Morning Coffee: This is where you will make money at the Big Four. Blame fixed income traders for your small banking bonus

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Some areas of banking and finance aren't as remunerative as they used to be. With some banks' shares at record lows, all those deferred bonuses (paid in shares) aren't nearly as valuable as they used to be. In Britain's shriveling brokerage sector, the Financial Times says directors have been made to take pay cuts from £300k ($381k) to £150k as companies desperately try to preserve their margins. Where, then, should you work if you want to preserve your earning capacity for all eternity?

How about the Big Four? Long lambasted as a) a bit boring (compared to banks), b) poorly paying (compared to banks), it's at times like this that the Big Four come into their own. Not only can they pay very well, but their remuneration appears strangely impervious to market conditions.

Take KPMG. In the UK, the smallest of the Big Four firms stands accused of questionable financial judgments for failing to spot the parlous state of Carillion, a government outsourcing firm which collapsed in 2018, costing the British taxpayer £148m+.  Even so, it hiked pay per head for its partners from £519k ($654k) to £600k for the 12 months to September compared to the year before. A 16% pay hike is the sort of thing that rarely happens in banking nowadays.

In Big Four world, KPMG isn't even the best paying - its three rivals are far more generous. The Financial Times notes that EY partners got £693k each for the past year, that PWC partners got £712k, and that Deloitte partners each had £812k ($1.03m) (even though their pay fell a bit). If you want to make money at the Big Four, you should probably therefore aspire to work for Deloitte. It undoubtedly helps that the firm is the strongest in consulting, where pay is typically the highest at all firms. These figures are UK-specific, but can be extrapolated globally.

Of course, not everyone will become a Big Four partner. There are only 700 of them at Deloitte, and everyone else earns considerably less. But the Big Four are always hiring, particularly in areas like technology consulting (with Delotte, for example, investing $547m into its cybersecurity offering globally) and there are often opportunities for disgruntled finance types who can work their way up.

Britain's broking professionals may want to reinvent themselves - although whether the Big Four have room for a wave of consultants with expertise in MiFID II (the regulations that have squeezed the broking sector) is open to question. In the worse case scenario, you will arrive at the Big Four in time for the firms to be forcibly broken up by UK regulators who are questioning the conflicts of interest inherent in their combination of audit and consulting work.   

Separately, you can blame fixed income traders if you work in banking and you get a lower bonus this year. At a banking conference run by Goldman Sachs this week, various banks have been reflecting upon the state of their revenues in the final quarter. The latest to do so is Citi, which said yesterday that fourth quarter volatility had affected its debt capital markets and rates trading revenues to such an extent that its ability to meet its overall efficiency (cost/revenue) goal might be compromised.

"It's a much tougher revenue quarter then we would have anticipated," said Citi CFO John Gerspach. Business Insider notes that J.P. Morgan said earlier in the conference that its overall sales and trading revenues will be flat, while Bank of America said its markets revenues were up a small amount.

Meanwhile:

Citi wants to rank 5th in equities. Two years ago it ranked ninth, right now it ranks around sixth. (Seeking Alpha) 

Brian Moynihan says Bank of America has spent $300m to $400m getting ready for a potential hard Brexit. (Bloomberg) 

Only 630 jobs have been moved out of London because of Brexit (so far). (Reuters)

After adding 65 people this year, Numis won't be hiring quite so enthusiastically in future. (Financial News) 

SoftBank’s Vision Fund is setting up an investment team in China. (Financial Times) 

Evercore poached San Francisco-based Zaheed Kajani from Citigroup to cover the internet and digital media sectors. (Reuters) 

Starting from 2019, Deutsche Bank staff won't be able to place trades in ETFs without first getting them cleared by their manager and compliance staff, regardless of their size. (Bloomberg) 

Goldman Sachs' stock is down 30% since mid-March (and around 15% in the past month). The Trump bump is almost all gone. (Bloomberg) 

Top hedge funds had a bad November. Point72 was down 4.3%. Point72 was down 2.8%. (Financial Times) 

Facebook employees are buying burner phones to say negative things to the press. "We have an intense culture of conformity." (BuzzFeed News) 

Glassdoor data suggests Goldman Sachs staff are happier than staff at Apple. (Financial News)

Never go on a four-day Mediterranean crytpo-cruise. (BreakerMag) 

A 500-year-old skeleton in thigh-high leather boots was found in the mud of the London Thames. (NY Times) 

But did you ever consider horse therapy? (WSJ) 

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