Big 4 accounting firms have opennings for "quants" to price derivatives and other exotic options. How do their salaries compare to middle office valuaton work in bulge bracket banks?

Badly.Base salaries are typically 25-50% lower and the bonuses even in good times are so low that I wonder why they bother to give them at all.Actually, it's worse than that.The big consultancies work by finding work for their staff, whatever work is available, you do it.As a quant or IT type you are basically a contractor in the large consultancies.To be a quant you need at least some programming skills, so be aware that you may end up doing SAP or web commerce work.Their model is to run you for a couple of years and since you aren't a line management type, (ie not a salesman), you are expected to move on, so why should they pay enough to retain staff ?In all my years as a pimp, not one quant working in a HF or IB has ever said to me "I'd really like to work for Accenture or PWC".

QuoteIn all my years as a pimp, not one quant working in a HF or IB has ever said to me "I'd really like to work for Accenture or PWC".Whilst consultancies don’t pay well in relation to banking quant’s, they offer more stability and better work/life balance. So those who make the switch to consultancies either weren't good in a banking environment or circumstances changed and they wanted more flexibility which the top consultancies are good at offering. The top 4 accountancies firms are in the times top 100 places to work for, so they are there for a reason.Stats Guy

I couldn't think of a worse place to work than a big 4 accounting house (except maybe accenture). Who cares if they're in the times top 100 places to work for.

QuoteI couldn't think of a worse place to work than a big 4 accounting house (except maybe accenture). Who cares if they're in the times top 100 places to work forOne of the reasons people leave Accenture is the high travelling requirement. Sounds great at first, until you end up on a client site just off the M25 Stats Guy

StatGuy may have had a better than average experience in the big consultancies...It may be that the best move forward in this market is to go to a big4 outfit, I would not criticise this, as long as you knew the score. The single most unhappy group of people I have ever worked with was at a big4, and when one takes into account the travel, hours do not seem noticeably better than the average banker, though to be fair the peak is typically lower. I found it fun, including the way they made me use the black people's lift, but your mileage may vary.I certainly do not recognise the characterisation of them as "stable". Arthur Anderson blew up spectacularly, and the staff turnover whatever the market conditions should tell you something.There is an upside in that you may well be exposed to more business areas, helping you to work out what to do with the rest of your life. That could certainly help some of the entry level people I talk to.The flipside is that you go where they need you to go, good or bad.Some do seem to be trying to build a competency in quant finance. At one level this should be a good thing, since there is a clear need for quantish backup and advice throughout the industry.It however, a difficult market for them to penetrate.Any consultancy is not part of the "circle of trust" within a bank, and so are usually isolated from the critical intellectual property, meaning the quality of work it typically lower.Banks are less than perfect in managing the careers of quants, to put it mildly, but at least there are now enough senior people with some sort of quant background to at least know the issues and opportunities.In the big4 (big10, whatever) consultancies your position is a function of revenue you bring in and internal politics. Very hard to bring in top quants to this.That's a political/organisational issue, and as such easy to state and viciously hard to solve.Banks are patchy in training, but vastly better than the big consultancies whose model is basically to charge you up for the next assignment. When I turned up at a big4 to consult on a big risk management project I asked where my team were.They were all away on a one week C++ course, since none of them had done it before than the project was to be built in it.That's why the quant consultancies are vastly better than the big sprawling outfits.But some people like the culture and you ought to at least talk to them if banking jobs don't turn up.

QuoteI certainly do not recognise the characterisation of them as "stable". Arthur Anderson blew up spectacularly, and the staff turnover whatever the market conditions should tell you something.No job is really stable( stable enough is good enough IMO), but in a consultancy if you work on the support side of the business you tend to have an easier time than those who are on the fee earning side where the cut comes sooner when market conditions take a turn for the worst IMO. There are some quant camps in top 4, they are not as technical as the banking quants, but to succeed in a consultancy you need a different set of skills than just mathematical and programming. You need to be good with sales and have good people skills which some quants will struggle with. I have met one or two quants from the Actuarial dept and I have to say the quant work they do is far from low level. Consultancy will give you a mix of skills, and so you will be more rounded as a business person, rather than focus on one area like in a bank. The pay differential can be huge with banks, but it all depends on what environment suits you best in the end. If you want to be a pure technical quant then banking is best, otherwise if you want to experience more varied work and get to travel then consultancies are for you. A good strategy, as you point out, is to look for a quant modeler role in a top 4 and then make a move into banking a few years later. Since some of their clients are banks, it wouldn’t harm your prospects if you use a consultancy as a stepping stone into a top bank. The average pay in a consultancy for a quant is only 2nd to a bank, so it's still a decent living. And not all quant roles in a consultancy require excessive travel - you can pretty much work a 40 hr week and get paid an hr rate higher than an average banking quants base salary. Stats Guy

would a quant working for an accounting firm ever make partner ? or no ?

Quotewould a quant working for an accounting firm ever make partner ? or no ?Unlikely (sure there will be exceptions), whilst quants are very technically bright and able to solve logical problems and code/debug quite well, the skills required to become a partner is kind of detached from what quants do. I suspect this is a similar situation in banks where quants may struggle to make the CEO positions. What you need to make partner is good people skills, good business knowledge, coupled with good sales and ability to lead. Having quant skills helps, but IMO too much quant mentality will work against you as you would be too rational in thinking sometimes. The easiest way to make partner in a top 4 is to train up as an Auditor, but I suspect quants will see this as dull and boring and so from the start they would fail as they are wired up differently. One think I think is true in any career is to choose areas that will best suit your skills and put you above average in that group. No point going for Partner when you are not the right fit in the 1st place so a large part comes down to understanding what you good at and then looking at professions that would suit your type. I know this is hard early on in your career when most are trying to experiment with what they good at etc.. but its all life learning I guess, as books and asking others will always be slightly biased.Stats Guy

QuoteOriginally posted by: DominicConnorTheir model is to run you for a couple of years and since you aren't a line management type, (ie not a salesman), you are expected to move on, so why should they pay enough to retain staff ?. yes, but it's still good to know that an HF guy has somewhere to go should he find himself on the street. if it pays the rent, getting a temp consultancy job sure beats standing in line at the dole office.

so what are the base salaries in absolute figure for a quant at Manager level (~5 years exp) in a Big 4 accounting firm in NY or London? Any bonus?QuoteOriginally posted by: DominicConnorBadly.Base salaries are typically 25-50% lower and the bonuses even in good times are so low that I wonder why they bother to give them at all.Actually, it's worse than that.The big consultancies work by finding work for their staff, whatever work is available, you do it.As a quant or IT type you are basically a contractor in the large consultancies.To be a quant you need at least some programming skills, so be aware that you may end up doing SAP or web commerce work.Their model is to run you for a couple of years and since you aren't a line management type, (ie not a salesman), you are expected to move on, so why should they pay enough to retain staff ?In all my years as a pimp, not one quant working in a HF or IB has ever said to me "I'd really like to work for Accenture or PWC".

QuoteOriginally posted by: DominicConnorStatGuy may have had a better than average experience in the big consultancies...It may be that the best move forward in this market is to go to a big4 outfit, I would not criticise this, as long as you knew the score. The single most unhappy group of people I have ever worked with was at a big4, and when one takes into account the travel, hours do not seem noticeably better than the average banker, though to be fair the peak is typically lower. I found it fun, including the way they made me use the black people's lift, but your mileage may vary.I certainly do not recognise the characterisation of them as "stable". Arthur Anderson blew up spectacularly, and the staff turnover whatever the market conditions should tell you something.There is an upside in that you may well be exposed to more business areas, helping you to work out what to do with the rest of your life. That could certainly help some of the entry level people I talk to.The flipside is that you go where they need you to go, good or bad.Some do seem to be trying to build a competency in quant finance. At one level this should be a good thing, since there is a clear need for quantish backup and advice throughout the industry.It however, a difficult market for them to penetrate.Any consultancy is not part of the "circle of trust" within a bank, and so are usually isolated from the critical intellectual property, meaning the quality of work it typically lower.Banks are less than perfect in managing the careers of quants, to put it mildly, but at least there are now enough senior people with some sort of quant background to at least know the issues and opportunities.In the big4 (big10, whatever) consultancies your position is a function of revenue you bring in and internal politics. Very hard to bring in top quants to this.That's a political/organisational issue, and as such easy to state and viciously hard to solve.Banks are patchy in training, but vastly better than the big consultancies whose model is basically to charge you up for the next assignment. When I turned up at a big4 to consult on a big risk management project I asked where my team were.They were all away on a one week C++ course, since none of them had done it before than the project was to be built in it.That's why the quant consultancies are vastly better than the big sprawling outfits.But some people like the culture and you ought to at least talk to them if banking jobs don't turn up.One of the worst things I have gotten to know about these consultancy firms is that they hire on grads who have zero "operative" experience in anything, and will even be more willing to hire them than people who have worked in the field for a longer period of time and who bring a demonstrated value-added to the table.Case in point: a guy who I have met through friends works at a smaller consultancy here in Germany. His firm was responsible for setting up the credit policies of a major lender in the CEE area. After he found out about what I do for a living I was bombarded with questions regarding this and that, because he and his colleagues lacked any kind of operative knowledge in this field. I was furthermore absolutely astounded by the fact that I had said to him: well, you know it would almost make more sense for your firm to hire me than to just pick my brain like this. It would be easier and more cost effective. But he, not wanting to be outdone by someone with a clue, basically said he was not willing to speak to his boss or to find out anything. At which point in time I just began to answer in gibberish to discourage him from bothering me with that nonsense.The fact that firms are willing to hire "consultants" -and pay a very pretty penny for "advice" which they could have done on their own for a fraction of the cost- is absolutely mind-boggling.CB

I'm being quoted from 5 years ago and things have evolved a little since then, generally the job market is better, but I see nothing in my core points that I need to amend.Farmer asks what might be the best question about partnership and there are Quant-ish people at partner level now because the big accountancy firms are making money from risk and compliance work and partnership is driven by revenue, not expertise.@Chargerbullit is right about them hiring new grad cannon fodder, which is both good and bad. Their clients/prey are paying more per day for new grads than for people with experience, but having your first job at a big consultancy is like doing an apprenticeship and the pay is not bad. A perfectly rational path I've seen people follow is to do a stint at a consultancy then do an MBA, MSc or MFE or indeed CQFThe cash flows of that path can be much more attractive than trying to fund postgrad study on top of student debt.The big consultancies are set up to work that way, indeed it is far from unknown for your boss to tell you it is time to go do your masters.Lastly, although I agree with the logic of Chargerbullit's post, it is the wrong way to think...When you spot a mispricing in a market, your thoughts should be :1: Do I know enough to be confident that the price is wrong ?2: How do exploit this mispricing for my benefit ?

Slightly different sequencing to may of the points that have already been made (and summarized by Dominic).1. At junior levels, consulting firms view talent as fungible. You will get to do lot, get paid, but will eventually be encouraged to move on, unless2. You are very good at selling new projects. This is the typical basis for making partner, and knowledge/experience is NOT a substitute! While working for a consulting firm might make a lot of sense in short term, you have to understand the incentive structure if you plan to stay there for the long term. I know a lot of smart peole who could not/did not want to "sell" and were forced to move on.Cheers!

This thread has gotten more interesting from my first read a few days ago. Dominic - I definitely agree with what you are saying. And I have, in the course of several headhunter related "applications" to some consulting firms, brought up the fact that they are very light on members with "operational" experience in my area (counterparty credit risk) and that my experience is something that would bring a massive value-added to customers and themselves if they were to bring me in and have me work on projects as a senior specialist. Despite my basic agreement, I have a bit of a dissenting opinion on the whole area in general.I have been contacted by several headhunters for consultant positions who turned green at my wage expectation, as one put it: "I can't see the value-added that your experience brings to the table." The funny thing is, I justified it with a story: my father worked on a major construction project in the US, where his firm for lack of a better word did not make the kind of revenue they had hoped due to client issues and other things. This same project that he led went on to earn numerous rewards and other recognition which brought in new business; effectively a value-added with it that far outweighed any loss that they made. I have discussed this as well not just with headhunters but also with people at consultants to illustrate what my knowledge and experience can definitely bring, but that hasn't brought the kind of feedback as I have hoped. The problem is -at least in my opinion- that a majority of these firms think their own sh't doesn't stink. So they tend to be more myopic than insightful about what their clients really need. And only having very few people with true experience in the area they advise companies on makes it more opaque and difficult as they only want to hire people who are not a threat to themselves.For pure examples sake: I was recently contacted by a headhunter in Germany looking for someone with experience with regulatory / reporting issues for banks. My experience here is very periphery but I still have an understanding of it, I stated as such and then asked if it wouldn't be more interesting for his clients to have someone on their team with a demonstrated level of experience in my field. He agreed hesitantly and asked what I wanted to earn - that was basically where he, in the end, refused to keep playing the game. After that all I heard were excuses as to why it isn't possible etc, despite me knowing multiple individuals from my former team who were hired on by the big 4 and who make six digit salaries in EUR, GBP and USD countries. It's true that you need to show the person on the other end that they need you, but it's always very relative and contextual as to how they see it. Which, given what I've seen, experienced and also discussed (especially in regards to 'consultants') can be very difficult to bring across if they are lacking in decided knowledge in the area that you're wanting to work in.That being said, I do believe that, depending on where you're at, at least in Europe a starting out salary of 75,000 is more than enough. You can at least then maybe allow yourself to be talked to 65,000 and then really prove you're worth a raise to more dependent on performance. That being said, you should definitely work out a niche and use it to the max.CB