What's so bad about corporate finance?
Hey guys,
Lately I have been hearing mad trash talk about corporate finance. A few people even said "it was the sh*t of the shi*t of finance". I mean what is exactly bad about it? The pay is good (with potential to climb the ladder being even better), the hours are pretty ideal, and the workload is pretty straightforward, and better yet there are plenty of fnancial analyst positions available for many companies.
What is exactly wrong with corporate finance since eveyone seems to hate it so much?
A guy I know chose to work in GE in the energy sector rather than take a few banking offers. Lifestyle plays a big factor, but you have to realize wall street is dominated by banks/PE/HF, and overall exit opps = win win
I think the crux of the issue is exactly what you said - the workload is pretty straightforward and there are plenty of financial analyst jobs available.
People don't hate it, but the people on this site are hardcore type As who are shooting for the top. Not that it is true in all cases, but most see entry level corp fin as mundane and something that any Joe Blow off the street can get into.
I'm not disregarding corp fin as a potential move for me down the line, but I didn't want to start my career in it because from talking to several people in corp fin jobs it seems like many companies have a "ceiling" for guys who start out in entry-level finance positions.
At some point guys with the same # of years of experience as you but at a consulting firm or investment bank start to come into the company above you in the corporate hierarchy, and the only way to break through that ceiling is to get some experience somewhere else, or go to B school, or whatever.
Obviously everyone will have anecdotes that support or deny what I just said but that is part of why I did not really consider corp fin as a first job.
Nothing is bad at all - it is all relative. Corp fin could be sweet, especially at the more senior levels, I think people are just worried about getting stuck with all the bureaucracy.
I agree with pretty much everything SEC said. I did a co-op in Corporate Finance at a F100 firm and the work was pretty much just accounting. There was a little bit of FP&A here and there but mainly the job entailed calculating variances over the prior month's spend and doing things like P&L cost control. There wasn't great upward mobility at that particular company, though it can obviously be much better depending where you go. They had a clearly defined hierarchy just like banking does: 2 years Financial Analyst, 1 year Senior Financial analyst, then 3 years as a Manager, etc.
Just to put things in perspective for you, I was reasonably displeased with my first year comp in my analyst stint, just given where I was relative to peers in years prior, but this was more or less due to the macro context. To reach my all-in pay from my first year as an IB analyst on the Corp Fin side it would have taken me probably 4-5 years. The work was less interesting than IB (primarily booking journal entries and writing explanations for observed variances in spend) and when you couple that with the fact that the experience would only qualify you to go to a different firm and do the same thing, the value proposition is fairly low.
The only real hope you have of breaking the compensation threshold is to do an MBA, whereas if you start in IB and then decide you want to move over to the Corp Fin side, you would jump all the people who are the same age as you because you have so much more experience than they do. This is one of the main reasons why most people would rather start in banking and then move to Corp Fin later if they want a lifestyle improvement. It's much easier to move downhill than uphill.
I thought I'd put in my two cents as "Corp Fin" is quite broad and encompasses a large amount of companies/cultures. This is additionally tricky because rufio would have undoubtedly been very successful in corp fin, so his estimates are FAR from the mean.
Manager in 3 years is very atypical - will be more like 5 years for quite successful employees and 3 for the high potentials (I'll ballpark it at top ~10%).
4-5 years is also a stretch in my mind for most people... once again, top employees only. 4-5 years and hitting that comp puts you at a ~26-27 year old financial head of a business unit. Cost of living is also very important here, as that 140k or whatever is being earned in a non-NYC area (140k goes a long way in Dallas/Charlotte/Atlanta).
This is an interesting point...my experience has been certainly atypical, and I may be additionally biased since I came in with a masters, which may be a piece of the reason of why I don't see this ceiling. Another side-point here is that a lot of FLDP's go nowhere fast, though an FLDP is probably still the best entry-point.
I could rant about this for a bit but I definitely agree with the OP that a lot of shit gets thrown around here regarding corp fin. A lot of it is definitely the money over everything college crowd that dominates this site. A lot of it also, in my mind, is that when someone gets disgruntled they make a post about it, but a corp fin analyst who is successful really doesn't need to discuss it.
Entry level corp fin is very accounting/FP&A based, but once you get into the middle management levels you do have significant exposure to strategy, corp dev, M&A discussions, the other areas that people consider to be more 'sexy'.
My last point is that if you are capable of getting a good IB job, you'll likely be quite successful at CF and get to the levels where you can enjoy it after a few years. Where CF really sucks is if you are mediocre at your job and get stuck there. That's where you see people complaining that CF is boring and stagnant.
TLDR: Corp Fin can be solid if you’re successful, cost of living/quality of life argument, adverse selection is still a thing
This is actually a pretty good point... The timeline is a bit more aggressive than what most could likely expect. Joining as an FLDP if they have such a program would put you as a Senior Analyst at the end of the 2 year program, but you would still need probably 2-3 years as a Senior to hit Manager. That being said, I know a few guys that were at this place that did 2 years and were able to lateral into Manager positions at other F500 firms that had less of a hierarchy. Typically you'll probably need 4-5 years to hit Manager, so I agree with Aspirant on that, but it also underscores my point below that if you are taking 5 or so years to hit Manager and then at that level you are hitting 1st Year IB Analyst pay (more or less), that's a long time horizon.
This is a good point as well, but this is where the career trajectory starts to take effect. Here, being 28-29 as a 1st Year Finance Manager in Corp Fin making this money in an area like the ones above is great, but being a VP in Private Equity in that same city with the same amount of years of experience put in is putting you more in the $300-$400 range and your lifestyle is probably very similar to that of a Finance Manager, but you would also easily have the flexibility to simply go the Corp Fin route at that level as well. The IB path really just allows for additional optionality. Lifestyle in Corp Fin at the beginning is hard to beat, but you aren't going to be hitting the PE Vice President type money until you make Director on the Corp Fin side, which is a long, long haul...
Aspirant,
Could you explain in detail what you mean by a lot of "FLDP's go nowhere fast?" I have a FLDP internship this summer and I'd like to hear your opinion.
seems a poor proposition to slog through journal entries in the hope that you might get some exposure to more interesting problems at a later date. this goes back to the first point - typical corp finance work has very little relevance to these sexier areas of work, so you're unlikely to be hired into any internal m&a/strategy groups after a stint in accounting.
note: i don't want anyone to reject it out of hand after reading this forum, but you need to be clear about what you're signing up for. not all programs are the same.
^I agree with this 100% and I wish I had a silver banana to give. One thing you have to understand is that this site has a huge selection bias (it's called WALLSTREEToasis not financeoasis for a reason) and by this very nature, most people are going to shit on careers that aren't IB/Consulting/PE/HFs. People are naturally biased toward those careers, which is why they're on this site in the first place. That's why you're more likely to see someone saying how much they hate Corp Fin and want to go to IB and less the other way around (not to mention bankers probably have less time to write their hearts out on WSO).
The second thing is that a lot of the "info" on this site is regurgitated by college kids who mostly look at how much $$ they'll make or what's "prestigious" rather than what suits them. I can't criticize because I used to be the same way (only caring about money/prestige), but I think once people start working, they start realizing that that's not all to life and also that no entry-level job is that great. I have plenty of friends in investment banking at top banks (think Morgan Stanley, Blackstone, GS, Bank of America, etc.) and it's not as though they like their jobs any more than a corp fin analyst. Hell, some of them even have the nerve to tell me that they barely make enough money to survive, which is laughable.
Having said that, Corp Fin is definitely solid if, as the poster above me mentioned, you are good in this field. I'd still echo the sentiment, however, that you're better off going elsewhere (besides IB/Consulting, I'd also throw getting Big 4 experience in there as a good way to jump start your career) before making the transition because the pace is much slower and the amount of learning you do is much more limited than in IB/Consulting/Big 4, etc. Those programs are all catered toward people putting in a few years and then leaving and thus are designed to be fast-paced, teach you a lot, and are open to you moving onto greener pastures. Think of it this way, Corp Fin IS the exit opp and therefore, they are more inclined to believe you will stay for longer. This isn't the case with the other options, and that's why I'd agree that you're better of elsewhere first.
All in all, if YOU enjoy corp fin, then don't let people on this site dissuade you. Everyone has their own personal goals/sources of happiness and there's absolutely nothing wrong with choosing this over PE/HFs and you won't be poor pursuing it either.
This. If we were on a corporate finance forum, I’m sure the tables would be turned and you’d see tons of negative posts about investment banking about how awful the hours and lifestyle are, how the pay really isn’t impressive when you look at it on an hourly basis, and how investment bankers get raped by the cost of living in NYC.
corporate finance is a pretty good gig with better than average pay and great career advancement opportunities if you take a role with the right company. My salary increased 119% in 6 years and I never had to work more than 45 hours a week. The CEO of the company I work for started in corporate finance, and now he clears $12M a year. Not bad, right? All of the VP’s/Directors at my company started in either corporate finance or public accounting. None of them came from IB/PE. The problem with this forum is that the vast majority of the comments about corporate finance are coming from either college students, or people who work in IB/PE/HF who have very little knowledge about the industry. Very few of the comments are coming from experienced individuals who actually work in corporate finance.
Sure, it doesn’t carry the prestige or entry level pay of wall street, but there aren’t many jobs out there where you can clear six figures before you’re 30th birthday and all that’s required is a bachelor’s degree and being at the office 40ish hours a week. Yes, there are many people who don’t make it far in corporate finance, but the same way a college with open enrollment will have a higher dropout rate, there are many people in CF who don’t make it anywhere because the barriers to entry are lower. The ones who have some intelligence, ambition, and people skills will advance through the ranks and will make great money while having a good work/life balance. Cream always rises to the top.
This is a very clear summary, thank you. I agree with your sentiments totally and am pretty excited for my own f500 internship this summer.
The reason people shit on corpfin is it doesn't give you the immediate jump start that IB does (it's true, IB can give you a leg up). That said, there is absolutely nothing wrong with corpfin. Better and more consistent lifestyle, you learn steadily, the pay is solid, etc.
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From my experiences, the incremental benefit/utility of making 80,000 compared to 50,000 is a lot more significant than the incremental benefit/utility of making 110,000 compared to 80,000. Now this where the non wall street oasis friendly jobs come in. I don't know what entry-level corporate finance positions pay, but there are certainly good jobs in consulting, corporate banking, etc. that will pay somewhere in the 70,000-90,000 range with a better work/life balance yet still having some sense of high finance to them. Just something that I've thought a lot about when comparing first year IB analyst jobs and other first year analyst jobs.
Are there even any exit opps in corporate finance? Like is it possible to do a few years at F500 and then transition to PE/HF? What about MBA exit opps as well? Would you have to work for the same company of the company lets you leave for the MBA ?
I know people from Corp that have gone to hbs, booth, tuck, darden, wharton... to name a few. Continually surprised by this mentality that if you don't do ibd/pe/consulting that you can't get into a top b-school. Though, the aforementioned people come from more analysis/fp&a/strategy type roles and not accounting/journal entry type roles.
Why would the company have to "let" you leave? If you want to go for an MBA you can, just make sure you finish your contract with the company first. That MBA will be your path to moving into a different industry (PE/HF wouldn't be easy, but possible). I don't know about transitioning to a different industry without an MBA
What about other areas of corp fin; ie, treasury? How does progression, comp, and exit opps differ from typical FP&A type corp fin?
^This. People really need to understand the fact that there are many paths to success and while some roads make things easier (i.e. going to Harvard vs Compass Point State University will make getting a top job and thus getting into a top MBA easier), there are other routes one can take to get into top companies.
This is anecdotal, I know, but an alumnus from my school (a complete non-target) went from GE FMP => H/S/W => MBB => in-house strategy at an awesome F100 company. You can be successful in life and have an interesting job without just doing IB/Consulting/PE/HFs if you're talented and wiling to put in the work.
Don't ever do FP&A its career suicide. Worked on a short term contracting gig for a FTSE100 in FP&A, great hours but you are surrounded by people without drive, whom do the same thing month in month out (imagine how soul destroying that is after 5+ years). Alot of the team were ex-Bank of Scotland, and therefore untouchable in the City of London (guess they have to pay for there sins in CorpFin).
Mind you, you could always get a CorpFin role and use the time to study up - get a CFA or you could do a self taught Masters in Finance. Try to get into a position which is externally facing especially working with the corporates investor relations team - maybe meet a few equity researchers and network like a mutha fucha...
Soul destroying, you say. Clearly, you've never worked in banking or you're still in the banking honeymoon phase.
...just no. There's a great post by a couple WSO users with careers in corp fin (http://www.wallstreetoasis.com/forums/corporate-finance-qa-with-account…) that outlines what each position is, what the pay scale is like, and what chances for advancement are. FP&A, as well as many other corp fin positions are far from career suicide.
As someone who's done boutique IB/AM/VC, I'm loving Corp Fin. It all depends on the situation like anything else. Starting out in Corp Fin would be a slog for sure, but transitioning in (especially into a growth company) from IB or consulting can put your career on a fast track while reintroducing you to life outside of work. That said, I wouldn't want to do it in a mature company where everything is already set in stone.
Few other thoughts:
The turnover in Corp Fin is low. For a highly ambitious person, this is a bad thing, as people above you frequently stay in their same positions for many years, so there are fewer openings. If you are extremely conservative, I guess that could be a good thing, as people don't really get laid off all that often.
...related to the point above is that you may have to move around more to achieve your career goals. I could definitely see someone doing the IB->PE track to stay in NYC throughout their career and be very successful, but a lot of F50 firms are quite spread out, so moving around may become more necessary. For what it's worth, my company basically requires you to work internationally for a few years at some point before getting to VP.
Corp fin and IB/PE is like comparing apples to oranges. Corp fin, to be blunt, is zero value add work at the end of the day. You spend your time "analyzing the business" which basically means a reporting role for the heads of the business. You have no control over the outcome of the business, as it is purely a reporting role looking backwards. Sure you may be forecasting a qtr out, but you most often don't really control nor influence the variables driving that forecast; again your sole role is one of reporting.
IB/PE is not about reporting, it's about deal making. Simple as that. If you like doing deals, raising capital, restructuring companies, m&a and thinking about finance from an investment perspective, which is purely forward looking,then IB/PE is for you.
It's really just that simple. In one line, corp fin is backwards looking (how much value can you add looking backwards especially when you're not allowed to turn face front in a role?) versus ib/pe which is purely forward looking (sure you look backwards but you do so only to determine the future of a business)
Think you meant to say corporate accounting. I’m an SFA at a F500 in an FP&A capacity. We are literally the glue and center of the business. Sure we have to understand what happened in the past in order to ensure the targets we set were accurate, but 90% of our time is spent looking forward whether it be an M&A opportunity, strategic initiative, divestiture, you name it. I think it all depends on the company and the people you work with. My team is an incredibly bright, ambitious group of people from big 4, consulting, Ivy League and F50 backgrounds. It all boils down to personality and drive. We are also very well compensated too which is a nice bonus:)
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