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 (85-110k) will likely get offers ranging 100-140k.
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)