Dan Mayoh is an international leader, lecturer and speaker in Financial Modeling. Dan is a leader of the ModelOff Question Design Team for the Financial Modeling World Championships 2013-2015. Dan is Managing Director of Fintega and currently ranked Top 5 in the 2015 international financial modeling rankings. Connect with Dan via email.
The ModelOff Financial Modeling World Championships is a challenging competition. This applies not only to those competing for the privilege of being a finalist and perhaps even World Champion, but also for those charged with writing the questions. I should know, as I’ve been involved with every ModelOff completion from either one side or the other.
Who is the ModelOff QDT?
My name is Dan Mayoh from Brisbane, Australia, and for the past 3 years (including this one) I have been part of the small but highly-talented ModelOff Question Design Team, or QDT for short. The QDT is typically a 3 person team of world class financial modellers whose job is to write the questions that you do in Round 1, Round 2, and if you’re fortunate enough, the Finals.
This year I have the privilege of being joined by Alex Gordon from New Zealand (2012 ModelOff World Champion) and Hilary Smart from the UK (2013 ModelOff World Champion). I myself competed in the inaugural 2012 competition, earning 2nd place after being bested by Alex in the Finals in New York. The quality of the questions this year is a testament to the skill and passion that both Alex and Hilary have for financial modeling and their desire to see others in the profession unlock this same skill and passion.
I would like to offer my personal perspective as the senior QDT member on the questions the competitors all just went through in Round 1, and explore why we design the questions the way we do.
Discovering the World’s Best
Without fail, the most common piece of feedback we receive on the competition each year is that not enough time is provided to answer the questions. This can make the competition not so enjoyable for the 90%+ of entrants who are not in the world’s elite. I sympathise, but let’s look at this from the organiser’s perspective. This is a World Championship, and a primary goal of the competition is to identify a world champion. As such, the Finals questions are written and calibrated in such a way that the top performer from 16 elite modelers can be found.
Working back to rounds 1 and 2, the primary goal of these rounds is to identify the top 16 send to the finals. It is not necessary to write questions in rounds 1 and 2 that can rank these top 16 in the order of 1 to 16, but it is necessary to write questions that can separate the top 16 from those placing 17 to 50. Hence the difficulty of the questions is calibrated towards achieving that goal, and the best lever the QDT have for calibrating difficulty is adjusting the balance between length of the questions and time allotted. In Round 1 this year, 6 people scored above 100 (out of a possible 120). I expect that if 4 hours were provided instead of 2, this number would be above 50 people, but that wouldn’t help us identify who within that top 50 deserves to be in the top 16.
All competitors should keep in mind though that there are plenty of ways to learn from the questions after the competition. First and foremost, ModelOff exists for educational purposes. The people behind ModelOff are passionate about raising the awareness of financial modeling as a valuable skill set and increasing the ability of financial modellers around the world.
ModelOff is more than just the flagship World Championship competition, and many of the questions and answers are made available for people to learn from in their own time. So, if you can’t get through all of the questions in time on competition day, give yourself 4 or 6 hours and have a go at all case studies, and then check for yourself how you did against published answers and where you can improve.
Balancing Finance & Excel Skills
Another consideration for the QDT when writing the questions is the balance between testing finance skills and testing excel skills. Often we hear from people who self-assess as being strong in one area and weak in the other, and therefore self-conclude that the competition is not for them. From my point of view, the World Champion needs to be strong in both areas. More generally, a good financial modeller should be strong in both areas.
As a financial modeling consultant I speak to a lot of employers who tell me that it is easy to find someone who is a gun with Excel, and easy to find someone who has good commercial acumen and understands finance and accounting theory, but it is very hard to find someone who is strong in both areas. And that is precisely what is needed in a top financial analyst or financial modeller. ModelOff is not a pure finance competition, nor is it a pure Excel competition. It is a financial modeling competition, and so the questions will continue to draw on both of these pools of skills. That way, the competition can continue to have the trust of the industry that exceling in ModelOff is a good barometer for exceling (technically at least) as an employee.
That said, if you are less experienced in one area (finance or Excel), or you see a question topic that you’re not familiar with, don’t let that put you off from having a go at all of the questions. Usually, all of the information you need to answer the question is provided, so long as you can think through logically, ‘how does this need to be solved?’. People with experience might just get there a bit quicker. Often in the real world financial analysts and modelers are presented with problems they haven’t seen before, and are expected to be able to figure it out by drawing on their core skill set and applying it to this new situation.
Language and Terminology
The final comment I’ll make is about language. Being an international competition, the QDT needs to be very careful and deliberate in wording each case study and question. Terminology and standard conventions are not consistent in financial modeling between the offices of Sydney, Hong Kong, Frankfurt, London and New York. We don’t want to accidentally advantage or disadvantage people from any particular country due to the wording we use.
It is also an important lesson for entrants from one country to realise that not the entire world does things the same way they do, and that they need to be versed in these other approaches. There’s no easy answer to this issue for the QDT. Just know that it is something we are absolutely aware of, and try to tailor the balance of explanation given vs assumed knowledge with this in mind.
Good luck to everyone competing in Round 2, and I look forward to meeting 16 of you at the finals in London!
Dan Mayoh, ModelOff QDT