"Deferred Compensation Structure"
The big four accounting firms operate under a deferred compensation structure where the large chunk of your compensation is not paid in cash as a year end bonus, but rather the compensation comes in the form of a balloon raise upon making partner, and an outstanding pension program.
Once you make partner, you can expect more than a 100% raise. Typical partners in my office, and practice, start at a salary of $350, which is a 133% raise from a typical senior manager's salary of $150. Further, the partnership provides all partners a defined benefit pension plan, where the benefits paid are a certain percentage of your three highest year's salary. For example, I have heard of retired partners earning 40% of the average of their three highest year's compensation, which was $2,000. They get to take home $800 a year for the rest of their lives. What is the value of a guaranteed $800/yr annuity beginning at age 55? What kind of banker or trader get's that kind of deal?
The true compensation and profits in accounting accrue to the partners of the firms over time. If you are not planning on staying at the firm for the long run, all of the earnings you are working for are accruing to the firm, and you wont realize any of them. Decide sooner rather than later if you want to stick it out; otherwise you are being squeezed for your profits in the partner's pyramid business model.
Friday, June 7, 2013
Day in the Life of a Big 4 Auditor
So I've decided to document a 'day in the life' of a senior associate in at a Big 4 firm during a typical day in busy season. Days are typically filled with a ridiculous amount of noise from conference calls on speaker phone, speed walking through the office to collect documents and speak with client executives, and, very often, trips back and forth from the client to the firm's headquarters to speak with partners and senior managers. The audit room is often as hectic as a trading floor, except its full of accountants.
7:30am Wake up
8:30am Leave For Work
8:50am Arrive at the client's conference room
8:50-9am Get Set Up
-Boot up computer, get a cup of coffee from the kitchen. Maybe eat the bagel you picked up on your way to work.
9-12pm Audit
-Open up email and check for the status update from the India staff who have been working on your work-papers all night, per your instructions last night.
-Get on call with India and briefly walk through the work performed before it gets too late in Mumbai and they go home.
-Check in with the staff on the team and ensure they are actually doing the work you need them to do, assess staff's mental stability
-Coordinate the conference call with the audit manager, the firm's valuation team and the client's Middle Office VP to discuss a valuation difference on the one of the sample swaption positions.
-Write a memo explaining, in 'auditing speak', the resolution to the swaption valuation difference for the audit files.
-Answer the staff's questions on how to prepare the work you assigned him, explain high level concepts and how the client's business works so the ridiculous detail excel file he is staring at all day makes sense and is in perspective.
-Respond to the manager's constant questions and 'review comments'. This is probably the most frustrating part of the job. You honestly can't get any work real work done as long as the manager or senior manager is in the conference room. Your job is to be their bitch, and answer all of their questions. You'll have all night to finish the actual work..
12-12:30pm Lunch
-Run out of the building and grab a sandwich or a salad
-Eat at the conference table as a team, pretend to work, read the news, desperately search job boards, send out job applications.
-Review financial statements, provide comments, discuss issues with managers. Copy,paste and consolidate the Partner's, Managers' and your own comments on the financials onto a single copy.
-Review the staff's work papers
12:30-6pm Audit More!
-The afternoon is where things get most intense. This is when most client meetings are scheduled, when managers typically have to leave for other meetings and are trying to squeeze in all the work they didn't finish earlier.
-Often lunch is delayed to the later afternoon, and dinner delayed to 7 or 8pm due to meetings scheduled in the early afternoon.
6-6:30pm Dinner
-Instant message your staff back with your dinner selection, and anxoiusly await the delivery man
- Grab your dinner from the bag the Staff just retrieved from the front desk at the building
-Eat at the conference table, read more news, facebook, gmail
6:30-11pm Audit Even More!
- After dinner is when the real work gets done.
-'Tick and Tie' audit work-papers to third party supporting statements. This process involves matching numbers between a 'external document', such as a bank statement, to the clients accounting records, such as a bank reconciliation. It is tedious, mind-numbing, soul-crushing, and 99% of what auditing is.
-Luckily, the big firms have teams of people in India who can perform this work for us, while we sleep. Our only responsibility is to write detailed instructions via email, and review the finished product.
-Write detailed instructions to our Indian team members on how to perform the tie-outs we need performed for the next morning.
11-11:15pm Cab ride home
11:15pm-12am Get ready for bed, some TV or reading, maybe chat with the roommate
12-7:30am Sleep
7:30am Wake up
8:30am Leave For Work
8:50am Arrive at the client's conference room
8:50-9am Get Set Up
-Boot up computer, get a cup of coffee from the kitchen. Maybe eat the bagel you picked up on your way to work.
9-12pm Audit
-Open up email and check for the status update from the India staff who have been working on your work-papers all night, per your instructions last night.
-Get on call with India and briefly walk through the work performed before it gets too late in Mumbai and they go home.
-Check in with the staff on the team and ensure they are actually doing the work you need them to do, assess staff's mental stability
-Coordinate the conference call with the audit manager, the firm's valuation team and the client's Middle Office VP to discuss a valuation difference on the one of the sample swaption positions.
-Write a memo explaining, in 'auditing speak', the resolution to the swaption valuation difference for the audit files.
-Answer the staff's questions on how to prepare the work you assigned him, explain high level concepts and how the client's business works so the ridiculous detail excel file he is staring at all day makes sense and is in perspective.
-Respond to the manager's constant questions and 'review comments'. This is probably the most frustrating part of the job. You honestly can't get any work real work done as long as the manager or senior manager is in the conference room. Your job is to be their bitch, and answer all of their questions. You'll have all night to finish the actual work..
12-12:30pm Lunch
-Run out of the building and grab a sandwich or a salad
-Eat at the conference table as a team, pretend to work, read the news, desperately search job boards, send out job applications.
-Review financial statements, provide comments, discuss issues with managers. Copy,paste and consolidate the Partner's, Managers' and your own comments on the financials onto a single copy.
-Review the staff's work papers
12:30-6pm Audit More!
-The afternoon is where things get most intense. This is when most client meetings are scheduled, when managers typically have to leave for other meetings and are trying to squeeze in all the work they didn't finish earlier.
-Often lunch is delayed to the later afternoon, and dinner delayed to 7 or 8pm due to meetings scheduled in the early afternoon.
6-6:30pm Dinner
-Instant message your staff back with your dinner selection, and anxoiusly await the delivery man
- Grab your dinner from the bag the Staff just retrieved from the front desk at the building
-Eat at the conference table, read more news, facebook, gmail
6:30-11pm Audit Even More!
- After dinner is when the real work gets done.
-'Tick and Tie' audit work-papers to third party supporting statements. This process involves matching numbers between a 'external document', such as a bank statement, to the clients accounting records, such as a bank reconciliation. It is tedious, mind-numbing, soul-crushing, and 99% of what auditing is.
-Luckily, the big firms have teams of people in India who can perform this work for us, while we sleep. Our only responsibility is to write detailed instructions via email, and review the finished product.
-Write detailed instructions to our Indian team members on how to perform the tie-outs we need performed for the next morning.
11-11:15pm Cab ride home
11:15pm-12am Get ready for bed, some TV or reading, maybe chat with the roommate
12-7:30am Sleep
Self Improvement
Self improvement is a illogical process. It implies that you are not good enough, it implies that you are trying to change the way you are perceived in order to gain acceptance from others.
“No amount of self-improvement can make up for any lack of self-acceptance.”- Robert Holden
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction."- Ben Bernanke
“No amount of self-improvement can make up for any lack of self-acceptance.”- Robert Holden
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction."- Ben Bernanke
Big Ben's Commencement Speech
Ben Bernanke is a very smart, and more importantly, a very wise man. His commencement speech at Princeton this year is probably the first time Ben opened up and spoke honestly, as his current occupation doesn't allow him to make many unrehearsed public statements. He speaks about life, expectations and aspirations of the current college graduates, and addresses life's biggest questions and graciously offers his answers. I urge you to take 10 minutes to read what he had to say. Some of my favorite quotes:
"A career decision based only on money and not on love of the work or a desire to make a difference is a recipe for unhappiness." - Ben Bernanke
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction." - Ben Bernanke
http://www.federalreserve.gov/newsevents/speech/bernanke20130602a.htm#fn1
Friday, May 17, 2013
Leave Public Accounting Today
“The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.” - Steve Jobs
Honestly, do you love accounting? Cash Reconciliations, Financial Statement Tie-Outs, Month End Closes, Year End Closes, Audits, Journal Entries, Ledgers? Debits and Credits?
Are you passionate, or are you comfortable? Does your psychological need for comfort and stability outweigh your need to feel fulfilled and satisfied?
Are you settling? If you don't love accounting, get the fuck out. "The mass of men lead lives of quiet desperation."
Lets be honest though, most of you are going to get back to your tie-outs and checklists like the fucking Melvins you all are. Make sure you eat lunch at your desk, stay past dinner, and come in early to that windowless conference room next to the copier. Fucking back office monkey. Enjoy your year end bonuses and working all that unpaid overtime 4 months a year.
Life is pledging. The shitty parts don't end until you decide to grow a pair and you end it yourself. Be a man. Take control of your career and your life.
Don't settle.
Lets be honest though, most of you are going to get back to your tie-outs and checklists like the fucking Melvins you all are. Make sure you eat lunch at your desk, stay past dinner, and come in early to that windowless conference room next to the copier. Fucking back office monkey. Enjoy your year end bonuses and working all that unpaid overtime 4 months a year.
Life is pledging. The shitty parts don't end until you decide to grow a pair and you end it yourself. Be a man. Take control of your career and your life.
Don't settle.
Tuesday, May 14, 2013
Tiger Woods
Tiger Woods is an amazing dude, but not for the reasons you might think. Sure he is the greatest golfer to ever live, and he's such a boss that even a supermodel wife can't satisfy his sexual appetite. He is a black man dominating the white man's country club game, and banging-out their blondes.
Beyond the golfing, I think Tiger is amazing for his self awareness(which is actually a part of the golf game). After winning The Players Championship this weekend, Tiger completed his contractual obligation: the post win press conference. His recall of each and every shot of the day, hole locations, wind direction, standings, etc. is unreal. What is most impressive I think is the way he thinks about himself. He constantly refers to himself in the 3rd person, and even when he speaks in the first person, its as if the 'I' he is referencing is the golfer/athlete, and the person speaking is his manager.
He knows that when he did mishit the ball this weekend it was always fat, so he made sure that whenever his lie was not perfect, he hit in a direction that gave him some margin on the long side. Fascinating that he makes a study of himself. Its not that 'he personally' mishit the ball, its that his 'athlete self' was a little off this weekend, and in order to compensate, his logical self needed to adjust for this issue. Its fascinating to see an interview with someone who's job is to be an expert on himself, his body and his emotions, who is required keep his emotions and nerves in check, and stay in the moment while under the tremendous pressure of million dollar prizes, and golfing legacy. Amazing.
Beyond the golfing, I think Tiger is amazing for his self awareness(which is actually a part of the golf game). After winning The Players Championship this weekend, Tiger completed his contractual obligation: the post win press conference. His recall of each and every shot of the day, hole locations, wind direction, standings, etc. is unreal. What is most impressive I think is the way he thinks about himself. He constantly refers to himself in the 3rd person, and even when he speaks in the first person, its as if the 'I' he is referencing is the golfer/athlete, and the person speaking is his manager.
He knows that when he did mishit the ball this weekend it was always fat, so he made sure that whenever his lie was not perfect, he hit in a direction that gave him some margin on the long side. Fascinating that he makes a study of himself. Its not that 'he personally' mishit the ball, its that his 'athlete self' was a little off this weekend, and in order to compensate, his logical self needed to adjust for this issue. Its fascinating to see an interview with someone who's job is to be an expert on himself, his body and his emotions, who is required keep his emotions and nerves in check, and stay in the moment while under the tremendous pressure of million dollar prizes, and golfing legacy. Amazing.
My Deepest Darkest Fear
Everything anyone says or does is a result of some underlying psychological reason.
What if the reason I write these ridiculous blog posts is because I'm afraid of facing the truth: that I actually enjoy accounting.
What if accounting's trade-off of medium hours and moderate career risk is actually just right for me. What if I made the right decision in college and pursued accounting because I find it interesting, challenging and dynamic? What if I am where I'm supposed to be? Can I accept myself as an accountant, or do I need to feed my ego with a 'front office' job title somewhere?
The shittiest parts of auditing are: (1) dealing with 'bosses' who are 25-30 years old who were promoted based on seniority, (2) doing tedious bitch work for seemingly no purpose, (3) working long hours for the sake of face-time,(4) mind numbing and tedious checklists, (5) . All of these shitty parts are not applicable to a job in industry where you can manage the accounting for an actual firm, make decisions and have input into the business operations of the firm.
Stepping out on the 'career risk curve' a little bit and looking at assistant controller spots at smaller hedge funds might actually be what I need right now. Equity research sounds intriguing and fascinating, but really, what I hate the most about my job is the tedious detail work. Equity research is 100% detail work. Equity research gives you no operational experience Accounting puts you in the trenches, at the office, managing the business day to day.
I want to manage high level. Manage a process, build a team, provide strategic input, and be involved in the operations. Maybe I am on the career path I want. I used to be so excited about starting this job, and then they slam you with two years of staff work. Now that the staff work is over, I can start focusing on the parts of the job I actually enjoy. Maybe?
I'm thinking I might interview for some hedge fund assistant controller spots. See what's out there.
Subscribe to:
Posts (Atom)