A panel of headhunters gives its assessment of typical London pay packages. Average salary: 65,000; bonus - 15% to 20%, though highly variable depending on individual, team and institutional performance.
Accountants have to steel themselves against a lifetime of barbs from colleagues who have chosen more colourful careers. Yet one of their main defences has always been that what they are doing is somehow important to the broader scheme of things, that without them the world just wouldn't be as we know it.
Such is the position today of the structured investment vehicle (SIV) accountant. Carrying out a role that would be considered deathly dull by more flamboyant but less numerate people, its core importance has never been greater.
Simon Lindrea, manager of the executive finance team at Michael Page City, says, 'Post-Enron, the need to control and ensure transparency within special purpose vehicles created to facilitate particular transactions has never been more important, yet it is quite difficult to find the right individual to do this.'
New laws mean higher profile
To date, accountants with a solid technical background in financial accounting have performed this role. Yet with the New Year, the knowledge requirements become greater under some new laws that should enhance the importance of SIV accountants - and boost their long-term worth.
Steve Leeson, manager of the senior finance division at Morgan McKinley, says, 'After Enron, structured investment vehicles were considered a form of off balance sheet accounting. This spurred a number of new pieces of legislation to come into force on January 1, 2005, including the IAS, US GAPP, FAS 133 and FAS 140, all of which will govern accounting practices in this area.'
Leeson expects an increase in demand for SIV accountants over the next 18 months as financial institutions' appetite for risk returns alongside the market's continued expected recovery.
'As banks take on debt in the more volatile emerging markets, that debt is likely to be packaged within a structured investment vehicle to spread the risk,' he says. 'Therefore more accountants will be required to regulate this increased SIV activity.'
Indeed, SIV accountants are crucial if another Enron-type debacle is to be avoided. They must explore what is happening to each of the underlying investments in an SIV, gauging the total worth and validating it. They give it product approval and help manage the risk of the composite parts, all before their most prominent action: issuing approval reports to traders and external reports to the regulators.
Pay higher than a hill of beans
How much can the average, barb-resistant SIV accountant expect in compensation?
Michael Page's Lindrea suggests a recently qualified individual or somebody with up to three years experience will pull in between 45,000-55,000 plus a bonus of between 10-15%; a more senior individual with up to five years experience will earn up to 70,000 basic and about a 20% bonus.
Beyond this a basic salary could reach 85,000 with a bonus maybe as high as 40%.
Morgan McKinley's Leeson broadly agrees, estimating that those with three to five years' experience will be earning around 55,000-75,000 basic, whilst senior SIVs with more than seven years' experience will earn anything upwards of 80k. Bonuses? Leeson says they 'will be discretionary, dependent on individual, team and company performance.'
The really good news, however, is that prospects into 2005 and beyond look solid. Leeson says SIV accountants - along with other derivative product controllers - have seen a 15-20% increase in base pay over 2004. With the new legislation coming into effect in 2005 along with almost certainly increased use of derivative and SIV products, further percentage increases can be expected. Further strengthening in the markets could only solidify a SIV accountant's good fortunes.
Accounting, boring? Well maybe, but the compensation is getting better all the time.
Commentary and figures by Morgan McKinley and Michael Page City