Choosing between Big 4 accounting firms (Deloitte, PwC, EY, and KPMG) or investment banking can be a significant decision for any recent graduate looking to jump-start their career.
While both industries offer lucrative opportunities and a chance to work with renowned clients that can shape your professional journey, there are massive differences between the two.
The 8 key differences between the ‘Big 4’ and Investment Banking are:
- Work-life balance
- Client relations
- Career progression
- Job Responsibilities
- Employee development
- Exit opportunities
- Job security
In this article, I’ll explore the 8 key differences between the Big 4 firms and investment banking, shedding light on their distinct characteristics and helping you make informed career choices.
1. Work-life Balance and Culture
The Big 4 firms, while demanding in terms of workload, generally offer a better work-life balance than investment banking. (Source)
Professionals there typically work long hours during peak periods, such as Tax season or audit cycles. However, they have more predictable schedules and opportunities for flexible work arrangements.
On the other hand, investment banking is notorious for demanding work hours, especially in front-office roles.
You may often work long nights and weekends, mainly when working on high-stakes deals or transactions. The nature of the work and the fast-paced environment in investment banking can result in limited work-life balance and higher stress levels. (Source)
A Career Coach said, “Work is a rubber ball. If it is dropped, it will bounce back. The other four balls—health, family, friends, and goodness—are made of glass. If you drop any of these, it will be irreversibly scratched, nicked, perhaps even shattered” (Source)
2. Client Engagement and Relationships
Another critical difference between the Big 4 firms and investment banking is their client engagement and relationship-building approaches.
The Big 4 firms primarily work with a broad range of clients, including corporations, governments, non-profit organizations, and individuals. (Source)
They offer various services, such as financial consulting, Tax planning, and risk management, providing comprehensive solutions tailored to clients’ needs.
In investment banking, client engagement primarily focuses on corporate customers, such as:
- Large corporations
- Institutional investors
- Government entities
The relationship-building in this field revolves around facilitating complex financial transactions, including mergers and acquisitions, initial public offerings (IPOs), and debt or equity offerings.
3. Career Progression and Promotions
Career progression is typically structured in the ‘Big 4’ firms and follows a defined path.
Employees start at the entry-level and progress through various ranks, from bottom to top:
- Senior Associate
However, promotions are often based on performance, experience, and expertise.
On the flip side, investment banking follows a more meritocratic system. Hard work, exceptional performance, and deal-making skills are essential for career progression.
The plus point is that upgraded opportunities may arise more quickly, depending on individual performance and the investment banking firm’s needs.
4. Job Responsibilities
The ‘Big 4’ firms provide various services, including assurance, Tax, advisory, and consulting.
Employees in these firms conduct audits, prepare financial statements, and offer strategic advice to clients. They serve diverse industries and work with a broad client base.
In contrast, investment banking professionals facilitate capital raising, mergers and acquisitions, and other financial transactions.
They perform in-depth financial analysis, due diligence, and deal structuring, providing strategic financial advice to corporate clients and working on complex transactions.
5. Compensation and Bonuses
In the ‘Big 4’ firms, salaries, bonuses, and benefits vary depending on location, role, and experience level.
Entry-level positions, such as audit associates or Tax consultants, offer competitive wages ranging from $50,000 to $70,000 annually. (Source)
On the other hand, Investment bankers, especially in prominent financial hubs like New York or London, can earn substantial salaries, often reaching the high six or even seven figures.
However, it’s important to note that the nature of work in investment banking can be consistently demanding, with long working hours and high-pressure environments.
Here is a comparative overview of salaries in each industry:
|Position||Big 4 Firms||Investment Banking|
|Entry-Level||$50,000 – $70,000||$70,000 – $100,000|
|Mid-Level||$80,000 – $120,000||$100,000 – $250,000|
6. Training and Development
Deloitte, PwC, EY, and KPMG offer a range of technical skill development programs tailored to specific service lines, such as audit, Tax, and advisory.
One of them is Certified Public Accountant (CPA), a mark of expertise and professionalism in the accounting industry.
In comparison, Investment banking often has robust analyst and associate training programs, including classroom-based training, hands-on case studies, and mentorship from experienced professionals.
While certifications are not as prevalent in investment banking as in the Big 4 accounting firms, the Chartered Financial Analyst (CFA) designation is still highly regarded.
7. ‘Big 4’ vs. Investment Banking Exit Opportunities
Regarding exit opportunities, the debate between Big 4 and investment banking often centers around the breadth of options versus the potential for higher-paying roles.
Consulting is often touted for its broader range of exit opportunities in strategy, operations, non-profits, and startups. However, you must consider the following factors:
1. Access to Finance Exit Opportunities
Investment banking provides better access to finance exit opportunities, such as private equity (PE), hedge funds, and corporate development.
Candidates with banking backgrounds dominate the PE and hedge fund sectors, making it challenging for management consultants, especially in North America, to transition directly into these roles.
2. Pay Discrepancy
Although consulting provides broader exit options, the compensation can be lower than high-paying roles in PE and hedge funds.
At the entry-level, strategy and operational roles obtained through consulting tend to pay significantly less than their counterparts in the finance industry.
8. Job Stability
Jobs in the Big 4 management consulting firms are generally considered more stable during generic, cyclical downturns, as consultants can offer expertise to companies in recessions and expansions.
Defenders of management consulting often say, “Yes, you earn slightly low for most of your career, but your job is also more stable! Companies must hire consultants during recessions and expansions, but most bankers get cut during a recession!” (Source)
In contrast, investment banking positions are more susceptible to job cuts during economic downturns, particularly in industries directly impacted.
In this article, I have discussed 8 key differences between the Big 4 and investment banking to help you choose wisely. However, aligning your career goals, interests, and strengths with each path’s unique opportunities is essential before opting for one.
If you want more in-depth insights, watch this YouTube featuring a former Big 4 employee comparing both industries:
Big4 vs Investment Banking (London)