Business Administration

Are You CFO Material? What It Takes to Become a Chief Financial Officer.

Are You CFO Material? What It Takes to Become a Chief Financial Officer.
The role of the CFO is to make decisions to meet financial goals, balancing long-term investments with short-term strategy to keep the cash flow moving and the company solvent. Image from Death to Stock Photo
Lucien Formichella profile
Lucien Formichella September 17, 2019

Only 37 percent of the CFOs polled had an MBA. The takeaway? An MBA could help you become a CFO, but it's not essential.

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What is the secret to success for the modern CFO? According to Pat Yarrington, CFO of Chevron: “With an increasingly integrated world economy, be prepared to respond to higher levels of both risk and opportunity. A strong balance sheet is a tremendous asset when managing through periods of volatility.” If that quote inspires you rather than making you feel stupid or tired, you speak the language of finance, and you may have what it takes to become a CFO.

In this article, we’ll cover:

  • The pros and cons of becoming a chief financial officer
  • The kinds of chief financial officer careers
  • The educational commitment to become a chief financial officer
  • Licensure and accreditation for becoming a chief financial officer
  • Resources for becoming a chief financial officer
  • The typical advancement path for a chief financial officer

Pros and cons of becoming a chief financial officer

CFOs are, in short, money people with leadership skills. These top-level executives deal with accounts, taxes, financial reporting, and the management of people. The role of the CFO is to make decisions to meet financial goals, balancing long-term investments with short-term strategy to keep the cash flow moving and the company solvent.

Pros

  • High salary—The average annual salary for a CFO is about $130,000, plus substantial incentive compensation ($20,319 in bonuses; $9,620 in profit sharing). Depending on how large your company is, the number could go up. Plus, stock options!
  • Lots of responsibility—As every CFO’s favorite artists—the Wu-Tang Clan—put it: “Cash rules everything around me.” As the gatekeeper to the money, you have the power to make things happen.
  • Growth is in your hands—Among your powers: the ability to promote growth. As the company’s lead financial manager, you’ll identify and pursue growth opportunities. You’ll have the autonomy to pursue your vision in ways you couldn’t in any other job.

Cons

  • Long work weeks—It is not uncommon for CFOs to work long hours. This is not a job you leave at the office. If you ever get to leave the office, that is.
  • Failure is in your hands—If things go south, you will find yourself in the crosshairs. There is nowhere to hide in the c-suite.
  • __High turnover rate—The job is changing, and if you cannot adapt and grow constantly, you might get left behind. In fact, anything that causes the board of directors to lose confidence in you—regardless of whether it’s actually your fault—can cost you your job. Everyone in the c-suite has a target on his or her back.
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“Should I Get A MBA?”

The National Association of Colleges and Employers predicted an average starting salary for 2019 MBA graduates of $84,580—provided those graduates found jobs in computer science, engineering, science, or business. (source)

Students considering an MBA or graduate business degree can choose from varied career paths, including those focused on financial management, data analytics, market research, healthcare management, and operations management. The analytical skills and problem-solving techniques gained from graduate level business degrees are in high demand across business sectors. (source)

University and Program Name Learn More

Kinds of chief financial officer careers

Pretty much every large company needs a CFO, not only to keep the money in order but also to help stimulate growth. CFOs do a lot more than manage accounts and answer to the chief executive officer.

In addition to broad education requirements—which include a bachelor’s degree and potentially an MBA—a good CFO can benefit from specialization. In “How to Hire a CFO Superstar,” the Pacific Crest Group observes: “The more experienced CFOs become, the more they tend to specialize in specific industries.” Specialization is a useful tool for good CFOs because it provides a competitive edge. Knowledge, as they say, is power.

Educational commitment for becoming a chief financial officer

According to Business Insider, the eight most popular degrees for top CFOs are:

  • MBA
  • BA Business Administration
  • BS Accounting
  • BS Economics
  • BA Economics
  • JD (Juris Doctor)
  • BS Finance
  • MA Economics

Worth noting: only 37 percent of the CFOs Business Insider polled had an MBA. That was by far the most common degree held, but it’s far from universal. The takeaway: an MBA could help you become a CFO, but it’s not essential. An executive training program or certificate program can also advance your prospects.

What appears to be more important than any particular degree, however, is knowledge gained through experience—though it is tough to get experience without a degree, creating a classic chicken-and-egg paradox. According to the Association of Certified Chief Financial Officers, “A deep understanding of business is a must because a good CFO is more than just a ‘numbers guy.’ He should immerse himself in the operations of the company and have a macro view of the numbers, drivers, and pains.”

Licensure and accreditation for becoming a chief financial officer

There are no set licensure or accreditation requirements for becoming a CFO. Being a Certified Public Accountant (CPA) can help, though it is not as necessary as it once was. Leadership and decision-making skills are more highly valued today than the degree.

Becoming a CPA involves:

Once most CFOs were CPAs, but the current trend is away from CPAs and toward those holding a master’s degree in a finance-related field, or an MBA.

MBAs can be expensive. Check whether your employer will pay your way; some do, although they usually require a commitment to remain with the company for a fixed time after graduation. You could also look into online programs, which can help cut costs (by eliminating the cost of relocation and potential job loss) and allow for more flexibility. Another plus to getting an MBA is it will prepare you for other careers, such as financial analyst.

Finally, some CFOs hold a CMA (Certified Management Accountant) degree.

Resources for becoming a chief financial officer

There is, at most, one CFO at every company, which explains why there aren’t tons of online resources for CFOs: there simply aren’t enough CFOs to create the demand. A quick Google search can uncover quite a few good materials for aspiring executives. This list of finance scholarships might be helpful to aspiring CFOs entering undergraduate or graduate school.

There is also a wide array of books on the market that can provide insight into leadership and business strategy.

Some useful organizations include:

Typical advancement path for a chief financial officer

CFO is a position most people reach only after years, if not decades, of experience in the business world, including a significant stretch as a senior manager. Successful CFOs are constantly training to improve their technical and people skills in order to optimize their résumés and prepare them for increased responsibility.

Where do you go from CFO? There aren’t a lot of higher positions in the finance world. King of Goldman Sachs, maybe? Fed chair? Mr. Monopoly? After a stint in this grueling position, you may want to escape to a remote paradise for a year or three. You should be able to afford that if you’re so inclined. Conversely, you may aim for the role of CEO. It’s not an uncommon transition. But that’s another story.

(Last Updated on February 26, 2024)

Questions or feedback? Email editor@noodle.com

About the Editor

Tom Meltzer spent over 20 years writing and teaching for The Princeton Review, where he was lead author of the company's popular guide to colleges, before joining Noodle.

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