Accounting or Finance?

CFA General
#1

I’m just gonna throw this out there. Sound off if you have an opinion. If you agree, say so. And if you don’t agree, that’s cool too.

Not too long ago, I was talking to a student at the library where I study. She was impressed by the fact that I had an MBA, CPA, and working on the CFA. She was a finance student, but was considering a double-major in accounting. She asked me two questions:

  1. Which is the harder exam? CFA or CPA? (This was the easy question.) I told her that there was absolutely no question–CFA is harder. CFA is much harder. Each level of CFA is about as hard as all parts of the CPA exam combined. Anybody who says something different has not taken both exams.

  2. Which is better? Finance or Accounting? (This was the difficult question.)

I think that all finance students have dreams of being the next Jim Cramer, or Warren Buffett, or George Soros, or John Meriwether, etc. We all have dreams of working on the NYSE screaming “Buy! and Sell!” We think we’ll eventually get a corner office on the 50th floor of some building in lower Manhattan, riding in our limousine to our private jet, which will take us from vacation home to vacation home in our Armani suits and Patek Philippe watches and Mont Blanc pens. Life for finance majors is meant to be exciting.

Accountants, on the other hand, lead a very boring life. The life of an accountant is general ledgers, adding machines, journal entries, and reconciling balance sheet accounts. We wear glasses and pocket protectors. Our dream job is one where you get to create schedules, then make journal entries, then reconcile the accounts. (Rinse and repeat on a monthly basis.) If you’re a tax accountant, then you get to create a working trial balance, then put the numbers into a software package that will create a tax return for you. The life of an accountant is meant to be very boring.

This being said, I told her that I think accounting is a better career choice for 95% of all graduates. In my (very limited) experience, accountants will make more money and have better job security than their finance counterparts. Sure, this is not true at the upper levels, or for those who actually do work in a major financial center. But unless you graduated from a top-50 school and had a 3.5+ GPA, then your resume will probably find the working end of the shredder very quickly if you apply at Goldman Sachs in New York.

I’m not trying to discourage those who want to pursue the CFA charter. But I can tell you this from personal experience–the CFA charter is just as likely to collect dust as it is to earn you six figures. The CPA license will certainly open doors for you. CPA firms like CPA’s, and they’re always hiring–no experience necessary. You don’t see many jobs at JP Morgan for “US Equity Analyst” that say “Will hire somebody straight out of the local state school.”

And the CPA exam will probably take about 250 hours over the course of a year to study for. The CFA will take about a thousand hours over the course of three years–if you’re lucky.

In my (very limited) experience, those who didn’t go to Harvard and get a 4.0 GPA will more than likely get a job as Credit and Collections Manager at the local manufacturing firm. You might also get a job in a regional bank as a “Collateral Analyst Cash Accelerator”, whatever that is. But I think the average accountant is a far more lucrative profession than these. The pay is better, and the potential exit opportunities are better.

Just some thoughts on the passing scene. For those of you who are on the bubble about whether to go the Accounting or Finance route, take from this what you will.

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#2

I started my college career as an accounting major. Even if you are debating between finance and accounting, you would be an idiot not to take 2 or 3 accounting courses. Accounting is the basic business language and having some fundamental understanding (the more the better) is incredibly beneficial. That being said, I made the switch after I took my first finance course. Finance is much more broad, math-oriented, and interesting in my opinion.

As far as careers go - if you’re looking for security, go accounting hands down. In my opinion, if you chose accounting, you’d be incredibly mistaken not to go to a 1 year grad program and continue on to get your CPA. CPA’s are in demand at the very least because they have a technical understanding of something that is REQUIRED by businesses and individuals to comply with standards and regulations. As great as that is, it is also what turns me off.

Salaries (coming from someone entering the job market and comparing to friends) - Starting off as simply a business analyst doing mostly accounting type work for the first couple of years I will be paid slightly more than the accounting majors in my school (even with CPA’s) going to the big four. The company pays well, yes, but I would easily say that the highest earners coming out of our school are going into a finance role or had finance degress. On average though, the accounting majors are definitely outpacing the rest of the business students.

Long term - I always worried about doing accounting and then getting stuck into doing tax or audit or w/e. I really think it depends on the kind of person you are. A few alum I know started their career at the big four and then went to work for one of their clients directly and now have management positions. My supervisor during my internship came from a Big Four firm and is really not doing any “accounting” type work. Many, many accountants leave the Big Four to go on to more managerial/business analyst type roles. So, I don’t think you will be stuck doing “accounting” for the rest of your life. You certainly can if you want but if you have the right motivation and work ethic you can do a lot with accounting.

It seems like I’ve kind of gone back and forth. What I’m really saying is just depends on what you want to do and how much confidence you have in yourself as a person. I think I have a pretty good understanding of business and do better than most of my peers in class and in an actual corporate setting. I also think I have the kind of personality to where I can leverage my understanding and competencies into a broad career path. I’m not trying to brag or anything, just trying to make a point. If you aren’t as confident or are looking for more security, go accounting and you will get that security if you’re half decent at what you do. I could go on and on, but when it comes down to it, I’m glad I chose finance and I do not think I will regret it.

If you want a career in investments/money management, obviously go Finance. If you don’t really know what you want to do, but you know you want business, go Accounting - it will serve you well.

I don’t want a career in investments or money management (not right now anyway) and yet I went Finance and am going for my CFA. Why? Idk, I’m weird. I just like the stuff, quite a lot. Anndd… I think I’ll do just fine with the finance background, fingers crossed.

#3

TLDR version for both of these posts: Unless you’re the cream of the crop, accounting will probably be a more secure and financially rewarding career for most people. Both the entry and exit opportunities in public accounting are better–especially if you can land at a Big Four accounting firm.

#4

the only real upside for being in accounting is stable employment and if you end up making partner of a large practice and then you make the big bucks. The downside is the work makes you hate your life, long tedious hours doing dull work, your salary and bonus both suck, and you may be looked down upon as not good enough to do finance.

#5

I disagree with everything that you just said. And I think it’s because we have different points of view. I’m looking at it from the average 22 year-old, graduating with an average GPA from an average university. Based on past conversations, it seems like you’re looking at it from the viewpoint of the guy who says “Hmmm…I got accepted into both Yale Law and Harvard Business. Decisions, decisions…”

I think this attitude is typical of most people in finance. (If you disagree, read Wall Street Oasis.) People in finance seem to think that they are inherently superior to accountants. Being a hybrid of the two, I personally believe that accounting is the more demanding discipline.

Like I said before, I believe that for most people, the salary and bonus are better for accountants than for financiers. (Again, I’m talking about the AVERAGE grad/postgrad–the top graduates of the top MBA programs would not be included here.) Having worked in both corporate accounting and internal audit of a public company, I can attest that the finance majors make significantly less than the accountants. (The one guy who was in Corporate Development is the lone exception.) I can also attest that, in my experience, an entry-level accountant makes more than an entry-level analyst.

And I’m not really sure that the work makes you hate your life or that you have long tedious hours doing dull work. It’s probably not longer, nor is it more dull and boring than most financiers. Accountants spend 50-60 hours a week creating or verifying the assertions of company management. Analysts spend 50-60 hours a week reading the assertions that accountants create or verify. How much more “exciting” can one be than the other?

#6

Thats fine you disagree. In fact I applaud you for not being a dbag in your reply like many other new folks here. Thats the point of a forum, people sharing their points of view. I can agree about your argument that on average, finance doesnt pay that well. the truth is there are a lot more back office functions then there are rainmakers so obviously the average pay will skew downward much more. Just look at total average salaries and you’ll see even engineers will have much higher starting averages vs finance. but 1 thing you need to think about is that people don’t generally go into finance thinking oh yes I’m going to work in the back office. there are not enough jobs for everyone to be on the revenue generating side and so therefore people end up taking back office jobs, or finance jobs in small mid size companies. I also do agree on the whole there should b much less finance folks. But again its the fundamental problem where people only see the huge potential payout of landing that awesome job . it’s the same reason why people spend money buying the big payout lottery tickets even though the chances of landing it are slim to none. people buy the tickets shooting for the top and it’s generally the same with finance. I say generally because there are people who want to do back office, and some smartass will probably use it as an argumentjust for the sake of argument

#7

Iteracom, you and I disagree on a lot of things a lot of the time. But I always respect your opinion, and you don’t put other people down for disagreeing with you. That’s why I like you.

#8

Finance is an umbrella term because there are so many job functions within the industry. It’s the equivalent in saying, “I work in Science”.

#9

Well thanks man. AF could use more like you

#10

That is soooooo cute :slight_smile:

#11

I’d rather kill myself then be an accountant(again).

#12

A buddy of mine is a CPA. He complains about the work, finds it boring. I tell him he’s got a 200 yard drive down the middle of the fairway and that ain’t bad. It’s definitely a safe bet, being a CPA. You probably are not going to reach the green in two on a par five but your going to get there in regulation. Better than a lot of hackers who got a finance job and got burnt out making cold calls for …enter your favorite wire house here… and now sell plumbing parts at Home Depot.

Finance is a stock, a exotic call option, an ipo. Accounting is senior secured bond with no call option. Different strokes for Diff…

#13

Connections and networking play a bigger role in finance than accounting if you want to be successful.

#14

I was in an Undergrad business program and specialized in Accounting for 3 years and then jumped ship in 4th year and took all finance courses. I had good reasons to be in accounting at first, the Big4 hired our graduates in abundance but not many of the major finance firms were lining up at our door step.

In the end, my choice was simple, I went with the discipline I loved. Accounting was the bane of my existence, and I couldnt stand the thought of audit.

And while I still don’t have my dream job and chances of success arent great, I would prefer to chase the dream rather than be in relatively well paying job that ate away ate my soul every day. I knew very well that the finance industry was contacting, but that didn’t hold me back.

But I would agree with Greenman72, for MOST graduates, accounting would be the better option

#15

Bigger role? I don’t know about that. Maybe on average you’re correct. But I’m sure the top quartile of “successful,” whatever we want to define that as, people from both disciplines will tell you that networking played a crucial role in their success.

#16

I like how this popped up on the front page as today is my last day as an accountant. This afternoon (Friday) I will walk out of my sweat shop of a big 4 firm a happy man. I’ve been at work till at least 10 pm for the past 3 weeks and worked every Saturday since Jan. 1. No thanks…

I’ll tell anybody, Big 4 is a great place to begin a career, but that’s about it. Do 1-2 years, get your CPA, and get out. The hours you are required to put in are completely insane relative to the pay until you are at least a manager. Bonuses are virtually non existent. Unless you deep down enjoy the work, or have your heart set on being partner, there are very few reasons to stay at it for more then 5 years.

Pros of accounting: one of professions with the best job security. Very good pay relative to hours once you have 5-10 yrs of experience and work in industry.

Cons: to me, the work is really boring. For the most part, its going to be the same stuff every month, quarter, year, unless you happen to find a really dynamic company.

I’ve been at this for just over a year, passed all my CPA exams, passed CFA L2, and am on my out taking a 20+% pay bump. Some people like it, I don’t. I hate doing things for the sake of doing them, which is what public accounting really is.

Oh CFA or CPA? CPA is way easier. Not only is the material easier to begin with, its mostly just memorizing a ton of stuff, but its way more predictable than the CFA about what will be on it. Its also 4 bite sized pieces where as the CFA is like taking all 4 CPA exams in the same sitting.

#17

Well OP, it seems Most people agree: accounting work sux.

It’s funny, we all agree more finance people should do accounting. But who wants to willingly do a job that the consensus says “the work sucks, and you will likely hate your job”

#18

Isn’t this a classic case of sampling bias? The people on this forum are predominantely those looking for or currently have finance related careers. So if we did have anybody coming from accounting, chances are they wouldn’t be here if they liked what they did.

I don’t know if there is a forum like this for accountants, but I’m sure you’d get a much different response asking this question on that forum.

That being said, I can only imagine that being an accountant would start to suck really quickly.

#19
  1. I say this having only taken CFA L1 (and only partially through the L2 material), so take it with a grain of salt, but based on my experience, I would disagree that any one portion of the CFA is more difficult than the entire CPA exam. From a pure breadth of information standpoint that covers a broad range of topics, there’s absolutely no doubt that the CFA an entirely different animal than the CPA, but that’s also the main source of it’s difficulty level. Conceptually, there’s nothing mind-bending (at least nothing I’ve encountered). I found several topics to be difficult (mostly in macroeconomics and derivatives), though most of the material is very logical.

The CPA on the otherhand - and accounting in general - is like learning a new language. You have to will yourself into understand concepts that are not easily relatable to some logical, everyday conclusion. That makes the CPA and studying for the CPA extremely mind-numbing. On top of that, there are concepts in the FAR and REG sections of the CPA that are vastly more advanced than any one topic on the CFA. I am sure anybody with their CPA license finds the concepts addressed in the FRA portions of the CFA to be borderline elementary accounting, and yet a majority of candidates struggle with this section specifically.

It’s very difficult to compare the 2 exams. The CPA is broken into 4 sections, each of which contains the amount information that can be found in one standard CFA book. In that sense the entire CPA exam encompasses the amount of material in any one level of the CFA. As it stands, individuals (or “candidates” if you will) that take the CPA, sit for each exam independently. They devote all of their time leading up to an exam preparing for one topic - yet the pass rates are still between 45% - 50% (even the NYS Bar Exam has a 70% pass rate). What’s more, everybody sitting for the CPA exam has the equivalent to a master’s degree in accounting, as the exam is prohibitively cut off to anybody else.

With all of that said, I admittedly found studying for CFA L1 a lot more exhausting and grueling. Additionally, the exam itself was an entirely different (and more difficult) experience than any one portion of the CPA (FAR included). When I passed L1, I was much more satified by my accomplishment than I was after passing the first 3 portions of the CPA (nothing compares to passing that last part of the CPA). I imagine though if the CPA was one exam, offered once a year, covering the entire range of topics it currently does, there would be no contest - the CPA (in my pre-L2 eyes) would be more difficult.

  1. I agree. Accounting is a better career decision as it’s in demand and it provides you with a transferrable skill to just about any industry and geographic region. Finance is so much more interesting though. Plus, in order to avoid the random accounting equivalent to the “Collateral Analyst Cash Accelerator” position, you’ll be told by a lot of people (including your professors) that you must go to the Big 4, and once you do that - well that’s a different topic…
#20

I am an accountant (very close to the C level) but working as an expat for a major US MNC. I can not complain about pay and my job doesn’t suck.