Investment banking or the Big Four?
If you're contemplating a graduate career in finance, you've probably toyed with the idea of working for a Big Four accountancy firm as an alternative to an investment bank. The Big Four (EY, Deloitte, KPMG and PWC) certainly have plenty going for them, but are they really an alternative to the ever-so- exciting world of banking? Well...
The Big Four hire LOADS of people. Investment banks don't...
The great thing about the Big Four is the sheer abundance of opportunities they offer. European investment banks like Barclays and Deutsche Bank hired 800 and 766 graduates globally last year; EY, Deloitte, KPMG and PWC hired more people than that in the UK.
In the UK alone, EY brought on 1,500 trainees (including graduate, undergraduate, school leaver and apprentices) in 2015, Deloitte hired 1,800 (graduates, internships, scholarships, industrial placements and apprenticeships), KPMG hired 979 (graduates alone) and PWC hired over 1,500 (graduates).
Compared to investment banks, the Big Four are awash with entry-level jobs.
The Big Four are no easier to get into though...
For all their opportunities, the Big Four are still pretty hard to go into. Goldman Sachs only accepts 3% of the people who apply to work there. PWC's UK business says it receives 40,000 applications for its 1,500 graduate jobs - an acceptance rate of 3.8%.
In other words, the Big Four are not a soft option.
The Big Four have a broader range of opportunities than investment banks do...
Just as investment banks aren't only about M&A and sales and trading, the Big Four are not only about audit. At a Big Four firm, you can also work in areas like risk, law, tax, consulting, M&A advisory, regulatory advice, people advice, forensic technology.... The opportunities are endless.
While this might seem a bit confusing for the novitiate contemplating a job, the Big Four portray breadth as a strength.
"One of the biggest selling points to working at a large professional services firm such as KPMG is the breadth of opportunity we can offer to our graduates and school leavers," says Martin Blackburn, head of HR at KPMG. "- Many of our schemes offer rotations around the firm so that individuals can find the area of the business they most enjoy working in, and in turn excel at."
"We tackle a wide range of business issues and complex commercial challenges. And our ideas boost the performance of all sorts of organisations. This means we offer a huge variety of career paths and opportunities for our people," says a spokesperson for PWC.
And the Big Four probably have better exit opportunities...
When you're leaving an investment bank you definitely have opportunities. However, the tend to be fairly closely-defined and difficult to access. For example, if you're leaving M&A there's always private equity (300 applications per job), or 'business development' in a company which might have its own in-house M&A team (a handful of opportunities here and there). And if you're leaving trading, you could always try a hedge fund - although hedge funds hire far fewer traders from banks than they used to, or a financial technology (Fintech) firm, although few Fintech firms pay good money.
By comparison, if you leave a Big Four audit job in the UK, you'll be equipped with an ACA qualification, which will open doors both to banking jobs (banks like Rothschild hire ACAs as a matter of course) and to jobs in industry, as well as a career in the Big Four if you want to come back one day.
But the Big Four don't pay as well as investment banks...
The downside of working for the Big Four is the pay. In the UK, starting salaries at the Big Four are around £38k ($54k). After five years, you might receive a salary of £60k ($85k).
By comparison, starting salaries for M&A roles in investment banks are something in the region of £50k to £55k. After five years in an investment banking role, you should be on a salary of £95k to £110k. This will, of course, be supplemented by a bonus of anything from 20% to 100%+.
And, the working hours aren't always that great either...
Much like investment banks, Big Four firms have been doing their best to keep their junior people happy.
KPMG's Blackburn says the firm has introduced, "intelligent working", which focuses on "outcomes rather than the time that we all work." Maggie Stilwell, EY’s Managing Partner for Talent, UK & Ireland, says EY is flexible too: "Our people are empowered to decide how, when and where they work to suit their professional and personal ambitions."
Nonetheless, the internet is awash with complaints about long hours in Big Four audit during the "busy season" before clients report their annual results. One audit junior, 'Stu in Tokyo', complained last year about working from 9.30am to 11.30pm every weekday and then 10 hours on a Sunday.
Speaking anonymously, one former senior finance professional in an investment bank who left for a Big Four firm, told us the hours are pretty similar overall but that their distribution is different: "Big 4 consulting is a little more boom bust, so there are quiet periods, but then these are made up for working at very demanding clients."
The Big Four can be very political...
Now, we're not going to pretend that investment banks are meritocracies where politicking is of no importance. But the politics you get in Big Four firms are different. "The Big 4 are partnerships, so you are either in or out of senior management, rather than more blurred lines you get in banking," says the ex-banking MD who's now a senior (non-partner) in a Big Four firm.
Big Four firms are also super-corporate. Like banks, these are big bureaucracies with big "mission statements." PWC, for example, defines itself as having a "purpose," which is to, "Build trust in society and solve important problems." That's very noble, but might seem a bit spurious when you're applying for a job auditing a manufacturing firm.
But the Big Four are growing and they probably won't make you redundant...
In the current climate, this is surely one of the biggest advantages of working for the Big Four.
While investment banks are laying people off all over the place, the Big Four are busy hiring. Deloitte added 3,000 "experienced hires" in the UK in 2015; KPMG added 1,642; PWC added more than 2,500; and EY adds around 2,250 every year.
"Banks are shrinking, but the Big Four are growing," says the ex-banker working for a Big Four firm. "Because of that, there's no culture of fear here. And that's a huge and positive difference."
Photo credit: Choices by Dinukshan Kuruppu is licensed under CC BY 2.0.