News

Where to Next?

“I am currently a Big 4 employee specializing in Financial Services Audit.  I want to move to the private sector, but cannot decide if I should focus my search on the Investment Banks or the Alternative Asset Management sector?”

The impact of the sub-prime mortgage meltdown has had tremendous, negative implications on the investment banks.  As such, accountants and CPAs no longer view these firms as the best places to seek employment. The demand [at the banks] for Big 4 candidates is nowhere near where it was just six months ago.  In fact, many of the jobs available at the banks have simply disappeared.  Conversely, we are seeing the complete opposite in the alternative asset management industry.  According to an industry insider, “One sector of financial services that doesn’t seem to be impacted is the alternative investment and asset management field.  Hedge funds…Hedge Funds and asset management firms are still very busy and in need of CPAs…Private Equity is strong as well, and so we’re seeing quite a bit of activity there, too, for accountants.” 

How did so many hedge funds and private equity firms post record years, while their counterparts at Investment Banks took such tremendous hits?  Besides having completely different trading strategies and risk measurement systems, alternative investment firms are acquiring, and retaining, top talent.  For example, 13% of Harvard Business School’s 2006 MBA class took jobs in Private Equity which made the most popular destination for finance professionals (topped investment banking).  This trend has been growing since early 2002, as the number of MBA students taking jobs in private equity has steadily risen.  Tim Butler, a Director at Harvard Business School, says, “private equity tends to be a destination career – whereas many jobs are stepping stones, for students who pursue private equity, this is what they want to do.”

According to an executive recruiter,  “A number of my hedge fund clients are smaller shops, and as such, offer the candidate tremendous exposure to complex financial products and to senior management. Hedge fund jobs are typically highly challenging and rewarding, offering the candidate an opportunity to learn every aspect of the business.”  For experienced auditors currently working in the alternative investments sector, the move to a PE firm or hedge fund is the next logical step.  While many of our candidates move into Controller and CFO roles, others move into the front office working as traders and investment professionals.  With so many different career paths to take, a career in the alternative asset management sector has never been more attractive.

IPOs in this space are also attracting top talent.  For instance, when firms like Blackstone and Fortress Investments went public, its employees were given things like option grants and restricted stock that provide deferred payout which is tied to future share price appreciation.  Many candidates find this alluring, hoping to move to a firm that will file once they are on board.

According to Brett Skolnik, Vice President of Executive Search at Mission Staffing, “From a total compensation perspective, its very difficult for the investment banks to compete with hedge funds and private equity firms.  For a candidate coming out of public accounting, most banks offer somewhere around 20% more, however, the bonus will only be around 20% as well.  On the contrary, the candidates I place with alternative asset management firms command similar increases on the base but their bonuses greatly exceed the banks.  Numbers like 25-50% are the norm.”

The economic roller coaster we’re currently experiencing have affected everyone, particularly the job seeker.  Over the past few years, the investment banking sector was “the” place to go for the best job opportunities, specifically for the experienced auditor looking to build a career in financial services.  However, as companies like Citi, Merrill Lynch, and UBS continue to report record losses, alternative asset management firms like Private Equity Firms and Hedge Funds are now leading the way.  While the roles offered at all financial services companies share many of the same elements, they also differ greatly – primarily with respect to compensation, culture, and growth potential.  For experienced auditors asking themselves “Where to Next?” the answer is clear.  There has never been a better time to make the move into the alternative asset management sector.