September 11, 2023 – With a focus on helping PE and VC backed healthcare organizations, Tim Russell, managing
partner of The Tolan Group, oversees the business development and recruitment activities for private equity and venture capital clients. Mr. Russell recently shared his views on the current state of recruiting within the financial services sector with Hunt Scanlon Media.
Tim, what is the current climate for recruiting senior executives for the financial services sector?
As a senior executive in the financial services sector, opportunities abound. From a recruiting standpoint, there’s high demand for both permanent financial executives as well as interim/fractional finance executives. Traditional finance responsibilities remain top priority for almost any organization in any sector. Those associated with private equity firms have the extra layers of bank filings and other financial reporting responsibilities. Highly skilled finance leaders are one of the roles that is always in demand.
What positions and types of roles have you found most in demand?
By far, the most requested role that our firm (and I would presume most any other executive search firm) is asked to help their clients find, is the role of chief financial officer. There’s a lot of reasons for the high demand of CFOs these days. Controllers and VP of finance are common asks as well.
Has the worry of a recession impacted this sector at all? If so, how?
The subject of recession is on everybody’s mind. Finance executives and otherwise. I don’t know that the word “worry” is the best description, but perhaps “prominent” might be the better word. Credit is expensive for a lot of the investing companies that we serve. Finance executives are being asked to evaluate every aspect of the company’s operations in order to find areas to save money in order to free up capital for repurposing. One answer to saving money is the implementation of finance technology systems. Many finance execs are tasked with identifying viable technologies that would help improve operations and ultimately bottom-line results. Regardless of the recession climate, finance executives are always in the hunt for opportunities to save money and opportunities to make money. In times of recession those ideas get a little more creative than at other times.
What challenges does the financial services sector face and what do you see moving forward?
I think there are several challenges facing financial executives today. The never-ending challenge for financial services is doing more with less. Looking for ways to decrease overhead spend is the constant ask of the finance team. Building a strategy around how to free up operating capital includes evaluating resource spend, payroll and facilities management. Technology is the answer for many finance organizations that are looking for efficiencies and reduction in overhead spend. With the rapid progression of technology, finance executives are having to be well versed in SaaS platforms that create efficiencies for in-house finance teams.
What impact is AI having?
AI certainly leads the list of talking points when it comes to technological advances in the finance sector. Today’s finance executive is tasked with not only improving and managing the company’s finances, but also becoming well-versed in the functionality of these financial SaaS platforms. It’s a time-consuming endeavor to learn all of the features of the latest finance software and technology and then be able to teach it to the team. Not to mention all of the upgrades and integrations that go along with interacting with a finance SaaS tech stack. Learning the technology is not without its challenges. Funding certain initiatives like DEI and ESG remain a focus for many chief financial officers. As the focus on these initiatives remain priorities for LPs and board members, CFOs are needing to have answers for how the organization will fund the commitments to these subjects.
Can you discuss the path to the CFO role, and how many of these CFOs typically make it to the CEO ranks?
The path to the CFO role is different from company to company. Oftentimes size of company and type of company dictate the career progression of the finance executive. Traditionally we have seen controllers move into a VP of finance role that ultimately moves into the CFO chair. Again, the timeline for this happening is often dependent on type of company and life cycle of the organization. There was an article in Forbes magazine not long ago that highlighted the trend of many companies’ boards selecting the current CFO to ascend into the CEO chair. There seems to be a benefit to today’s CFO’s skill-set that lends itself to be more than just the finance expert in the organization. We’re seeing a growing number of CFOs being promoted into the CEO chair due to their finance expertise as well as their leadership acumen. Once promoted, we are being asked to backfill the CFO chair that they vacate to make the move.
How has the role for senior finance leaders changed over the past couple of years?
One of the main reasons for such a demand for CFOs is due to how the job has changed over the years. Few positions have morphed into the multi-layered responsibilities than that of today’s chief financial officer. Gone are the days when the CFO sat in the boardroom with her spreadsheets waiting to give an account for each division’s financials. Today’s CFO is an advisor to the CEO. They need to be familiar with more than just the financials of an organization. Today’s CFO has to have an understanding of compliance, HR issues, a familiarity with multiple tech stacks as well as handle the normal responsibilities of juggling tax law and accounting practices. I made the comment to a candidate recently, “It feels like today’s CFO is the job of three men.” He quickly replied, “I wish it was just the job of three men.” It’s almost unfair how much today’s financial chief is asked to handle. I have seen a dramatic increase in the request for a CFO to have an MBA over a CPA. Evidence that the job has changed considerably from years gone by.
Share with us some of the recent search work Tolan Group has conducted within the finance sector.
Our perm placement recruiting team has placed over 30 finance roles in the last 18 months. CFOs were the most common placements, but VPs of finance, controllers, accounting, and FP&A roles were a few of the other placements made. Since our firm’s focus is predominantly in the healthcare sector, most of the finance placements we’ve made have been in healthcare organizations. With the continued interest of private equity’s influence in the healthcare services market, we have worked with many MSOs in specialties such as rehab, retina, cardiology, primary care, autism, gastroenterology, palliative care, surgery, and dermatology. As a favor to some PE clients, we’ve even recruited some CFOs, VPs of finance, and a controller in non-healthcare oriented portfolio companies. Companies such as E-commerce, women’s retail clothing, and footwear were some recent non-healthcare finance placements made by our recruiters. With repeated calls from clients to provide temporary coverage in times of transition, our founder, Tim Tolan, has created an interim placement division that has interim talent on standby ready for deployment in a fractional or interim capacity. That division has a sector agnostic focus so we can help staff finance execs in healthcare or non-healthcare businesses. Our phones remain active with calls for finance team members. The pace of recruiting those folks shows no sign of slowing down at The Tolan Group and we’re happy to help inquiring clients.