Audit vs Investment Banking Part 2: Compensation
Mod note: See part 1 in this series, and for more compensation info, check out WSO's 2013 Compensation Report
Accounting
The accounting compensation is going to be greatly overshadowed by the finance pay. It just isn’t that sexy. Accountants don’t get rich through employment (with the exception of CFO/Director level executives) but it is definitely enough to put them in the upper middle class.
Starting with the exit from PA, the general rule is you should expect about a 15% increase in pay when you leave. Looking at the accountants above who stayed in PA for 3-5 years (60-75k) they should see offers ranging from 70-85K. Those who stuck it out to 6-9 years at manager (85-130k) will likely get offers ranging 100-150k.
For a detailed compensation report for Big 4 audit and tax from 1st year to senior manager download this free Big 4 Accounting Compensation Report.
Those brave souls who stick it out in PA for the long haul can make it to partner, which normally ranges from $300k to several million depending on the size of the firm and years in the partnership. Additionally advisory service partners make multi-millions in many cases.
Finance
The pay can be pretty insane because it is largely dependent on ones bonus. For example a first year investment banking analyst straight out of college can get an offer for $60k with a 100% bonus of $60k. The pay goes up at very high rate as well, and no matter where you are in finance whether on the sell-side or buy-side, you’ll be ahead of your peers who went to almost any other field.
investment banking compensation
Analyst – First Year: $80k – $140k
Associate – First Year: $150K – $300K
Vice Presidents: $400K – $1M
Managing Directors: $500K – $5M+
In private equity it is a little trickier to gauge the compensation because it is largely dependent on the performance of the companies it buys. It also may not be 100% cash bonus but you may get “carry” which may not be realized for some time.
Pre MBA Associate: $120k-$300k
Post MBA Associate: $250-$700M
Vice President: $500k-$3M+
Hedge Fund Compensation
Hedge funds compensation is also difficult to determine because it is tied to the performance of the fund, as well as your performance as a trader. The hierarchy is also flat and there aren’t many layers of seniority, but it goes something like this.
Research Analyst: $150-$300k
Portfolio Manager: $1M-$10M
Fund Manager: $500k-2.2B*
*If you’re David Tepper of Appaloosa Management, you can take home $2.2B.
Outside of the buy and sell side, financiers may wish to go to work for a corporation, but will almost always take a pay cut. Positions in corporate finance, corporate development, and investor relations range from $100k-400k until VP/Director positions.
Next up in the 4 part series will be:
Accounting vs Investment Banking: Part 3 – Work/Life Balance
This is a syndication from Big4Bound.com.
Find the original post at big4bound.com/audit-vs-investment-banking-part-2-compensation
This is why you use accounting for a stepping stone, stay until partner, or GTFO. The no-man's land in the middle (5-13 years) gives you the most work/stress, and you see how much they value those people with the relatively low pay. Not trying to sound bitter, but that's the reality. If you're using Big 4 as a springboard to finance, start planning exit strategies before HR shows you their first "Welcome to the Firm" powerpoint.
Umm... am I the only one here that thinks these numbers are ludicrous? There are at least a couple categories on here that I can confirm are either wholly incorrect or extremely misleading.
The accounting/audit numbers look legit - mediocre until partner. Not sure about the other side . . .
The 250k - 2MM number for post MBA Associates in PE was an insane range and so was the VP number. Having ranges so egregiously wide doesn't really provide any useful info. Agree that numbers were misleading/inaccurate.
Those B4 numbers are on the lowside, goingconcern.com is reporting PwC is hiring first years at 60K and if you're rank 1 you get about 18% raises per year. In NYC after 5 years at PwC you can be pulling in 120-130K.
I don't think any VP is pulling in $2M. Then again, I'm not a VP so what do I know.
Prospect you're actually right, the original top end of manager is low. I changed it to reflect what I have in the comp report on from my site (130k). I don't know if that would be appropriate for a 1st year manager though.
first year managers in NYC start at 85-95k depending on which firm you are with and your ratings. this is accurate as of 2 years ago, numbers may have changed but not by much maybe up to 100k.
pwc does give first year managers a guaranteed 25% bonus after their first manager-level busy season, but that's only a one time thing.
I hope everyone realizes the major accounting ranges given here are a bit low, and the i-banking max ranges are a bit exaggerated for most analysts and associates.
And, for some reason, pre-MBA PE associates range is too low, while the post-MBA associates range is absurdly high.
I will second the Accounting pay ranges, especially in the South. Have an uncle switching from 3 years Big 4 to a regional firm and was given a salary of 75k. Its Dallas.
Those big 4 numbers aren't low, if we're talking about numbers 95% of Big 4 employees experience.
No idea on the finance ranges, but I did eight years in Chicago and have seen as many salary threads on going concern as the next guy, the range above is perfect for setting your expectations, especially in non-NYC markets. And if you end up making more, all the better.
Why was this thread even started? OP must be auditioning for Captain Obvious.
Thanks for those data points. Just to clear up any confusion, the high end I refer to above is for 6-9 years in.
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