Accounting to Investment Banking
There are a lot of bright professionals in audit who have expressed an interest in moving to investment banking. The good news is that the Big 4 firms are strong brand names and the work experience is somewhat relevant.
The bad news is that analysts at boutique and mid-market investment banks (which does include professionals in the Financial/Transaction Advisory Services groups at the Big 4s), other professionals in capital markets and corporate finance employees (especially internal candidates/existing employees of the bank) rank ahead of accountants as ideal candidates for off-cycle hiring.
However, it certainly can be done, especially with the level of attrition in the investment banking space – we regularly see 10 or so accountants, both pre-CA and after getting their CA, switching into investment banking within 3 years of graduating. The position is practically always for an entry-level investment banking analyst.
As an accountant who is interested in investment banking, you should be aiming to execute on these steps concurrently.
Try to Break into Investment Banking As Is
Structurally, there are always off-cycle needs for fresh investment bankers due to the attrition in the industry. Banks try their best to plan ahead and “overhire” analysts for the next year, but this balancing act is never perfect.
Bankers want a candidate to hit the ground running so the transition is smooth in replacing an already experienced analyst, so the preference is for someone with dealmaking experience. This means an analyst from a smaller bank or someone in financial advisory at Deloitte/PwC. However, everything is timing, and often these professionals are 1) not available; 2) unable to close on their interviews. Look for an opportunity to demonstrate how you are the right candidate – auditing the same industry, for instance.
Accountants have the best shot at landing “fresh grad” roles where there is irregular attrition (a new analyst gets fired or burns out much quicker than anticipated due to a mismatch between expectations and the reality of banking), which can happen at any time.
Accountants should be networking via coffee chats as frequently as possible, especially when it isn’t busy season. Many of these openings are not posted because bankers have met enough people through coffee chats for a full recruitment process – so it is important to get your face out there and make a good impression; it is a numbers game.
Be Technically Sound for Interviews
It is important to spend a lot of time spinning your story so it is tight and being prepared for technical questions even for coffee chats, as you do not want to waste the banker’s time and end up blacklisted. Again, the goal of off-cycle hiring is to fill the role of someone who knows what they’re doing, so no one wants to hire someone who will require a lot of handholding.
A big mistake is to forget to study for accounting questions with the assumption that bankers will not ask accountants accounting questions. If a banker is willing to have coffee with you, he will most likely give you a much more difficult accounting question to see if you are worth your salt (walk me through purchase price allocation with a x asset write up over 2 years).
Transfer into Transaction Advisory
The corporate finance and merger divisions of Big 4 companies entail similar work to investment banking (due diligence, corporate finance accounting), which means that professionals from these groups are first choices for interviews.
Transitioning to these groups (preferably internally so there aren’t too many names on the resume) is a good way to enhance your marketability.
Write Your CFA
Passing Level I is a plus on the resume. Passing Level II is a much bigger plus. People care less about Level III. The CFA is also excellent for broadening your understanding of corporate finance. Please refer to our previous post for more details.
Be a Student of Finance
Accounting is a much more powerful tool than a lot of auditors realize – not so much the checking boxes, but the ability to normalize statements and understand the difference between cash taxes and accounting taxes is paramount for a comprehensive understanding of corporate finance.
Use your accounting knowledge and build on it with a finance coat of paint. Be a regular subscriber to merger news, corporate finance activity at companies and how it ties back to accounting.
PS: Chartered Accountants are also desired candidates for equity research and corporate banking, so if the goal is getting out of accounting more than getting into banking, this may be useful to know.