This is a common scenario to British, South African and Australian candidates, and to some extent Canadian Chartered Accountants as well. This posting was prompted by a British graduate who immigrated to the US and is trying to join a consulting firm. We have been asked this question a few times before so it is worth answering it here for all our readers.
“Will my Chartered Accountant background give me an advantage in management consulting?”
Upfront, I must state that I have close personal experience with Chartered Accountants and the field. I was offered an Ernest & Young full scholarship to study accounting and pursue a Chartered Accountancy path which I ended up not undertaking since that particular scholarship arrived in the mail about 2 weeks after another scholarship which I ended up pursuing to study the sciences. Moreover, my first appointed mentor at the firm was a Chartered Accountant and a great guy. Really smart and friendly and I also worked with a few younger Chartered Accountants who were associates and consultants. Like all affiliations they were a mixed bag with a few exceptional, most average and a few who were struggling. This is like all degrees and the same performance distribution would apply to MBAs as well.
The Chartered Accountancy (CA) designation is a prized and much sought after qualification in several of the former British colonies, now Commonwealth countries. It is also highly regarded in the UK itself. The Chartered Accountant designation is mistakenly called a degree when it is actually not. It is not a degree since the candidate needs to obtain a Bachelor’s degree in commerce or accounting and then serve an internship (called articled clerk) before sitting for another exam and finally receiving the Chartered Accountant designation. This does not take away anything from the designation itself, but it is important to make this distinction. If you lived in South Africa, Britain and to some extent Australia the Chartered Accountant could be a route to great riches. There is a reason for this.
As much as the British do not like to admit it, they arrived on the MBA scene fairly late. British MBAs are not held in the same standing as their US, Canadian or even continental European peers. A Harvard, Wharton, Sloan, Stanford, Yale, Columbia, Duke or INSEAD MBA is held in much greater standing. With the exception of LBS, not many of the other British schools are even well known. Even LBS is not well known. Of course, the schools would argue this is not true but a cursory check on Google or a discussion with a pool of prospective MBA candidates would support this view.
The late arrival of MBA programs to British universities meant that aspiring CEOs needed to obtain their training somewhere else. Usually this was via the Chartered Accountant designation. Many British CEOs hold CAs and served as financial directors before progressing onwards to their current positions. This is slowly changing, but the MBA is still not held in the same regard as it is held in the USA. Of course, management consulting firms originating from the US and operating in London think differently, and their presence has actually led to the acceleration of the MBA degree in these countries.
If you want to see an extreme example of this, then look no further than South Africa. Due to a host of issues including international isolation, South Africa was very late in developing MBA programs. A search of the country’s top business executives indicates that over 65% hold the CA designation. Less than 5% hold an MBA. South African MBAs are also not widely regarded worldwide and only a few even make it into the FT.com rankings. None feature in the Businessweek.com rankings. To get to the top of business in South Africa, it probably helps to have a Chartered Accountant designation. However, again, it will not necessarily help, more than other degrees, with the top consulting firms.
McKinsey, Bain and BCG do make a special effort to recruit CAs and involve their work as part of the qualifying requirements for the CA, but this is mostly due to the still developing quality of the MBA degrees in South Africa versus the inherent strength of the CA designation. The crucial point is that this does not diminish the CA designation or qualifying exams in any manner whatsoever. It is just that the broad problem solving skills needed to be an outstanding management consultant are not taught to a greater degree to CA candidates.
The words “to a greater degree” are crucial. This means a CA designation does not give you some excessive advantage versus being a medical doctor for example. Both are great accomplishments I am sure, but just not conferring the specific skills consulting firms seek.
A number of reasons have driven this bubble for the CA designation in Britain and South Africa. For one, both countries were really late to embrace the view that management is a science. Both countries felt that understanding the accounting statements made one an expert in business – it does to some extent and an MBA who does not understand the accounting statements will be a terrible consultant. But you need a wider skills base. A CA designation is a qualification which trains one to be an auditor. An auditor’s job is to reconcile the accounting statements and make sure everything is as stated. That’s it, nothing more. If it is GAAP compliant, the job is done. Accounting firms have tried to do more to increase billings but ensuring GAAP compliance to protect shareholders is their primary concern. As it should be.
Chartered Accountants are not trained to understand business in its entirety. That is a critical point. CAs are trained to spend years understanding the minutiae of a business. And that is something they should be doing because heaven knows how many companies are trying to cook the books.
You are probably wondering why a top consulting firm will not value this. That is because consulting firms value the ability to solve problems rather than having/applying a pre-existing knowledge base. Chartered Accountants are linear thinkers who solve linear problems. Again, this is not an insult. Engineers, doctors and lawyers are also in this category. Thousands of MBAs are also in this category. That is why consulting firms hire so many MBAs as a proportion of all hires, but so few as a proportion of all MBAs studying.
Applying MECE, decision trees and hypotheses is not a linear process. Most solutions to consulting problems do not lie in the financial statements, though the clues usually do. The statements outline the symptoms of a problem, but it takes time and effort to find the real issues. Something a Chartered Accountant is not particularly trained to do. Again, this is not an insult to the profession but an observation based on how CAs have performed in management consulting. And again, this would apply to many other rigorous disciplines.
In the US, a certified public accountancy (CPA, and pseudo-CA equivalency) designation will allow you to, at most, serve as the financial controller. It is very unlikely a major US enterprise will allow someone without an MBA to serve as CEO or CFO. A rare person can change this, but all things being equal, the MBA designation is a key stepping stone. This is not to say this is correct, but merely an analyses of CEO designations at the major firms.
I must add that Chartered Accountants are not common in management consulting in the top firms. We have personally never met a Chartered Accountant who served as a partner at McKinsey, Bain or the BCG. I am sure they exist, but they are in the minority. The same way I am yet to meet a brain surgeon who is a partner, or a prize-winning poet. All admirable and difficult past careers to master but they are in the minority as consulting partners because their careers did not specifically train them for these roles so the ones who rose in management consulting bolstered their existing skills with attributes sought by consulting firms.
That is not to say that someone with a Chartered Accountant cannot become a management consultant. You can. If you have the correct problem solving skills, right values and attitude then you can make it and be a successful management consultant. However, walking into an interview and assuming a CA designation is a gold standard is not just arrogant, it shows a total lack of understanding of business. You will not go beyond the first round. That is the point I want to make. A CA does not confer an advantage on an applicant. No more so than other degrees and designations listed above. Thinking it does hurts candidates because they assume they have a competitive advantage which is actually non-existent. So, as a brilliant Chartered Accountant, you can be a great consultant, but not just because you are a CA.
The analogy would be a Harvard MBA thinking he/she could be a great consultant just because they went to Harvard or have an MBA. The fact that McKinsey hires about 7% of graduates in a good year indicates this is not true. MBAs are prized at consulting firms, but the MBA alone does not confer an advantage.
I would even go as far as to say it is not the MBA that matters as much, but the type of teaching method used and, all other things being equal, the case-method tends to produce consultants who can keep widely differing views in their periphery vision, debate points and influence colleagues in class. The major case schools are Harvard, Ivey, Darden and IESE. That, I suppose, is for a different discussion.
McKinsey, Bain and the BCG look for talented graduates and MBAs to join their offices. If you have a CA but unwilling to learn the proper management consulting techniques or unwilling to retrain then you should consider going into a corporate role or joining an auditing firm. Auditing firms like Deloitte, E&Y, KPMG and PWC usually staff their consulting leadership ranks from the accounting side of the business. The exception is obviously in the US, where this would never work. The consulting leaders usually possess MBAs.
Chartered Accountants do have one slight advantage. The CA designation is uniform. A graduate from any university is treated the same if they have the designation since the CA is administered by the same body. That is why there is no global CA ranking. MBAs are different. It really matters which school you attended. That said this uniformity will only help Chartered Accountants if they choose to join the consulting arms of the accounting firms. And then, it will only help if you have no intention of immigrating or working on international assignments. If you transferred from PWC Consulting London to PWC Consulting New York, the MBAs tend to have more sway.
For those who have a CFA, this entire discussion about the CA is applicable to you. The CFA was designed for financial analysts and not management consultants. It is like a CA but focused more heavily on financial analyses and valuations. It does not teach broader management/business analyses and particularly the style of problem solving used in consulting firms. There is furthermore a reason why an entry level McKinsey hire is called a business analyst. Analyzing a business is the most basic skill you need in a consulting firm. It is not all the skills you need, but the base skills. There is a reason junior consultants must prove themselves with spreadsheet analyses. If you have a CFA, then expect to struggle just as much as the CA to get in.
What would we recommend for a chartered accountant who actually wants to get into management consulting?
• Accept that your designation is giving you no greater advantage than someone without a graduate degree or no business degree.
• Understand that your designation may put you at a disadvantage since the interviewer will likely think that you believe you have all the required skills.
• Learn the correct way to solve consulting case problems.
We felt it is important you get the right information and did not want to unnecessarily raise your expectations. You need to know where you stand to make the right career choices. Your future is far too important to rely on inaccurate information. That said, every candidate is different.
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