When accountants get duped into becoming 'bankers,' or not
Banks are hiring accountants again. It's all happening according to recruiters, who claim that banks are once again scouring the newly qualified ranks at the Big Four for people who might be able to fill their vacancies in M&A, equity research and finance.
But before eager accountants leap into banking roles, it's worth considering that careers in banking may not be as exciting as they seem.
"We have a lot of boomerangs," says Dan Richards, head of recruitment for the UK and Ireland at EY. "A lot of our people leave, and then come back again."
Much has been made of the tortuous working hours faced by junior bankers on M&A teams, conditions which could turn the mind of any newly qualified accountant who thinks banking is a glamorous alternative to audit. Less has been made of the fact that a lot of the accounting jobs in investment banks are actually a bit boring.
A case in point is product control, which involves working closely with traders to analyse their trading activities, report their profits and losses and verify the values of the positions they hold. "Product control gets very repetitive, very quickly," says Paul Stewart, senior financial officer at Canaccord Genuity Wealth Management and a former product controller. "It can be exciting at first - you're learning about new products and dealing with traders, but after a while you find yourself doing the same thing day after day."
Product control: tedium and repetition
For all its repetition, product control can also be a stressful career option. Haughty traders have traditionally had little respect for banks' lowly accounting staff. Jason Hughes, the product controller in JPMorgan's chief investment office at the time of the London Whale scandal in 2012, was left checking 132 trading positions single handedly, many of them complex derivatives positions. When Hughes challenged JPM's traders about their dubious valuations, his queries were dismissed and he was told to "talk to management." More recently, Manas Kapoor, a product controller at Morgan Stanley tragically strangled his wife after being summoned to a disciplinary meeting regarding a multi-million pound accounting error at work.
Product control accounts for most of the finance hiring in banking. Historically, banks sucked up accountants from around the world to become product controllers in locations like London and New York. This has changed as the more mundane product control roles have been off-shored. In Europe, Goldman Sachs continues to base many of its product controllers in London, although in New York many of the firm's product control jobs have moved to Salt Lake City. Banks like JPMorgan have shunted product control roles globally to Mumbai.
Tom Stoddart, director at recruitment firm Eximius finance, says off-shoring has reduced banks' demand for newly qualified accountants to become product controllers in the City, but has also made the roles that are left behind more interesting. "There still needs to be some quality control at the coal face in London. There's more emphasis now on supporting traders and offering advice on positions rather than just calculating yesterday's P&L."
Bigger bids for experienced staff
Stoddart says banks are hiring fewer newly qualified accountants into these mundane P&L-calculating jobs and are instead focused on recruiting experienced accountants for the new advisory positions. In London, there's a shortage of product controllers with two to five years' post qualification experience, he says: "People are getting 10-15% increases in salary to change jobs and the salary for an assistant vice president in product control has gone from £65k to £85k [$106k-$139k]." It's sometimes possible to get a 0-20% bonus on top of this, says Stoddart, but bonuses are now, "0% more often than 20%", he adds.
There are advantage to quitting accounting for a finance role in a bank. Once you've spent a few years in product control, ex-product controller Stewart says you can jump into, "any number of things, like risk and project management." Accordingly, former product controllers are to be found managing OTC derivatives clearing projects and working as 'divisional risk financial officers.' Far fewer actually become traders, much as they may want to.
There are also opportunities for former product controllers to return to the Big Four firms where they gained their accounting qualifications often in consulting or advisory roles. "It's a two-way model," says Richards at EY. "People leave for banking and then come back to us. We have advisory opportunities across the firm."
Richards cautions restless newly qualified accountants from leaping into banking jobs too soon, however. "You're better off waiting for two years post qualification before you make the move. That way some of the more interesting finance roles in banking will be open to you." Newly qualified accountants typically go into the more simplistic product control roles, says Richards - and can end up regretting it.