The fractional CFO playbook is being rewritten

If you run a fractional CFO firm right now, you're probably feeling something you can't quite put your finger on.

Business isn't bad, exactly. But client conversations feel different than they did two years ago. Prospects are asking tougher questions, especially around AI. Competitors you've never heard of keep showing up. And somewhere in the back of your mind, there's this nagging sense that the way your firm operates today isn't going to be the way it operates in three years. Maybe not even next year.

I've been sitting with that feeling too. My name is David Rapoport. I'm based in Austin, Texas (and yes, I have a BBQ ranking, ask me sometime). I've spent 15+ years in Finance and Operations, at companies ranging from a 5-person pre-seed startup with zero revenue to 400,000-person consulting firms.

The common denominator throughout my career has been helping businesses take their data, models, and reports, and turn them into something they can actually act on.

Earlier this year, I joined Aleph to help more companies implement the kind of technology I wished I had along my career journey. And I wanted to start writing about something that's been on my mind a lot lately: the world of fractional FP&A is shifting under everyone's feet, and most firms aren't talking about it openly enough.

This is the first in a series of posts where I'll dig into that. But let's start with something that might seem contradictory.

Everything about finance has changed…except the work

When I started my career in finance, the core of what I did day to day then is basically the same as what I do now. Monthly reporting packs, board slides, ad hoc analysis. Someone asks a question, you go find the answer in the numbers.

What has changed is how you get there.

I used to log into 10+ systems just to pull the data I needed, clean it up so it was actually usable, and then manually update a series of reports and dashboards. One of the biggest wins of my early career was rebuilding an entire reporting pack for a healthcare company using VBA. It automated hundreds of hours of manual work over the course of a year. At the time, that felt like magic.

Today, that kind of automation is table stakes. The tools have gotten dramatically better—what used to be a week-long exercise can happen in hours. And that acceleration keeps compounding almost daily.

But here's the thing. No matter how fast you can pull the data or how clean the dashboard looks, every finance deliverable comes back to the same question: so what?

What is the CEO supposed to do with this? What should the department heads change about how they operate their team or where they focus their efforts? How does this information actually help the company hit its goals?

This is just as true for fractional firms

If you run a fractional CFO firm, you already know this. Your clients don't hire you to produce slick reports. They hire you because they need a trusted advisor—someone who has been there, done it, and can help them avoid pitfalls on their journey.

They want the model to be right, sure. But they also want you to tell them what you're seeing in the numbers that they might be missing. They're paying for your judgment and your experience, not your ability to format a P&L.

That core value proposition hasn't changed, but the environment around it has. And it's shifting in two ways that I think every firm needs to be honest with themselves about.

1. More competition, seemingly overnight

First: there are a lot more firms in the space. Maybe it was COVID giving everyone the ability to work for themselves, or the latest round of job cuts forcing people onto the entrepreneurship path, but it feels like new fractional CFO shops are popping up constantly. Some are hundred-person firms, while others are basically a person with a laptop and a LinkedIn page. But either way, the competitive landscape is more crowded than it was even two or three years ago.

What that means for your firm is that just offering FP&A services and having a great bench of staff to deploy isn’t a differentiator anymore. People are looking for industry and domain experience, and why they should hire your firm over the other three they've talked to.

And it's not just other firms. There are more and more tools making it easier for smaller firms to offer their services at a lower price point. The bar for "good enough" keeps moving up, and the cost of meeting it keeps coming down. If your firm's pitch starts and ends with "we'll build you a model," you're going to have a harder and harder time standing out.

2. Clients expect more (and maybe want to pay less)

Second: client expectations are changing. AI is a big part of that conversation now, whether you're ready for it or not. Clients are starting to expect that your firm has a point of view on it, and maybe even that you're already using it. They want you recommending the right tools and actually implementing them, not just doing the monthly close and sending over a PDF.

And, whether it's justified or not, some of them are asking for that increased scope while pushing for lower fees.

We'll get deeper into the AI piece later in this series. But the broader point is this: it's not just a pricing problem. It's a positioning problem. When a client asks you to deliver more for less, what they're really saying is that they don't fully see the value in what you're currently delivering. That's the part worth paying attention to.

So, what do you do about it?

That's the question, right? You've got more competition, rising client expectations, pressure on pricing, and a macro environment that isn't doing anyone any favors. How do you balance all of that while still growing your firm and keeping the people you have happy?

I don't think there's one clean answer. But I do think there are some specific ways firms can think about this differently, and that's what the rest of this series is going to cover.

Next up, I'll get into something that sounds counterintuitive: why finding efficiencies might actually be bad for your business.