What is FP&A (Financial Planning & Analysis)
Learn all about FP&A and whether it’s the right career path for you
What is FP&A?
FP&A (Financial Planning and Analysis) is in charge of performing budgeting, forecasting, and financial analysis to provide the management team (CEO, CFO, etc.) with actionable insights for decision making.
The role is pivotal in ensuring a company’s financial health and long-term growth. Here’s an in-depth look at what FP&A is, why it might be a suitable career choice, what salary range you can expect, and much more.
Key Tasks in FP&A
The key responsibilities of FP&A professionals include:
- Budgeting and Forecasting: Developing financial models to predict future financial performance. This taken into consideration historical performance, market trends, and more.
- Variance Analysis: Comparing actual financial outcomes with budgeted figures and identifying reasons for variances and plan better budgets for the following year or quarter.
- Reporting: Creating financial reports and dashboards for management to aid in decision-making.
- Strategic Planning: Collaborating with executives to formulate long-term financial strategies.
- Performance Monitoring: Tracking financial metrics and KPIs to assess the company's financial health.
FP&A professionals also work closely with other departments as they plan their annual budgets. This can include monitoring how the marketing department is spending its budget, negotiating the budget for next year, or understanding why actual spend is higher than budgeted.
FP&A Company Hierarchy
The five departments above encompass the core financial functions essential for the strategic, operational, and regulatory success of a Fortune 500 company. All of them report primarily to the CFO (chief financial officer). Alongside FP&A, we have the the Treasury team, which is in charge of cash and liquidity management, the accounting department which is in charge of financial reporting and tax, the corporate development team which is in charge of mergers and acquisitions, and the financial audit team which is in charge of controls and fraud prevention.
Should You Work in FP&A?
Working in FP&A can be highly rewarding for individuals who enjoy analyzing data, solving complex financial problems, and making strategic recommendations. Here are some reasons why you might consider a career in FP&A:
- Diverse Skill Set: FP&A roles require a mix of accounting, finance, analytical, and business management skills, making it an ideal career for those who enjoy multidisciplinary challenges.
- Impactful Work: FP&A professionals directly influence the strategic decisions of a company, providing a sense of accomplishment and contribution to the company’s success.
- Career Growth: FP&A is a stepping stone to higher executive roles. Many CFOs and financial executives started their careers in FP&A.
- Job Stability: As companies continuously need to manage their finances effectively, FP&A roles are in demand across various industries.
FP&A Salary Breakdown and Career Path
Salaries in FP&A can vary widely based on factors such as experience, education, industry, and location. Here’s a general breakdown:
- Entry-Level FP&A Analyst: Typically, entry-level positions require a bachelor's degree in finance, accounting, or a related field. The average salary ranges from $70,000 to $100,000 annually.
- Mid-Level FP&A Professional: With several years of experience, professionals can expect salaries ranging from $100,000 to $150,000. Advanced degrees or certifications like a CFA or CPA can increase earning potential.
- Senior FP&A Manager: Senior roles, which often require extensive experience and proven leadership skills, can command salaries from $150,000 to $250,000.
- Director/VP of FP&A: At the executive level, FP&A professionals can earn over $250,000, depending on the company size and industry.
Performance bonuses are sometimes distributed based on the company’s profits and/or the performance of the individual. These are typically 10-20% of the base salary.
Please note these salary estimates are based on US job positions from sources such as Robert Half, Glassdoor, and BLS.
Work-Life Balance in FP&A
FP&A has a good work-life balance with competitive compensation while working reasonable hours (typically 40-60 hours per week). This is considerably better than other finance roles such as investment banking or private equity.
As the job is not deal-based, the hours are fairly predictable, knowing when it is going to be intense (for example a deadline for publishing budget forecasts) and when it is going to be calmer.
Key Skills for FP&A
To excel in FP&A, here are some of the key skills and qualifications you should have:
- University Degree: Bachelor's degree in accounting, finance, economics or similar. Although they sometimes make exceptions, these are by far the most popular majors.
- Technical Skills: Proficiency in software and tools such as Excel, PowerPoint and even sometimes SQL. To learn all of these skills, check out our courses here.
- Attention to Detail: Avoiding errors in building financial modelings, formulas, and SQL queries is crucial.
- Problem-Solving: Creative thinking to develop strategic solutions. This is particularly useful for financial modelling and automating processes.
Exit Opportunities
Perhaps unsurprisingly, many FP&A professionals stay in the industry long-term. At most, they might move from one company to another to pursue a different challenge and / or a higher pay.
If looking for external opportunities, the most obvious are other finance departments such as treasury, corporate development, or accounting. Some FP&A professionals may opt to work at an investment bank or a private equity firm, although this is more unusual.
Finally, another path -albeit for more senior FP&A professionals- is to become a private business consultant with the financial skills acquired.
Additional Resources
If you found this article useful, consider checking out our Financial Analyst Program where we help you learn the technical skills needed to perform in competitive finance roles such as FP&A. Our students who have landed roles at Goldman Sachs, Amazon, Bloomberg, and other great companies!
Other Articles You Might Find Helpful
Ready to Level Up Your Career?
Learn the practical skills used at Fortune 500 companies across the globe.