This is the last article in our three-part series with financial modelling experts Rickard Wärnerlid, Andrew Berkley and David Lyford-Smith. In unpacking the future of financial modelling standards, one idea kept coming back around — that storytelling is crucial to a financial modeller’s work. Read Part 1 and Part 2.
It’s easy for financial modellers to miss the point. They can get caught up in all the details and functions of the modelling process. Doubly so when the rapidly evolving tech scene is constantly bringing new features that shake up how modellers work with spreadsheets.
But that only makes it even more important for modelling teams to not lose sight of their end goal. A model isn’t just a complex spreadsheet, after all — it’s a tool that’s meant to deliver answers and analytics. And to do that, it needs to tell a story.
A model is more than just a spreadsheet
“A financial model is a story told with numbers,” Andrew says. It’s an idea that’s so central that it’s enshrined in the ICAEW financial modelling code as well as Mazars SMART’s 10 guidelines. And that’s because clients don’t really want the model itself, they want the insights the model brings.
To deliver on that, a modelling team needs to do more than just calculate and present numbers. They need to bring those numbers to life, using them to tell a story of where you’re coming from and the place you’re trying to reach.
Telling a story doesn’t mean making things up — the basis of the model still has to come from reliable fact, not fiction. But communicating those facts into a story rich with insight and analysis is what transforms a model from a spreadsheet into an invaluable resource for shaping strategy.
Standards are the way to go
In order to tell those stories, your team needs to be following a modelling standard. Whether it’s FAST, Mazars SMART or the ICAEW code, working to a standard helps ensure the model is reliable and allows everyone to focus on the client who’s going to be using it in the end.
Standards aren’t just a set of spreadsheet rules. They’re a framework that ensures every one of your team’s models is built with clarity and consistency, meaning they can continue to be used and modified in the long term as well as the short.
Most importantly, standards make the why just as important as the how. A good standard followed properly makes sure the client and the insight they need is always the driving force behind the process.
Rolling out a standard in your organisation isn’t always easy. It’s a kind of culture shift, and changes like that take a lot of time and perseverance to do right. David says a common difficulty with bringing in standards is that a lot of modellers will agree with them in principle but be reluctant to apply them to their own practice.
This process needs careful planning. It’s not just about enforcing a standard for the sake of it. You’re bringing in a standard to improve things for your organisation and the individuals in your modelling team, so Rickard says the first step should be to look at what you’re doing already.
“Start by creating a committee or a group which has got representatives from various departments, and talk about it,” he says. “What do we like? What do we not like? If you start there, it’s the easy first step to think about how you roll things out.”
Set your team on the right track
You don’t have to lay all the groundwork yourself. The right training is another key piece of the puzzle. There are many courses that will teach you FAST and Mazars have their own training programme that uses SMART. Full Stack can also help. With lessons from industry experts and teaching underpinned by modelling standards, Full Stack Modeller helps your team embrace best practice principles and the benefits they bring.
Full Stack isn’t just about teaching modellers the latest Excel features. Software skills are only half the battle. A financial model is only as good as the insight it delivers, and a core part of the Full Stack mission is to train modellers who can tell stories with expert analytics, and who are sufficiently self-aware to understand how best to utilise the tools available to them.