Accounting vs Investment Banking (2 Viewers)

[turtleface]

Re: Accounting Cadetships

For some reason theres still sceptism about Accountants working in Investment Banking departments (no not reception mr_shittles you idiot, the actual Corp Fin/M&A Advisory areas, and not the Finance (accounting) department of Macquarie either. This lot don't do any statutory/auditing related accounting)

Moore and the Investment Banking Group recognise the importance of continuing education for their employees; currently some 50 staff are studying for the Chartered Accountants designation, with 10 completing the course in 2005

source: Charter June06 Page 61

Thats 50 actual Analysts/Bankers in the Investment Banking division, out of no more than a few hundred bankers total.

This doesn't include those who already have their CA, just the new lot who are still studying.

Go figure

 

[ND]

Re: Accounting Cadetships

It is only a little bit more considering you are being paid for extra hours, if you compare them with a common base, for example hourly rate. You work more hours so that would be the only way you could really compare. If you have a better way, I'll use it.

You said that they work their asses off for a little bit extra. Your statement indicated that you were referring to total compensation.

If your intention was to say that their hourly rate isn't much better, then i agree. But that's for the first few years, and at VP level (which should be reached before 30) you can be earning $500K p.a. and working significantly less than a grad.

I'm not really clueless considering I have no experiance in the industry, I asked a question and there is no shame in that. There is no need to be rude about it. You didnt really answer it anyway, I'd like to know where you could work, not just a superficial "it has the best exit opportunities". Also when you say PE, that means?

PE = private equity.

Other exit opps include hedge funds and corporate (i.e. anywhere in business, but there is the problem of the pay cut).

 

[turtleface]

Re: Accounting Cadetships

You said that they work their asses off for a little bit extra. Your statement indicated that you were referring to total compensation.

If your intention was to say that their hourly rate isn't much better, then i agree. But that's for the first few years, and at VP level (which should be reached before 30) you can be earning $500K p.a. and working significantly less than a grad.

Yes but its unlikely an accountant is forever at Accountant level 1. There have been multiple instances of people reaching partner level before 30 (including some at 28 and even 25). They would be up to 300K p.a. base and up to 300K bonus (staff partner) according to the 05 BRW survey

Not sure what that proves though.

I've realised that the labour market is just like any other market. It is unlikely arbitrage opportunities exist for long.

True Investment Banking staff earn more than an average accountant on average (I'd guess about 2.5 times more at graduate level). However, this is offset by the fact that they do more than 2 times more hours than accounting grads (40-50 hours vs 80-120 hours). Additionally, as the excel work at analyst level for Investment Banking is even more mind numbing than the documentation work for auditors, I'd say its a fair trade off.

I'm beginning to see that its pointless to compare accounting with investment banking cause its like comparing a doctor working in neurology vs. cardiology

However, I think everyone in this thread who says things like this:

wow

this thread is full of insecure accountants in big 4 firms who think they're king shit.

when will you finally wake up and admit the fact that your precious stocktake counting widget skills are actually worthless.

no your accounting major will not get you into an investment banking role. dipshits.

is pathetically lost. I feel sorry for you. Please seek some careers guidance and do a bit of research lest you totally screw up your future based on your misinformation.

 

[turtleface]

Re: Accounting Cadetships

of course it looks like accounting work . . . thats because it is accounting work . . . when ex-auditors get hired into IB that's what they do . . . they just get paid more to do it.

to prove beyond reasonable doubt:

now please can you stop denying the obvious?

how many traders are ex-auditors? NONE.

and you'd know because...? oh you must audit the ASIC licence registers...sif. Even then I doubt they'd have details on past careers.

Actually I wonder if tacky is around, he might know since he's a trader

processing clerks probably know more about derivatives than most auditors . . . this is not a joke btw, i'm dead srs.

uh...AASB 139. If you've studied that at all (if you have studied accounting at all actually), you'd know you've just implied the stupidest thing ever.

 

[turtleface]

Re: Accounting Cadetships

how many traders are ex-auditors? NONE.

got it:
http://www.seek.com.au/users/apply/index.ascx?Sequence=69&PageNumber=1&JobID=7740643

 

[csmg]

Re: Accounting Cadetships

...yes...

keep telling yourself you're all on track to earning 300k at an IB firm...

this is great... junior grad auditors who think they're on track to a huge IB paypacket... HHAHAHAHAHAH

 

[velox]

Re: Accounting Cadetships

Goldman Sachs is small in aus, nearly 2nd tier, so probably not the best example. Grads in IB earn around $90k with bonuses around 50-150% of base. Yes they do work more ours, M&A probably being the heaviest. IBs like experience from BIG4, so i'm not sure why people are bagging Big4.

The way to look at IB salaries is to look at the bonus only Btw ND, Hedge Funds in the US pay more than PE. Just because PE is on the rise this year, doesn't mean the salaries will overtake Hedge Funds.

Lets say 100 hours per week for IB @ $135 000/annum (assuming bonus is around 50%). This equates to ~$26/hour. At $180k/annum (100% bonus), the hourly rate is ~$34.

Lets say 45 hours for Big4 @ $50 000/annum. This equates to $21/hour.

 

[phrred]

Re: Accounting Cadetships

Why does everyone want to work in an IB. You literally work 7am till at least 10pm everyday. great life

 

[lizbon]

Re: Accounting Cadetships

You said that they work their asses off for a little bit extra. Your statement indicated that you were referring to total compensation.

If your intention was to say that their hourly rate isn't much better, then i agree. But that's for the first few years, and at VP level (which should be reached before 30) you can be earning $500K p.a. and working significantly less than a grad.



PE = private equity.

Other exit opps include hedge funds and corporate (i.e. anywhere in business, but there is the problem of the pay cut).

ND i know bonuses are a big part of IB's pay, but not everyone earns the max amount of potential bonus because it's based on your work efficiency not hours. On the point about working up to VP, again not everyone will be a VP (just like aspiring to be a partner in acct, who earn 550K base + 150% bonus), and alot of people leave IB's beacuse they can't take the lifestyle, thats why everyone in IB's are usually so damn young.

As i said before, working in a big 4 firm or an ib is a matter of personal pref, you can't go wrong with either, both give you a solid base for further career opportunities. It's just depends on whether you want to commit to working for long hours or not.

For all you people who seem to be dead set on thinking investment banking is a step above and the best grad path, a good read is "Monkey Business" by John Rolfe and Peter Troob, Harvard and Wharton grads who worked for Donaldson, Lufkin & Jenrette (acquired by CS a few years ago). It's not all it's cracked up to be, granted as ND said the pay is good.

 

[Conspirocy]

Re: Accounting Cadetships

You said that they work their asses off for a little bit extra. Your statement indicated that you were referring to total compensation.

If your intention was to say that their hourly rate isn't much better, then i agree. But that's for the first few years, and at VP level (which should be reached before 30) you can be earning $500K p.a. and working significantly less than a grad.

You're sort of right, and sort of wrong at the same time. Like yeah I'm referring to total compensation, but also what you get out for what you put in.

For the level of work you do in IB you would expect to get paid what you would. Now, if i could work that long in accounting and get paid that much, I would. Don't really think that is an option, so I cant compare with you on that level. The amount of hours per week is set by your employer not you. I cant imagine someone rocking up and saying, pay me the normal IB rate but I only want a 40 hour week.

It is a different culture, you are expected to work longer hours and you get paid for it. So then I cant see how you can complain or say your job is better or harder or more prestigious, you are getting paid to do your job. Saying I work longer hours so that makes it tougher is not a point at all (not that you have said that), you get paid to work longer hours.

In accounting you would get paid to do your job as well, it just so happens that you dont have to work such long hours.

 

[ND]

Re: Accounting Cadetships

Goldman Sachs is small in aus, nearly 2nd tier, so probably not the best example.

You sure about that? The thomson league tables website is currently down so i can't check but i recall that they were right up the top most of the time. Also, i'm pretty sure that people wise they are also quite big here.

And I don't think that you can say that Goldman anywhere is 2nd tier (and i'm not being biased )

Btw ND, Hedge Funds in the US pay more than PE. Just because PE is on the rise this year, doesn't mean the salaries will overtake Hedge Funds.

Yeh I wasn't saying that HFs pay less than IB or PE, i was saying that corporate does. (the reason i emphasised PE is because PE is a better fit with IB experience than HF is)

 

[ND]

Re: Accounting Cadetships

ND i know bonuses are a big part of IB's pay, but not everyone earns the max amount of potential bonus because it's based on your work efficiency not hours. On the point about working up to VP, again not everyone will be a VP (just like aspiring to be a partner in acct, who earn 550K base + 150% bonus), and alot of people leave IB's beacuse they can't take the lifestyle, thats why everyone in IB's are usually so damn young.

As i said before, working in a big 4 firm or an ib is a matter of personal pref, you can't go wrong with either, both give you a solid base for further career opportunities. It's just depends on whether you want to commit to working for long hours or not.

For all you people who seem to be dead set on thinking investment banking is a step above and the best grad path, a good read is "Monkey Business" by John Rolfe and Peter Troob, Harvard and Wharton grads who worked for Donaldson, Lufkin & Jenrette (acquired by CS a few years ago). It's not all it's cracked up to be, granted as ND said the pay is good.

I think that usually the entire grad class gets the same bonus, and although it does fluxuate there is always a minimum (and a maximum).

Yeh i've read Monkey Business; it's a bit exaggerated (from what i've heard) but it was a good read.

 

[seremify007]

Re: Accounting Cadetships

Why this is all stemming from a cadetship thread is beyond me... my only thought is it's in response to the person asking if a cadetship will limit their future career prospects, and everyone jumping to the conclusion that IB is the way to go.

Pretty much.

Somehow I have my doubts that the average IBer will be looking at $110k+ as a base salary for grad. Even when I was applying for UNSW, in the Finance lecture (as in, the one where they give prospective students information on the major and why they should do it), the "pinnacle" job offer was Mac bank's $90k with normal grads getting in the $40-60k range; I really doubt that the "normal" salary which an average IB grad can expect has risen that much in the past two years. Yes this is an invitation to prove me wrong.

and you'd know because...? oh you must audit the ASIC licence registers...sif. Even then I doubt they'd have details on past careers.

I'm too lazy to login but http://bww.dnb.com.au/default.asp would probably help answer that.

On a sidenote, there are a lot of people who leave audit to join IBs whether it be in accounts or as a trader. Even if the actual job is very different, the knowledge and understanding of both how businesses work and the industry as a whole, are probably very valuable insights useful to IBs.

...yes...

keep telling yourself you're all on track to earning 300k at an IB firm...

this is great... junior grad auditors who think they're on track to a huge IB paypacket... HHAHAHAHAHAH

Hmm so where do you work then?

I wonder, of all the people in these BoS topics who bag out Big4 or IB- how many of them actually work in these companies/firms? Or have even worked?

Industry Interests:
Admin/Secretarial

Taken direct from your profile... hmm?

Seriously, before you start bagging out any of these professions or the ease/difficulty of obtaining a spot, why not try getting yourself a job there first? Why not experience first-hand what it's like? Apologies if I'm mistaken but it doesn't seem like you've worked in a professional job before- either that, or it just doesn't show.

Goldman Sachs is small in aus, nearly 2nd tier, so probably not the best example. Grads in IB earn around $90k with bonuses around 50-150% of base. Yes they do work more ours, M&A probably being the heaviest. IBs like experience from BIG4, so i'm not sure why people are bagging Big4.

The way to look at IB salaries is to look at the bonus only Btw ND, Hedge Funds in the US pay more than PE. Just because PE is on the rise this year, doesn't mean the salaries will overtake Hedge Funds.

Lets say 100 hours per week for IB @ $135 000/annum (assuming bonus is around 50%). This equates to ~$26/hour. At $180k/annum (100% bonus), the hourly rate is ~$34.

Lets say 45 hours for Big4 @ $50 000/annum. This equates to $21/hour.

Interesting thought- but assuming all your salary and bonus figures are accurate and applicable to grads, didn't we all study economics with the little supply/demand graphs for labour and marginal product whereby each additional hour needs to be paid just a little bit more to make up for the extra work? That's a pretty big jump working 45hrs/wk to 100hrs/wk. On one hand you're doing 9 hours a day which in busy season is quite expected, but on the other, at 100hrs a week, not counting weekends, that's 20hrs a day. Maybe I'm missing something here but that seems just a tad unreasonable don't you think? If your hourly expectation was correct, then even at that pay rate, I wouldn't want to work 100hrs a week (well not as a grad anyway)!

On a sidenote, I read in an interview from the UNSW Comsoc Careers Guide that in IB, he works 55hr weeks (see p32). Based on his first question respone to what a typical day at work;

I usually get in at about 7:30am and spend about half an hour checking overnight emails and catching up on the morning news. Following that, my day depends on what my team is working on and any tasks that I am able to assist with. I also have regular responsibilities which include daily/weekly/monthly reports and several databases which I have responsibility in updating. I may also have a longer-term project which I'm working on. My day finishes at about 6:30pm.

Am I the only one who thinks that sounds a bit like over glorified data entry?

EDIT: I just realised this is my 3000th post on BoS... man I must have no life if I keep coming back!

 

[Conspirocy]

Re: Accounting Cadetships

...yes...

keep telling yourself you're all on track to earning 300k at an IB firm...

this is great... junior grad auditors who think they're on track to a huge IB paypacket... HHAHAHAHAHAH

why do you guys always say auditors? I'm not going into audit.

As for the argument about having the opportunity to go into other areas from an IB. That's true, I'm still not getting it to be honest. It doesn't as easy as say starting your own accounting practice, or moving to another non big 4 accounting firm to become a partner.

Also, the specialisations in the types of accounting work are pretty much being ignored.

 

[ND]

Re: Accounting Cadetships

Why this is all stemming from a cadetship thread is beyond me... my only thought is it's in response to the person asking if a cadetship will limit their future career prospects, and everyone jumping to the conclusion that IB is the way to go.

Not if it started from my post, but my post merely corrected turtleface's statement that an accounting degree could get you *any* position in finance.

Somehow I have my doubts that the average IBer will be looking at $110k+ as a base salary for grad. Even when I was applying for UNSW, in the Finance lecture (as in, the one where they give prospective students information on the major and why they should do it), the "pinnacle" job offer was Mac bank's $90k with normal grads getting in the $40-60k range; I really doubt that the "normal" salary which an average IB grad can expect has risen that much in the past two years. Yes this is an invitation to prove me wrong.

The 90K at Mac is base - you have to add a bonus (of about 50%) onto that.

 

[seremify007]

Re: Accounting Cadetships

The 90K at Mac is base - you have to add a bonus (of about 50%) onto that.

But how can you be sure that everyone will get a share of the bonus, or if there even will be a bonus every year?

I know with some firms/companies, there isn't always a bonus, and the amount of the bonus varies between years and even between levels of staff.

 

[ND]

Re: Accounting Cadetships

But how can you be sure that everyone will get a share of the bonus, or if there even will be a bonus every year?

I know with some firms/companies, there isn't always a bonus, and the amount of the bonus varies between years and even between levels of staff.

In IB, bonuses are pretty much guaranteed (except in deep recessions); in the US and UK first year bonuses range from 50-120% and here it's a little lower.

edit: In fact, i've heard of bankers borrowing money throughout the year to be repaid at the end of year by the bonus. (to smooth out their income stream)

 

[velox]

Re: Accounting Cadetships

ND, lots of people regard it as 2nd tier as its quite small here. Not to downplay your good work in securing the internship

IBs are like this.

Deal goes through : 'yay we get a good bonus'
Deal falls through: 'ahh who cares, investors money anyway'

You're correct about the recession thing, but IB is risky depending on the banks diversification strategy. Look at how hedge funds collapse (but their industry is unregulated)

 

[lizbon]

Re: Accounting Cadetships

I don't think people regard GSJBW as 2nd tier, in fact i think most people still think it's the most prestigious IB to get into, although UBS is by far the biggest IB in Australia in terms of M&A's (30% of total), if i wanted to go into IB i would definitely want to work for UBS.

Are IB's really that risky? Seems like most of them are trying to copy Macq and go heavy on infrastructure investments. i thought hedge funds collapse because of their high leverage factor, sort of a domino effect when their investments go bad.

 

[mr_shittles]

Re: Accounting Cadetships

ND, lots of people regard it as 2nd tier as its quite small here. Not to downplay your good work in securing the internship

So how do you define 2nd tier investment bank . . . . is anything other than the market leader 2nd tier then? Since in Aust, the order is Maccas, UBS then Goldies, Deutsche, JP, Citi, CS for M&A completed deals in 2005 . . .

Btw, this post is missing the topic of the cadetships . . . if someone is really interested in an accounting vs. IB thread, please create another one!