vertical models that are kind of annual, like you said, which is not that unusual. But I think the theme of like most kind of ugly models is the whole kind of Frankenstein model, models that have been used by many people over many years. Again, these are normal things that I'm sure you hear a lot of that haven't been taken care of. They didn't have a nice guide, so no one really knew how to use them. They've been passed down generations of finance teams. These obviously—

Have you been peeking at my FP&A models over my career? That's very common.

Oh, yes.

All right. So I know you're relied on by some of the largest banks and organizations in the world to audit financial models. You've worked on hundreds of deals. So maybe take us through the process. What is a typical— I know there's not necessarily a typical, but if you kind of had a, you know, say average or kind of outline, what's that normal process look like for a model audit for you?

Good question. I mean, so most model audits that we do are in the energy and infrastructure space. This is just because we're talking long-term cash flows, potentially contracted revenues to some degree, and effectively that need to build out for the long term and get certainty over them. I think, you know, typically they will be in terms of deal size about half a billion pounds, so about $500 million if you want to talk about a sort of a, put a number on that. And the process effectively is that we will receive a financial model, it'll take us a couple of weeks to to run proprietary tools and processes over that. And then we'll go back and forth with the client. I spoke previously about that kind of iterative workflow before ultimately landing on what's kind of the closed model, which is what the deal is underwritten on. And ultimately, you know, we sign off on the logic of that model. So if there was an error in that model, if there was something going on, ultimately we would be responsible for that potentially. And that's something obviously we are very keen to avoid. But, but that's, that's sort of how it works. And, and, you know, it kind of makes sense because if you look at the, the quantums of the deals we're talking about, if you're a bank and you're gonna underwrite a transaction on somebody else's financial model and put out half a billion pounds without that assurance of this model works, I think that would be a, a pretty foolhardy investment for, for a funder.

When the model goes to the board, it's your name that is on it. The advanced financial modelers is how you prove the work holds up. I took the exam. It sharpened my modeling skills and taught me how to be a better financial modeler. I invite you to join me and start the journey to becoming an AFM today. Go to fminstitute.com/podcast. That is fminstitute.com/podcast. institute.com/podcast and use code podcast for 15% off. They need some level of comfort. So when you're signing off on a model, what are you kind of— what are you validating? I mean, obviously you're not validating that the $102 million of NPV they expect over the next 20 years is right.

We are validating that the NPV calculation works. So, you know, and And I know that you talk a lot about ex-NPVs and NPVs at times as well, but it's not just about that. I mean, it's what we steer clear of is, I was saying, validating the assumptions. So we are really, it is really about the logic. Fundamentally, that's what we're looking to do. Decision makers do not have time to trawl through a model which can have tens of, and at times hundreds of sheets, to understand everything that's going through that. So We're really trying to eliminate the need for that to be done by somebody else. And ultimately, we are saying that it all kind of, that the different constituent parts of them will all come together so that the outputs can be relied upon. And that's really important. It's really output-driven. So that might be in the case of a debt raise that your debt is gonna get repaid. You know, ultimately, if we've been brought in by a bank to make sure that the debt is repaid, we don't need to test 1,000 different sensitivities or scenarios. That's not really our job. We're just making sure that according to the base case, the debt is repaid. But that's effectively our role.

Yeah. So you're basically going through the model, making sure the logic is sound, right? The assumptions are supportable.

Correct. The assumptions we validate to documentation as well. So for example, with debt transaction, we would look to the financing agreements, the credit agreements. Correct.

You're basically saying, look, this is a sound model, the logic, the assumptions, everything is supportable. You're not saying, hey, we guarantee that the $102 million is where you're going to end up because we all know that's a—

No, that is really important. I mean, ultimately we are independent. So sometimes we refer to our work as independent model auditor. Some people who review a model might be, I would say, promoting the fact that they're very collaborative, the fact they're very efficient. We try and avoid those terms actually. It's a bit counterintuitive having said communication is the most important skill. But for us it's about professionalism, independence, because you want to make sure in these transactions that everyone is satisfied that the model works. You can't take sides. And that independence point is really critical for us. It's something that differentiates us from, I would say, other people who can review financial models.

Yeah, you're basically saying, look, we're an independent review. We're not favoring the bank. We're not favoring the lender.

Yeah. Or buyer and seller in an M&A deal. We can't, you know, we will ultimately offer our lines to all parties on the transaction. Works for M&A deals as well. We can, we can do that.

Sure. Yeah. Yeah. M&A. Yeah. We're not in favor of the buyer or seller. Here's our, here's our opinion. Do what you will with it. Which makes total sense. I think that makes a lot of sense in modeling. So. What would you say are the most important skills for model auditors? Because I think there are some differences between those that are just building models. I don't want to say just, but those who build models and those who audit. So what would you say are the most important skills for the auditor?

I mean, it probably depends on how you audit a model. I mean, so I think the skills are closer than you might imagine. There's convergence because, you know, the way that we review a model is we actually build a model. We build all sorts of stuff.

Sure, if you're building a full model to review it, then they're going to get a lot closer in the way you do it.

Exactly. The skills are more similar. I think it changes though as you sort of go up the seniority. So ultimately more people will look at and review a financial model than build a model. By that, what I mean is a single user who's created a model is generally building for somebody else. It might be for your own self-validation or interest, but typically in a corporate setting, there'll be many other people who look at it.

Okay.

And I think that a key skill for more senior people, and this is not like a professional model auditor, but anyone reviewing a model, being able to quickly distill what are the critical outputs and what is this model trying to do. It is with alarming regularity that I will open a model, and I've been doing this for a very long time, and I'm not really clear what the purpose of the model is because it isn't signposted, the outputs aren't clear, there's a lot happening. One of the things that is a real bugbear is a financial model trying to do everything. A good financial model, in my opinion, should really be doing a single thing. If you want to do multiple things, well, build multiple models. Otherwise, you have a confusing story. It's difficult to understand what's happening. So that ability to apply human judgment, it becomes really critical for financial modeling, model reviewers in particular, in my view. Although also, I don't want to pick sides here. I've got a lot of very competent modeling colleagues and model auditors.

Go ahead, you can make fun of all the modelers.

We are a little bit competitive. That's okay.

I would have never guessed. Speaking of competitive, do you compete in the modeling world championship stuff?

I haven't, but I've been— a lot of people have been trying to convince me, Giles and Faye in particular in the UK. And I do really promote it as an excellent activity. I follow it on YouTube and I think that some of the The live battle at the Global Excel Summit was also really impressive. I think that the esports world is really important because it has opened up Excel to a new audience, which is really, which for me is really important. I'm really passionate about this, but personally, I'm terrified. I can't— yeah, that's a good question. Why?

Let's have a therapy session. Ready? Go. No, I'm kidding.

Do I seem like I need therapy? No, I think that the reality is that I think there's a lot of difficult skills to learn, and I think that I'm applying my own learning time in other things at the minute. But I wouldn't rule myself out in the future, definitely. And I've encouraged a lot of my junior colleagues to have a look at that and become involved, certainly.

I, I'm absolutely completely with you on your reasoning. I, I would like to do it more, but it's just a matter of time. Because I see the ones, if you're really going to get into it, it's a time investment. Now, some people maybe just do the cases, totally have fun, but I know me and I know I want to get better and I know there's a real time investment. The level of stuff they're writing and the level of stuff I'm writing right now are just different levels.

Yeah, absolutely. It is a big time commitment, but I think the skills you develop are really worthwhile. I don't know if we'll come on to like the importance of skills now and in the future. I imagine we might do, but I do think it is a time for people to be doubling down that investment in skill development, whatever that means to somebody. Yeah, absolutely.

So, you know, kind of speaking, this is a little bit on skill development, but we'll start here and we'll get more to that. You know, how do you see, first we'll start with auto models changing with the use of AI. Let's start there, then we'll get into skills, but because people are going to use AI to build models.

Yeah, I think that, you know, so I really, that is a, a really big question in my field. It's a big question in financial modeling.

Yeah, a lot of people are trying to figure it out. So.

Of course. I mean, one of the critical distinctions, which is well understood and well discussed, is just the difference between probabilistic systems and deterministic systems. And that's really important. I mean, what we have done over the last 20 years in auditing financial models is that we have actually a solid proof of what we've done. Okay. We can exactly, we can point to the shadow model that we've developed. So you have a client model, we have the shadow model, which is our own intellectual property. It's our version of their model based on our knowledge. Okay. One of the concerns about using AI without a deterministic process is that you don't really know how it's got there. Um, and if it isn't targeted, then that, then that is a, a major concern. Um, that said, I am personally very bullish on what AI can do. And I have really observed in the last 3 months in particular, a major step change in, in spreadsheet understanding from, from, from AI, which was not there a year ago. That does change the opportunities and possibilities in the model audit field. And I can talk about this all day, so probably stop me there. But I don't know if there's anything specific you want to pick out from that.

No, I think that was good. I agree with you. First, I think you mentioned the whole probabilistic versus deterministic. I think second, we've all seen it. I think most of us, when Claude 4.7 came out, or 4.6, I think it was 4.6, now we're on 4.8. There was a leap forward in what the models could do. I mean, anyone who watched ModSquad a year ago when we first launched, or not quite even a year ago, October of last year, and saw some of those first models we went through, they were pretty bad. I mean, there were some of them that if a junior analyst did that, I would be concerned. You know, and now it's like you can look at some of them and go, okay, that's better than a, or as good as a lot of people starting. I mean, some of the structure is better than a lot of models I built early on in FP&A, and that comes with excitement and nervousness. Like I've talked with so many people, the whole idea of I can build a model in 5 minutes. You can, but is that really the important thing?

I mean, the real concern is what you just mentioned, right? The fact that it can seem good. That's the real concern is like some, something now that's produced is so plausible. in how it looks. It's become so strong at detecting patterns effectively that it can produce something that looks really credible. But ultimately, there can be errors in there. There are errors in there. I have never, again, I don't know if you have seen this, but I'm yet to have received a model built by AI yet, like fully built by AI. I'm sure people are using AI to understand concepts, to help with complicated formulas, For both parsing formulas, understanding what's going on. But I'm yet to see someone actually say, I've built this entirely using, I don't know, agentic AI solutions. I would love to see that.

There is a difference between editing a template and building a model from scratch. The Advanced Financial Modeler tests whether you can actually build a model from scratch. What are you waiting for? Get started on your AFM journey today. Go to fminstitute.com/podcast. That is fminstitute.com/podcast and use code podcast for 15% off. So, I know someone who got a model, but it wasn't a financial model. It was, well, it had financial components to it. We'll call it a financial model, but it wasn't like a 3-statement or what you think of as a typical It was a, you know, an HR, or was a resource model around hiring. The one of someone who worked in finance, their business leader goes, I use Claude and I put it together. And the person shared, and then I spent 3 hours fixing it all. That was their description. And he was so proud of it. They're like, they're so proud that they were able to build their own model and didn't need my help. And I was like, I wish you would've came to me.

Yeah, absolutely. I mean, it's interesting you say that because, you know, that does kind of illustrate a an interesting trend, which could be in the future that financial modelers are moving more towards from build to audit. And it could be that financial modelers, you need the skills in how to build a model. But as you said, as the coding from AI side becomes cheaper, you need to spend more time refining, fixing, reviewing models. And that could definitely become a key trend. So maybe I've much more by luck than judgment ended up on the right side of the modeler versus model audit line. But I think they converge anyway. There's a lot of convergence there.

There definitely is some convergence. I mean, regardless any role you're doing, FP&A, you're doing investment banking, you're doing whatever it may be, if you're doing a lot with modeling, at some point you're reviewing modeling and sometimes at some point you're reviewing somebody else's. You may not be formally doing model audit, but at a minimum, review and build converge to a certain degree. Do I expect in the future review to become even more important? Yes. As less and less of the build is done by a human, it's more and more important that we validate all that. Human judgment, I believe, will become more important. I think as we talk about skills, and I imagine you would probably agree, but You know, what do you see as kind of the most important skills for this profession? And maybe how do you see it changing? Just kind of your thoughts in general as we see more and more AI.

I mean, it's a really, really big topic of discussion. I do think that soft skills become more important. I've sort of said this earlier, that interpersonal skills become more important than they perhaps once were. You know, you might have in the past, you request a model from a model builder, They send you a model and away you go. And it becomes very sort of black boxy how they get there. It doesn't really matter. You'll get a product. I think now there is much more need to develop deeper relationship between the modeler and the user, which is a good thing as far as I'm concerned. And I think you could argue that certain technical skills become less important. Now, that doesn't mean that they're not important because they are absolutely critical. But the types of technical skills become different. I mean, I've spent a lot of time in the last year looking at Python, more than I've ever spent in my entire life before the last year. So I think that there's a sort of need to continue to upskill, but people need to kind of think about, are they using the most up-to-date technical resources? Are they using trusted resources to upskill? And I think that, you know, we haven't really talked about it, but What I really value is the trust economy. You know, we're moving away from kind of a product and services-based economy to a trust economy where people will effectively pay for things they trust because the actual unit cost of producing something in general has reduced. And I know that you've had Ian Bennett on a recent podcast talking a lot about this, and I completely echo all of the sentiment. I mean, we're both coming from a professional services environment, so we have probably quite a similar angle. on this conversation. Um, but, but certainly the, the value of trust becomes so important.

Um, so yeah, I mean, trust should have always been important, but it becomes even more. I was— I, I think I posted on LinkedIn the other day, and not talking modeling, I was saying content creation, creation of content has basically become free. Development has become nearly frictionless. Not free, you still got the tokens, but even with content you do, but it's Content doesn't use many tokens. Developer developing code does, or developing a model can use a lot. And so to develop, development in general has become virtually free and frictionless.

Yeah, absolutely. And also that point about content, we could talk a lot about, about, about, about content and LinkedIn, but, but it does, it does seem to have just the quality seem to deteriorate, at least the quality of conversation that I see and, you know, understanding who are authentic voices that I can trust. It's become a kind of a quagmire of frankly rubbish. I was gonna say use a different word, but I'll keep things professional. Um, I mean, it's important to know who you can trust, you know, and I think that actually, I think about the FMI, what they're doing, I know they sponsor this podcast, is really important. It's actually about building those trusted voices, um, in the community so people don't have to question, um, what to believe in, if you like.

Yeah, trust becomes more important than ever as we're moving, you know, It's funny, I'm sure you've heard of Y Combinator, probably heard of that, right? And, you know, they used to be, if you came to them with the services business, it's like you weren't getting in, go away. We want just the software. This last round, they basically said you need a service component to your AI business because where's the trillion-dollar opportunity? In the services field. And as agents get better and better, what are they starting to do? Build a lot of those workflows that were performed by people. services. And so it's just, it's a whole new world in a lot of ways.

That definitely is.

You know, it's, it's exciting and frankly a little scary, but 100% agree, trust has never been more important to find voices you can trust. I can put rubbish that looks great on LinkedIn. I can put rubbish in Excel that looks great. I could put rubbish on YouTube. I can put rubbish in software. You can put it pretty much anywhere. Really quick, and it can look right. That's the hard part, is unless you really know that area well, it's very easy to believe it's not rubbish. So that's why I like people to comment on my post to get a free prompt pack. You know, so I think I know the answer to this question because we've talked about it quite a bit. in different ways. But you mentioned what skills become more important as we go more and more to AI. But as you become more senior in your career, what are those skills that become more important? I imagine communication. Is there something else? Because we've covered communication pretty well. Is there another skill in there that you would say becomes more important?

That's a really good question. I think what comes to my mind is sort of abstracted away from the financial modeling world just for a second. I'm very fortunate to speak to very, very intelligent, high-achieving people, um, you know, top CFOs, top CEOs. Um, it's one of the privileges of my job is working with really clever clients. Um, and one thing I've noticed from like leaders in general, this is like a very personal observation, so, you know, don't hate me if you don't agree, um, but this is my view, is that the leaders who are at the very top have very few weaknesses and they continually invest in their development. areas, like almost like kind of obsessive in their keenness to never kind of stand still. And I think that becomes a really crucial element to senior people, kind of, let's say, medium-grade seniority people, the highest C-suite as well. You know, I think now is a time where everything is changing, that requirement to continue investing in yourself becomes more and more pronounced. or you'll be left behind 100%. And that's why I said earlier about looking into Python. I'm not a coder, I'm not a computer programmer, but you need to work on your development areas. You need to really seek to identify them, and then you need to really invest in that as well. And I think that would be, that for me is often what differentiates somebody who maybe has a career that's sort of stagnated, still a good career, but maybe they haven't continued to progress further. It's because they haven't taken the time or perhaps invested the money required in that self-improvement and that self-development. And maybe they don't know what to do. You know, quite often I do quite a lot of coaching and mentoring as well. And a lot of the time people don't really understand like what are their weaknesses and strengths. And it's not for me to tell you, it's for you to— often you know the answer if you think about it a bit. So I think it sort of abstracts that completely away from financial modeling, but it's also true in the context of financial modeling and people in finance in general. At least that's my view.

No, I I love the answer and I love just sharing CFOs and these top people you speak to. An example I'll share of, I think really hits this home of development. So I interviewed Gary Ridge. He wrote a book called Any Dumbass Can Do It. He was rated as one of the top 10 CEOs of the 21st century. He ran WD-40 and had like over a 90% approval rating over his 20-something years as CEO. So, you know, the surveys, you're like thrilled when you get in the 80s, right? For the employee surveys, he averaged, I think it was 92 or 93% over his 20-something years from his employees. So tells you he was loved and stock price increased like 12,000%. You know, revenue went up. It wasn't just he was loved, he performed. And when he became CEO, first thing he did is he goes, I don't know how to be a leader. He signed up for a master's degree in the evening on leadership, and Ken Blanchard was the one who taught it. Anyone knows, he's a big one of the foremost leadership people in the world, at, in San Diego at the local university where headquarters were. I was like, okay, that speaks to, I am a lifelong learner and I will never stop developing myself.

I totally agree with that. I mean, I feel embarrassed to compare myself to someone of such a high esteem, but But, you know, you mentioned in my intro about researching with Cambridge University. It is true, I'm studying at Cambridge University. That's a course I only took up about a year and a half ago, and part of it was just to effectively broaden leadership skills. I was challenged by, and appropriately so, by people that I trust very much that basically said, we are entering a new world, you need to effectively broaden your horizons away from just the details of the Excel. I think that's really valuable advice, and I think that parallel you've drawn To senior leaders is really, it's really good. Completely agree with that.

FP&A guy here. One of the certifications I'm most proud of is the Advanced Financial Modeler, the AFM, from FMI Institute. Why am I so proud of it? Because it taught me how to be a better modeler. I didn't just take a test. I had to demonstrate that I could build a fully integrated 3-statement model, a skill that is invaluable for financial modelers. It's one of the certifications I'm most proud of, and I encourage you to earn it as well. So go ahead and join me. Get started on your journey to becoming an AFM charterholder. Go to fminstitute.com/podcast and use code podcast for 15% off. And I'll share one other, you said kind of the development, because I think you'll like it, of broadening your skills. So I interviewed Jorge Rojas, which will come out before this episode. I think it'll be the one before yours is released, one or two. And we talked about using satellite data to improve financial models. I can't say I ever thought about satellite data. He just published a research paper looking at all the research that's been done Around Earth observation and financial modeling.

That sounds very impressive, and I'm looking forward to listening to it.

It's fascinating. So there's some great stuff in this. I'll put a plug in there, you know, when you talk about that, because had you ever thought about Earth observation and satellite data and modeling? I have.

It won't surprise you to— for me to say no, I have not.

So I'm glad I'm not the only one, because when he first broached that topic, I'm like— and then he started explaining, I'm like, I can't wait.

I have no idea what's going to happen in that episode, but I'm looking forward to it.

It's well worth it. He even shared his research paper with me, so I got to read it. Definitely worth it. All right. We're going to move into our more standard section. We're going to go to rapid fire here in a minute. Before we get there, your favorite Excel shortcut.

I know people say this a lot, but it is Ctrl+C, Ctrl+V. I'll give— sorry, if I had to choose one, I'll go Ctrl+C. There you go. Because I'm lazy.

That works. Last guest had Alt+E, S, V, so paste special values.

Yeah, but you sometimes don't want the values. Sometimes you want the formulas. So I do, I do, I do also dabble in OESG as well.

But they first gave me a custom LAM, they gave me a custom shortcut. I'm like, no, no, you got to give me one of the standards. Uh, what's the most fun thing you've built with the spreadsheet? Most unique?

Oh, I didn't think I'd be talking about being a nerd so much, but I, I guess my, my favorite spreadsheet that comes to mind— I'm actually not somebody in general who, who like models for the love of modeling. I know there are people out there, full respect to them, but I've always been about the story, the meaning behind it, like the meaning behind it works out, if you like. And that's what I see on that sort of separate debate, if you like. The strategy that comes to mind is I've been playing a video game quite recently called Blueprints. It's a puzzle game. It's pretty well known actually. It's done very well in the last year or so, would recommend. And as part of that, you have to take notes. I'm not gonna spoil the game 'cause it should be experienced on its own. But effectively, there's a part where I needed to build an Excel spreadsheet. Of course I did. Now, again, if this tells you anything about me as a model reviewer, it's a spreadsheet that had zero formulas. So my most fun spreadsheet, and this is probably, I assume I'm the only person to ever say a spreadsheet with zero formulas, it was just a very beautiful kind of illustration within Excel.

So you're going to be like that Japanese artist, if you've ever seen him, that does nothing but illustrations in Something like that.

Yeah, my most fun spreadsheet was effectively a spreadsheet with no formulas for the game Blueprints.

Love it. That is great. I don't think we've had anyone say that. We get all kinds of unique things, so I appreciate it. I'm sure you've heard a few of the unique ones over the years. Rapid fire incoming. 20 questions, yes or no answers, no hedging allowed. Circular references, VBA, the future of Excel, and more. Let's find out what our guest Really, Dinks? Circular references, yes or no?

No.

VBA, yes or no?

Yes.

Lambdas in financial models?

No.

External workbook links?

Definitely no. That has to be a no.

Should modelers primarily use keyboard shortcuts? Yes.

Let's go with yes.

Should models always be print ready?

Yes.

Okay. Are merge cells ever acceptable?

Definitely not. No, no, no.

You know, I got my first yes about an hour ago.

Oh, oh no. I know who's in the interview as well, because I stumbled into it.

And then I know, you know who, so I won't, I won't tell our audience yet because you come out first, but let's just say here in the next month, you're going to hear someone say yes on They're going to completely undermine my answer, but I'm going to stick with a no for now. I couldn't resist. I knew you'd be like, wait, what? So should financial modelers learn Python in Excel?

Yes.

What about Power Query?

No.

How about Power BI?

No.

Okay. Should modelers be able to build a fully integrated 3-statement model? Is that necessary for a financial modeler?

Yes.

Okay. Will Excel ever die?

Yes.

Okay. Have you used AI to help you build a model in Excel?

I guess yes.

Okay. What financial statement is most important? Income, balance, or cash flow? Cash.

Cash is king. Definitely.

That's almost the exact same answer I got last time. Favorite LLM?

Can I count Mythos, or is that, is that Is that banned now, or Fable? I would go with— I would go with Fable if I can— if I can say that.

Sure, you can say Fable.

Okay, let's go with that.

It will come back out eventually, even if it's a slightly modified version. They'll figure it out.

So if we're counting models that are no longer allowed to be used by people, I would go with Fable.

You could thank my government for that. You're welcome. All right. If you could pick only one for all your models for the rest of your life, which one you picking? Sensitivity analysis Or scenario analysis?

I mean, people define it in different ways, but I think scenario analysis, probably.

Yeah. How you define it, and I get it. It's not a 100% clean question. Do you believe financial models are the number one corporate decision-making tool?

No.

Okay. What is?

I think that the question for me is that a model typically invalidates a separate kind of idea. So they are I guess if you, if you mean what's the, what's the, what's the key tool to like validate an idea or a suggestion someone's had or kind of a thought, then yes, definitely it is. But in terms of that ideation piece, I think that has to come from, from people, from humans, from people in sectors, technologies, companies.

Makes sense. I get that. What's your lookup function of choice?

XLOOKUP, probably.

Okay. And any of those you want to elaborate on, any of your answers there?

I think there's a few of them. I mean, I guess the Lambda question is interesting because I know that some guests have said yes. And for me, I feel really strongly that the models, financial modeling should all, should be about understandability, readability, ease of use. Not all financial models and spreadsheets, but, you know, from my perspective, that's a key part. And I think if there's a function which is not understood by someone, that's not a very helpful function for somebody. Imagine if I built a function, a custom effectively a custom function, a Lambda function myself, that only I really understood, that that would be a problem. And I know they do lots of things, but I'm yet to receive a model which has complicated Lambda functions because as effectively a fresh pair of eyes, that understandability piece becomes really complicated. So for me, that's it. I know some people, I mean, people have done amazing things with Lambda functions. I probably just wanted to clarify that before I get— get hate in my DMs or whatever the LinkedIn equivalent is. I'm trying to think of other quickfire questions. I think a lot, I think actually a lot of my answers come back to that point about understandability and ease of use, to be honest. The same with Power BI. It's, of course, Power BI is great. It's a great tool, has a place, very helpful. I use Power BI every single day. But is it a skill that you have to learn? Probably not. And you can find other ways of like clever reporting. So it's about understandability there as well.

I'm going to follow up on one because I think you're the first one who's done this combination, at least that I can remember. You said yes to Python, no to Power Query and Power BI. Give me a little bit of your reasoning why Python. I've had people say yes to that, but I don't know if they've said no to the other 2 with that yes.

You know what I was saying to you before we started recording briefly, that I was listening to an episode Um, in preparation somewhat earlier this week. And as they were doing the rapid fire, I was a bit nervous about this section because their answers were almost exactly opposite to what I was going to say. Almost apart from perhaps merge sales, which I think, I hope not as well. You said one person's now said yes to that, but I think overall it was like almost opposite. I think what I'm coming from is what skills do you need to learn from now? Right. Which is a different question. If you asked me this set of questions 2 years ago, you would've got very different answers. So what I'm really thinking about is where's the future of financial modeling? Let's say Python in Excel, just Python in general. I think, you know, I mentioned in the show earlier, I've been spending a lot more time looking at Python in the last year than before because I think there are interesting tools and ways to potentially review financial models or build models that will require that almost fundamental skill of Python. So that's the reason why I've said it's purely based on what I've been If you like, using myself in the last 6 months, 3 to 6 months in particular.

That makes a lot of sense. And as soon as you started to give the answer, I was figuring that's kind of where you're going, right? Because the more and more you use AI, AI makes Python very easy to use. Python can solve a ton of problems.

Very machine readable. Exactly.

But you want to have some understanding there. I mean, like I've been having AI do a ton of building on my website. And at first I had no idea what any of the CSS was. And now I'm starting, as I understand it better, going through and refining and understanding meta. And so I get it, similar to Python, certain things you're doing, you just have to understand it to a certain level if you're going to trust the output beyond just going, it looks right.

So perhaps one thing I would say as well is that I think learning how to do things is really important. So like learning like best practices from trusted voices is crucial. You know, make sure for anyone that might be listening, is interested in developing their own skills, make sure you go to a trusted provider, someone that has a name that you understand that you can fully trust because I also am concerned about the kind of the quality of training you can get. I'm worried about a future where training materials are AI-generated, basically slop. You get a sort of vicious circle where any kind of the unit price of training becomes very low because you can just do the obvious things, asking AI. And I think that what you can't teach as easily is almost best practice. And maybe I stand to be corrected in the future on this, but certainly there's that requirement. to look at those things. And my answer, I feel a bit bad about Power Query and Power BI. Now coming back to that, I thought I do feel bad. They are both very valuable skills.

No need to feel bad. We all have different opinions. That's what the show's about. There's not a right or wrong answer here. That's the whole goal of forcing people to say yes or no is one, there's nuance to all of them. And 2, very good modelers, some of the best in the world can disagree on some things that others might think of as fundamental. So I like it. You're all good.

I feel less bad now. Thank you.

You're welcome. That's my job. That's the only reason I show up here is to try to make sure you don't feel bad at the end. Now let me see if I can make you feel bad with this last question. I'm kidding. As we wrap up here, first, thank you for joining. Really appreciate it. Any last parting words? Any last thoughts you want to give our audience before we let you go?

I think maybe coming back to that theme of self-improvement, almost like abstracted from the Excel and financial modeling is really interesting conversation. I didn't expect to have it actually. And I think we've obviously both had different conversations with different people and have identified that theme of kind of that obsession to always self-improve despite being at the top of your game already. And I think that's, that just has become so important in the AI era of modeling that we are absolutely in right now. So I guess my message is to not stand still, keep engaging in conversations, people like yourself, make sure you listen to the right voices and keep self-developing. Good luck.

Listen to the right voices, like going running while listening to modeling.

Just keep going.

No, I think it's great advice. I love that you ended on always be developing yourself. That goes just to life in general, whether you're a modeler, whatever you may be doing. Improving yourself, it's really the best thing you can leave behind, is you did the best to make yourself the best you could, which involves, you know, improving the world for others. And so I think you get real deep on that, but I think there's a lot of great advice that goes far beyond modeling in that. So thank you for sharing it. I really appreciate it. People will be able to find Ryan's contact information in the show notes if you want to reach out to him. But again, thank you so much for carving out an hour and spending some time with me, Ryan. I appreciate it.

Thanks so much for having me. It's been a lot of fun.

Good. I'm glad you enjoyed it. That's always the goal. Financial Modeler's Corner was brought to you by the Financial Modeling Institute. This year I completed the Advanced Financial Modeler certification and it made me a better financial modeler. What are you waiting for? Visit FMI at www.fminstitute.com/podcast and use code podcast to save 15% when you enroll in one of the accreditations today.