How I Prepared For And Passed FMI Advanced Financial Modeler (AFM) Certification Exam

, , No Comments

In the financial modeling professional world, Financial Modeling Institute (FMI) issued certifications are the most visible and, perhaps, most rigorous. 

I have been teaching Financial Modeling since 2016 and have been creating financial/investment models since 2012. I have undertaken many very helpful training -- classroom training, online training and remote (but not online) training. The one that has most impacted my competence was a six months spread training sponsored and organized by Bloomberg. It greatly broadened my mind and exposed me deeply to the amazing Bloomberg Terminal. It formed the bedrock for greatly translating my technical knowledge to real world use. Armed with the Bloomberg Terminal, I was able to do jobs for clients even outside the country. My proudest being a 2 year consulting for a Canadian investment firm on building an investment portfolio return driver model that pulls data directly from Bloomberg Terminal and computes likely investment returns based on current values and trend of macro economic factors. 

I have also used these knowledge to develop tools for our Nigerian investment ecosystem, to make available data I easily get for foreign economies. I built a Microsoft Office app that provides you current and historical values of macro economic metrics (GDP, PMI, Oil Production volume, Inflation, Unemployment etc), Oil commodity price and Nigerian stocks data for free. I also built freely accessible Power BI dashboards of stocks performance data. Then I built a paid subscription based tool for accessing all the equities financial models, valuation analysis and market data we warehouse.

In a nutshell, the truth is that I had been preparing for the exam long before I knew of the exam. All my consulting and training experience meant that I met the Excel knowledge requirement and the accounting knowledge requirement. But there is a third requirement that I needed to learn from scratch. So if you are reading this, just have in mind that I didn't start from ground zero in preparing for the exam. I already got two of the three main requirements to passing the exam. Just that, interestingly, the Excel and accounting knowledge requirements are a lot easy to acquire compared to the third requirement: model structure. In fact, if you have used Excel significantly at work and have some accounting certification or intense training, you too would have met those two requirements.

So to the modeling structure requirement. 

All my consulting career, I had always modeled at a more top-heavy level. Meaning, I let the clients provide all the assumptions. I don't build depreciation schedules for them nor break down their revenue to unit price and volume (except for startups) nor equity schedule nor tax schedule nor debt schedule. The company in-house finance teams do all those and plug in their final figures into my model. I do working capital schedules, scenarios and all the other key breakdown/assumptions but in a way that they can replace with theirs as they seldom share with me all the data I need to make the best assumptions for them. My focus has been more of how to seamlessly integrate the model with their existing financial reports and planning/budgeting templates, create management level dashboards and put some level of access control. And be disposable. They (not just the CFO, so mustn't be scary or mammoth looking) should be able to use and update the models without ever needing to reach me.

The model structure required for the exam is a much more intense/granular one. You'll have to flesh out as schedules all the key input drivers on the financial statements. Also, you'll need to know how to handle issues not commonly experienced by private Nigerian companies -- equity capital raising etc.

Unfortunately, I underestimated how much study and practice I would need to master this more granular model structure. I kept chasing money and projects till it was one week to the exam. And then, I spent three days just to reproduce the solution to one of the practice samples. Three days to do what I am expected to do in 4 hours, and while looking at the answer! I now had three days to go and it looked obvious I was going to fail the exam. What my ego (overconfidence, as we call it in Naija) has caused! I quickly shut out every other aspect of my life besides sleeping, eating and using the toilet/bathroom. It became an almost 24/7 practice. I gradually shifted from panic mode to a more relaxed mode when I was able to take on a prior exam question without looking at the answer and finished in about 6 hours. Then it became a game of improving my speed.

The resources I used were purely the ones given on the the AFM webpage under the self-study section. Then I supplemented with the practice files they email all registered exam candidates. Interestingly, they were adequate even though not bulky (page-wise) at all. I think the most important factor is the study strategy one adopts. Best to take a study strategy that is spread over weeks and then do a very intense practice on the week on the exam so one is in the optimal operating zone to meet the strict time limit.

And that's been my experience. Thankfully, I passed!

If you are interested in our financial modeling training class, then here is the link to the registration details:


Post a Comment

You can be sure of a response, a very relevant one too!

Click on Subscribe by Email just down below the comment box so you'll be notified of my response.