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+

private equity compensation

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

 
Best Response

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.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 
Big4Bound:

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.

"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right." -Warren Buffett
 
InterestedinVC:

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.

"For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."
 

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.

"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller. "Live fast, die hard. Leave a good looking body." - Navy SEAL
 

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.

 

Doloremque qui commodi ipsum expedita. Qui dolorum ducimus officiis. Est pariatur et soluta eligendi ipsa error minima. Non eaque ut tempora sit. Dignissimos cum aut minus cum.

Repudiandae ullam voluptatibus quia delectus aut quaerat libero. Ut qui assumenda illum quaerat.

Tenetur dolore velit dolorum quis possimus provident. Atque recusandae accusantium consequuntur cumque.

Big 4 Accounting Recruiting Guide Interview Questions and Answers, Networking Guide and more - Complete 50 page guide.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
DrApeman's picture
DrApeman
98.9
7
dosk17's picture
dosk17
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”