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THE 5 MINUTE FRACTIONAL CFO

067: 5 Reasons AI Won't Replace Fractional CFOs in 2024

Dec 08, 2023

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067: 5 Reasons AI Won't Replace Fractional CFOs in 2024

Dec 08, 2023

Read time: 3:33 minutes  

There's a lot of talk about AI and its role in finance and how it's going to take over our industry. 

I can definitely see a world in the not-so-distant future where AI is regularly handling things like: 

  • Audits
  • Tax prep
  • Reconciliations
  • Basic projections
  • Month-end closeouts

I haven't seen any AI platforms that are ready for prime time yet, but I suspect we're months away, not years away.

All that said, one of the questions people have been asking me lately is this: 

Are fractional CFOs at risk of being replaced by AI? 

The quick answer is no, fractional CFOs aren't at risk of being replaced by AI. But to stop the discussion there is short-sighted and dangerous.

In today's edition, I'm going to share 5 reasons why AI isn't going to replace fractional CFOs any time soon - and one big lookout to avoid keeping your seat at the table.

Let's dive in.

Reason 1. Strategic Decision-Making

Fractional CFOs excel in strategic decision-making, a skill that AI currently can't compete with. 

We possess the ability to understand the business context, apply our understanding of the markets, and make decisions that align with the company's long-term goals. 

ChatGPT, on the other hand, still struggles with basic math

In all seriousness, AI is limited to data-driven insights and cannot make holistic, strategic choices.

Fractional CFOs: 1
AI: 0

Reason 2. Application of Human Judgment and Ethical Considerations

A key aspect of a fractional CFO's role involves making judgments that consider ethical implications, company culture, and human relationships. 

These decisions often require a deep understanding of human values, ethics, and emotional intelligence, areas where AI lacks proficiency. 

AI operates on algorithms and data, devoid of the moral and ethical reasoning essential in financial leadership.

While there are plenty of examples of CFOs that lack ethics, we at least CAN apply judgment and ethics (if we choose to do so).

Fractional CFOs: 2
AI: 0

Reason 3. Customized Financial Solutions

Every business is different. 
Every situation is different.
Every owner is different.

A good Fractional CFO knows how to tailor their suggestions and strategies to fit these differences. 

AI, while efficient in handling standardized tasks, cannot (yet) provide the customized advice and nuanced understanding that can only come from years of experience handling all of these differences!

Even though fractional CFOs typically standardize our services, the advice and perspectives we give aren't. 

Beat that, Sam Altman! 

Fractional CFOs: 3
AI: 0

Reason 4. Relationship Building and Networking

The role of a fractional CFO isn't just about numbers.

It's more about building:

Trust.
Rapport.
Familiarity.
Relationships. 

Whether it's helping clients overcome unhealthy mindsets, negotiating with banks, pushing clients out of their comfort zone, or helping clients set bigger goals, some level of people skills must be present.

Siri struggles to understand that I never EVER intend to write the word "duck" in a text message. I don't see her (him? it? they?) helping my clients with mindset issues anytime soon.

Fractional CFOs: 4
AI: 0

Reason 5. Adaptability in Unpredictable Scenarios

The business world is full of 3 things:

Taxes
Uncertainty
Rapid changes 

AI can (kinda) help with one of those. 

Fractional CFOs can help with all 3. 

We're able to adapt our strategies and plans based on crazy town market conditions, regulatory changes, and those inevitable unforeseen financial challenges that pop up out of thin air. 

AI systems, although improving, still struggle with unpredictability and change. They do work well (ish) in scenarios where there are clear patterns and plenty of historical data. 

The reality is that most companies that want fractional CFOs are in growth mode, making any historical data not applicable to future growth.

See ya, sucker! 

Fractional CFOs 5: 
AI: 0

So yeah, AI isn't knocking on the door of fractional CFO work any time soon. That said, the big lookout here is to make sure you're actually providing and delivering on the key differentiators listed above! 

If you're heavy on the things AI is soon to replace and light on the things that AI can't touch it might be time to re-evaluate your offering.

If you want to make sure you're not completely ducked over by AI in the future, make sure you're doing the things AI can't do today. 

Your coach,
Michael

Whenever you are ready, here are 3 ways I can help you:

  1. 1:1 Coaching with Michael King -Get hands-on support and fast track your firm’s growth by working directly with me. 

  2. The Inner Circle - every month my team and I go live and share the most impactful lessons we've learned in our journey to start, scale, and optimize our own Fractional CFO firm (including live Q&A). Plus you'll get access to our private community of nearly 200+ Fractional CFOs.

  3.  If you'd like more amazing (and free!) content about starting, scaling, or optimizing your Fractional CFO firm check out The CFO Report.

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