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As one of the key members of the C-suite, a Chief Financial Officer (CFO) oversees a business’s financial activities. Constantly seeking opportunities to reduce costs and increase profits, they’re closely involved in budgeting and fiscal reporting.
A CFO’s role is heavily involved in strategic planning; in collaboration with other stakeholders, they will help devise and execute business goals while tracking key performance indicators. Additionally, they serve a management function, filling out the organizational structure with a trusted team of smart, savvy finance professionals.
The exact duties will depend on the scale of the company and the industry itself. However, the way to earn the CFO title is fairly consistent across the business world.
A master’s degree, such as a Master of Science in Finance (MSF), and many years of professional experience are the baseline requirements. An eager attitude, leadership mentality, and inter-departmental curiosity will help an aspiring CFO to go far.
Here are some tips for developing a path to the most senior role in finance and learning how to become a CFO.
Occupational Outlook for CFOs
According to data from the U.S. Bureau of Labor Statistics (BLS), employment prospects for CFOs will remain competitive but relatively stable. Furthermore, finance executives will continue to be well-compensated for their work.
Between 2018 and 2028, the BLS projects 6% job growth for the top executives occupational category (which includes leaders in government and education as well as chief executives and general managers); this is on pace with average growth across all occupations. Within this grouping, however, job growth for chief executives is predicted to decrease by 5%.
This can be attributed to the fact that executive-level roles are competitive, highly coveted, and not readily vacated by those who have earned a spot in the C-suite.
However, aspiring CFOs may consider finding employment in financial management. This profession is expected to expand more rapidly, with 16% growth expected in the BLS’ 10-year forecasting period—much faster than the national average. In the increasingly complex business landscape, there’s a high demand for the skills that savvy financial managers provide.
As finance careers crop up across all industries, opportunities and growth trends vary by vertical. Burgeoning and booming industries will see increasing demand for top executives with finance expertise, while opportunities in traditional and stable industries may be more limited.
For a competitive edge in this relatively tight market, the BLS advises that aspiring CFOs set themselves apart with an advanced degree paired with substantial managerial experience.
The high earning potential of a CFO makes the career an attractive goal for many finance professionals and future business leaders.
BLS data reveals that the median annual salary for chief executives (including CEOs, COOs, CFOs, and other C-suite peers) was $189,600 in 2018. Meanwhile, the median pay for financial managers was $127,990. According to PayScale, the average CFO salary was $132,216 in 2019, while the top 10% saw average earnings of $218,000.
Pay rates—and structures—can vary considerably across the profession. CFOs may be compensated through salaries, commissions, bonuses, stock options, and other profit-sharing plans. PayScale cites the following averages for CFOs in 2019:
- $20,397 in bonuses
- $12,208 in commission
- $9,664 in profit-sharing
Location and experience level play significant roles in pay variance. Earnings may be 15–30% higher than the national average in large metropolitan areas. Seasoned CFOs with 20-plus years of experience can earn 63% more than new executives, on average. Moreover, high-profile CFOs earn well into the tens of millions, according to Business Insider’s shortlist of America’s top-earning CFOs.
Pursuing the Right Education
In a 2015 survey conducted by Robert Half, two-thirds of CFOs reported that they found it more challenging to be a company leader at that time than they had five years ago.
As businesses grapple with realities like cryptocurrency, cyber threats, and delicate global trade relations, leadership challenges have only continued to expand. To keep up, the right academic experiences and credentials are crucial.
Obtain a Bachelor’s Degree
An undergraduate degree is the first step toward a successful career in finance. A bachelor’s degree in business administration, finance, accounting, or economics can establish a strong foundation for internships and entry-level professional experience.
During their undergraduate studies, ambitious students can cultivate leadership skills by participating in student organizations and extracurricular activities. In class, they will engage with a wide range of business finance topics and skills, from accounting and public speaking to economic theory and statistical analysis. Advanced coursework in quantitative reasoning and mathematics is also essential.
Earn a Master’s Degree
Postgraduate experiences help top candidates distinguish themselves in a highly competitive workplace. A 2012 industry study by Russell Reynolds Associates revealed that roughly two-thirds of Fortune 100 CEOs had advanced degrees.
The right master’s program will serve as an incubator wherein students can make substantial theoretical and practical growth while continuing to advance in the workplace.
Enrolling in a Master of Business Administration (MBA) or Master of Science in Finance (MSF) program and earning a graduate degree can help finance professionals leap ahead in their careers. While an MBA may cover a broader range of business topics, an MSF cultivates finance-focused business leaders and primes mid-level and senior managers for the CFO track.
Mastering Key Financial Concepts
CFOs are responsible for a wide range of activities that support business growth. While the scope of duties may differ from one industry or company size to another, an aspiring CFO should know how to:
- Maximize profits while mitigating financial risks and losses
- Manage investment portfolios and conduct audits
- Support expansion by raising capital or taking a private company public
- Develop financial strategies for mergers or acquisitions
- Analyze market trends and generate financial forecasts
- Ensure compliance with laws and regulating agencies
- Prepare financial statements and present reports to stakeholders
- Create internal procedures and administrative guidelines
- Oversee department heads and supporting staff
Busy professionals should consider Northeastern University’s Online MSF program. Students choose either the Corporate Finance or Investment Finance track and complete the six core courses in the MSF curriculum:
- Financial Theory and Policy
- Analysis of Financial Institutions and Markets
- Investment Analysis
- International Finance Management
- Financial Strategy
- Finance Seminar
In addition, an array of elective courses empowers students to select a focus and enrich their depth of understanding around key topics such as mergers and acquisitions, value creation, investment banking venture capital, and more.
Developing Essential Management Skills
While the CFOs of the past were largely responsible for managing cash flow and developing intricate reports, the tech-savvy CFOs of the future serve slightly different aims.
Since accounts can be reconciled and reports generated with a few clicks, chief financial officers are increasingly responsible for interpreting data and using it to fuel strategic money moves. They also need to be well-versed in IT and computing to support these activities.
Soft skills are also essential for success in the C-suite. The BLS recommends that chief executives possess the following qualities:
- Problem solving
- Time management
Notably, communication is at the top of the list. Without communication skills, the best number-cruncher or controller may not have CFO potential. In the boardroom, chief financial officers meet with investors and board members. Such interactions require a professional demeanor and an aptitude for public speaking and presenting.
Internally, CFOs also interact with managerial staff and employees. Managing is another necessary skill for would-be chief financial officers, as part of the role involves delegating responsibilities and supervising departmental activities.
Throughout an aspiring CFO’s education and career, it’s important to find ways to develop and demonstrate leadership skills.
Establishing a Career in Finance
For students eager to embark on a career in finance, there’s no need to wait. While working toward a finance degree, students can pursue hands-on internships and apply their course learning to practical, real-world environments in business finance.
Once these work experiences are paired with a diploma, recent graduates may begin their finance careers in earnest by securing entry-level positions within financial institutions or finance departments.
Throughout their careers, finance professionals can attempt to advance within their own companies. They may also choose to move laterally or vertically from one employer to another. It can be advantageous to work at a few different companies to broaden one’s experiences—especially earlier on.
Either way, it’s important to focus on gaining more responsibilities and expanding one’s scope of duties from year to year. Employees who keep a low profile and manage a narrow scope of work are not likely to advance to the C-suite quickly. Those who take advantage of company training programs and seize leadership roles may come across more advancement opportunities.
Many CFOs worked in finance-related roles before entering executive leadership. Banking, accounting, investing, consulting, financial management, and underwriting may lead to a fruitful career in finance. Working as a controller or in a treasury department can also lead to a promotion to the C-suite.
Money-savvy professionals working in general management roles are also regularly selected for advancement. This is because a CFO needs to understand all business operations—not just the financial figures. They must adopt a broad, long-range perspective on company growth and should also be experienced with things like stakeholder relations and corporate governance. It’s also important to deepen industry expertise while advancing along a career in finance.
Building a Robust Resume
A recent finance graduate and even a seasoned professional won’t reach CFO status instantly. Achieving this significant career milestone requires a considerable amount of professional experience. Along the way, ambitious individuals can enhance their business acumen while boosting their professional reputation through a variety of channels.
Gain Industry Expertise
Since finance is a key component of every commercially viable business, finance professionals can work in practically any industry. However, specializing in one area increases one’s chances of success.
Management consulting firm Russell Reynolds reported that 66% of externally hired finance executives at Fortune 100 companies worked in the same industry or a related industry prior to being offered the CFO role.
Would-be CFOs should develop specialized knowledge about their chosen vertical. It’s advantageous to become familiar with industry-related tax laws, regulations, budgeting processes, investing practices, and other aspects of business like mobile banking and international finance.
Explore Interdepartmental Opportunities
In addition to industry expertise, it’s important for financial professionals with their eyes on the C-suite to become familiar with how companies—and the business world—operate.
The role of a CFO continues to evolve, overlapping more and more with information technology, human resources, and operations, making cross-disciplinary perspectives critical for success. To keep up with the pace of change, CFOs undoubtedly need sharp computing skills and digital literacy as well as adaptability.
At the same time, a chief financial officer is also an important player in maintaining a positive company image. They will need to have some familiarity with public relations and crisis management.
Successful CFOs also have allies outside of the finance department. They don’t simply slash budgets; instead, they strive to understand the challenges faced by sales, human resources, and other departments so they can work for and with them to find appropriate solutions.
Cross-training programs and job-shadowing arrangements allow finance professionals to engage with colleagues from different departments. They may choose to lead interdepartmental committees and join company-wide project teams as well. Mentorship opportunities and networking activities can also be invaluable.
Earn Professional Credentials
Each employer follows a different set of requirements, but some may ask that financial leaders hold one or more certifications. Even when not required, they are still important opportunities for aspiring CFOs to prove their competencies.
To become a CFO, a financial professional may be required to earn a Certified Public Accountant (CPA) licensure through state board approval. Alternatively, they might be asked to hold Certified Management Accountant (CMA) or Chartered Financial Analyst (CFA) licensure.
Achieving such certifications usually involves meeting experiential requirements and educational credentials as well as passing an exam.
Securing a Spot in the C-Suite
Chief financial officers can work in practically every industry and businesses of all sizes. They’re needed everywhere from small business and mid-sized ventures to enterprise companies and multinational corporations.
According to Russell Reynolds’ study, CFOs are most often hired from within—but only with the right experience. Within Fortune 100 companies:
- 69% of CFOs were promoted to the role internally
- 70% of these internal hires had been with their employer for at least 11 years
- 41% had more than 20 years of tenure
Only a small percentage (15%) had been with the company for five years or less before being promoted. This data suggests that “heir apparent” hires are not typical. Rather than expecting to be taken under a C-suite executive’s wing and placed in a CFO position within a year or so, finance professionals should commit to making steady professional growth.
While recruiting from outside is a less common way to become a CFO, it is still a possibility—more for seasoned CFOs rather than first-timers. In the same study, it was found that:
- 31% of CFOs in Fortune 100 companies were brought in externally
- 57% of these external hires came with previous CFO experience
A finance professional eager to learn how to become a CFO will see that, on the path to the C-suite, things evolve not in a matter of days but in a matter of decades. But the personal, professional, and financial rewards can be substantial.
In fact, some CFOs later become chief executive officers, while other business leaders may occupy both roles simultaneously. For an ambitious finance professional, countless possibilities await.
Consider Northeastern’s Online MSF Program
Start your path to becoming a CFO at Northeastern University.
Within the D’Amore-McKim School of Business, Northeastern’s Online Master of Science in Finance program is designed for growth-oriented professionals in finance and related fields.
Its online curriculum enables you to continue building your experience, reputation, and resume in the business world while earning your graduate-level credentials.
Students can complete this globally and regionally accredited program in as few as 16 months while working full time.
As a student in Northeastern’s MSF program, you will:
- Gain essential knowledge through a comprehensive curriculum
- Cultivate leadership and communication skills
- Learn from an award-winning faculty composed of leading finance professionals
- Study anytime, anywhere, while continuing to build your career
- Enter an alumni network of 235,000 (and counting) Northeastern graduates
Download a brochure today to learn more about how to take your finance career to the next level.