Accounting vs Finance: Part 2 – Compensation
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. If you’re interviewing soon with the big 4 or a public accounting firm, look at the Big 4 interview guide to make sure you are prepared on interview day.
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 (85-110k) will likely get offers ranging 100-140k.
For a detailed compensation report for Big 4 audit and tax from 1st year to senior manager download this free ebook.
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.
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 – $2M
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 – First Year: $120k-$200k
Post MBA Associate – First Year: $250-$1M
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-$500k
Portfolio Manager: $500k-$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.
Continue below for the next part in the series – the lifestyle
Accounting vs Finance: Part 2 – Compensation (You are here)