Why Most Financial Models Fail for FP&A Pros to Build Business-Aligned Models with Maria Zlobina
In this episode of Financial Modeler’s Corner, host Paul Barnhurst welcomes Maria Zlobina, a finance professional with over a decade of experience in Big Four audit, FP&A, and business partnering roles across the US, Australia, and Russia. The conversation explores the importance of understanding the purpose behind financial models, the challenges of inheriting others’ models, and the value of continual learning in finance. Maria also shares insights into the Advanced Financial Modeler certification, her passion for efficiency, and her experience navigating the world of financial modeling.
Maria, who has a rich background in financial modeling, discusses her journey in the finance industry, her love for continuous learning, and her adventures living in different countries. She offers practical advice for modelers and professionals, including tips on making financial models dynamic, understanding the business context, and utilizing the right tools like Power BI and XLOOKUP. Maria also touches on her passion for languages and learning, sharing how her diverse experiences contribute to her success as a financial modeler.
Expect to Learn:
Why financial models are critical for decision-making and how to avoid common pitfalls
The importance of understanding the context and objectives behind a model
Tips for inheriting and improving existing financial models
The benefits of continuous learning, both professionally and personally
Insights on dynamic financial models and best practices for forecasting
Here are a few quotes from the episode:
"The magic of financial modeling isn’t in the model itself, but in how it helps guide decisions." - Maria Zlobina
"It’s not about creating the perfect model, but the model that gives the best insight for decision-makers." - Maria Zlobina
"The best financial models don’t just answer one question; they provide a range of answers." - Maria Zlobina
In this insightful episode, Maria Zlobina emphasizes the importance of dynamic financial models and understanding the business context behind them. She highlights the value of continuous learning and staying curious to improve as a financial modeler. With practical advice on overcoming challenges in modeling and working with stakeholders, Maria reminds us that great models support better decision-making.
Follow Maria :
Follow Paul:
Website - https://www.thefpandaguy.com
LinkedIn - https://www.linkedin.com/in/thefpandaguy
YouTube - https://www.youtube.com/@thefpandaguy
Follow Financial Modeler's Corner
LinkedIn Page- https://www.linkedin.com/company/financial-modeler-s-corner/?viewAsMember=true
Newsletter - Subscribe on LinkedIn-https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7079020077076905984
Sign up for the Advanced Financial Modeler Accreditation Today and receive 15% off by using the special show code ‘Podcast’.
Visit https://bit.ly/3AK5dYo and use the code “Podcast” to save 15% when you register.
In today’s episode:
[01:13] - Introduction to the Episode
[03:52] - Worst Financial Model
[06:37] - The value of continuous learning
[10:24] - That One Defining Moment
[13:09] - From Curiosity to Certification
[17:49] - Starting with the Goal in Modeling
[25:17] - Transparency in Modeling
[31:07] - XLOOKUP Time Saver
[34:24] - Rapid-fire questions
[38:16] - AI and Tools in Modeling
[43:56] - Final thoughts on modeling
Full Show Transcript
[00:01:13] Host: Paul Barnhurst: Welcome to Financial Modeler’s Corner. I'm your host, Paul Barnhurst, aka the FP&A Guy. This is a podcast where we talk all about the art and science of financial modeling, with distinguished financial modelers from around the globe. The Financial Modelers Corner podcast is brought to you by the Financial Modeling Institute. FMI offers the most respected accreditations in financial modeling, and that's why I completed the Advanced Financial Modeler. This week, I'm thrilled to welcome our guest to the show, Maria. Zerlina, welcome to the show.
[00:01:48] Guest: Maria Zlobina: Thank you. Paul. Great to be here.
[00:01:50] Host: Paul Barnhurst: Yeah, very excited to have you. So Maria is joining us from Sydney today right?
[00:01:54] Guest: Maria Zlobina: Yes that's true, Australia.
[00:01:56] Host: Paul Barnhurst: So she's joining us bright and early on this episode, and let me give a little bit of Maria's background. And then we'll jump into some of our questions. So Maria is a finance professional with over a decade of experience across big four audit, FP&A, commercial and business partnering roles. She has worked and lived in three countries US, Australia, and Russia, bringing a global perspective and analytical skills to every project, helping businesses and executives support their decision making and see stories behind the numbers. With your curiosity and love of continuous learning, she recently earned her Advanced Financial Modeler certification and is on the path to become a Chartered Financial Modeler. Beyond that, she's passionate about traveling, having explored 30 plus countries and believes that diverse experiences feel better insights in a professional life. I love it. So, 30 plus countries do you have a favorite country?
[00:02:54] Guest: Maria Zlobina: Everybody asks and I have to disappoint you. No, I do not have a favorite. It's just so hard to pick, so I don't think you'll get one from me.
[00:03:02] Host: Paul Barnhurst: But you have a favorite on the list that you'd like to go to that you haven't gone to yet. You have a next one on your bucket list.
[00:03:08] Guest: Maria Zlobina: Next one? Well, I'd like to explore more South America, Colombia, Argentina, but I think one country that was really surprised for myself was Indonesia, specifically Bali. And I know in America it's just people feel like it's some dream destination, right? And I thought it was really overrated. Actually. I actually didn't know anything about it, to be honest. So. But once I get there, I probably spent about eight months there combined between 5 or 6 trips. So that was definitely one of the places that, you know, was a big surprise and I really loved it there. So I guess I'll distinguish that one for this conversation.
[00:03:48] Host: Paul Barnhurst: We'll go with Bali. We're going to jump into this first question I give every guest. Tell me about that worst financial model you've had to work on or that you've seen in your career.
[00:03:57] Guest: Maria Zlobina: You know the worst financial model. I think I'll respond in a way that probably you don't expect. I'll say it is the one that was built not by me, and not because I'm so amazing and great. No, I'm more honest than that. I think it's just because everybody has different ways to set up a model, to think through that right, to build the logic behind it. And so really, I think the first thing that kind of catches me off guard is to see if I'm inheriting somebody's model, is that I have to figure out the way how the person was thinking, the logic, the train of thought. I find this in the beginning the most challenging part. Right? So and of course, there are some things that can be difficult for everybody, you know, to inherit. For example, it's like hard coding and very like a sporadic way to set it up and things like that. So I can't remember the worst, worst one. But you know, little bits of pieces are different in my experience, the ones that I've seen, there are definitely some things that could make it really hard to work with. But yeah, generally inheriting somebody else's work is more challenging for me.
[00:05:04] Host: Paul Barnhurst: That can always be a challenge, as joke I like to tell is what do you call a broken spreadsheet?
[00:05:10] Guest: Maria Zlobina: Oh my god.
[00:05:10] Host: Paul Barnhurst: The new employees problem.
[00:05:12] Guest: Maria Zlobina: Wow.
[00:05:13] Host: Paul Barnhurst: Right. Because that's usually what you're inheriting is it's broken in some way or another.
[00:05:17] Guest: Maria Zlobina: Yeah. It's always different, you know, where it's broken or not. But yeah, it's definitely different and challenging.
[00:05:24] Host: Paul Barnhurst: That is for sure. Even if it works great, you still have to figure out someone's logic and thinking and layout and can always be a challenge. So you mentioned, you know, hard coding different things. Is there a pet peeve when you inherit someone else's model? Like one thing that just drives you crazy.
[00:05:38] Guest: Maria Zlobina: Yeah, hard coding is probably is high on the top. It's just because it's a dead number, right. So when you're modeling and I'm sure you can relate to that, uh, one of the critical Core features of the model of a good financial model is being dynamic, right? And so hard coded stuff, it means that it's dead. So you can't see what was there and you don't see where it's coming from. So really that's a kind of a dead end when you start modeling is you don't understand the value behind it. So definitely it's one of the big ones there. For me. Hard coding I.
[00:06:14] Host: Paul Barnhurst: Think is probably pretty high on everybody's list. Right. Those hard coded, especially when they're all over the model and in places you'd never expect them. You're like, really? You stuck that number there like just at the end of formulas and things.
[00:06:27] Guest: Maria Zlobina: Exactly.
[00:06:29] Host: Paul Barnhurst: So I know you're a big advocate of learning, you know, kind of mentioned that in your bio. You've completed your CPA, you did the FMV from CFI, you know, you're doing the you did the AFM from FMI. And I know you're looking at doing the CFM. So I'm curious, you know, what motivates you to keep learning and to complete these different programs. What is it about learning that you love so much.
[00:06:50] Guest: Maria Zlobina: You know, it's just, I guess the process. We don't know what we don't know. That's one thing, right? And just for me, it's I guess it's really for a number of different reasons. And they're not all like, professional related. Yes, of course I always want to, you know, learn what I don't know, um, learn best practices, uh, learn how other people are doing the work. Right? Because we all have our own things that, um, you know, we like and prefer. But, um, I think for me, it's more of a lifestyle or something. It's just hungry for, like, for more in general. And it comes to, you know, traveling like you mentioned earlier is just absorbing information, absorbing. And it's not just hard coded information like books and courses. Right. So I like to learn from the experiences from life in general, from day to day life. I try to also keep it multifunctional. And it's not just about professionals like finance. Let's say I'm also learning Spanish. I got my coaching certification as well, which is like all sports or some other hobby. So it's really, you know, goes I guess across my different, different areas of life. And uh, just this sense that I'm learning something new, it keeps my brain alive. It keeps, I guess, I don't know, it means a more interesting person for conversations. So it just I don't know, it feels great. I guess the short answer, it feels great. So that's why. That's why I do it.
[00:08:15] Host: Paul Barnhurst: I love it. How's the.
[00:08:16] Host: Paul Barnhurst: Spanish coming? You said you're learning Spanish.
[00:08:18] Guest: Maria Zlobina: Yeah, it's actually been great.
[00:08:20] Guest: Maria Zlobina: And since, um, I learned English. Uh, it's not my native language. Right. So, um, I've been able to use some things that I'm doing differently, basically while I'm learning Spanish. So I just went straight to Costa Rica . I guess after like three months of learning some basics, I went to Costa Rica for two weeks. It was, um, six hours a day, uh, boot camp. So that was great. I guess. You know, it really jumpstarted my process there. So I went to I lived in Ecuador. I went to Mexico a couple times and I'm keeping up on a weekly basis as well. So really consistency and passion. I think those are the key pillars to any learning, any progress.
[00:09:02] Host: Paul Barnhurst: Yeah, I agree, you got to have some passion. As you start to lose that passion, it becomes really hard to keep going and consistency. It's like anything. Everybody's like, well how do you become so good at something? Well I did 500,000 hours and over time it gets easier. One of my favorite quotes kind of along this I've always loved says, uh, things become easier. Not that the nature of the task becomes easier, but our ability to perform the task becomes easier. And that's what, to me, what really is practice is it makes our ability to do something easier. It's not that it was hard to start with, and it still probably kind of hard to sense, but our ability becomes better. It's not the that thing itself becomes easier. We've just learned how to do it right.
[00:09:45] Guest: Maria Zlobina: Yeah, and I love the process of it. You know, the better you practice, the more you do it, the better you get. And for me, again, it's a very satisfying feeling. Right? So even, like for me, going to a different country and, uh, talking not about just ordering your food, but having a conversation, you know, and more sophisticated topics. I think it just feels great. And, uh, you know, just you naturally keep wanting more of it. And so you just continue to love it.
[00:10:15] Host: Paul Barnhurst: So I know you started your career in big four accounting. And from what I saw, I was, you know, looking online and I noticed it came after a chat with your big brother. So, you know, how did that conversation help shape your life? You've mentioned how it kind of shaped where you're at today. You want to talk a little bit about that story?
[00:10:30] Guest: Maria Zlobina: Yeah. Of course. Um, yeah. That actually came out of nowhere. Yeah. My big brother. Yeah. I like to think of him sometimes these ways, you know, it doesn't matter how old we are or how young we are. Uh, you know, if you have your big brother, Big sister. It's always there, always there. Even though we're in different continents still. You know, the bond is there. So he actually worked for a big for, I guess, before me. So he had a great experience in knowing what it is and what it can provide, the value, the opportunities. And uh, so I definitely was interested in something like that, but I thought I missed the submission point. Uh, but somehow it just happened that, you know, he's like, do it today. That's like the last day, basically. So I just jumped on it and, uh, you know, I never thought it's gonna turn out to be like that because really big for as much as it's a great experience, I think it's a resume builder for any finance person. Right? But for me, it also was a window into a different life, as I like to say, because that was ultimately, uh, my way how I moved to the States and, you know, just have had an amazing life there for ten something years. So it's really, you know, highlights the point where you don't know what conversation is going to be such a massive step, and it's going to be a game changer, uh, into for the rest of your life. Right. So really, the surprises of life, surprises of like just casual chats with different people, they sometimes can be really a turning point. Um, and it's fun to look back to it. And I definitely do remember that conversation and which out of all the conversations, um, him and I had over a lifetime. But, uh, definitely do remember that one for which I'm forever grateful.
[00:12:22] Host: Paul Barnhurst: No.
[00:12:22] Host: Paul Barnhurst: That's awesome. Thank you for sharing. And it's amazing how, you know, some conversations stand out more than others, and they can make such a difference in our life. And it sounds like, you know, Big four has been a great place to start your career and gain some really good experience.
[00:12:36] Guest: Maria Zlobina: Yeah, absolutely. I mean, it was challenging. And I think people who've been through that experience can definitely confirm it doesn't matter what country you're in and in what, um, you know, audit or consultancy or any other areas, uh, professional area. I think it's definitely character building and experience building exercise. Yes. For sure. Definitely grateful. Across Russia, across my American colleagues and friends there.
[00:13:05] Host: Paul Barnhurst: So great. Yeah.
[00:13:08] Host: Paul Barnhurst: No. So I'm curious. I know you recently completed the Advanced Financial Modeler from FMI. What motivated you to take the program? What was the kind of impetus for taking the AFM?
[00:13:19] Guest: Maria Zlobina: Uh, yeah, I came across that, uh, very, uh, I guess I wasn't searching for it specifically because I just didn't know that it existed. That back to my point, right? We don't know what we don't know. And so, uh, somebody posted on LinkedIn this very helpful post, actually about all the finance related certifications. And so I thought, like, well, you know, I had my CPA and there was an SEC analyst that I actually did most of that back in my time in Russia. So like, well, you know, one more something finance related on top of what I already had before with CFE, um. Financial modeling and, um, validation. So I found this one and really, uh, interested me with the agenda. So I actually initially wanted to do CFM straight away. But there is a process you need to do advanced modeler first before chartered. Uh, and I thought it was a really good foundation to refresh, you know, and I'm sure I would learn something else. So I really jumped on it. You know, that's pretty much how I do it. I find something interesting and jump on it without waiting for too long. And really, it's probably exceeded my expectations in some ways that I didn't expect. Uh, so definitely. Yeah. Can, uh, recommend anyone who is looking to excel or who's looking to polish financial modeling skills and just learn some best practices. So grateful for that experience as well. I think it's gonna help me um, further as well. And I'm going to definitely use some tips from that course.
[00:14:46] Host: Paul Barnhurst: Got it. No. That's great. I know I learned a few tips from it as well, and it was helpful. It was definitely I felt more comfortable doing a three statement model, which isn't my area of expertise, you know, and so. Well. So you're doing the Chartered Financial Modeler, then you're planning on doing that one as well?
[00:15:01] Guest: Maria Zlobina: Yeah, absolutely. That, uh, I'm actually really, really excited about it. Uh, I know it's only once a year. That's why I'm definitely not waiting for the next year to come. Definitely no patience for that. And why not? You know, do it this time around. So excited about some module, excited about the depth of that course and also the variety of the subjects. Right. As you mentioned, there was about three modules, which I think is a great foundation. And uh, I'm actually looking forward to some modules like MBAs and valuation and some, uh, some more sophisticated topics. I think it's really going to help me with my current role. And, uh, you know, just again, there is no limit, uh, for knowing more and learning more. So, uh, October, I think October 25th, uh, definitely is the day on my calendar.
[00:15:54] Host: Paul Barnhurst: Yeah, I am, I need to put the date on my calendar. I recently signed up for CFM and I'm hoping to do it this year. I'm not quite ready to commit yet, so we'll see. But I have started reviewing it a little bit.
[00:16:05] Guest: Maria Zlobina: Once you start, you get in and you're like, okay, I'll wait and I wait. And you know, I think we're going to be in the same cohort.
[00:16:15] Host: Paul Barnhurst: But I hear, you.
[00:16:16] Guest: Maria Zlobina: Know, I was just going to say, you can study together and be in a study group and, you know, be accountability partners for each other.
[00:16:23] Host: Paul Barnhurst: I definitely need one of those. I have one person I'm talking to another. So yeah, we'll definitely have to chat about that. Accountability is always good. It's the only way I get stuff done Some days.
[00:16:36] Guest: Maria Zlobina: Well, let's do it then.
[00:16:38] Host: Paul Barnhurst: All right. Sounds good. So when it comes to modeling, just in general, there's something that we see is. Right. A lot of models fail. Most of them seem to have problems. That's why I think everybody hates inheriting somebody else's model. I mean, I've built plenty myself with problems. So one thing you mentioned is you think one of the reasons a lot of them fail is because people truly do not understand kind of the purpose or goal of a project. Why do you think that is? Why do you think so many people struggle with really understanding what we're trying to accomplish with the model?
[00:17:08] Host: Paul Barnhurst: Paul Barnhurst:While my background is in FP&A. I am also passionate about financial modeling. Like many financial Modelers, I was self-taught. Then I discovered the Financial Modeling Institute, the organization that offers the advanced financial modeling program. I am a proud holder of the AFM. Preparing for the AFM exam made me a better modeler. If you want to improve your modeling skills, I recommend the AFM program. Podcast listeners. Save 15% on the AFM program. Just use Code Podcast.
[00:17:49] Guest: Maria Zlobina: You know, I think when you start from scratch, especially on a project that you've never done right. So it's really easy to get in the way of just building something and move on, right? Just to put some numbers together, you know, they will do some formulas. They'll produce something and that's it. And I think that, uh, better way to do it is really start with a goal and understanding what the, you know, the stakeholders for who you're building. Uh, the model is really trying to achieve. Sometimes I think even they don't fully understand what they're trying to get out of the model. Right. So I think it's really in that collaboration and being curious and understanding more, more than just on the surface level. What is the goal? Right? What questions this model is trying to answer. I think that's definitely the first step right. And then you kind of can start and shape up the model how you want to set it up, how it needs to look and how it needs to work. So, uh, because I think if, if, if there is no if there is no right understanding or lack of understanding of what it needs to do, uh, everything else kind of becomes, you know, uh, not as useful because, um, like in some of my experiences before, uh, you know, and I've done it at all and I've seen in some other ones that, uh, you know, it lacks the, uh, like, model needs to be dynamic, right? So if it's not dynamic, then it becomes obsolete, in my opinion, because it's not just black and white.
[00:19:20] Guest: Maria Zlobina: It's not like the person comes to you and asks you to build a model, and it's going to be the way it is, right? So it's just going to be multiple changes, multiple iterations, what ifs. So if the model cannot sustain all these changes, that's just not going to be as useful. So I think it's really critical to understand all the inputs, all the variables, all the things that can change the output and towards, you know, answering the question. So I think that's definitely an important one that's getting misunderstood or underestimated.
[00:19:54] Host: Paul Barnhurst: Yeah I agree with that. I think sometimes they underestimate you . Hey, this is just a math exercise. All I got to do is build it and there's a level of understanding how do you when you're working with a client, you know, kind of for that first time, are there specific questions or ways you like to go through to make sure you really understand what they need? Because like you said, sometimes the client doesn't even know they have an idea of what they want. But as you start talking to them, they become apparent, okay, what they want and what they need are two different things.
[00:20:21] Guest: Maria Zlobina: Right?
[00:20:22] Host: Paul Barnhurst: How do you kind of make sure you have a good understanding of their specific questions or process you like to go through?
[00:20:28] Guest: Maria Zlobina: I think it's all individual, right? It's just trying to put myself into the shoes of that person that's trying to make a decision and trying to look a little bit wider. Of what other factors that can impact, uh, you know, the area, the you know, what we are modeling. And so how is it going to be used? Right. Who are the people that are going to be impacted? Uh, what other variables that we need to take into account? Uh, so sometimes when you start going through that, you know, some people like, why are you being so noisy or why are you being so difficult? You know, but at the end of the day, it's actually, you know, working for that. Right. Working for the result, for the process. Because a lot of the times people who give you this, uh, you know, task, they have a lot more in their head. So they think that something is obvious or, you know, they just, uh, kind of it's running in the background in their mind, but it's not being explicit. Right. So the more you ask, the more it becomes transparent and obvious that a lot more things need to be taken into account. So it's just, I don't know, simple conversations and trying to be logic and curious and expand the depth of the model, I guess. Uh, it can always take things out, but, uh, you know, the, the broader approach, you, you, you get you take, uh, during the process of scoping, I think is going to be beneficial.
[00:21:52] Host: Paul Barnhurst: Yeah. No, I agree, I think the, you know, the more time you, you spend up front, almost always the better model you end with, end with. I know the times where I just start working in Excel, you often go, okay, now I need to rebuild that because I didn't know what I was doing. Right after you have some conversations, you really understand it. So I'm a big believer that understanding up front will save you time in the long run. You may not get into the model for, you know, another day or later than you planned, but you'll have a better idea of how to lay it out, how to structure it, how to think about things. And to me, it's worth it.
[00:22:28] Guest: Maria Zlobina: Absolutely. And I think the more you work on it, you always go back and ask. So it's just, you know, sometimes it's helpful to start with something and then see where it takes you. What other information you are missing? So it's always a process, right? But I think it's always good to keep a reminder that you know what else that I'm missing. What else is critical to take into account?
[00:22:52] Host: Paul Barnhurst: Agreed. It's always, always good to be able to look at it and think, are the other things I'm missing because. Right. Bad assumptions. It doesn't matter how well designed the model is, if you're missing key assumptions or have bad assumptions, you're not going to get a good output.
[00:23:07] Guest: Maria Zlobina: Exactly.
[00:23:08] Host: Paul Barnhurst: And so, you know, when we talk about modeling, you know, one of the things we're often trying to answer is what if type questions. You know, a lot of times scenario sensitivity you had mentioned you really love answering what if questions. What is it you like about that? What is it specifically about? Kind of, you know, that what if type question that we're offering often answering and modeling excites you.
[00:23:31] Guest: Maria Zlobina: You know, it's just the matter of I'll put it that way. So financial modeling, it's not just, you know, it's an open ended answer. Right. Or question. Uh, so it's just a model and it's supposed to provide you information or like range of answers, I guess, given like a set of criteria. Right. So and this what if I don't think I've met any executive uh, in, in my experience that asked for a model, they got it and they were like satisfied with it. Right. There's always like, uh, it's in their nature. It's in people's nature to ask questions. Uh, so especially when they get a start, um, and then they see all these variables and then how things work and flow and, uh, it's, it just naturally happens. Like, what if, you know, we increase prices not by X but by y percent. What if we sell not this volume, but the other volume. So really it's being dynamic. That's I think what you know, one of the biggest advantages of having financial modeling is, is that it's dynamic. You don't get just one, one question, one answer. It gives you the whole range and provide sensitivity analysis as well. Right. Which is also beneficial for a lot of the cases. So it's looking at a broader picture and helping decision makers to, to get to, to really make the best choice. Right. So it's the art I guess, or combination of art and science, but um, definitely a creative process. So what if is a very powerful question in finance.
[00:25:11] Host: Paul Barnhurst: I agree, and I like how you said, you know, helping our clients make the best decision, right. There's lots of decisions they can make. Some are good, some are better. But how can we really help guide and make sure they're making the best decision they can with the information they have? It's never going to be perfect.
[00:25:30] Guest: Maria Zlobina: I think it's been really transparent. Right. So, uh, transparent on the inputs that okay, you know, these are let's say ten inputs. But we know that in reality it's going to be so much more, right? Uh, it's just some we're modeling, some we're going to happen or we don't even know what's going to happen. You know what? Other ones can come up. So we just need to make sure we nail the most critical ones in a given case. And, you know, look through the outputs and really talk through that. And I think, uh, financial modeler, which, you know, it's not a topic that I'm kind of passionate about. I think that financial modeling FP&A in general, people, uh, buy some companies or people being really under underestimated, undervalued. So it's not about just crunching numbers, right? It's not about creating a spreadsheet. It's about creating a story. It's about understanding. Right? So it's been really partnering with a stakeholder of the model. It's working together to make sure that we translate the business case business situation into the numbers, to again provide back the best insight for the answers. So it's just, you know, working together and we never know what's the best answer, what's the right answer. But we can do our best to in a given circumstances to take the best one.
[00:26:50] Host: Paul Barnhurst: I like you said, it's really about working with the partner and figuring it out together and having those conversations because that's really where, you know, the learning takes place. It's not even so much the output, because the reality in every model we've built, the output is wrong, some less wrong than others. But, you know, as I heard George Box once say, all models are wrong, some are useful. Or as a friend of mine said that I laughed. He goes, if you work in bio pharmaceuticals, it's just all models are wrong. There are some are not useful. And I kind of laugh because they're so hard to build. So I think that process and the thinking and understanding and the assumptions and trying to help guide the decision making to say, hey, is this a plausible solution? Can we get in this range? Does it make sense? Is really what the model's there for? Because like I said, we're never right in the sense of I haven't had a single forecast. I've come out to the dollar. I don't know about you, but I never have.
[00:27:48] Guest: Maria Zlobina: That's what I was gonna say, that the model that is always wrong is the budget day one. It's wrong. Right. And, um, I mean, so in some companies, there's so much effort going to budget. And the process which I think is great to, you know, obviously budgeting is a great tool, but, um, it just needs to be a balance between, you know, the costs and value it provides. Right? So it has to be directionally right. It has to answer the questions and provide the insights, but it's never going to be right. Um, so it's just again, a matter of how it's being used. And if everybody is aware of the limitations and the, the, the proper use of the tool. Yes.
[00:28:33] Host: Paul Barnhurst: I fully agree with you. Right. Budgets are never wrong in the day they're finished. Yeah, they're wrong the entire time. So I think sometimes why are we spending six months on it? It's like, let's focus on the important things, the key elements, the plan. And then let's really spend time on making sure we can get as close as we can to achieving those goals, making sure the business is in the right direction versus should this be 10,000 or 12,000 doesn't matter.
[00:28:58] Guest: Maria Zlobina: Doesn't matter. It's all the same. Yeah. Yeah. I think the magic a lot of magic also goes into then uh, explaining uh, those variances. Right. So if we're holding on to this budget as the Bible and source of truth, uh, you know, and of course, as we all know, that it's wrong. Then it's 12 months of explaining the variances. And again, you know, it can be useful. It can be helpful. Uh, it just depends, you know, to what extent you really follow every, every of those numbers.
[00:29:29] Host: Paul Barnhurst: Yeah. It's finding that right balance like you said. I mean budgets planning, you have to do some kind of planning. What rolling forecast whatever portfolio. I mean there is beyond budgeting. You don't have to do a budget per se, but you got to plan. You got to have some numbers targets to go toward. It's just finding the right balance between being rigid, which I'm sure you've seen. We've all seen and being flexible because at the end of the day, it's just a guide. The goal is to really to achieve your strategic objectives, not to hit an exact number. Yeah.
[00:29:59] Guest: Maria Zlobina: And that's what I'm grateful for again, to audit for this concept of materiality. You know, uh, there is this difference between accounting and audit. Right. And so what was great about being auditor on being on that side of the of the fence. I guess there is a materiality concept. You know, it doesn't have to be dollar for dollar or cent for. So it just, you know, materially correct. That's all we need, right.
[00:30:25] Host: Paul Barnhurst: Yeah. That's one thing I like about I didn't come from audit or an accounting background is hey, you know it's about being directionally correct. Not an exact number. But I know what you're talking about when people think it has to tie out to the penny. Yeah. No balance sheet, I get it. This is a little different. So I want to shift gears a little bit. We've talked about modeling. Now we're going to jump into some kind of fun questions I ask every guest. And the first one, what's your favorite Excel shortcut.
[00:30:52] Guest: Maria Zlobina: Uh none I don't use any. Well I actually use any, I use.
[00:30:57] Host: Paul Barnhurst: Any.
[00:30:58] Guest: Maria Zlobina: Wow. It's just like control C. Control v, you know, I'm not a big I'm not a big fan. I guess I'm really good with my mouse. So.
[00:31:05] Host: Paul Barnhurst: So, no, I was that way for a long time. I've started to use shortcuts a lot more over the years. Totally get it. Okay. What's a tip or trick you've learned in Excel that most people don't know or something you think would be helpful?
[00:31:18] Guest: Maria Zlobina: Gosh, it depends on the task, but oh my God, that's like caught me off guard. I can't say that nobody knows. It just really don't know. Like, let's put it that way. Simple formula of xlookup saves me a lot of time. Can we go with that one?
[00:31:36] Host: Paul Barnhurst: We can. Xlookup works.
[00:31:38] Guest: Maria Zlobina: Yes.
[00:31:38] Host: Paul Barnhurst: So what's the most unique thing you've either created or seen someone create? Like a model for using Excel? Kind of for personal life or something fun that you've seen be done in Excel.
[00:31:51] Guest: Maria Zlobina: Yeah. And I thought, you know, my first, uh, thing was like, you know what? I for fun, for personal life, I don't think I use Excel, but actually, like, I had to use Excel just a little bit ago when I was, uh, coming to Australia. And then I had to list all my travels for the past ten years to the city, to the country, to the date. So that was a nightmare for me, considering that I've been to so many countries over the last two years, not even ten years. So that was like a huge thing. And I had to do all this exercise, right. But then I thought like, well, you know what? Since I have already all these data in Excel, I might as well just calculate how many times I probably like, you know, went around the world and you know, how many, uh, months or maybe years I spent in the air in my airplanes and how many flights I took, you know, in a given in a given month. So that was kind of interesting, you know, in my digital nomad days, uh, because I had, like, I don't know, in some year I had 27 flights in one year. And, uh, so that was kind of interesting to calculate, you know, on how many.
[00:32:58] Host: Paul Barnhurst: Miles.
[00:33:00] Guest: Maria Zlobina: I didn't get to that part. I thought it would be cool to see. But I mean, yeah.
[00:33:06] Host: Paul Barnhurst: That's a lot of work.
[00:33:08] Guest: Maria Zlobina: It is a lot of work. Yes. I mean, I'm sure it would be fun to kind of see what it is, but, um. Yeah, again, I would imagine.
[00:33:14] Host: Paul Barnhurst: It's a lot if you had 27 flights in one year. That's a lot of miles. Yeah.
[00:33:18] Host: Paul Barnhurst: Bad financial models can lead to bad decisions or worse. So, how do you minimize the risk of a bad model? You make sure the models you build are great. The Financial Modeling Institute developed the Advanced Financial Modeler accreditation program to help modelers like you. The AFM program offers a step-by-step approach to building world-class financial models. The program ensures that you know the best practices in model design and structure, and will help you brush up on your Excel and accounting skills to be the one on your team to build great models. If you want to impress your boss and your clients, get AFM accredited. Podcast listeners. Save 15% on the AFM program. Just use Code Podcast at www.fminstitute.com/podcast.
[00:34:24] Host: Paul Barnhurst: Alright, so now we're going to move on to what I call the rapid fire section. So I'm going to tell you how this works. I have about 1012 questions and you pick one side or the other. So you can't say it depends. And then at the end you can elaborate on 1 or 2, because you could say it depends for all of them. But that doesn't make for a very interesting show. So you ready?
[00:34:43] Guest: Maria Zlobina: Yes. Let's do it.
[00:34:45] Host: Paul Barnhurst: All right. Circular references and models. Yes or no? No VBA yes or no?
[00:34:53] Guest: Maria Zlobina: No.
[00:34:54] Host: Paul Barnhurst: Do you prefer horizontal? Lots of sheets for your schedules or vertical? Kind of putting it all in one page. Both are one of those. All right. We'll give you both ends. All right. Dynamic arrays. Do you think they should be used in models, yes or no?
[00:35:11] Guest: Maria Zlobina: Um, let's put it. No. Keep it simple.
[00:35:14] Host: Paul Barnhurst: All right. External workbook links. Yes or no?
[00:35:17] Guest: Maria Zlobina: No. Absolute no. It's one of those pet peeves. Uh, in addition to hard coding.
[00:35:23] Host: Paul Barnhurst: I had a guest on at one time said they found, uh, I think it was 47 deep links. So you would have to open 47 files to refresh everything in a model.
[00:35:33] Guest: Maria Zlobina: Oh my God.
[00:35:35] Host: Paul Barnhurst: Yeah. Imagine picking up that model in Hampton on Tangled. It's when you just start over.
[00:35:39] Guest: Maria Zlobina: I would just delete it. The model and.
[00:35:43] Host: Paul Barnhurst: I don't know, I'm glad I haven't had to deal with that one. Named ranges in models. Yes or no?
[00:35:48] Guest: Maria Zlobina: No.
[00:35:49] Host: Paul Barnhurst: All right. When you build your models, do you follow any of the formal standards out there? They're fast and smart and some of these others like standard boards.
[00:35:59] Guest: Maria Zlobina: I do not.
[00:36:01] Host: Paul Barnhurst: Okay. And then here's kind of just get your opinion on these. Do you think financial modelers should learn how to use Python in Excel?
[00:36:08] Guest: Maria Zlobina: No.
[00:36:10] Host: Paul Barnhurst: How about Power Query?
[00:36:12] Host: Paul Barnhurst: Oh yeah.
[00:36:13] Host: Paul Barnhurst: How about power BI?
[00:36:14] Host: Paul Barnhurst: Yes.
[00:36:15] Guest: Maria Zlobina: Love that one.
[00:36:16] Host: Paul Barnhurst: So we got a no. Yes, yes. Will excel ever die?
[00:36:20] Guest: Maria Zlobina: No.
[00:36:22] Host: Paul Barnhurst: I always like to see what people have to say.
[00:36:24] Guest: Maria Zlobina: Yeah, I think that's an absolute no. With so many BI tools and everything. I think Excel is there to stay.
[00:36:32] Host: Paul Barnhurst: Do you think I will build the models for us in the future?
[00:36:36] Host: Paul Barnhurst: No.
[00:36:37] Guest: Maria Zlobina: I mean, maybe they will build, but it's not going to be a good one without human input. So I guess it depends.
[00:36:43] Host: Paul Barnhurst: Yeah. And that's I think that's where a lot of people say yes, they could do the technical, they probably build the model, but there's going to have to be human judgment and input. I would agree with you.
[00:36:50] Guest: Maria Zlobina: Absolutely.
[00:36:51] Host: Paul Barnhurst: All right. Do you believe financial models are the number one corporate decision making tool?
[00:36:57] Guest: Maria Zlobina: I can't say number one, but it's definitely in the top three. I should say if used properly. Right? So, um. Yeah. Considering what we're talking about, definitely. If used correctly, if everybody understands all the magic that goes in, there definitely can be one of those critical ones.
[00:37:16] Host: Paul Barnhurst: What are the other two you mentioned? It's probably in the top three. What would you put above it?
[00:37:21] Guest: Maria Zlobina: Well, for decision making, lots of going on. Right. Uh, when people are trying to make decisions. So it's modeling and it depends what, uh, how much of the information and relevant information is included into the model. Because like if you talk about finance, right, it's numbers. But there is also an market Intel. They are like macro macro things. So it just depends if it's going to make it in the model. Or there's always this qualitative not just quantitative uh right factors that are going on. So it's one of, it's one of but not the only one.
[00:37:53] Host: Paul Barnhurst: It's one of but it's going to vary. Yeah. Makes sense I get what you're saying there. And then what's your lookup function of choice. Are you a xlookup Vlookup Vlookup index match. Which one?
[00:38:03] Guest: Maria Zlobina: Xlookup I think Vlookup and Hlookup is a old age now. Xlookup I think is definitely the one to go with for me. Definitely saves tons of time and effort.
[00:38:15] Host: Paul Barnhurst: Yeah, I'm.
[00:38:16] Host: Paul Barnhurst: A big I like xlookup. I'm a fan of it, so I can appreciate that. Any of those you want to elaborate on your answers or are there any where you're like, I want to add a little more context.
[00:38:26] Guest: Maria Zlobina: Uh, you know, I is really big right now, right? So, uh, you mentioned that if the US if AI is going to build models for us, um, I think back to, I guess, yeah. How what I said it's how we use it, right? Because I think AI technology is great for creating new tools like, you know, Excel keeps up with new formulas and new features. And I think it's really critical to stay up to date. Um, yes. Maybe like, you know, sometimes people say old dogs, new tricks and it's hard to it's hard to keep up, especially people with so much experience in the field. They may be like, okay, you know, I've done it for so many years. You know, I know it all. But to like the truth is that companies software always comes up with better solutions, with more efficient tools and instruments we can use. And I think it's for our own sake, it's best to keep up with that. Right? And but it's just technical thing. And like I mentioned before, modeling is like a science in the arts. So it's a combination of technical and the meaning behind that. So um, I think we can utilize those as much as possible, but um, definitely have our own input and creativity and, um, human mind that AI doesn't have. So as much as I'm actually like, I would like to get more into that and, you know, keep, uh, being more updated on all those possibilities. I know in Excel they have, um, what's it called? Copilot, right? Yeah. So sometimes it's a question that you're. I'm faster to find the answer than I'm going to be typing the request for. Right. But sometimes it can be really useful. So it's just I think the more the matter of practice and actually utilizing and find the, the right the best case for um, for the tool. Right. Because you're not going to be, you know, uh, doing something simple with a pivot table. You just don't need it. Right? It's just, you know, keeping the balance and making sure that you're using the appropriate technology, tools, formulas for what you need.
[00:40:29] Host: Paul Barnhurst: Yeah, I agree, it's always a matter of finding out where it makes the most sense. There are times when it can be fabulous. There's times when you can do it on your own and kind of everything in between, and it will definitely be interesting to watch how it develops and grows. I mean, it's pretty amazing what it will do. And I think the, uh, the logical stuff it will be able to build. But there'll always be that human judgment and human element that's needed and whatever, you know, AI is doing. So it will be interesting to watch how it develops, for sure.
[00:40:59] Guest: Maria Zlobina: Yeah, I mean, it can't keep up, like I said, but I mean, we can always try. Right.
[00:41:04] Host: Paul Barnhurst: And yeah.
[00:41:05] Host: Paul Barnhurst: Well, it's just happening so fast that nobody can keep up. I mean, I have a podcast where I talk all about AI and technology and AI partners like, oh, do you see this? I'm like, no, do you see that? No. I'm like, okay.
[00:41:16] Host: Paul Barnhurst: It just changed so much.
[00:41:19] Guest: Maria Zlobina: Yeah, there's just so much. And I think having this, you know, like short, um, how do you say it like, um, when somebody does a review or overview? Okay. This is a great tool and this is how to use it. I think it's, you know, great educational thing. Or when you take a course like CFM, CFM or any other in AI when you already can digest information being put in a nice way, that's easy to learn and implement. Um, you know, I think actually like one of those, um, you know, questions that, um, I could elaborate all these like, uh, Excel shortcuts or any, you know, tips and tricks. They're the best when they're being utilized, right? Because you can know so much. But the truth is like how you're using it and how beneficial it is.
[00:42:06] Host: Paul Barnhurst: So that's that's a question I agree.
[00:42:09] Host: Paul Barnhurst: I mean, you could have a ton of knowledge in Excel, but if you're not using any of it and you're not using it to be better than is it really valuable knowledge at the end of the day, it's the idea is especially, you know, modeling Excel, certain things. It's really about how it helps you be more productive?
[00:42:26] Host: Paul Barnhurst: Yeah.
[00:42:27] Guest: Maria Zlobina: Efficient. Productive. Yes. That's actually probably my number one word that, um, you know, I'm trying to like it describes how I function a lot of the times. And personal and professional life is efficient. Um, you know, I'm having a hard time with, uh, inefficiencies and idle time and effort, so, uh, sometimes driving myself crazy as well. I'm sure other people do.
[00:42:52] Host: Paul Barnhurst: Yeah.
[00:42:52] Host: Paul Barnhurst: I'm sure. Yeah, all of us have those moments when the inefficiency drives us crazy. I've definitely been there. So if you could, you know, as we wrap up here, we just have, uh, two more questions. If you could offer a piece of advice to our audience that you think would help them become a better financial modeler, what would be the advice you'd give them?
[00:43:12] Guest: Maria Zlobina: I think staying curious and open to what's out there. Always keep learning. Keep learning in terms of the tools and you know the ways how it can model and how you can, you know, set it up and make it happen, basically. Uh, and also be curious about the context of it, the business side of it. Right? The, you know, the situation or scenario that you're trying to model in. Uh, I think the combination is going to give the best result. And then, of course, like, you know, take courses, you know, get new information, tips and tricks. And most importantly, apply it because without the application that we already talked about it's really useless. So I think those two are probably the biggest ones.
[00:43:56] Host: Paul Barnhurst: And then last question. If someone's listening to this podcast and they want to kind of learn more about you or potentially get in touch, what's the best way for them to do that?
[00:44:05] Guest: Maria Zlobina: Probably LinkedIn is the best way for me.
[00:44:07] Host: Paul Barnhurst: That's what I figured. That's pretty common. I think everybody uses LinkedIn nowadays, right? Yeah, perfect. Thank you so much for carving out some time today, Maria. I really enjoyed chatting with you and I'm sure our audience will enjoy this as well. So thank you for coming on the podcast, I appreciate it.
[00:44:22] Guest: Maria Zlobina: Yeah. Thanks, Paul. Thanks for doing it all for all of us. And I'm sure like your podcast, like just a treasure for finance and maybe like somewhere close to finance because it just touches so many different topics. You know, sometimes for the outsider it can sound like a Nerdy Finance podcast, but actually it's about life. It's about business and finance. People are fun people to begin with, right?
[00:44:45] Host: Paul Barnhurst: So I love.
[00:44:47] Host: Paul Barnhurst: It. Can I get that? I'm going to put that on a billboard. Maria. Finance people are fun people.
[00:44:53] Guest: Maria Zlobina: Yeah. I mean, you can't be a good finance person if you're not having fun while you're doing it, right. So I think.
[00:44:59] Host: Paul Barnhurst: I hear you.
[00:45:00] Guest: Maria Zlobina: Yeah. So,. Yeah. Thanks for all you do. And thanks for bringing this tons of value and treasure for us, I guess, to learn from. And thank you for having me. It was great.
[00:45:11] Host: Paul Barnhurst: Thanks, Maria.
[00:45:12] Host: Paul Barnhurst: Financial Modeler's Corner was brought to you by the Financial Modeling Institute. This year, I completed the Advanced Financial Modeler certification and it made me a better financial modeler. What are you waiting for? Visit FMI at www.fminstitute.com/podcast and use Code Podcast to save 15% when you enroll in one of the accreditations today.