Why Skills & Storytelling Matter More Than Degrees in Financial Modeling – Rachit Jain

Nov 12, 2024

Rachit Jain, a seasoned financial modeler with a background from Deloitte and HP, shares invaluable insights on the importance of critical thinking and storytelling in finance. He recounts early career horror stories and emphasizes the need for transparency and continuous learning. Rachit discusses how data science enhances financial modeling and provides practical advice on building trust in models. He also explores the balance between simplicity and complexity, revealing how effective communication can elevate model utility.

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ANECDOTE

Disconnected Three-Statement Horror

Rachit found a corporate model where the cashflow, P&L and balance sheet were not connected and cash was merely a balancing figure.
He called this a nightmare and focused on mastering three-statement models afterward.

ANECDOTE

When Front-End Data Breaks The Books

Rachit described a model where forecasting data diverged heavily from accounting data due to mismatched front-end and accounting systems.
He warned that garbage-in, garbage-out errors can materially break income forecasts via reserves and allowances.

ADVICE

Pick Your FP&A Strength And Practice

Understand which FP&A skill fits you and focus there instead of trying to master everything.
Network with practitioners and practice by building three-statement models from public filings like 10-Ks.

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In this insightful episode of Financial Modelers Corner, host Paul Barnhurst (aka The FP&A Guy) welcomes financial modeling expert Rachit Jain. They delve into the nuances of financial modeling, exploring the art of building accurate, reliable models and the importance of critical thinking and lifelong learning in finance. Rachit shares real-world horror stories from his early career, reflects on the challenges of predictive modeling, and emphasizes the human elements that make models truly effective.

Rachit Jain is a seasoned financial modeler with extensive experience in finance, auditing, and quantitative modeling. Having worked with firms like Hewlett Packard and Deloitte, Rachit brings a wealth of knowledge on creating models that inform decision-making and avoid critical pitfalls. His expertise spans FP&A, data science, and quantitative finance, making him an authority on building dynamic, real-world financial models.

Expect to Learn:

How to build trust in financial models through transparency and sound design
Why critical thinking and communication skills are crucial in financial modeling
Rachit’s career journey and his transition from audit to financial modeling
The role of data science in enhancing financial modeling capabilities
Strategies for applying financial modeling in personal decision-making

Here are a few quotes from Rachit Jain:

"The first step in financial modeling is critical thinking – you need to know what you want to achieve before you start building."
"In financial modeling, curiosity is everything. It’s what drives you to improve and learn beyond the basics."
"Before starting in financial modeling, understand what part of FP&A suits your skills. Not everyone is a ‘numbers person,’ and that’s okay."

In this episode, Rachit Jain highlights financial modeling as both an art and science, emphasizing the importance of accuracy, clarity, and storytelling. Rachit’s approach shows that great financial modeling goes beyond numbers; it requires curiosity, critical thinking, and a balance between simplicity and sophistication.

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In today’s episode:

[01:15] - Introduction to the Episode and Guest

[05:26] - Rachit’s Background and Career Path

[09:00] - Advice for Transitioning to Financial Modeling

[11:01] - Lifelong Learning in Finance

[13:17] - Financial Modeling as a Way of Thinking

[18:15] - Unique Applications of Financial Modeling

[22:23] - Building Models for Decision Making Process

[26:57] - The Intersection of Data Science and Financial Modeling

[33:40] - Rapid-Fire Financial Modeling Preferences

[38:53] - Closing Advice and Wrap Up