Can Competition Make You Better at Finance? with Eric Kelley

Speaker A: Hello everyone. Welcome to another episode of Financial Modeler's Corner. I'm your host, Paul Barnhurst. This podcast is 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 on the show Dr. Eric Kelly. Eric, welcome to the show.

Speaker B: Thanks Paul. Good to be here.

Speaker A: Uh, good to have you know and I think that's the first time I've called you doctor.

Speaker B: That's all right. Most people, most people don't.

Speaker A: I would imagine so a little bit of uh, his background. Dr. Eric Kelly is a professor of finance at the University of Tennessee's Haslam College of Business. Eric teaches finance students at the undergraduate MBA and PhD levels. He emphasizes quantum problem solving techniques and challenges students to create robust scalable models. He is particularly passionate about developing integrated university curricula spanning multiple courses that teach students to build financial models from the ground up using the most innovative techniques available. Which we'll spend some time talking more about today, which I'm excited about. He is also a Microsoft Excel MVP and a faculty fellow with the Microsoft Excel Collegiate Challenge. He worked alongside other MECC leadership to create the organization's first regional competition in 2024 and continues to promote Excel based esports competitions by writing and testing cases and creating instructional content. Eric also coaches his students Excel esports team from the University of Tennessee that won the 2024 MECC World Championship and placed sixth in 2025. Again welcome. I'm really excited to get to chat with you today. So you're the first guest we're doing this with first or second? We're doing a new career corner. So I have a couple questions kind of about your career around financial modeling. First one we're going to ask you is how did you decide you wanted to be a college professor teaching finance?

Speaker B: It was really kind of a perfect storm for me. Few things came together. I enjoyed the teaching and learning process and so that applies both the classroom stuff as well as research. Uh, because our job is to generate new knowledge. I enjoyed math from really as long as I can remember. Um, I was always fascinated with how financial markets work and uh, just generally I like variety in my day to day duties and so the academic career, uh, the PhD and finance in particular just all, it all just came together in.

Speaker A: That makes sense. You love teaching, you Love the math. You enjoy markets. Good, Good combination to be a professor.

Speaker B: It works.

Speaker A: So the next question I want to ask, and I'm curious to see what you say to this, what is one skill that you think most financial modelers need to have that most people would be surprised to hear you say that?

Speaker B: I would say oral communication skills. I know modeling, it's a very technical thing, right? But at the end of the day, we gotta be able to communicate. We gotta be able to tell stories. And so I think the oral communication piece is, uh, essential. And, and when I say oral communication here, I'm not talking about, uh, preparing something and sort of delivering this, this speech. Rather, I'm thinking about the, the ad hoc thinking on your feet, answering questions in clear, coherent ways so that your audience can understand you. I think, uh, I think it's, it's essential. If you can't tell the story behind your model and what your model is communicating, it doesn't really matter how good your model is.

Speaker A: People have already lost you 100% agree. And I, I've been guilty of that before where I think I'm explaining something well, and everybody's looking at me like, what are you talking about? And you're like, all right, I clearly did not communicate that well, even though I thought I understood it. Yeah, definitely more important than a lot of people think. We all think we're just Excel nerds, and we are Excel nerds. But there's more to it than that.

Speaker B: Oh, yeah, absolutely.

Speaker A: Well, do you tell college students who are interested in a career in financial

Speaker B: modeling before we actually get into, like, the, the nuts and bolts of trying to build a model? I mean, I, I, I, I try to start with let's just learn the thing that we want to model. Let's learn what is actually going on behind the scenes. And so in a lot of ways, it's, it sort of starts with things like just, just learning the financial statements, just how they, how they fit together, the story they tell. And then, then once you kind of have an idea of the types of things that you want to model, then I, I pivot and, and try to get folks to, uh, to think about efficient systems and processes. I mean, it's, it's not about doing anything once. It's about creating a system and a thing where you can, you can do tasks, uh, at scale.

Speaker A: And I'm curious, obviously you see a lot of students first model ever, and you know, they're very early attempts. So what's maybe one of the biggest mistakes you see or craziest thing you've seen, kind of as you're seeing those early models, because I'm sure, you know, it's very new for some of these students, might be their first time really ever using Excel.

Speaker B: I think it's just trying to solve a problem whether it's big or small, just for the purpose of solving that individual problem. So how that translates into models, whether they're big or small is going to be like lots of just hard coded values. Don't do that. Like when you're taking a test and you need to, you know, you're asked to calculate a loan payment or something like that. Yeah, you're solving an individual problem. But when we get into modeling, what, what the initial thing that, that I think people need to learn is, they're not trying to find a loan payment. They're trying to build a system that is going to take in a flexible set of inputs and generate a loan payment as an output so that they can then go and change the inputs and then get the right answer and not have to resolve the problem. But yeah, so, I mean, it's, it's, it's being very, very focused in solving individual problems and instead of thinking about

Speaker A: systems and process, and that totally makes sense because that's usually how we work in school. You're just thinking, how do I solve this case? I want to get the answers in whether it's accounting or whatever it is. And with the model, you're trying to teach them that. No, you're building a system so if you change the inputs, you make adjustments, it will work continuously with you. It's an evolving document. You know, it's not something you just get the answer and move on.

Speaker B: Yep, exactly, exactly. And, and, and it's, and it's interesting how long it sometimes takes that to, to quit because we are, we are so trained not to think that way.

Speaker A: Yeah, I, I, I hadn't thought of it that way, but that totally makes sense. It's, it's, yeah, it's not the way we study, it's not the way we typically learn. Now, whether we should or not is a whole different debate that I'm sure we could spend the rest of the time on, but.

Speaker B: Oh, yeah, yeah, we can talk a lot about, uh, the system and it's

Speaker A: going to be interesting to watch how it changes with AI. I'm sure you have a lot of thoughts on that, but we'll get back to modeling for our audience. So I know you're a big fan of Excel esports. How did you first Discover it. What was your reaction? Kind of tell a little bit of that journey.

Speaker B: I learned about Excel Esports the same way a lot of folks have learned about Excel Esports, and that is they, they know David Brown. So David is, um, a finance professor at University of Arizona. And interestingly, I was, I met David. I was on faculty at Arizona at the time, and I was in the process of leaving, moving to Tennessee, and we were in the process of trying to hire him. And that was, gosh, 12 or so years ago. But, but, but I met David and I, I, I kept up with him over the years. And then maybe five years ago we reconnected and, and spent a bit of time together and he was kind of telling me the story about how Excel esports work. And, and David, uh, for folks who don't know, he is, uh, the founder of the Microsoft Excel Collegiate Challenge, which is the kind of the big network and the big competition at the college level. And David, uh, learned from, uh, Andrew, uh, Regalinga. I have trouble with Andrew's last name.

Speaker A: I think I have a hard time.

Speaker B: Um, but who, who actually is. So, so if David's kind of the father of college Excel esports, Andrew would be the grandfather of that.

Speaker A: Right?

Speaker B: Because Andrew started the financial Modeling World cup and the Microsoft Excel World cup, uh, or World Championship. And uh, when, when David kind of told me about how all of these, these things work was like, hey, man, I'm, I'm in. This is, this is awesome. It's, it's learning. It's the opportunity to display creativity. It's working under pressure and competition. We, we love to compete. It's, it's something that, something you can win at. So, so, so why not? Uh, but, yeah, so I was immediately, immediately excited.

Speaker A: Love it. And for those who are interested, uh, David Brown was one of the first interviews they ever did. Funny enough though, I think it's episode three was David Brown, but back to back, I interviewed two David Browns. So it's the University of Arizona one, not David Brown, that runs a consulting firm out of Africa, because they were literally, I think episode three and four of the podcast. So it was kind of funny because I'm like, and this week I have David Brown, then the next week and I have David Brown again. Tell our audience what's it like competing. Let's start with that versus coaching, because I know you've competed in the event as well.

Speaker B: Yeah, I mean, I've done, I've done a little, little, Little competition. Uh, more coaching than competition. But I mean, I think the Way to think about it is you're, you're going to walk in and you're going to encounter some type of problem like you've, you've never seen before, something completely new, maybe totally off the wall. And you're going to have a few minutes to read, plan, digest, and then maybe 30 minutes to just go at it and make as much progress as you can. And I at least am very used to just typing type all day long by getting there and just like all tensed up and you're making mistakes and trying to, you know, move around and get things done and trying, uh, to remember all the tools in your tool belt. It's interesting what happens to you when, uh, you think you know everything and then you're under a, under a huge, uh, time crunch and you forget how to copy and paste cells sometimes. But it's a interesting beast. It's, it's, it's pretty cool though.

Speaker A: It is pretty cool and it is unique. I've competed a few times, not a lot. I think I've done four, four, maybe four or five times in total. And it is definitely unique, especially the first time you do it.

Speaker B: Yeah, but I don't know, just it, it's addictive. Like, I mean, it's just like I, I, I want to, I want to come back, I want to do more. It's um, it's just fun, a lot of fun.

Speaker A: Love it. So talk about what it's like coaching students because obviously coaching versus doing it yourself is very different.

Speaker B: Very different. Very different. Um, so certainly there's, there's techniques and, and, and skills that they need to learn. But there's, there's an interesting twist to the coaching part that, that comes from the fact that so, so these students and students that I work with and the students that are, are, are into this stuff, they're typically going to be high achievers, also highly competitive individuals themselves. But that brings this dynamic where you've got, you've got students who are very accustomed to, in all their academic career, studying very hard, regularly, earning A's, oftentimes attaining perfect scores or near perfect scores on their exams and then just kind of keep on going. They expect, they expect excellence and they're bright. And so this is not unjustified. But in Excel Esports, this is, it's so different because achieving perfection is rare even for the best players. And so I've got to just drill it into my kids early and often to know that you know what, you're probably going to see a problem that is too big for you to solve today or for sure in 30 minutes. And in, in some cases, 50% may be like a really, really good score. And, and, and to, to, to a, a super high achiever, that's a hard thing to stomach and somebody who's never

Speaker A: got a B in their life to be sold. Be happy with 50%.

Speaker B: Yeah, yeah. But the, the thing that I, I, I try to use to hook them is this. While that experience doesn't look like a test that they're accustomed to taking, it looks a lot like real life. And, uh, that's a place where, you know, your, your life, your work life at least is one where a good goal on any given day is just to make as much progress as you can and just have a place to start the, um, next day. And so, so I think the cases are much more like real work than they are tests and good things.

Speaker A: Totally agree. And I'm curious, how did you decide that, you know, making the learning? Because I know you've, and we'll talk about this. You've turned several of the, uh, cases into esports learning cases for learning financial modeling. Right. You've turned that into a competitive game. So you started saying, hey, let's do some of these esports. Then you said, how can I teach financial modeling as a competitive game? Kind of an esports framework. So how did you first come up with that idea? How did you develop that idea?

Speaker B: So, uh, well, first of all, um, I can't take credit for the whole, um, financial modeling in esports. So there are many greats that did that well before me, specifically, uh, Andrew and, uh, David and that lineage. But I did focus really clearly on the FMI stuff. So that was, in some sense it was, it was new because it was a different set of material. But yeah, so, I mean, I already recognized watching my students compete in more kind of generic cases that really didn't have anything to do with finance or more just general problem solving. Just watching how engaged they were, especially with things that they could do in teams because they loved it. They just thrived on working together and then putting a live scoreboard up so that they could see their progress. Uh, I was saying, okay, there, there, there is, there is certainly something here, but what I was lacking was, I hate to say it, but basically an enforcement mechanism to get them to a lot of students to do the cases. Because, I mean, it's, it's really kind of sold as an extracurricular activity. And these are busy kids. I got a lot of things to do. And so Um, I set out to find ways to bring the competitions into the actual classroom so it was part of their actual course. And so then, you know, I've got a captive audience and so it was great. And so in order to do that I had to take the actual subject matter that was being caught, taught in a given course at a given, at a given time and put it into the context of the models. But it's really, in many ways it wasn't that hard because if you think of a model very broadly as just some mechanism that has some inputs, does stuff with those inputs and then generates outputs, uh, that are useful for decision making, that's exactly what we're doing in many of our classes, especially those that have a quantitative bent. And finance is just, it's perfect for that, right? Because that's what we do in finance from a very basic level when we're learning time value, money, we're solving problems. And so I just started taking these ideas and putting them into the case framework. And I started really small with intro to finance topics like calculating loan payments, calculating retirement savings amounts, things like that. Moving into bond pricing, um, stock pricing, some risk and return, building portfolios. And then this past spring I had the opportunity to do an honors class with a, uh, group of second semester sophomores, all finance majors. And so this is really their first semester when they're even taking finance. And so I just had the, the freedom just try stuff with them just to see what we could do. And uh, we blew through all the material that um, I had planned in the first two thirds of class. And so end of end of that I had another month like well, what are we going to do? Well, um, I, I like the FMI curriculum, I like the, the, the foundations package. I know it, it's uh, um, it's a very good thing for them to learn. So let's, let's put them through that and on Fridays for a few weeks in a row, let's just do a case based on that material. And so more complex than the original cases I was writing for them. But by that time they'd seen cases, they knew how they were inputs and outputs and all of that. And so now they've just got a new set of material. And so now they're building a revenue schedule, they're building a cost schedule and they're making it all the way down to EBITDA and um, incorporating taxes and Capex waterfall and getting all the way through an income statement. So it was, it was pretty cool. Just, just kind of one layer at a time and just see what they could handle. And they. They delivered.

Speaker A: Sounds like kind of a little bit born on the FMI side of doing that out of necessity in the sense of, okay, I gotta go. I got a few more weeks of material I need to do. What am I gonna do? I like this material. I like the framework of competitions. Cause I know they can learn that way. So let's start layering in these lessons in the competitions.

Speaker B: Um, and thanks for the conversation today. Paul's been a lot of fun. Yep.

Speaker A: Enjoyed it. Thank you.