Why isn’t accounting to banking more common?
I wonder why there isn’t a recruiting pipeline like IB to PE. Accounting knowledge is useful in most aspects of finance and I’m sure a lot of accountants would like the opportunity to increase their salary.
It's like anything else, majority of people dont want to work long banking hours. Big 4 accounting provides an okay living and wlb (barring busy season). I also think the personalities of accountants are a bit different than bankers.
I've done 4 years in B4 audit and 4 years in BB IB.
Comparing busy season hours and workload (even if you're staffed on a 6/30 YE client) in the Big 4 aren't anywhere close to an average 3 month period in banking - its apples-to-oranges. Busy season is like eating a wedding cake between 12 people and you get 2 - 3 months to do it. Live bilateral negotiations (or some other equivalent) in banking is like having to eat Derrick Henry (alive) and by yourself.
Give me a single competent IB analyst and the two of us would get a FYE audit done in 2 weeks tops. Probably earlier if there are no misstatements or control failures.
I can tell you for a fact, in Big 4, you can work just as much (maybe not on average, but when its bad, it is worse than banking if you can believe that) for a legit fraction of the pay. You also can have terrible travel too and daily working conditions are usually pretty bad. That also doesn't account for clients who aren't trilled to have you around.
As someone who started their career in big4, they really have no idea what the comp is for bankers
Before I transferred to a target everyone at my state school was jerking themselves off to accounting/the Big 4 (mainly audit & compliance, getting your CPA, and getting MBAs right out of or very shortly after undergrad - these were a big deal in their culture) because they genuinely thought this was the pinnacle of prestige, comp, and finance because these were the best companies that would come recruit at the school. Having someone who got an internal audit internship at EY Houston act like he's the shit and literally walk differently because of it is cringe to witness (maybe its more cringe that before I knew better I too wanted that role). They had no idea of the concept of IB or anything else, I'd feel sorry for them if they weren't such assholes. Target kids who got MF PE jobs out of college had smaller egos than the state school Deloitte SOx compliance intern did. It is just a very weird phenomenon to witness firsthand, a sociological wonder some might say. In my experience I've also noticed the interviewers/alumni campus reps for these roles have been more gate-keepy than those for high finance roles, just a weird vibe showing overall lack of self-awareness or awareness of the landscape overall.
Anyways this got derailed, my point was that those are the only companies that recruit at some schools, so many Big4 people simply don't know what else is out there because this is the best option that has ever been described to them or presented to them by their university.
It wouldn't be out of turn to say this is a failure on the part of the university faculty, but ultimately the school is going to foster the deepest relationships with the companies that are hungriest for their specific student demographic at large because placement makes the university looks good. Sure you can have Ares go recruit at 'Bama but if year after year they're not taking anyone the university isn't going to see that as a symbiotic relationship. Ultimately its a game theory thing, its like dating, companies and universities match in the most mutually beneficial way.
Universities don't look out for students, they look out for statistics
I believe the below pic is the phenomenon/term u r looking for? Essentially, each social class of people is stuck in their own bubble/cave. For example, those no-name state school kids thinking they're the shit for heading into HR/compliance at Big 4 probs look the same way at lower-class kids who think becoming a drug cartel manager or pimp is the pinnacle of life ("the streets) the way we look at these middle/lower-middle class suburb kids.
This might be the most accurate comment I’ve ever read on this forum.
Big 4 kids oddly cocky at my UG as well, they had no idea what IB or PE is and that it pays 3-5x more.
My guess is there are way more accounting seats, schools push these jobs, and IB and Big4 accounting recruiting don’t always overlap at schools… for example: don’t see many Ivy League auditors
As someone who went Acc -> MBA -> IB, you are learning a compliance skillset in public accounting. It’s outsourced SEC or IRS compliance work.
"Deloitte is more selective than Harvard!" yet no one from Harvard goes to Deloitte.
Jokes aside congrats on what you've achieved. I too had "Big4 dreams" when I first began to learn about finance as I thought that this was the way, especially since they had such a presence at our school both with regards to recruiting and reputation according to our faculty and alumni.
Do you feel your Big4 job was loosely endorsed or pushed by your school and peers in UG? Was that option of working in accounting a common goal amongst those at your school? Did you learn about IB later during UG/post-grad?
You think only big 4 kids have dunning-kruger effect but ivy league kids who is studying gender studies and are told they are perfect for banking do not have dunning-kruger effect? A non-target who studied finance and accounting is not prepared for banking but a target school kid who studied liberal arts and has never used excel is prepared for banking?
There are Big 4 kids who have transferred to banking but it is just not popular because when people leave the big 4 they want less hours. Big 4 does have similar exit opps as banking, such as corp dev, even PE, as well as corporate controller, cfo path, or something unrelated to finance and accounting. People go to the Big 4 to get their CPA, so they can have job security and a cushion if they were to pursue a more volatile career like banking. Outside of NYC, people do not care where you went to school, but they do care what you majored in. Even high finance careers outside of NYC would rather have a Big 4 CPA than a Princeton English major.
Target kids are even more clueless about banking than accountants. They are told they are going to an intellectual think tank. Recruiters tell them they can learn in 5 weeks what an accountant learned in 4-5 years. That is the biggest bullshit I have ever heard. People who say that do not know anything about finance, accounting, banking, excel. These are not hard, but it takes time to understand the concepts. Those who have an accounting background already know these concepts.
One more thing, Harvard kids do not go to Deloitte because they are not qualified to go to Deloitte. Deloitte hires mostly CPA eligible grads so they can charge clients more. Harvard does not have accounting.
I think a lot of it has to do with a lack of knowledge as you alluded to. When I first gained an interest in finance it was through an intro to Accounting class. I basically begged my friend to help me get an interview at B4 because I didnt know what IB / PE was and I assumed working at a HF was only for brilliant people (i.e., not me). I didnt think Accounting at B4 would have been comparable to say lawyer / doctor / engineer, but I thought it would be the best option out of the accounting / finance career path.
This might sound crazy but no one in my family worked in finance, other than one great Aunt who worked in commercial banking underwriting 1-5M loans, which sounded largely uninteresting. I had one relative who went the accounting route and she seemed very successful, so I didnt know any better.
Luckily, I discovered finance before securing internships and quickly changed gears toward IBD. However, if it werent for one friend whose Dad was a trader who nudged us toward IBD, I would probably be salivating at the idea of having Deloitte Audit on my resume.
The thing most people don't talk about in forums such as WSO that are more focused on high finance, is that most people don't stay in IB, PE, or HF long term. They are super cool, super interesting career paths, but most people that start in banking do not end up making multi millions or end up in something else. There is certainly a much higher comp ceiling in IB, PE, and HF, but that's assuming you can stick it out with the stressful work and avoid getting cut in downturns. Many accountants tend to exaggerate how stressful a busy season is or the hours they work. Look at the nature of the work, in PE for example you are working with large amounts of investor funds that could disappear if things are not handled correctly vs. accountants cramming for year end financials. Accounting and high Finance are not the same in stress levels. However, in accounting you can still make very substantial amounts of money. I know more than a few partners making over or around $1.5m and that isn't just at big4. A good amount of regional firm partners bring in around $700k working 55 hours a week or so. If you were to really break down how many people go into Finance and end up making over 500k vs how many accountants end up making over 500k id be willing to bet there are a lot more people who went down the accounting career path making that money. A lot of people on here tend to think that every person working in Finance is making $2m+ a year. I also used to think that way until I started really networking.
It's definitely silly when people get an offer for Deloitte and act like they got into Goldman IB. Obviously as everyone on WSO knows, banking recruiting is intensely harder than accounting. However, I feel like most of the students on here just look at the first few years salary for accounting and trash it as a career path as a whole. Finance blows accounting out of the water for the first 3-5 years, but after that, accounting salaries scale very fast. Like I mentioned earlier, people in accounting make more than your average Finance student who generally starts in banking and ends up leaving for FP&A or Corporate Dev. Most people don't stay in banking or high finance long term.
Banking is great, PE is great, HF is great, and accounting is great. You will make great money in each career and learn a lot. Each one has it's pros and cons. In accounting you generally make the trade of less stress and less hours for less total comp potential. In banking you sacrifice a lot of your personal life and job stability for a higher possible total comp. It all comes down to what you desire from life. People on here tend to knock accounting but its a great career path and shouldn't be brushed off by students because of prestige or starting comp.
All fun and games until you realize the real top targets at Stanford ivies etc view IB the same way as you viewing state school kids and big 4
I’ll tell you why I was a better analyst than a junior auditor.
“Don’t change the work paper”
That’s what I was told. The context is the audit was done every year, so junior auditor “don’t change how things are being done.”
But my mindset was to make things better. Not saying that all auditors think like this. There is definitely efficiency and consistency that are important for an audit, and it is better not to have loose ends. Not knocking that.
But inherently I loved the creativity of being an analyst - to have original thoughts and be rewarded for them. So, there is some personality and worldview in play. And banking (I never done it - I went buyside out of audit) sounds soulless itself (doing work that nobody is going to care to read or rely on).
But the key fundamental mindset is did the “don’t change the work paper” indoctrination change the person?
That’s the question. And that’s where you go next after audit.
For the students reading this, audit is a good profession and there are many benefits. I relied on Accounting to put food on the table when the economy crashed and I still use it and oversee folks (finance people become unwanted when there’s not enough money sloshing around). Accounting is a strong base.