Why independent financial advisors are the first performance lever for CFOs

This article was designed as an in-depth educational resource. Alongside the shorter and more concise formats we also offer (Insight videos, Macroscope, and Deep Dives), we deliberately chose a more detailed and comprehensive approach for this article. The objective is to provide you with a thorough understanding of the topic by exploring its key nuances and underlying considerations.

In a macroeconomic environment shaped by interest rate volatility and increasingly complex financial markets, the role of the Chief Financial Officer (CFO) has evolved significantly. Beyond accounting compliance and budget control, CFOs are now responsible for protecting margins, securing financing and optimising strategic financial decisions.

A key question therefore arises: how can you validate the best financing or hedging options when your main adviser has a vested commercial interest in the products being proposed? While banks remain essential partners in supporting growth, they also act as market counterparties. It is precisely this dual role that makes independent financial advice a major performance driver.

For Kerius Finance, independence is a core principle. Owned exclusively by its managers and remunerated solely through flat advisory fees, the firm relies on its own dealing room platform to analyse and price financial instruments in real time. This alignment of interests enables companies to benefit from transparent, objective and conflict-free advice.

Financial glossary

• Conflict of interest: A situation in which an institution may be incentivised to prioritise its own commercial margin over the interests of its client (within the regulatory framework of MiFID II).
• Inducements: Fees, commissions or other financial benefits received from a third party that may influence a recommendation.
• CIF (Financial Investment Adviser): A regulated status in France, supervised by ANACOFI, which imposes strict governance and compliance requirements.
• Hedging: A strategy used to reduce exposure to financial risks (interest rates, foreign exchange, commodities) through derivative instruments (swaps, caps, floors or options).
• Counterparty: The financial institution that takes the opposite side of a market transaction.
• Competitive tendering: The process of obtaining and comparing real-time quotations from multiple counterparties in order to assess pricing, execution quality and contractual terms.

1. Risk management: increasingly technical financial decisions

Anticipating the trajectory of floating-rate debt, mitigating foreign exchange risk or stabilising commodity costs requires specialised expertise. For CFOs, the objective is not simply to purchase a standard financial product, but to design a strategy that is fully aligned with the company’s debt structure, banking covenants and business plan.

The challenge lies in the technical complexity of financial markets, where solutions that may appear similar at first glance can produce vastly different outcomes:

• A cap provides flexibility but represents a budgetary cost
• A swap provides complete visibility over future financing costs, but it reduces flexibility and may involve a financial commitment over the life of the financing.
• Options enhanced with knock-out features can reduce the upfront premium, but they may cease to exist precisely when protection becomes most needed.

To effectively balance cost, protection and flexibility, CFOs must rely on objective analysis. Without it, they risk being exposed to commercial proposals where the underlying risk-reward trade-offs are not fully aligned with their interests.

2. Banks and corporates: understanding conflicts of interest with clarity

Banks play a central role in the corporate ecosystem. However, when a financial institution proposes a derivative instrument, it often combines several roles simultaneously: adviser, lender, liquidity provider and product seller.

The objective of the finance function is not to confront its banking partners, but to rebalance the relationship. Having access to an independent review makes it possible to validate several critical points, including:

• The actual suitability of the proposed structure in light of confidential internal constraints and strategic objectives.
• The embedded margin and hidden costs incorporated into the pricing of the instrument.
• The terms governing early termination, unwind costs and potential restructuring of the transaction.
• Scenario simulations based on the evolution of benchmark rates (Euribor, SARON, SOFR), assessing both the effectiveness of the hedge and the remaining residual risk exposure.

3. Independent financial expertise: what are the benefits for the company?

Engaging an independent financial advisory firm with no product-related conflicts of interest delivers tangible benefits to a company’s financial performance:

• A tailored strategy: Recommendations are built around the company’s actual risk exposure, assessed independently, rather than being driven by the range of products offered by a particular bank.
• Pricing transparency: Using financial modelling tools comparable to those employed on trading floors, cost differentials and embedded pricing components become clearly visible, enabling more informed decision-making.
• Fact-based negotiation: By understanding the real-time market value of a financial instrument, CFOs can negotiate on the basis of objective data rather than relying solely on the strength of an existing banking relationship.

• Secure governance: A documented strategy that has been put out to competitive tender is easier to present and support before a board of directors, an audit committee or investment funds.

   

4. Ownership independence: the key criterion when selecting your adviser (Financial Investment Adviser - CIF, regulated under the supervision of the French Financial Markets Authority - AMF)

Not all forms of independence are created equal. Beyond marketing claims, CFOs should carefully assess the ownership structure of the advisory firm they choose.

When a firm is owned by its managers, as is the case with Kerius Finance, the business model excludes any incentives linked to product distribution, retrocessions or financial intermediation. This structure helps ensure that recommendations remain fully aligned with the client’s interests and objectives. For finance leaders seeking transparency and genuine alignment of interests, it represents a strong differentiating factor.

5. The financial adviser as a trusted third party

A close relationship with a strategic financing partner can make market negotiations particularly sensitive. CFOs may be reluctant to challenge a market proposal for fear of damaging a long-term commercial relationship, or simply due to time constraints.

The involvement of an independent expert helps professionalise the discussion without creating tension. By providing objective, fact-based analysis, the adviser can often help the bank present a stronger case to its credit committee, ultimately supporting more favourable pricing conditions and reinforcing the long-term sustainability of the relationship between all parties.

FAQ - Independent financial advisors

What is an independent financial advisor?

An independent financial advisor supports companies in their strategic decisions without being dependent on a bank or product distributor. Their sole role is to analyze needs, model risks, and formulate recommendations aligned solely with the client's best interests.

Why is independence important for a CFO?

It guarantees the objectivity of financing choices, eliminates commercial conflicts of interest, optimizes the cost of derivative instruments, and strengthens negotiating power with banks while securing corporate governance.

What is the potential conflict of interest between a bank and a company?

A bank can combine the roles of lender, advisor, and seller of financial products. Having a direct financial interest in the transaction, its proposal may be biased. An independent counter-analysis allows for an objective verification of its price and suitability. And in any case, the seller of financial products has an incentive to increase its margins, while the independent advisor must strive to maintain them at an optimal level.

Why hire an independent firm for your hedging strategies?

Hedging decisions (interest rates, exchange rates, commodities) commit a company over the long term and directly impact its margins and financial results. A specialized firm helps to precisely calibrate the required level of hedging, choose the right instruments, and avoid unfavorable contractual clauses.

What does the status of CIF mean in market risk management?

The status of Financial Investment Advisor (CIF) governs the support provided to companies in defining and deploying strategies aimed at hedging interest rate or currency risks, while respecting strict regulatory transparency obligations and the directives of the supervisory authorities (AMF)

Why is managerial ownership of capital an essential criterion ?

A management-owned firm is immune to commercial pressure from external shareholders (banks or distribution networks). This ensures that the consulting work is based on a long-term support approach, free from any short-term sales objective.

How to choose the best financial consulting firm for interest rate management?

Choose a firm that combines strict financial independence, in-depth expertise in derivatives, and independent, real-time pricing tools. The ideal firm should act as an advocate for your interests, capable of clearly explaining the budgetary impact of each option to governing bodies.

Disclaimer:

Kerius Finance is an independent advisory firm, authorised as a Financial Investment Advisor (CIF) – ORIAS N° 13000716 - Member of ANACOFI-CIF, an association approved by the Autorité des Marchés Financiers (France).

As such, Kerius Finance, which is product and bank-neutral and does not distribute or sell any financial products, only provides personalised recommendations after signing an engagement letter specifying the client's objectives, and carrying out in-depth, personalised analyses.

This document is therefore provided solely for informational and educational purposes. It does not constitute, under any circumstances, a recommendation to enter into any transaction involving the products described herein. The Kerius Finance team remains available to provide further clarification or personalised advice where required.

Please note: banks may offer products that appear identical but contain specific contractual provisions, sometimes subtle, which can significantly affect both the economic outcome and the accounting treatment of the transaction. These products may differ from those presented in this document even when they share the same or a very similar name. Banks may also offer "enhanced" or "dynamic" products, which should be approached with caution and require thorough analysis before implementation.

We recommend in any case that companies which do not have access to an expert treasurer and professional valuation systems seek the support of qualified, regulated advisors to carry out the appropriate analyses, select the right strategy without conflicts of interest, and then negotiate it as effectively as possible (legal terms and pricing) with their usual banking partners. It is also often useful to monitor the strategy over time to ensure that any developments affecting the debt do not require adjustments to the hedging strategy.