- Self-taught finance strategist Andrew Chen, founder of Hack Your Wealth — a personal finance blog for high earners — shared with Business Insider how to get up to speed on corporate finance quickly if you have no idea what it is or how it works.
- Chen suggested enrolling in a CFA program even if you don't plan to finish it because the first level of exams teaches you a lot of what you need to know to be successful.
- He also recommended reading books like "Analysis for Financial Management" by Robert Higgins and studying YouTube videos on pages like Corporate Finance Institute and Breaking Into Wall Street.
- Visit Business Insider's homepage for more stories.
Plenty of would-be entrepreneurs have great business ideas — but may not have the finance chops to launch and sustain a successful startup. Even if you're not an entrepreneur, developing expertise in corporate finance can help you pursue opportunities for finance-related positions at your own company.
"Corporate finance is always I've found a good career investment to make," Jonathan Poston, a director at the ad agency Tombras, told Business Insider. "Money is the lifeblood of the modern organization, and the more we understand the levers and concepts around it, the more oriented we are to the business goals and how we fit within them."
If you feel that your corporate finance skills could be improved, you're in luck. Business Insider grilled self-taught finance strategist Andrew Chen, founder of Hack Your Wealth — a personal finance blog for high earners — on how to get up to speed quickly.
Chen previously served as a consultant at McKinsey & Company and private equity investor at Huntsman Gay Global Capital. He told Business Insider that his original impetus to teach himself corporate finance was to take advantage of a career opportunity in the corporate finance department at McKinsey. His efforts to bolster his skills in this area later helped pave the way for additional professional opportunities, including landing a role as a private equity investor after McKinsey and eventually founding his own finance website.
"I had absolutely zero business/finance background before McKinsey; [I was a] history major [and] law student," said Chen, who has a JD from Harvard University.
Enroll in a CFA program — even if you don't plan on completing it
The best way that Chen learned the ropes of corporate finance was by enrolling in a Chartered Financial Analyst (CFA) program, which is offered by the CFA Institute and allows participants to earn the globally recognized professional designation of CFA.
The program requires that you pass three levels of exams and takes around four years to complete, and the Institute offers the exams in more than 170 cities worldwide.
Chen studied for all three exams — and passed them — on his own time.
But, he added, "You don't have to pass all three levels to get the majority benefit. You can get 60 to 70% of the basic knowledge you need in Level 1, and that only takes a few months of study time." Just know that if you choose to just fulfill the first level, you won't receive an official CFA designation.
Sign up for online courses and check out ebooks
Chen didn't stop once he had received his CFA; he also enrolled in applied online trainings from training companies like Training The Street (TTS). Self-paced courses from TTS cost between $250 and $500 for bundled courses, and individual courses run between $75 and $200.
"They teach a mix of advanced Excel skills applied in a corporate finance/valuation context," Chen said. "These trainings are usually one to several days [long] and provide a great crash course to learn applied techniques after you have learned some basics through reading."
Chen also mentioned that Adkins Matchett & Toy, aka AMT Training, offers elearning courses that range between $100 and $600, and Wall Street Prep offers individual courses as low as $33, with bundled packages from $169 to $424.
In addition to online courses, Chen leveraged online content such as finance/quantitative interview guides from Vault.com, which he found helpful. Vault offers an extensive list of banking and finance topics in ePub format, including a "Career Guide to Investment Banking" and a "Finance Interviews Practice Guide" for $29.99.
Read literature on corporate finance
Chen targeted what he identified as "canonical" books on finance — industry standard texts on corporate finance that are highly read and respected — like McKinsey's "Valuation: Measuring and Managing the Value of Companies," which, according to its website, "enables everyone, from the budding professional to the seasoned manager, to excel at measuring and maximizing shareholder and company value."
"McKinsey's book, in particular, provides the most theoretically sound and rigorous approach to understanding corporate finance and valuation," Chen said. "Even if you don't read the book cover to cover, you can get a lot by skimming and reading select chapters."
Additional books that Chen read and recommended include:
- The CFA curriculum textbooks, which he described as "very comprehensive."
- "Analysis for Financial Management" by Robert Higgins, which Chen said was "required reading" when he was onboarding at McKinsey.
- "Business Analysis and Valuation: Using Financial Statements, Text, and Cases" by Krishna G. Palepu and Paul M. Healy, which he said was a "standard text used at Harvard Business School" when he cross-registered for a class there.
Study corporate finance modeling on YouTube
Chen also taught himself how to do corporate finance modeling in Excel outside of his work hours. He recommended searching on YouTube for learning content to do just this. Two channels he particularly likes are Corporate Finance Institute and Breaking Into Wall Street.
"In corporate finance, there [are] now a lot of useful step-by-step videos you can find on YouTube to teach specific aspects of corporate finance modeling: balance sheet modeling, cash flow modeling, WACC, valuation/DCF, LBO modeling, etc.," he said.
Take advantage of in-house corporate trainings
While working at McKinsey and later at Huntsman Gay Global Capital, Chen additionally jumped into several in-house optional corporate trainings, which covered topics like DCF valuation modeling, balance sheet and cash flow modeling, LBO modeling, and advanced merger modeling.
"You had to take these trainings on your own time; sometimes they were all-day trainings, in which case you'd have to negotiate with your teams for an absence — usually by agreeing to make up the work later in the evening," Chen said. "I presented the class [to my boss] as an opportunity to sharpen my skills in a way that would benefit the team as well because I'd have more analytical skills and understanding to more effectively model problems the team was grappling with on a day-to-day basis."
He added that if your firm offers a free training, it is a tremendous opportunity for you to boost your knowledge and skills, since these classes can be expensive to fund yourself. Investopedia, a website dedicated to simplifying complex financial information that serves millions of users, reports that the best financial modeling courses for investment bankers, for example, range anywhere from $100 to nearly $2,000.
If you do take advantage of your company's trainings, Chen recommended being flexible in negotiating with your teams for "time off" to take the classes; for example, by offering to make up for lost work time on nights and weekends if needed.
"Advocate for the benefits that the trainings will help bring to your employer by emphasizing they'll make you a more effective employee," Chen said. "If your firm doesn't offer the trainings, you could even advocate for HR or Learning & Development to start up such trainings, perhaps by polling your office mates to demonstrate that multiple people in your office are interested in taking the class, thereby reducing the per-head cost for the employer.
This article was originally published on Business Insider December 5, 2019.
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