No, You Can’t Have It All: Why Finance Does Not Guarantee You $10 Million and Your Own Beach in Thailand
“Life is either a daring adventure or nothing. Security is mostly a superstition. It does not exist in nature.”
– Helen Keller
I almost decided not to publish this article.
But it needed to be said.
This one is long – so grab some yerba mate, take a seat, and close your YouTube window before you start.
How It All Started
“I’ve been keeping up with your blog for quite some time now and I’ve noticed that a very diverse group of people eventually “discover” that they want to become a banker (former premed students, engineers, lawyers, entrepreneurs, …).
That said… do you find it odd that so many people always ask you about exit opportunities in the first place when they’re still trying to break into the industry? This makes me suspect that some people have the wrong mindset going into the game (models & bottles).”
Yeah, of course *I* find it odd.
But does anyone else?
No, apparently not – just look at comments like this one:
“Damn… there goes another profession I was aspiring to do go down toilet. I thought the travel involved in consulting was just exaggerated. But I was wrong. I heard from Kevin that consultants at McKinsey travel 50-75% of their time. I’m sorry but I just can’t handle that. My only other alternatives are PE and HF. How are the hours and travel like for each of those professions. I’m praying that at least these jobs don’t screw up my life…”
At least he’s done his homework though: he understands some of the trade-offs between these different options.
But he’s still searching for the magic-bullet solution: a way to become a deca-millionaire with no risk and no 100-hour weeks.
About twice a week I get emails asking, “So, if I work at a boutique can I go home at 10 PM rather than 2 AM each night?”
If you don’t work in the industry or if you haven’t done an internship, I can understand why you don’t “get it” yet.
But then the other day a friend at a top bank emailed me saying:
“Man I’m so tired of banking right now, do you know anything else that would pay me this much and give me much better hours?”
And that’s what pushed me to hit the “Publish” button on this one anyway.
What Do You Want?
It’s a broad question, but most “goals” can be reduced to:
“Become a deca-millionaire without doing much work and also getting my own private beach in Thailand while having the best life ever.”
This brings up a slew of other issues – such as, “Wait, so what then? You’ll get bored in a week of doing nothing” but we’ll put those aside for now.
Based on this goal, you may have already decided that finance is the best route to becoming rich with no risk – and sure, the hours may be bad, but they get better over time, right?
Not so fast.
If this is your plan, you don’t understand the trade-offs between finance, different fields within finance, and different options altogether.
There are an infinite number of variables, but we’re just going to look at the most important ones here.
This is one of the biggest lures of finance: just work for a few years and you’ll become a millionaire instantly, right?
But it’s also one of the most poorly understood trade-offs: most people in finance save little money, and any money they do save they either manage poorly or not at all.
$500K per year doesn’t mean much when it’s only $250K after taxes and $240K of that goes into models, bottles, and sports cars.
I almost cringe writing this one – but it needs to be addressed here.
The secret that no one tells you about prestige: no one in the real world gives a crap where you work or where you went to school.
I can’t even remember the last time I told a stranger where I went to school, even though it’s supposedly one of the top universities in the world.
And not to turn this into a dating column, but citing a “prestigious” school or company won’t attract members of the opposite sex – at least not the ones you want.
Sure, your life may suck for awhile but once you hit 35 and have $10 million you can just deposit it all in bonds, make $800,000 per year in tax-free income, and then retire to the Caribbean right?
Except I know of no bankers or other financiers who have actually done this.
To quote a friend who finished the Analyst program at Goldman Sachs a few years ago: “Even Partners take calls in between their kids’ soccer games on weekends.”
If you’ve been working that much for that long a period of time, you’re going to be bored out of your mind if you actually “retire early.”
You might actually get a thrill out of running around and being on-call all the time; you might like traveling every week; or maybe you just want to relax.
So it is relative.
But we can say a few things with certainty: for example, banking has a lot more grunt work and repetitive tasks than other fields. So you’re probably not going to “like” what you do on a daily basis compared to other options.
This one seems like an afterthought: who cares how many friends you have at work, right? It’s all about the dollars!
Well, not quite. Certain fields are lonelier than others – and one untold benefit of banking is that you’ll make a lot of close friends because you spend so much time at the office.
But in most other fields you’re either alone most of the time, or you don’t have close peers.
And what good is money if you have no friends?
“You might get rich if you start your own company, but it could also fail, you’ll go bankrupt and your life will be over. On the other hand, if you go into finance you will easily become a deca-millionaire with almost no risk of losing money or getting laid off.”
If you haven’t been hiding under a rock for the past 2 years, you know that the second statement here is false.
But you may not realize that the first statement is also just as wrong. The real risk of starting your own company is not going bankrupt – it’s something else that nobody ever tells you about (yes, you have to keep reading to see what it is).
Ok, Now Let’s Get Specific
“Ok,” you say, “but what about all the fields I’m interested in? Why are you saying I’m wrong about everything?”
Yes, this one is well-worn ground and we’ve talked about everything from stuff investment bankers like to pay to stuff investment bankers don’t like.
But there’s more.
Besides the pay being extremely variable, you should note that most bankers save nothing in their first few years.
$60K-$70K base salary is barely enough to get by in New York, and your bonus just pays off credit card debt. Even at the VP-level and up, plenty of guys make $500K, then spend it all and have no savings.
Think you can avoid that and still save a lot? Peer pressure is tough to resist.
If you really want to “get rich,” you have to stay in the game until you’re at the MD-level, and then be a seasoned MD with regular business coming in.
And that doesn’t happen in 5-10 years.
Prestige? Well, your parents can brag about it to other prestige-obsessed parents but otherwise it has no effect on your life.
Lifestyle: if you have clients and live transactions, you’re always on call – no matter what level you’re at. MDs spend a lot of time answering email and checking their Blackberries “on vacation.”
But despite other drawbacks, banking is good for forming real relationships with people – you spend so much time at work, it would be hard not to. And that keeps you (relatively) sane.
Everyone has heard about “risk” in terms of layoffs and hiring freezes, but actually getting laid off at the entry-level doesn’t matter much: when you’re young you have plenty of options.
But when you reach the mid-levels it gets very, very difficult to “jump back in” if you get cut – which is a big problem when you have 2 mortgages, 3 BMWs, and 2 kids.
Sales & Trading
“Ok,” you say, “so banking is not that great – I know, I’ll do Sales & Trading instead and make as much or more money but also have a life!”
On the surface the lifestyle is better because you work roughly market hours – it can go beyond that, but you’re not going to be pulling all-nighters.
And hey, you can tell people you work at a bank, so it must be prestigious right?
Plus, the social aspect is quite similar to banking: you make a lot of friends because of the environment you’re in. Sure, you might get hazed but that’s just a part of any fraternity trading desk.
And many traders like their work more since there are no pitch books and there’s much less grunt work and coffee-fetching (unless you’re an intern).
So what’s the catch?
Risk and exit opportunities. Most entry-level traders at large investment banks get paid roughly the same, and it’s more dependent on group performance than individual performance.
But as you move up the ladder that changes – more so than in banking, where even a crappy VP might get paid well just because his MD did well.
So yes, if you’re a rock-star trader and can make millions effortlessly year after year, you’re set – but if you have a bad year, don’t say I didn’t warn you.
And no matter what area of trading you’re in, you don’t have as many exit opportunities as bankers.
You either stay in trading, trade at a hedge fund or prop trading firm, or you get out of finance entirely.
If you’re an intern or you’re relatively new you can move elsewhere but you don’t have the flexibility that investment banking analysts do.
Ah yes, the Promised Land: private equity. Better pay, even more prestige, and much better hours to boot – right?
Well, not exactly.
Let’s start with prestige: whereas 99% of people have heard of Goldman Sachs, the average person doesn’t even know what “private equity” means. KKR or Blackstone may sound prestigious to you, but anyone outside finance is unlikely to know them.
Pay: despite rumors to the contrary, it’s not dramatically different for most people moving into PE. Yes, if you come in from a banking background you’ll get a higher base salary and possibly some sort of guaranteed bonus, but you’re not going to instantly start making $1 million at age 25.
Yes, Partners at the largest PE firms make 10x more (or more) than the top bankers do.
But very few people make it to the top, the industry is much smaller, and if you’re responsible for one bad investment you could be done.
The risk of getting laid off as a junior guy or girl in PE is lower than in banking – but advancing is just as difficult, if not more difficult.
There is less grunt work than in banking, but just a quick reality check: if you don’t find valuing companies, building models, and doing due diligence interesting, you’re going to hate PE too.
The social aspect always gets overlooked – once you move to the buy-side, you lose that large group of friends you used to hang out with, and your co-workers will be much older.
Yes, lifestyle is generally “better” but that’s not true if you go to a large fund – it’s banking hours all over again. And when you get busy with a deal, you’re going to work. A lot.
Much of the above applies to hedge funds as well. The average pay may be higher, but there is so little reliable data on what people at hedge funds actually make that I’m reluctant to say this.
And once again, the lifestyle is not much different from banking at the largest and most well-known funds: You work. A lot.
The risk is even greater with hedge funds, for one simple reason: they have a habit of collapsing.
I’ve been compiling lists of regional banks, private equity firms, and hedge funds, and as I was going through the hedge fund list I kept coming across “As of last year, such-and-such fund has ceased operations” in the “business description” fields.
This isn’t meant to scare you away from hedge funds: it just means that they are more risky than you think, pay is more variable than in banking and private equity (more similar to Sales & Trading), and the lifestyle may not be as good as you think.
I had already given consultants a good beat-down last year, but hey, let’s give it a go once again.
First, the pay is less than any of the other fields mentioned above – unless you’re at a small prop shop that pays $0 base salary.
It’s hard to say whether McKinsey or Goldman Sachs is more “prestigious” – but the average person is more aware of “consultants” than they are of “private equity guys.”
And then there’s the travel aspect: this seems fun at first, but you quickly get tired of flying to the Yukon Territory every week to “advise” on a new oil drilling project.
Most travel is not that bad – but if you don’t want to be away from home every week, you’re going to hate the consulting lifestyle.
One of the big lures of consulting compared to banking is that there’s less “grunt work” and what you do is more “intellectually stimulating.”
But is that true? There’s certainly more “variety” than in banking but I know plenty of consultants who find it very repetitive and think that most of the “research” you do is just fluff.
Still, on average there’s probably more “fun” in consulting.
Another big lure: exit opportunities. One consultant once told me, “Management consulting is the only industry that gives you unlimited options.”
But ask any consultant who’s interviewing for PE or finance-related jobs, and they’ll tell you a different story: yes, it’s possible to get in coming from a consulting background but it’s significantly more difficult than if you were a banker. It’s hard to “prove” you know how to model an LBO if you’ve never done one before.
It’s good preparation for business school or for “management” jobs at companies, but if you’re coming from a consulting background you’re at a disadvantage next to bankers for finance jobs.
I don’t get many emails or comments about this one, probably because no one wants to do it or because you already know the trade-offs.
But I do get a lot of emails saying, “I want to do corporate development after banking to get a better lifestyle. Can you tell me about it?”
My take on it is simple: it’s similar to private equity, but with reduced hours, pay, and upside.
Your chances of getting laid off are very, very low unless you’re at a new startup that happens to fold – but your chances of moving to the top, especially at a huge conglomerate, are slim.
The lifestyle is definitely better than the other options presented here: not much travel most of the time, and the hours are fairly standard except for when you’re working on a live deal.
The other trade-offs vary by what company you’re at and how your group runs – sometimes you might be the only person who isn’t married, and sometimes there’s a bigger group of people your age.
If you go into this after banking – or anything else on this list – you’ll find it very slow since you’re used to constantly running around and being on-call 24/7.
Also, there’s no clear “exit opportunity path” as there is with some of the other options here. Most likely, you’ll end up going to business school or moving to a different company.
I have a theory that everyone who goes into banking secretly wants to start their own company instead. I get a lot of comments and emails that start out like this:
“Hi, I want to stay in banking for 2 years and then use all my money to start a company afterward. Do you think this is a good idea, and if so which group do you think I should be in?”
No, that’s a stupid idea because: 1) You will barely save any money over 2 years. 2) Banking is terrible preparation for entrepreneurship.
This one is almost impossible to write about because it depends on what kind of company you start – offline, online, products, services – and whether you aspire to be the next Google or you’d rather just start a bar with your friends.
But there are 2 important points that no one else ever brings up:
- The real risk is not going bankrupt or ruining your life, but rather wasting time going nowhere.
- This is the loneliest of the options here, because you don’t have peers – you’re either flying solo, or you have employees.
Yes, you could completely fail, but your life isn’t over – this happens all the time in Silicon Valley and everyone bounces back. More often than not, you might spend months or years on something and not get much traction – so you don’t get rich, but you also don’t lose everything.
On the social aspect: even if you end up with employees, you can’t really “hang out” with them. Especially if you started everything alone or with 1 other person, it’s quite lonely.
Pay, enjoyment, and lifestyle vary so much by what you do that it’s impossible to generalize: you could work 100 hours a week and hate your life, or you could treat your business as a simple part-time job.
If you’re wondering why everything I do is online, it’s for exactly those reasons: offline requires far more work, doesn’t give you as much leverage, and restricts your lifestyle a lot more.
Ok, that was really long. And maybe you didn’t read everything.
So here are the major points:
- Wanting to stay in finance for “just a few years” to “get rich” or “have enough experience to do something else” is a poor strategy. You’re not going to be rich after that short a time – and if you want to do something else, be like Nike and just do it.
- Most finance-related jobs entail a lot more risk than anyone ever talks about. And the lifestyle never matches what people with “normal jobs” get, no matter how high up you are.
- If you want to reach the top of anything listed here, it requires work, sacrifice, and risk. This doesn’t happen in “a few years” – it happens by spending 10-20 years or more excelling. There’s no magic bullet.
- The social aspect of all these options is huge and it’s something that almost everyone ignores. Hopefully you’re thinking about it now.
- Be aware of limits on exit opportunities. Hardly anyone tells you, for example, that once you’re at a specialized hedge fund it’s tough to move somewhere that uses completely different strategies.
So, What Should You Do?
Hey, I can’t give you all the answers.
I’m just like Fox News: I report, you decide.
You might be interested in reading Private Equity Salary, Bonus, and Carried Interest Levels: The Full Guide.
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I’ve only just found this article, but wanted to coment and say how accurately you’ve described the risk of being a entrepreneur. I’ve been grinding away for a few years, the business has done ‘fine’, but it’s not a game changer and not something I want to do for the rest of my life.
I’m now looking at other opportunities at age 30 after 5 years of grinding without much to show for it.
The lonliness spot-on too!
I’ve always been worried about failure, but now realising that failing fast would likely have been a net-positive outcome.
Great article anyway, thanks for sharing.
Thanks! Glad to hear it. This article is almost 15 years old, but it’s still relevant. The compensation numbers need an update, but the main points are still true. I would frame it a bit differently if I wrote the same thing today, so this one might be due for an update soon…
I second your article.
I live in Frankfurt am Main, Germany and people in Frankfurt (even in the financial sector) are quite strange and different from London or New York.
Germans are more into technical skills and save a lot of money from the 1st year on.
But most of them reach barely $ 10 Mio. or even fail to be a millionaire.
Yup, agreed. Take a look at some of our coverage of Germany, Frankfurt, and other European locations on this site. It’s a nice country in some ways, but not sure I’d want to live/work there…
You didn’t go into Asset or Wealth Management and how they differ from the others.
Thanks for the article, really eye opening!
I just started my sophomore year of college and am trying to figure out what career path I would like to take. I find both real estate and finance very fascinating, and am looking for a career where the hours are not as long as investment banking but has potential to pay well (e.g. around $250,000 maybe 5 years down the line). Assuming I can be disciplined in my saving of money/investments and am still willing to put in long hours, is it unrealistic to want this sort of income while still having time for family on the weekends? I’ve read about fields such as asset management or “middle office” finance and my impression is that they seem to offer a better work/life balance then IB, and although the pay is less, there’s less of a risk of getting let go and the pay is still solid.
Yes, it’s possible. Please see our coverage of real estate lending and real estate private equity for examples. It’s also doable in asset management, but the issue there is that it’s a very small field that doesn’t hire that many new graduates each year, and pay is under serious pressure due to falling fees.
A great article that cleared a lot of doubts for me. I have one follow-up question for you:
In the article, you said that traders usually don’t save any money due to peer pressure to upgrade their lifestyle. If I were to work as a quantitative trader, I would be an immigrant (with a master’s degree in Computer Science), so I think I could resist the lifestyle upgrades.
My financial goals are anywhere from 1.25 million $ to 10 million $ (or more). 1.25 million $ is the minimum I would like to earn so that I’m financially free in my country, but ideally I’d earn somewhere around 7-8 million $, so that my kids are also financially free and never have to worry about money in their lives.
My question to you: Even if my goal was 1.25 million $ and I could resist the lifestyle temptations, would it still take me 10-20 years to reach that net worth? If yes, then I’ll go with entrepreneurship, because it makes a lot more sense for me given that I can start a business from anywhere (even from my country).
If you can win a good quant/trading role at a solid firm and you do not spend that much money, no, it won’t take you 10-20 years to save $1.25 million. Even starting out as a quant trader in an entry-level role, total compensation is often in the hundreds of thousands at the top firms. So if you’re not overly aggressive with spending, and you don’t lose all your money on risky investments, it’s more like a 5-7-year goal.
Thanks for responding Brian!
If I wanted to earn something closer to $10 million, though, that would take longer than 10 years at quant/trading role. Right?
Even with what you said, 5-7 years for $1.25 million seems a too big time investment for that payoff, considering that I could start entrepreneurship (side projects etc.) from day 1 and be 5-7 years in at that point, while the upside of entrepreneurship is unlimited, I can do it from anywhere and if I persist at it long enough I will most likely build a business that I can operate from anywhere.
All of that plus the fact that the quant role doesn’t interest me too much, that I am not sure if I could get in as a quant software engineer and that I don’t like banks that much.
I think given all this, it’s much better for me to pursue entrepreneurship from the get-go. Let me know your thoughts on this, as you’re someone that has been both a trader and now operates an online business.
You are making way too many assumptions about events far into the future. How do you even know that you’ll be good at or like trading? How do you know you have what it takes to start a business? Do you have experience in a certain industry and know of a specific problem you want to solve?
Oh, and are you sure it’s a good idea to give your future kids money? What if that money loses all its value as the USD crashes and loses reserve currency status?
My advice is to complete internships in some of these fields and figure out what you want to do. If your end goal is “Make $10 million!” then you’re never going to reach it, or if you do, you’ll be extremely unhappy and have little besides money.
Wonderful article. Looking for advice as I consider entry-level jobs in Investment Banking VS Management Consulting.
Some context — I’m an undergrad (junior) and I’m not sure what jobs I want to be targeting out of college. I thought I wanted to work in tech, but I ended up dropping my CS major after sophomore year and now I’m majoring in German and Quantitative Econ. Not sure what I plan to do with my major because I don’t want to be an Economist. All I know is that I like being in charge of a team, handling logistics, solving problems, and thinking of how to make processes more efficient. In the long run I could see myself working at a company and be in charge of managing its operations…
But I’m not sure how to get there. People have told me that finance&consulting would both offer really great training and then I could leverage that to get an MBA and then work at a company. So I guess what I’m really asking is: would it make more sense to start out in an Investment Banking (or other finance roles) or as a consulting analyst? Also, given the uncertainty caused by Covid-19, would I have a better shot of landing a role at a bank or consulting firm right now?
(I wish I had a prior internship experience to base my decision on, but I don’t… I was a Software Engineer intern but that’s it)
OK, so if you’re already a junior, it will be extremely difficult to get into IB at this stage because recruiting starts a year in advance for internships, and those internships convert into full-time roles. And it’s nearly impossible to get in without an internship first.
Consulting might be a bit easier at this stage (???), but I believe it’s also difficult without a previous internship.
If your goal is general management/operations, you should just go into that field directly, either at a startup or larger company that offers some type of rotational program.
I wish I read this when I was in college and recruiting, not that I wouldn’t have just ignored anything that seemed irrelevant. The social aspect is huge, I’ve been ~6 months in equity research at a BB and holy crap is it isolating. No friends at work and no sense of community.
Thanks. Yup, everything is bad in different ways. Pick your poison!
Maybe someone will see this in 2020. Just left prop trading, and am on the hunt for something new. I am most likely to “old” to have a shot to go banking and start down that path. My options, in my head, are: 1. find a more established place to continue trading (hedge fund, bank – I was at a small shop that is collapsing. 2. Try to get in to consulting through networking (even small ones) or 3. Do something, and get an MBA to help change course. I would really like to still have earning potential and the challenges that come with these types of roles before I try to go strictly corporate. Penny for anyone’s thoughts….
You may want to look at some of the options the interviewee here mentioned (as he left S&T in 2019 as a VP-level trader):
Great article and something I’ve been thinking about over the last few weeks. I’m in a top 10 MBA program in the US, having come from a software engineering background pre MBA.
I came in thinking I’d switch to Product Management but absolutely loved my Finance class and the M&A class I’m enrolled in. Thought I’d consider investment banking since it seems like a good way to get into finance. There are some things I can’t seem to wrap my head around:
1. I know from research that buy-side exits for post MBA bankers are rare. Also, supposedly only 50% make it to VP and 10% to MD. If buy-side exits are rare and Corp Dev/Large company is slow paced and lower paying why is there still such a draw for MBA students to go into banking? Sure you’ll make maybe around 350-400k as a 3rd year associate but if you leave then, you’ll go back to a Corp Dev job that pays 200k.
2. It seems to me that a person may be better off starting a post MBA career say being a Product Manager and actually gain some experience and start climbing up the ladder instead of spending a few years as an associate only to leave. Am I missing something? I can understand a non-traditional student going into IB (ex-military etc) but I see ex-engineers, ex-marketing folks etc.
3. I’ve heard from some people that investment banking work can be very repetitive and is not the most intellectually stimulating. Is this correct? To be honest, money is not my motivator to go into Investment Banking. I like doing research on different industries/markets and making models but if the work isn’t interesting and money is not my motivator I think that banking may not be for me. Thoughts?
1) For the same reason that “biz opp” courses, lottery tickets, etc. always sell and for the same reason that marriages take place despite a 50% divorce rate: everyone thinks they’re “different” and “special” and that the probabilities do not apply to them. See the other articles on this site on the career path and Associate, VP, and MD roles.
2) I don’t know, it depends on what you want. Most Product Manager roles do not pay that well compared to IB, PE, and even roles like corporate development once you reach the mid-level.
3) You should really look at the articles on the Associate, VP, and MD on this site (do a search) to get a picture of this. And search for “career path” to find coverage of other industries.
Hey, thanks for the very informative article. I am in my 2nd semester at an undergrad business school in NYC and plan on majoring in Finance. I wanted to know if it’s possible to go straight from undergrad to somewhere like an REPE, REIT, or another real estate related finance field. Would this require doing a lot of research and studying of the real estate field as well as numerous internships? (I worked at an architecture firm last summer). And will I need a 4.0 gpa to get an offer from a company like blackstone or Vornado etc. (I am considering the option of going to NYU after undergrad for a graduate degree in real estate).
I am really interested in and enjoy real estate (site visits etc) almost to the point I was considering the Real estate development field. Based on the articles I’ve read on here the Pay and stability seems to be more in the financial sectors of real estate. Let me know if you have any insight on how I can best go about this journey. Thanks again!
It’s possible, yes, but you will need significant internship experience first. Please see:
Also, you will need to be at a top-tier undergrad to have a realistic shot at doing this in most cases… they’re not going to hire someone from a #50-ranked school right out of undergrad for these roles.
Thanks, seeing as I am not in an Ivy League etc. would going to a top tier/Ivy League for an MBA significantly increase my chances/open up better options?
Yes, but it won’t necessarily help that much in real estate. For RE, it’s more about the strength of the RE alumni network from the school you attended, and the schools that are strong there are not quite the same as the overall top schools in the country (see: https://mergersandinquisitions.com/commercial-real-estate/).
First, I would thank you A LOT, for all your work. It helps a lot, and answers plenty of my questions. You have by the way the best content I’ve seen so far in a blog (very well executed, “Bravo monsieur”).
Secondly, I wanted to know something. I already have an internship in corporate banking (analyst credit), investment banking (M&A) and lately as a consultant at Socgen (IT improvements, Back office).
Nevertheless, I still have 3 questions:
1) You don’t mention buying a company, it belongs to the “entrepreneurship” dimension.
Entrepreneurship could be : creating a start-up, buying a franchise, reproduce an existing concept and executing it well in an other country BUT ALSO buying a company (I imagine having €200k of sparing after 3 years at a BB and investing it, I don’t care of bottles and moddles, I already have a nice gf btw aha). It could be a nice way, but risky for sure, doesn’t it ?
2) How hard is it to create its own PE firm ? (network, funds)
3) And finally, is it easy to move from IB to VC ? (I heard it is better to work in TMT M&A)
A french young man,
Thanks again for all your contents, it is HUGE
1) We’ve covered this topic many times before. This is an older article (written in 2009), but please see:
Suffice to say that buying another business, especially a small business, is extremely risky because you have NO IDEA what’s going on or how it works until you’re in charge. And I say this as someone who has run a business for 10+ years and seen many others. For €200k, you are better off just starting your own business and putting less capital at risk.
2) Very difficult. It won’t happen unless you have 10-15+ years of work experience, a long record of successful deals you’ve led, etc.
3) Please see: https://mergersandinquisitions.com/how-to-get-into-venture-capital/
It’s not that difficult because VC is a less competitive exit opportunity… but you need the right background (tech, biotech, etc.).
I am economics student in my final year of bachelor’s at the University of Mumbai. I would like to know, which skills sets should I learn get into front-end or mid-end investment banking ?
Can I get hired right after my bachelor’s or should I go for an MBA program ?
Please see: https://mergersandinquisitions.com/how-to-get-into-investment-banking/
Fantastic piece. I have been trading fixed income for 8 years at a US bank, and you have hit the job right on the nose. Wish I read this 8 years ago…
What are your thoughts on the challenges one face in banking/consulting/entrepreneurship/other industries? Do they all boil down to same game? i.e. If I quit finance now because I’ve become bored/tired of it all (politics, culture…etc), is the same thing going to happen 5 years from now at another industry?
More generally, what do you think of people changing their career completely after investing a decent amount of time and energy into it? Is it wasteful/reckless/naive?
Would really appreciate your thoughts.
It is really hard to make a dramatic change more than anything. But yes, in general, if you get tired of one thing after a few years, you’re more likely to get tired of something else as well. So it may not be a good idea to switch, especially if you’ve already made it to a senior level. Or if you do switch, do something completely different that’s outside the corporate world.
1. Do you know much about hedge funds in Australia, and are they similar to those in America
2. As a year 12 student, what would you recommend doing to boost my chances to even gain an interview at a hedge fund after undergrad
3. What books/articles would you recommend to get a serious idea of the lifestyle and work at a hedge fund or private equity
4. Is it realistic entering into a hedge fund immediately after undegrad without any meaningful finance experience? And if so, would you recommend a large or a small boutique firm, or something else?
5. Considering your knowledge and connections, what is the ideal pathway to a position such as portfolio manager or even managing director from that of an entry level analyst, e.g. should I stay at the same firm for 30 years in the hope of a promotion or should I attempt to jump ship to jumpstart the next part of my career?
6. Sorry for the long comment, thank you
Hedge funds barely exist in Australia. The industry is underdeveloped, and there aren’t many openings. You need internships if you want to work at one, and you should ideally go overseas to do so (HK, London, NY, even Singapore). See all our articles:
No, you will not enter a hedge fund without relevant work experience right after undergrad. The best way to advance is to deliver great returns. The firm matters far less than your personal performance. Sometimes switching firms helps because other places may incentivize you.
As a citizen of a third world country who graduated from a 300-ish ranked university in the world with a mechanical engineering degree do you think it’s worth my time trying to get an internship in the USA or EU for a ‘front office’ investment banking position? I’m somewhat of a tech-entrepreneur myself who is used to 12 hour workdays/7 days a week for months at a time. My focus lately has been on software development however I feel a banking job would best suite my personality and workaholic tendencies. I do have some background in finance and economics mainly due to independent learning
No, because, first off, you need a way to get a work visa in the U.S. or EU before you can intern there. If you are in a 3rd world country, getting the work visa alone will be difficult. Also, if you’re already running your own business(es), you will be extremely bored interning at a large company or going into investment banking. If you really want to pursue this route, it’s better to keep running your own ventures, see where they lead, and if they don’t go well, think about a top MBA program in the U.S. or EU and use that to get into the industry.
I am curious of your thoughts regarding 1) PE/M&A Consulting and 2) Quant Research/Trading. It seems like they don’t have the same tradeoffs as the fields you listed above.
PE/M&A Consulting: Entry-level positions are often partner-track, which eliminates the overcrowding/competition that inhibits advancement in a PE firm. You advise on deals and think big-picture about a company, without having to do boring projects in the middle of nowhere. There is no travel, like for bankers (who execute a deal, while consultants advice on what deals to do in the first place). While this sounds nice, are the exit opps any better than Management Consulting? It seems like you actually do learn things relevant to PE and work with many of those firms as clients, so what am I missing here? The typical ‘no clear impact/P&L’ issue with consulting in general?
Quant Research/Trading: It seems like very good pay, a stable environment, and a great work-life balance for finance, but you have to ‘earn’ it by being exceptional at mathematics. Is the biggest downside that you are stuck in your position at that firm forever (though pay scales up), and it’s more repetitive than people initially think?
I am a soon-to-be graduate trying to decide between these two options. Any advice is appreciated.
All the best.
1) Significantly lower pay than real PE, and worse exit opportunities than management consulting. Previous interviewees have complained about this field. It might offer decent trade-offs, but you have to accept much lower pay and a surprisingly difficult path if you want to move into IB/PE in the future (you would probably need business school).
2) We’ve covered this on the site before, do a search for “quant”. Pay is very good, decent hours, stable work environment, but the main downside, as you said, is that it’s almost impossible to move into anything else and your role won’t change much over time, similar to trading.
I’m sorry, but i’m having trouble coming to terms with not getting rich. Is there really slim possibility of one ambitious, upwardly mobile banker making millions and living the good life after years in the industry? Also, is the prestige insignificant altogether? I love math, valuation, and im fascinated with financial markets. I dont mind working long hours, spending weekends in the office, so please tell me if this is still a dream worth pursuing. I’ve been dreaming about this for a while, only to be debunked by someone who clearly knows what he’s talking about.
the question: Considering im into finance, is my dream of getting rich and achieving affluence a thousand miles away?
You have to be way more specific for us to give you an answer. What is “affluent” to you? Is that $100 million? $10 million? $1 million?
You will not amass $100 million working as an investment banker, but $1 million is do-able after 5-10 years, and $10 million is plausible once you’ve become an MD.
Prestige matters far less than you think, especially in places like NYC where every second person is a banker… doesn’t really make you stand out.
Hi Brian, how hard is it to make MD of investment banks like goldman sachs etc.? How many years would it take for an MD to make 10-30 million dollars? I have heard many people saying that making MD is not hard as long as you stick around in the bank, is that true? or is it based on your performance? Do most people stop at VP or lower in investment banks? Thank you!
It is difficult, and turnover is very high. Anyone who says you just need to “stick around” is wrong because you need to achieve certain revenue targets each year. See:
Thank you, what level do you think most analysts end up at? In terms of risks of turnover, how big is the risk for levels below MD? I have heard that if you stay at a level for too long and not get promoted, you might get fired, is this true? Thank you!
The vast majority of Analysts never even advance to Associate because they leave for other opportunities, go back to business school, join companies, etc. Yes, it is an up-or-out culture. You should read the rest of the articles on the site because these questions have been answered dozens of times.
What do you think of asset management compared to the above? I’m doing my research and I find it stimulating. Any idea about salary for sales oriented positions? (I already saw the am sales 101 article). I’m in Europe…
Keep it up!!
Asset management can be good, sure, but the hours are still long and plenty of people do burn out. Pay tends to be lower than at (some) hedge funds (you can find salary surveys) but the lifestyle and hours can be a bit better as well. But in buy-side roles, it really comes down to your performance (individual and fund) more than anything.
Thank you very much, Brian!
I think the guy who wrote this thing has no idea on how other professions work. Whenever I see articles like this saying how tough banking is I get the “poor little rich kid” vibe. Don’t get me wrong I respect folks who work hard to get into top notch schools or hustle their way into banking.
other professions are not easy: I am a software developer . You have to be constantly updated on the new set of crap the industry puts out . As more and more Vcs invest in more and more tech companies they turn out different softwares and your skills get old just when you think you learnt it . What I would not give to be paid 10 times that I make to do a repetitive job ( even flipping burgers is repetitive and it is not highly paid) .
Overall banking is a paradise for many folks. Other professions are not as easy as the author thinks. And there are people who work are way smarter and do miraculous work and are grossly underpaid when compared to banking.
Wow, I almost don’t know where to start with your comment – Have you read anything on this site before? Or my own bio / life story? (Not the full thing, even a short summary is fine…)
The purpose of this article is to compare different career options in the FINANCE INDUSTRY. That is why we do not get into a detailed discussion of software developers, tech start-ups, etc.
I graduated with a degree in Computer Science from Stanford (see: https://mixergy.com/interviews/brian-dechesare-breaking-into-wallstreet-interview/) and worked at a number of tech companies before going into this industry and then starting this business, so I have an idea of what’s required in those fields.
Yes, there are smart and hard-working people in other industries. Many of my friends from undergrad worked at companies like Facebook and Google pre-IPO and I saw what they went through… but with that said, they still did not work the hours that bankers do. Yes, sure, sometimes they had to work at nights or on weekends, but that was more in the early days of the company (e.g., Facebook in 2006-2007).
If you really think banking is a paradise, you don’t know much about it and clearly haven’t read anything on this site or other sites that cover banking.
And finally: “a poor little rich kid?” Really? Nope, please try again… yes, I went to a top university, but I had middle-class parents and graduated with $150K in debt: https://mergersandinquisitions.com/how-i-started-this-site-part-1-2007-2008/
So thanks for your comment, but next time please try to do to at least a few minutes of research before you start making assumptions.
I have been reading couple of your articles and others in the website and found them quite helpful. I am a recent graduate with finance major but without any internship. The investment banks always intrigued me but i guess most of what I perceived was superficial info. This article does give a more comprehensive realistic insight of the practicality of the lifestyle and expectations at investment banks.
Yet, I still want to pursue my career in this field to start of as an analyst. I’m already looking at the different resources provided from this website but can you suggest any strategies that I can undertake that can enhance my marketability.
Also you mentioned the job is likely to take a toll on the social lifestyle outside of work and i do understand that considering the long hours that this job entails. My concern was how many hours do we have to work on the work days? And is this like this every day or just certain times of the year or during live deals? Thanks
I’d make sure you gain relevant work experience to enhance your marketability. And depending on the market you are aiming at, additional language skills maybe useful. People usually work 14+ work days as analyst in IBD at an investment bank, especially if it is a BB. Some days maybe slower than others, but all nighters are not uncommon. Most likely during deals, but sometimes you may get staffed on a ton of different deals, especially if the season is busy and the bank is a famous one.
First of all, thank you for this insightful article crafted without the veil of political correctness. It is precisely the raw truth that I require and need, and it is hard to come by.
Here’s some context for you before I ask my question:
I am a young undergraduate (BBM majoring in Finance and Operations Management) looking for a career path that provides practical remuneration and some degree of enjoyment. I am certainly not looking for the million dollar job but one cannot hope to survive on a career purely based on passion. I have a strong interest in video games and I did an internship with a video game MNC as a business analyst dealing with big data. While I enjoyed my time there and made a several friends despite my extremely busy schedule attributed to studying at the same time, I felt that the career progression and job security in this company and industry as a whole isn’t practical enough for me to sustain a family in the future. In all honesty, the only thing keeping me from joining this company and industry is the pay and lack of true meritocratic progression. However, I also discovered that I liked an intellectually stimulating job that are project based as opposed to business-as-usual.
From there, I decided to look for lucrative jobs and hope that it grows on me on the basis that I like intellectually stimulating jobs. With the assumption that jobs in the finance industry were well-paid because they were difficult jobs for intelligent people, I looked for my 2nd internship in that area. Today, I am in a large well-known bank working as a corporate banking intern. While the people I work with are very nice and willing to teach, I feel that the job in finance isn’t really for me. I don’t have any passion in finance per se, but rather an interest in the challenges that finance brings (or so I thought), which I frankly don’t find in what I do.
So here comes the question:
I am thinking of doing a 3rd internship and moving into consulting before finally exiting into a large video game company to circumvent the entire issue of pay grade in starting from a video game company after graduation. This way, I get the sufficient pay grade I so desire, while also working a job that I at least have a passion for in the subject matter. What are your thoughts on this strategy and what advise do you have for a person like me?
I think it sounds reasonable, but I’m not sure why you’d want to do consulting full-time for several years without having had any experience in it yet. If you do the internship and like it, sure, go ahead – but if you are lukewarm on the idea, I would skip full-time consulting roles and just go straight to the gaming company.
Thank you for the swift response.
As you’ve rightly mentioned in your article, there are trade-offs in the career decisions we make. Something (time and sleep) has to go if you want all that money that investment banking gives you. I believe this phenomenon applies to everything in life as well, and bearing that in mind, it is highly unlikely (impossible) that I can find a career that gives me what I like to do, doesn’t demand my entire life, and pays me decently (You cannot have everything). I spoke to a trader once in my bank and he told me something that I felt resonated with me very deeply.
“If you want to work for a company, you will do everything you can to get in there. It all depends on how badly you want to go in. The front door, side door, back door, window, chimney, it doesn’t matter how you get into the building. You will claw your way in to where you want to be.”
Having said that, I came up with a workaround to help me get there by sacrificing my earlier years in life and putting in the hours so I can end up in that position where I am given a good enough pay and a job I enjoy. In essence, I aim to improve my pay grade using consulting, then subsequently capitalize on the exit opportunities to break into that industry.
You brought up how you are unsure why I am heading into consulting. There are 2 reasons, one being the above mentioned attributes of a career in consulting (Money and Exit Opportunities) that will eventually allow me to get to where I want. The 2nd premised on how I believe, on a balance of probability, consulting is an intellectually challenging job where you are brought in to fix problems no one else could. Who knows, I might actually stay in there at the end of the day. I had a taste of what it is like to work in consulting by taking part in a case challenge, but I am not sure how reflective that is of such an experience. I feel that all the networking, research and asking around did little to tell me more about the job and nothing compares to going into it first hand. I hope this does not turn into another case of me working as a corporate banker once again.
I hope this clears up your doubts. I’ll be happy to hear from you again.
Thank you for your insight. I am a graduate management consultant that has recently started in a boutique firm (17 locations worldwide and 300 consultants). I have previously interned at a fortune 500 company as an internal strategy consultant and the experience was so exhilarating that I decided to take a consulting job over banking. However, I have found my job to be quite different to what I expected. We hardly travel, my manager does not like visiting clients so therefore 80% of our time is spent on Google. The office atmosphere is terrible and there are lots of face time even when we have completed all out work. I was just wondering if this could happen to any consulting firm and I just had bad luck with my case manager. Also, would it be difficult for me to find a new job since I have no other experience and have only worked here for 5 month (p.s. I have not had my induction yet and my training was simple 2 powerpoints on formatting conventions and Microsoft office tools)
Thank you for your help
I’d try to network as much as you can and transition in the next few months if possible. Yes it can be challenging but it is doable.
Good morning Nicole,
I have a difficult decision to make within the next year and was hoping you could offer your intellectual insight. I currently work at a wealth management firm (have been working there since I was 18 now 21) and summer is looming around the corner. I have struggled with deciding whether independent wealth management or investment banking is the path to forgo. My work-life balance is great right now but I will admit that sometimes work gets very stale and the office environment is not always exciting. Wealth management would require me to attain clients and at a young age it would be extremely difficult. In addition, most of my pay would be based on commision, so paychecks would be quite inconsistent in the first 5 years. With investment banking I feel the environment would be more exhilarating and fun and challenging, although work-life balance would severely lack. Pay would also be much better at investment banking up front and be more secure than wealth management. However, my boss is the sole owner of his company and looking for someone to succeed his business in the next 15 years when he retires. So my question to you would be how do I possibly decide between the two? And which one do you prefer?
University of South Florida Alumni
Degree in Finance
3 years Financial experience and Sales experience
Julien, I’ve already responded to your comment. Please post your comment only once on our website to avoid duplicate comments.
I cannot find your response?
Here: I don’t think you need to make any decisions here, unless you have an offer at an IB. What I’d do is continue working at your current firm and network with bankers at IB. If an interesting opportunity comes up in IB, you can take it. 15 years is a long time; I wouldn’t count on your boss retiring and taking over his company, unless you really love what he does and your current firm. Even then, I think its good to gain some IB experience if you have a chance.
Thanks Brian, great article and it came at the perfect time as I have been thinking a lot about this recently. I’m currently working in growth equity, and applying to top MBAs, wondering what it is I actually want to do. Your points about prestige really struck a chord with me … it’s such nonsense. Out of all those options, I think entrepreneurship provides people with the most fulfillment overall and even if it’s a flop, at least you worked for yourself and probably enjoyed every moment because it was your project. I like this quote, and try to think about it when deciding what career path to take:
“You only get one shot at life so make it count. Make it last. Make it worth every heartbreak, every smile, every tear, every memory.
This is your life, your destiny, your fate.. this is your
only chance, your one chance to make a difference in the universe, when you are gone, your life is over.. thats it, there’s no
more re-runs. this is the main show and youre the star.”
At the end of the day, I’d rather make a real impact than live in some false sense of prestige, “big money” and 100-hour work weeks just to make money for other people while I fade in the background, grow old and die without having made a difference in anyone’s life.
Thanks for your input and I’m glad you find this article useful. You may also like this one: https://mergersandinquisitions.com/investment-banking-to-sales-tech-start-up/
What are the best hedge fund firms in your opinion?
I can’t say, but I’d check out Barron’s Top 100 Hedge Fund list here: http://online.barrons.com/articles/SB50001424053111903843804579532040267881368
You mentioned management consulting, but what about IT consulting? Could you break down the trade-offs? Thanks!
I am not 100% sure re. IT consulting, since our site is focused on finance roles, so I’d leave this to readers.
Any thoughts on equity research?
If you like valuing equities and want to be closer to the stock market this maybe a great choice for you; hours can be long. https://mergersandinquisitions.com/equity-research-careers/
Thanks for your response
Great article. I am trying to break into finance from the healthcare sector. Am in my mid 30’s and considering an MBA to make up for a lack of background in finance. What are my options
Yes or an EMBA at a top school may help.
Would EMBA be an option if I am looking to make a complete career switch out of healthcare. Not really interested in healthcare consulting etc. I was thinking about a program from a top MBA school, but what are my chances of landing a job in finance graduating at 40 with nothing other than healthcare to fill my resume (I’d have the MBA of course). Just trying to gauge ROI etc since I make ~ 90K right now.
I’d say 50/50. Otherwise you can network with funds/banks in healthcare space and try to leverage your experience there.
Thank you for that great article. Its very useful for people like me who have very little experience working in corporate.
I have done B.A. in Political Science from India and a Masters in Business Management from the UK. Can you tell me what opportunities are available to me in finance as well as business in America. Thanks in advance.
If you want to work in some area of finance with ample opportunities to move “up the ladder” into top level positions, must you live in New York City? I understand lower level positions — such as anyalsts, etc. — are common in many other states such as California, but can you live in California and have that same reach for the stars “ladder” potential that exists in NYC? Are there many opportunities for top positions like VP and MD in California with comparable pay? I understand these positions are extremely hard to reach no matter where you live, but it would be great knowing that they are there in the first place, and I want to live in California.
Yes you can and yes there are. However California is more tech focused so if you want to do tech IB being in California maybe more useful to you. There are plenty opportunities in California so if you want to live there, I’d go for it
Hwy Brian ,I am an electrical engineering student and was wondering what a good route would be to get into investment management. My current route I was thinking was EE->Masters?->MBA->CFA . Any advise on how I should make the switch from engineering to finance?
I’d say an MBA or MF can help you. https://mergersandinquisitions.com/investment-banking-engineer-no-finance-background/
Hi Brian, thank you for the tremendous knowledge and insights you provide.
I’m planning a move to NYC in a few months and working on finding a decent fit career-wise, but my situation is complicated (I know, aren’t they all).
I have a B.S. in Bus. Admin – Corporate Finance & Management Entrepreneurship from 2006. I just turned 30 yesterday and have run my own companies since graduating college. Now after 8 years of being an entrepreneur, I need to start over and get a job to pay the bills.
I got chills when I read, “The real risk [of being an entrepreneur] is not going bankrupt or ruining your life, but rather wasting time going nowhere.” Even though I feel like I have an MBA in real life entrepreneurship, I’m starting over writing resumes and wondering how to equate my experience to something of real value to a company.
I’m an INTP all the way – Introverted Dominant Thinker and Ideation person with dozens of business ideas and I love analyzing them to death, building spreadsheets, and putting the people together to help make it happen. I’m definitely not a customer-focused person, as I’m rather impatient and cannot stand small talk. I have no interest in notoriety and don’t need a lot of social interaction.
Would you be so kind as to help a fiercely independent, deeply analytical, idea focused entrepreneur find some kind of new direction in the finance world?
If I want to spend my time valuing companies and building valuable skillsets, while still having some time to work on my side ventures, is PE the best option or should I try to get in with VC (great interview posts- read both parts) or something else?
Yes I think both PEs and VCs are better areas to be in in finance if you’re interested in entrepreneurship.
Hi Nicole – I was wondering how hard is it to come to Banking after 3 or 4 years of entrepreneurship? Lets say one completes his/her 2 years of analyst program at a BB or elite boutique and then goes into entrepreneurship but wants to come back into banking/PE after few years. Do you think it is doable?
It’s possible, but the obvious question will be: “So your business failed, and now you’ve come back to banking/PE as your Plan B?”
So you need to have a credible story for getting around that because it’s an uncommon transition. Prior experience will help a lot but it’s still tough to explain.
This is a wonderful article. I am a college senior, Math and Eco double majors. I was planning to go to wall street, but after reading some articles about people’s life there, I realize that is not what I want. So now i am rethinking about my career direction.
I enjoy courses like Probability,Statistics, Accounting,Economics and Finance. I also like teaching. I want a career that have good life-work balance. I am considering doing data analysis/statistics, but I am a little worried because i don’t write very well due to the fact that English is my 2nd language. Besides this option, do you have any suggestions about careers that fit me? Thank you very much!
This should help http://www.goldmansachs.com/careers/why-goldman-sachs/explore-goldman-sachs-careers-quiz/
Very good article esp. the emphasis on social aspects of work, and the sharp contrast between finance & entrepreneurship for that matter. Thanks!
Would corp development at a tech company like facebook, google, microsoft or apple be good preparation for developing your own tech start-up? Seeing that a lot of tech start-ups are acquired by these companies and I think being able to work in corp development would give a person a more in depth knowledge of the industry? Thanks!
Yes, I think so. Even if you don’t work in corp development, working at these companies HQ can also offer you insights, network and experience which help you with your startup.
Thanks a lot for the advice! I am really in a dilemma right now, I am not sure what I want to pursue after I am done with school. I am really fascinated with technology and dream one day after I gain some work experience of doing a startup or working in venture capital. However at the same time I feel like I do not know enough about the finance/investment banking industry and tech industry to really know what I want to do.
Jimmy, the best way to go about this is to gain experience in tech and finance. Perhaps you can start networking with people via LinkedIn or cold calling? Taking an internship maybe the first step. What about attending tech conferences? This may increase your knowledge and broaden your network too. http://techcrunch.com/events/
I’m curious as to why you repeatedly mention that a first year analyst (or second year, etc.) won’t be able to save much of their ~$100k salary+bonus. Is it so impossible given the peer pressure, or are there people who are able to do it. Speaking relatively to friends of mine as first years at big4 making $60k total in NYC, they seem to be doing okay.
Some people can do it, most may not given peer pressure and influence from banking culture. It can be challenging to save in NYC, especially if you like to eat out, go out, shop.
So in other words, a large portion of this article is dedicated mainly to people without self discipline.
Whilst I agree you don’t want to try attracting woman with your job title, you can’t deny that it doesn’t add to your total package, increasing your SMV (sexual market value). In other words, you’ll be able to pull more tail.
I think everything else you wrote is spot on though.
I found this article extremely helpful. I am 25 years old and currently working as a consultant (not management consulting), and applied to different financial engineering schools for a second master’s degree. However, I quickly realized that financial engineering is tailored to risk management (middleman), and the program will cost at least 100k out of my pocket. I do not have any internship or experience in finance, even though I did study finance on my own.
Granted I get admission from a top program, would you recommend taking this route? This seems like a very risky move after considering opportunity cost. In the best case scenario, I will be able to pay debt two years after graduation and hopefully make +150k to compensate opportunity cost. How likely do you think this will be? I am not dreaming of making half a million in five years or anything. I just don’t want to become a burden to my parents. I would sincerely appreciate your response.
Unless you get into a target school like Haas it may not necessarily be useful. Yes it is quite risky especially if you’re not interested in the subject. However, if you are, you may be able to open some doors. You may also want to consider an MBA at a target to increase your chances if you’re not sure what you want to do and want to increase your options
Hey Brian, I was just wondering, with a computer science degree from Stanford, why did you choose to work in finance and investment banking instead of Silicon Valley? It seems like right now the tech sector is hot with great pay, lavish perks, and really nice hours. I am also a computer science major who has an S&T internship coming up with a bulge bracket in NYC. But my friends in California’s tech scene are getting way better compensation. First year S&T analyst is 70k but Google/Palantir are paying 80k+ with free meals and housing. Personally, would you recommend someone like myself, with strong quant and coding skills, to continue pursuing a career in finance or to switch to tech?
Keep in mind you also get a significant bonus at banks, which takes total cash compensation above those offered by tech companies.
It really depends on what you want to do in the future. Working as an engineer = lower stress, still good pay, but a much lower pay ceiling than finance unless you get lucky and join the next Facebook. Finance is higher-stress, sometimes lower per-hour-pay at first, but offers a higher ceiling especially on the buy-side.
Plus, you have to factor in whether or not you actually like trading vs. coding more.
I want to be a low key franchise entrepreneur. By that I mean, buy a few little Caesars or something else and run them with managers. So I need to learn how to read financial statements and understand them inside and out. I have narrowed down some great career paths that would help me do that or at least give me some good finance fundamentals. Consulting, Commercial/Corporate banking, and Corporate Finance. Which one do you think that I should go for?
You may want to check out consulting or even accounting
This is one of the best blogs I have read.
I like this post.
Really love the stuff written here, consumed about 15-20 articles in last few days before interview tomorrow.
My question is, if one were to aspire to be an Entrepreneur, what WOULD you suggest??
Feel free to link me to relevant article etc…
All love from UK
Product Management maybe? What do people here think?
I’m a law student in India, and have been offered an internship at CIB Centre, Deutsche Bank in Mumbai with a view to recruitment. Since I had never really considered ibanking before, I have a few basic questions. There may not be too many answers out there but a newbie still needs to ask.
How good are these jobs considered within finance circles? Considering that it’s at DB, but at the CIB Centre so I will be working offshore for my team. Pros/Cons?
The role is as an analyst. What sort of work, pay, travelling etc would this entail? (I know there are voluminous articles on the same, but I was wondering if anybody knew anything India specific, since I’m guessing it will be quite different.
Lastly, How would this job be only to gain experience and in 2 3 years, move on to something possibly working in the Indian market? (I would rather live in India, though am open to moving for a couple of years)
Also, if any Indians reading this, would you happen to know the scope of ibanking in Delhi if I want to move there eventually?
Any help would be much appreciated. Thanks.
I’d suggest you to check out the links below:
For the details of the role, I’d suggest you to speak with HR at DB to gain better understanding. Since you’ve been offered an internship, I believe they could answer your questions.
Yes I think this role can open you to various opportunities in India. I’d leave the rest to other readers to comment.
As someone who was a part of IB (at a boutique firm) in India, I can say with significant surety that the DB offer is what M&I would refer as a captive KPO. You will be working as a support for DB transactions / pitches in any part of the world depending on the team. Would suggest you go for it but with a pinch of salt. Pro’s I feel is that coming from a non finance background, it will help you in getting grounded and knowing how things work. Post a stint, you can think of transitioning to a proper front-end job at a mid-market / boutique IB (slim chances of making front end for the bulgies) if you like the field. Cons mainly would be you supporting transactions running elsewhere (many times the front end team would not be giving you even the name of the client / transaction and you would be just assisting in making pitches / Industry deck through research / profiles / pulling out comps / valuation / etc. Hope this helps
I was just wondering what do you think will happen in Europe given the EU’s propsal to cap bonuses to 100% of salary and the new regulations? Will banks raise salaries or will people simply move abroad or will loopholes in the terms be found and exploited?
would you have anything that explains about the work and the culture in the Operations departments of bulge bracket/IBD companies?
This link should explain your question: http://www.goldmansachs.com/careers/why-goldman-sachs/our-divisions/operations/index.html
I was searching for something that would tell me how to get into Operations in bulge bracket/ IBD companies from general Marketing background.
Also, is it a good idea to confess redundancy in the previous job to your new employer, or make up things like- you quit and wanted to go backpacking. Please advise.
We don’t have an article on this topic yet. If you’ve been made redundant given market conditions, I’d be honest. If there are other reasons involved, you may want to spin it in a better way though I’d still suggest you to be honest because the company may find out. Of course you can add that you went backpacking after being made redundant but if you’ve made redundant then maybe its not a great idea to say you quit your job..
What if your only goal is the attainment of wealth? What if you truly like finance & accounting more than all your other courses? I am not going to be a doctor or a lawyer I know I wouldn’t like med or law school. I see no other field to fulfill my desires. I am not going to be Lebron James, Cristiano Ronaldo, Jay Z, or Brad Pitt, I also do not play the lottery. I have an aptitude and interest for accounting, finance and economics courses why not pursue Wall Street? I am only posting this because I read posts on your site quite often and you seem to steer people away from IBD, PE, HF if your objective is attainment of wealth. Are you saying that analysts & associates in IB actually ENJOY making powerpoints and financial modeling 90 hours per week and are not just there for the large salary? I mean if they wanted quality of life/ free time & other B.S why not pursue accounting or wealth management with their degree/skills? Are you saying that many HFM/PE partners out there do NOT have the primary objective of the attainment of wealth? I think they realize that they do desire wealth on a large scale in life and they have to get this through a legitimate profession and they have somewhat of an interest and aptitude for finance. I am truly not trying to be an asshole here this is just my perspective. What I am saying here is that my main desire in life IS the attainment of wealth, I also have an interest and aptitude for it. I am not asking for one of these psychological things about money not buying happiness because I do not see how anybody has mind reading power to see what makes others happy, also I believe it is all relative to individual, some like apples, some oranges. I know I am not going to be a star athlete, celebrity, or invent anything. I see no other venue of making multimillion dollar income?
Also about how many years does it usually take to reach MD level at bulge bracket?
Thank you for your feedback and comment. You’ve made some good points. If you truly enjoy finance and doing deals, then please do apply for roles in IB. And no, we are not here to steer people away from attaining wealth for acquiring wealth’s reasons. However, its best if you know what brings you true joy and how you can be of service to others in exchange for the wealth. Some people do enjoy making powerpoints and models; some love trading and can’t imagine doing anything else. It usually takes 10+ years to reach MD level, or perhaps less. There’s no set career path – https://mergersandinquisitions.com/investment-banking-career-path/
How does the buy side e.g. PE look upon an ivy graduate with both JD/MBA with two years at a top 5 law firm doing M&A?
Good credentials. However, you’ll be competing against people who have had IB experience. This article should shed some light on your situation: https://mergersandinquisitions.com/private-equity-recruiting/
I don’t mind working long hours during the week, but would hate to have to give up my weekends, so my question is which would give you the most free weekends?
Private Wealth Management, Sales & Trading, Prime Brokerage, Asset Management roles
“no one in the real world gives a crap where you work or where you went to school” – after so many years of working in finance I realize this is so true…not to mention that majority of people in society don’t even know what investment banking is. (Despite the fact that they just assume investment bankers “naturally” make a lot of money)
I really enjoyed reading this. An awesome article to get a reality check and i think everyone should read this before trying to get into IB. Tyvm
Thank you for your comment!
“Sure, your life may suck for awhile but once you hit 35 and have $10 million you can just deposit it all in bonds, make $800,000 per year in tax-free income, and then retire to the Caribbean right?
Except I know of no bankers or other financiers who have actually done this.
To quote a friend who finished the Analyst program at Goldman Sachs a few years ago: ‘Even Partners take calls in between their kids’ soccer games on weekends.’
If you’ve been working that much for that long a period of time, you’re going to be bored out of your mind if you actually ‘retire early.'”
However, would it be possible to retire early?
Yes, it is possible. Some bankers quit the industry early, invest in other businesses/start their own thing in other industries, or just pursue their hobbies. It depends on the individual.
What are your thoughts on a career in corporate law?
I’m currently study a combined commerce and law degree and still weighing up the options.
It depends on what you’re looking for… pay ceiling and progression are lower than in finance, but if you don’t like quantitative work as much it might be good. If you do a search we’ve covered law a few times across different interviews and articles.
I am about to start working in a discretionary asset management desk (research and pick fixed income/equity securities) at a BB Private Bank. What exit opportunities can that provide? Research? Buy-side? Long-short HFs? Would managing UHNW money (vs. institutional) decrease chances in getting into (say, fidelity or blackrock) few years down the line?
what are main advantages/disadvantages of being in Private Banking (investment side)?
Private banking? More private banking, or possibly some asset management (do a search for both terms on this site). HFs would be more of a long-shot. Yes, institutional is better than UHNW for getting into hedge funds and/or large asset management shops. See: https://mergersandinquisitions.com/private-banking-group/-group/
Great article here. I have a more specific question — how does working at an elite boutique (Evercore/Greenhill/Lazard) as a fresh college grad stack up against working at a relatively mature, VC-funded start-up (Series D) in terms of building skills and experience for someone who is eventually interested in working/running a business in some capacity? Whether that would arrive in the form of starting my own company, or perhaps working at a PE firm, I’m not sure, but I do know that if I did banking, I would want to transition from financial engineering to operational stuff sooner rather than later.
It seems to me that you would learn more at a boutique (and do less monkey-ing) than at a bulge bracket, and also preserve exit opportunities into finance – but then again, there’s no better way to learn how to run a business than helping to run a business. In other words, does the heightened optionality provided by a start in banking make up for the fact that it’s not directly what I want to do in the long run?
If you want to be an entrepreneur, I think the VC-funded start-up maybe a better option for you
Well, not necessarily an entrepreneur — I’d just like to operate a business someday. That could be in the context of running my own business, but I’d like to leave open the possibility of working for a PE or a VC firm as well.
In a nutshell, do you think any PE firms would hire from a business development/corporate strategy background for an associate role? Assuming that the megafunds would be a no, but I’d love to hear any anecdotal evidence of a non-traditional business candidate making it into a MM firm.
Yes, in an operations role. If you want an investment role, do IBD
Great article thanks. I see a lot of posts in the site about many fields in Banking (IB, S&T, PE, etc.) But none abot transacion banking (GTS at Citi, Treasury Services at JPM) Anybody can give me some insight about it? Pay/prestige/exit opps, etc. Thanks!
I think readers may be able to give you better insights on this front.
If you want to break into IB, going through transaction banking may not be the best route. And I believe this division does not pay as much as IB. Prestige vs IB – not comparable
Excellent post Brian, my question is more specific though.
I have previous IB (1 year) experience, left the job for some economics consulting and kind of became more religious in the process. So as a jew I’m keeping Shabbos (not working from Friday sunset until Saturday night).
I’m planning some PE interviews because I simply got tired of this lifestyle and find PE extremely interesting but I’m afraid my religious restriction is going to be a problem. What do you think?
(Sorry if this comment is in the wrong place)
Interesting question. Lifestyle in PE may not necessarily be better than lifestyle in IB. https://mergersandinquisitions.com/how-to-get-into-private-equity/
Yes your religious restriction may be an issue for most PE firms. However, if the firm really like you and you address this before you sign the contract, I think you will be fine. You may also want to look at teams in firms which observe the same religious day as you do
Thanks so much for publishing this article and also for all the other stuff on this website – I’m trying to decide what career to go for and I’ve found it useful for making an informed decision. (By the way, you’re all really good writers!)
Thanks Dominic. Brian is an awesome editor.
So Out of all these, which pays the highest? Private equity, Hedge Funds>
Hard to say. Depends on various factors such as the structure of the firm, the performance of the fund and your performance
Just wanted to send you a thank you note – from reading your posts you’ve convinced me that I DON’T want to do investment banking, for the following reason: It is not a scalable business.
In a scalable business, you get paid for the value you create, not the hours you put in. An IB analyst who is only on $15 an hour doesn’t seem to be creating much value, do they? Having said that, I’m still really interested in the area of finance itself, so I’m thinking that I’ll probably head in the direction of working in the finance/trading department of a Fortune 500 company, etc. I personally think IB is quite overrated.
Anyway, just to share my own thoughts and thank you for the informative information on this site and explaining the ins and outs of IB without sugarcoating the truth.
Thanks! Keep us posted!
One of the common themes I see in corporate finance, as well as careers in general, are the often conflicting themes:
1. Work as hard as you can, and make as much money as you can. (This gives pride and financial independence).
2. Travel as much as you can and have as many diverse relationships as possible. (This makes people happy).
Do you see this often in finance? Did you feel it?
(Sorry to bounce thoughts off you guys, it just seems like a hard reality many of us have troble realizing).
Ha. They are “beliefs” people choose to adopt. Not uncommon in finance. Whether you want to adopt the beliefs or not is your choice. And not everyone in finance thinks this way.
I guess I’m just trying to see how finance fits into the “big picture” of life.
Honestly, it seems like a job that is harder, more boring, more inconvenient, more stressful than most. But, the pay is prestige is definitely better than many other careers.
However, in the long run that may or may not be worth it.
What do you think?
Depends on your priorities and values. Its your choice. Whether its worth it or not is also your perception.
All good points.
If you knew what you knew now, would you try investment banking again?
I wouldn’t have known what I know now if I haven’t been through my path. So I can’t answer your question!
Well, basically it sounds like even though the pay is good, most poeple get out of finance because they don’t like it or aren’t good enough.
Am I correct?
I know it may sound like a “stupid” question; but, I’m just trying to ascertain whether finance is such a great field; with the high-turnover rate, it sounds like it’s not.
Not necessarily. Some people stay some people leave voluntarily or involuntarily. Whether it is a great field or not depends on your values and priorities! I can’t say!
Very insightful article yet again! I need to make a decision. I have two offers, one is from a Tier 3 bank which is paying 45k USD in HK to begin with, after a rotation of one year in ops, risk and FO roles, I finally get ED trading with around 55-60k. The second offer is for a Structuring role in DB but not exactly in FO, it’s called offshore FO. I’ve heard that the exit options are not as good as this ‘offshore’ FO is still considered as a middle office. The possibility of moving to a proper FO within DB is still there but like 10%. The pay is definitely better in DB to begin with, but its a tough choice to make for long-term. What would you suggest?
Which team do you like better?
I’d choose DB given the name and pay and exit opportunities
I don’t have more experience to compare to. However, DB is CIB centre in India (maybe what people refer to as KPO), so even though a structurer can work sitting here on the same stuff, the exit opportunities is something I am not very convinced about. The pay is better in DB to begin with.
Which one do you want to take? What does your gut tell you? That’s important
Hey, listen, I’ve come across your site occasionly. And now i realize that i stumbled upon a diamond. Many thanks for such a valuable info u post on the site…But, look I live in Kazakhstan a third-world country, and while reading your articles, i started to think about whether the things u write here can be related to my financial area, i mean your financial system and markets are bigger much more developed tnan in my country…my country only tries to copy the way finacial system and markets work i your state(i mean US)…So, due to my lack of knowledge and experience, i’m a little bit anxious that the things i read here can not be applied in my country, because the financial system and markets are not so developed as in yours and the culture and other important factors are different. So, what can u advice?…thanks in advance…
I don’t really know about Kazakhstan but many of the strategies still apply, just on a different scale. I would strongly suggest moving to a country with a better-developed system if you want to work in finance.
“I would strongly suggest moving to a country with a better-developed system if you want to work in finance”
Can u, please, recommend any country I can move to first, and then, which one is the best for working and building a career in finance? Please, take into account, that i’m 24 (bday in January),and i have 1,5 years of working experience in commercial banks in my country, to be precise, i had worked half a year in financial risk-management, then half a year i was assitant to chairman of the managing board of a bank, and now for half a year i work in the department of developing products and optimizing processes for crediting small and medium business in the bank. I can speak russian and english and have bachelor degree in finace(majior) and accounting(minor) from the best university in my country where all the classes are taught in english? So, considering this, what can u suggest? Many thanks:_)))
London / New York City
Your posts are awesome (you know that already). I really got a clear picture of FINANCE industry and most importantly about CFA.
It is not possible for me to get into a TOP TIER BUSINESS SCHOOL cause i don’t have the money as well as can’t plan my future on scholarship or student credit. So i would like to stick to CFA instead. But i followed your advise to NETWORK LIKE A NINJA and i m pretty much happy with my network COVERAGE. :P
I am not interested in investment banking particularly or neither dream about earning 10$ Millions in 5-10 year. I just love finance practice as well as i am good with number. Working for an hedge fund, a stock broker or some credit rating agency is my goal.
Cool, glad to hear it
1. First off, I want to say how much I appreciate your well-written articles. While I’m certainly jealous I am not yet in finance and making the big money, I am glad that there’s a realistic picture involved. (i.e. that Wall Street people right now aren’t partying with beautiful women, nice cars, travel, etc. with lots of money; in reality, they’re doing boring tasks with stressful job situations).
Am I right on that?
2. Secondly, I do want to quote what an insightful I-banker (Tom Harris) told me about 8 years ago, “In I-banking, as in life, you CAN have it all, just not all at once; in any given moment, you must be completely focused on your task, over time, you can move to other goals”.
Do you guys agree with that?
1. Yes and no, depends on the individual
2. Sure but also depends on the context
this is one of the most realistic articles I’ve ever read. Entrepreneurship and ibanking do not go hand for hand. Ever heard of the entrepreneurship mindset?? Entrepreneurship is about innovation, solving problems and capitalizing on it.
Firstly, thanks M&I for your site.
I have a question for you and just generally everyone who can help
I’m a first year medical student (here in the UK we have undergrad medical courses so I I’m still 18) and my whole life I’ve been in a dilemma over banking (or something finance related, as I come from a family of accountants and bankers) or medicine (cause at the same time, I love science and there isn’t much harm in helping people).
But right now I’m losing my motivation to do medicine and so am considering doing an internship in finance.
Where do you reckon I should intern to get a view of what a day of a person in finance is like? I know obviously there is no chance I will get an internship in somewhere like GS or ML, but do you reckon I would obtain a good insight if I shadowed my father who is currently a VP (Area Manager) at HSBC?
Informative article and entertaining read, thanks.
Im in South Africa, qualified civil engineer, as well as completed Chartered Accountant qualification, interested in investment banking. No misconceptions about being a millionaire or the mountains of grunt required, but, my biggest query, is where in IB would i find the most rewarding project based work? I have been accepted for internship with one of the local IB’s, rotating through M&A,structured lending, structured trade and commodity finance, as well listings on the JSE.
Any insight into which of these areas might provide the most job satisfaction from a project orientated work cycle, or perhaps there are other areas in finance where my expectation could be met?
Regards and thanks
I think most deals bankers do, while transaction-based, are project-oriented.
Thank you for the post! I’ve been reading your website since I started job hunting half a month ago. A lot of the stuffs here gave much more insight than those “job descriptions” on company website. I was a little bit lured to the i-banking a while ago, and am considering consulting right now. But especially after reading this post, I figure it might also be ok if I just go to Chemical Engineering industry as a Chemical Engineering graduate student should do.
Great post, really informative and realistic. If you could give me a little advice that would be great. Basically I’ve just finished my A-levels and got some good grades. I’m really interesting in banking and wanted to know which sector, if any, had the most maths involved? It’s just maths is one of my strong points and wanted to know if I could use this in certain areas more than others.
Perhaps you could look at derivatives, structured products, leverage finance …
Hi M & A,
I know there may not be a job in finance that’s a “perfect fit” for everyone. However, on the other hand, I do agree that there are better fits than others.
Can you recommend any way you have found that will get me a good fit? (I know trial and error is the only way; however, as with everyone else, I know my time, money, and others patience with me is limited). While this may sound naive and trite, I want to do whatever I can to save wasted time.
Thanks for the consideration
Sure, read everything on the site under these 2 categories: https://mergersandinquisitions.com/investment-banking/ https://mergersandinquisitions.com/investment-banking-exit-opportunities/
I know that the authors like to over-dramatize some quotes. However, I was wondering if someone could give me a figure about how much bankers really do save?
I know exact data is impossible to come by; an estimate or range would do.
(i.e. normally a first year analyst saves between 10-20K, or 10% of his income; a VP saves 40-60K, or 10% of his income, etc. would be a great answer).
Hard to say. There is no standard savings rate for bankers! It depends on the person’s priorities and expenditures! This link should help: https://mergersandinquisitions.com/investment-banker-salary/
Realistically, can someone save $3000 a month (after bonuses)?
Assuming you have relatively decent spending habits yes
I’m working at a small PE shop and pretty much everything you said about them are true. I was hoping for more active involvement in strategy and operations by working at a small shop, but that’s not happening. Any thoughts on starting your own PE firm? Difficulties (of course client sourcing)? Is it worth it?
Almost impossible unless you have grey hair and a long track record. If you want to start something, start a normal company – much easier and little capital required for tech/internet stuff.
Know anyone in/anything about quantitative finance? I’m an Engineering student, interested in a maths/stats/computing approach to investment. (Maybe, oh maybe, if I come into this field from another angle, I’ll avoid all the career downers that you list above… or I’m guessing not?)
Yes there are some quant finance articles here if you do a search for “automated trading” and “trading” in general.
First off, I want to say your site is great. I think that M&I’s solid evidence-based judgments, combined with a great commitment to personalized services, makes a big difference in what site I choose. I hope the site never loses is it’s dedication to both.
Secondly, my question asks about the positives to investment banking. Are there any other serious pro’s (besides the social aspect)?
The author of the site admits he is cynical (even though honest and objective). However, I’m guessing there are some other pro’s, if the data is looked at (i.e. a higher salary rate than average, etc.).
Thanks for the consideration
You do learn a lot, and yes you get paid well for a recent graduate. And it positions you for lots of opportunities in the future.
Do you believe in psychometric (aptitude) testing to see if you’d be a good fit for finance?
I know your website talks about merely needing to do a lot of grunt work, get along with co-workers, take long hours, etc.; but, I’m hoping that there’s a global, proven way to see finance is right for me.
While I know trial-and-error is the most common way, I think that a person’s experience can vary so much it needs to be coupled with some more rigorous (mathematical-like) theory.
I don’t really believe in it but then I am one of the most cynical people on the planet so tend to be skeptical of such things. Best way to tell if its for you is with an internship
I was wondering what you would say about working in “Venture Capital” with regard to the categories of “Pay”, “Lifestyle” etc. that you have outlined above?
You mentioned that people “think” PE hours are better, but they aren’t exactly much better. What about Mid-size fund PEs? Will the hours be much better? But far less pay? (How does Mega fund PE pay compare to Midsize fund pays?) And does not going to a mega fund hurt my chances at top B-Schools? (Wharton, HBS) Thanks
You might be doing 60-70 hours per week there instead, so maybe free weekends. These days pay may not even be that much different, maybe $200K vs. $300K or something like that (much more of a difference back in the bubble) you can still get into top business schools
It seems that so many people are counting on being done with their 2 yr stint to break into PE, but according to your article the reality is that people are still going to have to deal with long hours. Based on this and my question prior, do you think it’s better to go to a small/mid sized fund as opposed to a megafund? Also, I’d still want to go to a top bschool
It depends what your goal is. If your goal is to have the most prestigious name possible, go to the mega-fund. If you care more about making a good amount of money and also occasionally doing things outside of work, go to the smaller fund.
Can you give more detail about how much a financial analyst in a smaller PE fund would get paid, and how much they would work per week?
Are there many job opportunities for an analyst in smaller PE funds and would it be likely to get into these not coming from IB?
What about real estate private equity or working for a REIT?
Probably about the same as normal PE… working for a REIT could be interesting, I think there might be potential for higher pay than at a normal company but still below PE and IB. And it’s much more deal-intensive than doing bus dev at a big company since REITs are constantly acquiring and disposing of assets, so I’m assuming hours would be more intense as well even if not as bad as IB.
I really like this article. Thank you!
I’m planning to work in a finance field for 2 years and then hopefully I could get into a good MBA program. After MBA, I want to work in Asia. Do you think I should break into IB or consulting? Thanks!!
Hi M&I, i made a lot of research on “Life as an M&A”. It is good u provided with a realistic life of an M&A (Investment Banker).I appreciate it.
Am an seeking for an entry level position in Investment Banks Or Boutiques.Am confused, whether to choose M&A or Portfolio management( Starting with Equities Analyst), Private equity or Hedge fund manager as my career. As am interested in ALL the above mentioned streams, am confused which one to choose as my career, and the thing is i would like to make regular bulk cash inflows, i.e earn millions of dollars.
So can u explain me who from the above mentioned list earns lots of Dollars on the long run.?And the advantages of choosing a particular field(which u’ll suggest) and the opportunity cost of losing another field.?And who enjoys lot both in monetary terms and social life ?
thanks and regards
Um I think you missed the point of this essay – there is no perfect solution. See this as well: https://mergersandinquisitions.com/investment-banking-career-path/
Thanks for your articule. How about the asset management firms like Fidelity, Blackrock and some investment management arms of investment banking? I hear it is less demanding than IB and less risky than S/T. Is it true?
Yes there is some truth to that. Still not a walk in the park but asset management is a compromise in terms of pay and lifestyle.
Thank you for this article. I was wondering if you could elaborate on why investment banking is terrible preparation for entrepreneurship. I have a friend who is an I-banker and told me that I-banking would provide me with great skills for entrepreneurship. My goal is to have a small business in something that is not that innovative. (not really sure what yet, but probably in something like real estate)
What do you do in IB? Take care of random administrative tasks, fix commas in pitch books, and be the go-to monkey for senior bankers. It doesn’t teach you anything about finding market opportunities, developing a product, or inspiring/recruiting/managing people, all of which you need for entrepreneurship.
anything about finding market opportunities, developing a product, evaluation of projects,make connections with head of banks, funds, all of which you need for entrepreneurship.
you could find in VC or direct investment PE (middle or small)?
you could give advise how to use more efficiently of distressed business or assets. Increase capitalization and profit.
Is it creativity or routine? It looks like creativity for me. So Brian, what is your thoughts?
I don’t really consider that creative work in the same way that writing a novel or a screenplay or composing music are creative. You’re just doing business and making decisions which doesn’t really use the same part of the brain.
Question – My goal is to start my own business. I already have entrepreneurial experience so I know everything it entails. I have a finance degree and want to get a job that has good hours so I can concentrate on building a business while I save some money.
So, is it ok to take a back office job so I can have more free time to do this? The only thing that draws me to IB is the prestige and the fact that I might make some good contacts that will eventually help in my business. The long hours in IB seem like a hindrance to my entrepreneurial goal. Your articles make it seem like working in Operations is the kiss of death, but if staying in finance isn’t my goal, is it ok to work in back office? Thanks.
In that case BO may not be that bad, just make sure you don’t get addicted to the paycheck
What do you mean by get don’t addicted to the paycheck? Salaries aren’t that high in BO and there’s hardly a bonus, right?
Addicted as in “Oh I have cash flow coming in, I don’t have as much motivation to go do my own big idea anymore.”
I went through few of your posts and found them really helpful. I appreciate the time and effort you are putting in here.
I am a Software Engineer right now and looking for a career switch. I like investing in stocks, mutual funds etc. but don’t want to it. The reason being I am a creative kind of person and would love to do something in which I can utilize that potential e.g. create a new financial product/service or anything of that sort.
In the long run I want to be an entrepreneur in the career I enter. I am ready to put in long hours, sacrifice social life and live on low pay for till the time I am learning.
Can you please suggest me a relevant career in finance/ out of finance.
That’s sort of vague – you want to start your own company but you also want to work at an existing company? I would just start your own thing if you want, do it as a side project at first and minimize expenses until you have something generating profits. If you’re looking for an idea you could d any number of jobs in finance, PWM or trading are the most relevant if you like investing.
Thank you for replying.
I want to work for some company to gain experience and industry insights. When I think it is the right time, I would venture out on my own.
I like investing but I don’t want to make it my profession because it involves analysis, analysis and analysis. Trading will not work for me. Please suggest me a career where I can utilize my creativity. If you can give specific examples, it would be helpful.
Maybe work for a prop trading firm, learn about tech and investing there and then go launch your own thing. Unfortunately nothing in the investing world is really “creative.”
YOur cite: nothing in the investing world is really “creative.
But what about VC in new technology or product?
You have to source something really new, haven’t you?
What about PE-as direct investments? if you want to get EBITDA 50%, you can’t rely only on the same product or services. You have to create-advise-implement some competitive advantage (not only finance engineering)? Or you have to be a leader on your niche?Right? So you need sourcing new ideas, consulting and development.
is it creative way in investing world? you can get a lot of ideas during the process that can help you in your own project.
what do you think about it as an industry insider.
In practice most VCs do not do that, they operate more like pure financiers. There are some exceptions but mostly investing is not creative work where you’re making anything.
I have been a regular reader of articles on your site.
In most of your articles you have mentioned how bad hours can be in a IB related jobs, like 2am kinds and all.
Honestly i cant figure out how can someone sustain that kind of schedule. Even a 9am to 11pm, seems to be so challanging. Is it how worst it can get, or you are referring to some extreme situation?
It is not like that every day… see the day in the life series. Drugs and killing people also help to relieve some of the pain.
Not sure why did you want to put that second sentence in there. But honestly that sounds RUBISH..
Relax, it’s a joke. Inquisitions = violent, just the theme of the site
have been reading up your website and i find the subtle humor extremelely entertaing and i like.
I agree – humor is what gets us through, keep it up!
On Sales and Trading (and I can only speak for London) if you’re on an equities desk as a salesperson or a trader this is the ONLY job I know of in finance providing you are at least average if not good/great/excellent where you can become a millionaire by 30 and be in home for tea every day.
A family friend of mine is an equities trader at a top US bank and he frequently leaves between 5-6pm every day. No later than this. Market shuts at 4.30,people stick around usually for half hour-one hour to do some research, shoot the breeze and head home. Thats the only ‘perfect’ position in finance you can find. And even this has trade offs since if you have a bad year esp at this bank or even make 1-2 weeks you’ll be canned. Exit opportunities I BELIEVE are so overrated. I know plenty of S&T people who left and are doing good things bit still in finance i.e. PM, HF traders, Private Equity, other unique buyside jobs and a couple are now setting up their own shop aged 26-28.
So is your friend an agency or a prop trader?
How about the pay/lifestyle ratio in private wealth management/private banking? Thanks
As mentioned in the comments above, it’s similar to working at a large company, with better hours and reduced pay. The ceiling is much lower than in banking.
Hello. I am 14 and in eighth grade. I love this site. My dream job when I’m older is investment banking. Many of my parents’ friends are bankers, and they tell me they somewhat like their job. I’m great at finance for my age, know all about stocks, bonds, futures, etc,, and I know what people are talking about when they bring up GS, MS, JPM, etc. Is there any advice for me, even at 14, on thinkg about how to get a job later in investment banking?
Yes have fun, enjoy life, and stop thinking about banking
By Large Company do you mean Corporate Finance? Because it doesn’t really sound that bad. Working normal hours while making 70-80k sounds good to me. I’d love to hear some thoughts from you on Corporate Finance.
Yes. 70-80K seems like a lot if you’re in college but then you graduate and realize that half goes to taxes, leaving with you little for anything besides rent and food in most big cities. So as you get older you realize that you need something higher-paying to live more comfortably.
Probably my favorite article on the site.
Is it realistic to think I can work a “less prestigious” job in financial services (wealth management or commercial banking maybe, something to pay the bills) while simultaneously building an online business selling products?
Long term I want to work for myself, but I’m worried about not going anywhere as outlined above. Is it possible to hedge my bets, or do I really need to dive in head first?
If you work somewhere like wealth management or commercial banking, then yes, you will have enough time to work on side projects. In banking / trading / PE you probably would not (don’t ask how I started this site while still in banking, it was a unique situation).
So I gotta ask, how did you start this site while still in banking?
It wasn’t that hard because back then I wrote much shorter articles, didn’t do interviews, didn’t create comprehensive training programs, etc. so it only took a few hours per week. And it started during a market downturn so I wasn’t that busy.
Do people consider/categorize capital markets as banking? What about doing LevFin if it’s under capital markets?
Yes, all of those are considered banking: https://mergersandinquisitions.com/equity-capital-markets/
I enjoyed reading the post. I think I missed the section about why ibanking is a good career choice though…;)
It’s not – this site is just a long con that tricks you into going into ibanking, of course…
so what is a good career choice in your opinion?
Drug-dealing is a perennial favorite.
They have long hours too. And think of the exit opportunities.
Consider reading Levitt & Dubner’s ‘Freakonomics’, precisely the chapter ‘why do drug dealers still live with their mom?’. At least get a business degree before you enter drug dealing, otherwise you’re looking at 300 chips/month… Then again – unless you’re not all that bright – that comes tax free!
You are hilarious
So what exactly do you mean by upside?
Do analysts and associates get to travel a lot?
No, far less than in consulting. Maybe once every 1-2 months.
Hi thanks for this,
It would be great if you or someone could create a visual representation of all these variables and alternatives, I can’t sort them all in my head!
Anyway quick question, I am an entrepreneur at heart with pe advisory experience. I have a lot of ideas for different businesses but no cash. I need investors.
Where can I work that will position me so that I develop deep relationships with angel investors and wealthy individuals? I used to work in private equity placement but we mostly just dealt with institutional investors.
I’m thinking of being a deal finder for an angel group? Private banking? Dunno..
Venture capital or corporate development – the best way to meet investors is to move to the SF Bay Area and get directly involved with startups or groups like Y Combinator, Seed Camp, etc.
How ironic. The best article about all these breaking into IB stuff made me want to reconsider choosing IB. But do you think location would make a difference? I have heard that places like Hong Kong has much lower tax rates, something between 10%-20%. Would that help me to save more? Anyway, i think this article is great work. While we are all trying desperately to break into IB, we need articles like this one to remind us of what we are truly entering into. It seems that choosing a career is like investing in a stock, and if everyone is optimistic, it might be seriously over-valued.
You can save more in HK but you may also spend more on going out, taxi fares, higher cost of living etc. etc.
how about this?? Intend to get into IB, work my butt off till making MD, network, network, network ,grow my client base and finally head back to my country ( developing with huge investments within the next two to three decades ) and start my own Investment bank hopefully with a senior partner that I have managed to poach by then.
Does that make general sense for the direction in which I want head??
Sure, but who knows if you’ll still be interested in that 30 years in the future? My point was that interests shift all the time and there is no best “path.” So far-in-the-future plans rarely hold up.
Thanks for this post, ive been seeing multiple career choices and I-banking was one of them and this reality post really hits the spot about lifestyle & money.
Like you’ve said: theres no magic bullet
You keep stating how corp d/corp fin pays less. How much less exactly? If your coming out of 4-6 years of banking experience with the goal of settling down, im sure pay can’t be that bad..sure not as much as you would get in banking but the idea is you would be heading in at a higher level. Im not looking for the magic bullet but eventually, lifestyle takes precedence. Also what is the hierarchy tree like at corp d at any big company?
You would be lucky to make $100K all-in with most corp dev. positions. If you move in at a more senior level you might get more than that but you will still be making less than banking Associates even at high levels. Hierarchy depends on how big the company is – smaller places might only have a few people who all report to the CFO whereas larger places have multiple divisions that all report to each other and ultimately the CEO/CFO.
I guess my view on corp d was a bit skewed because i know head of corp d at a fairly large bank raking it in, but i guess chances of reaching that position is quite low like you said. by heirarchy i meant is their structure like ibanking ex: analyst-associate-vp-md-group head, or is the ladder a bit less strucutred.
It’s usually not quite as structured. Getting to a VP-like position at a company is actually much harder than making VP in banking because you need a longer track record of success + much more skill politically.
What is your view on Private Banking?
Similar to the comments on private wealth management / asset management above – better lifestyle but reduced upside and advancement potential.
when you say upside, what do you mean.
also whats the pay like in PB/PWM
I guess you wouldnt start really making a lot until you have your own clients right?
The pay is significantly lower. You will not be making upper six-figures / millions in PWM unless you are very high up. You need a lot of high-paying clients to reach that range.
I’m a 30yr old with a 10yr background is in project management. I’d like to get into REPE on the buy side. Once I finish my PMP I will be attending a top 20 school for a dual masters/MBA in either Strategy/Finance or Real Estate/Finance. My plan is to work toward REPE through companies like Jones Lang Lasalle or CBRE. I love real estate and I want to be involved in the biggest deals either through development or REPE? Is anyone doing it this way (rather than through Ibanking) and Is this a realistic path given my age and the time it will take to get there (with no ivy league degree?)
You could do that rather than going through IBD, but I’m honestly not sure how viable it is to get into REPE the way you’re suggesting. At first glance it seems viable to me but I’m not 100% certain.
is 60k/year (now 70k) really that bad in NYC?? I’m wondering if I should even look at jobs there.
You can live on it in NYC, but your lifestyle will not be that great.
Do you think you could do an article comparing Big 4 accounting to BB investment banking and give the pros and cons for both?
Really the only pro for Big 4 accounting is that the hours/lifestyle are better (at least outside of tax season) – but otherwise banking is better in terms of pay, exit opportunities, learning, networking, etc.
i’m an analyst in the corp dev dept of a large bank. couldn’t agree more with what you said above. as you correctly predicted, i do intend to move on to business school in due time.
that being said, any insight you can offer regarding exit opportunities and related fields that i can move onto? is m&a consulting a good option? thanks!
Most likely anything finance-related in the industry you’re working in now… maybe a bank or group focused on that specific industry as well. Don’t know too much about M&A consulting but that could be another option.
Great article! And I got one very important lesson from this: If you want to do something else after 2-3 years of S&T(or banking), just DO IT after you graduate.
I want to become a fixed income trader. But then I always wanted to pursue a higher degree in fields other than finance and economics. And I think there may be a handful of people in this website who thought getting a Ph.D is another good option. Now that I begin to realize that working as a trader and saving some 70-150K for my graduate school and life afterwards is very unrealistic and hardly possible within 2-3 years of time frame, perhaps I can just apply for graduate school upfront.
But here’s the tricky part: My career has already been half set up, since I did two internships over the last summers and am studying a major which is quite relevant for banking and trading. I’m a junior now, and it’s too late to give up the career plan that I’d been thinking about ever since I entered collge. Do you think it’s still better to start late than never, or should I just stick with my career plan and try my best to save some money before leaving the industry?
(of course I may want to stay, but I know that only a very few traders become successful and get the rights to remain in the industry, after all)
Yeah I mean if you’re really interested in BOTH trading and getting the Ph.D degree I don’t see the harm in doing both.
You may not save a ton of money if you work as a trader at a bank, but if you enjoy it, there’s no harm in doing it and getting some experience.
Good article as usual. I’ve actually been studying this topic for the last couple months (I recently started an IB analyst stint). All your points are valid. However I think you need to keep in mind that, yes banking can be tedious & has a lot of misconceptions, but I think its one of the most flexible post college careers. I want to work in prod dev after this job at a growth stage VC backed portfolio company, I’ll get to use my engineering from college and meet the position requirements for job experience. Will I be using all my modeling skills? Probably not. But My IB background conveys a good work ethic to clients and investors.
Also I think you have a misconception about start ups. I did a short shadow at a start up by my school (UC Berkeley), and I loved it. Everyone is really easy going & comfortable with each other. I’m enjoying banking, but I cant wait to get back into that environment and use what I can from IB to help grow a promising startup. I haven’t spent much time in or around PE or HF’s, but I personally think in terms of lifestyle a good start up plugged into the right community is by far the best culture.
And really, I know your articles are for a general audience, but your quality of life can vary so much from company to company group to group. A roommate from school is working for Bain consulting in M&A, and hardly ever has to travel & loves his coworkers.
Read the About page… experience starting multiple businesses. I’m glad I did banking, but it wasn’t for me – neither is a traditional startup, as I enjoy the online infopreneur model much more.
If you’re talking abt exit opportunity fr banking to being a corporate executive (CFO or finance director), I think it’s much easier for a corporate banker (who knows the financial health in more detail and the management of that particular company) to switch than for an i-banker (who’s more into deals/transactions)
The corporate bankers I meant here are the senior bankers who supported the company’s forex, trades, financial transactions opportunities, etc
There’s some truth for that – bankers are more likely to end up doing M&A at the company rather than the other tasks you described.
I see CFOs/senior finance executives coming from different backgrounds: corp bankers, ibankers, research analysts
M&A deals won’t be taking place everyday. hence bigger companies may have M&A or Strategic Investment dept which employ Ibankers/ consultants. Corp bankers seemed to be more familiar with the companies day in/out financial operations (forex hedging, cash management, etc).
That said, I think at the end of the day it’s much easier for bankers to be employed by large corporates if they are constantly in touch with the corporate management levels.
Great article and site. My only complaint is that like WallStreetOasis it seems to be almost exclusively targeted at pre-MBA folks with nothing for MBAs/post-MBAs. I know that to a college kid or 23-year old analyst it seems preposterous that you could have your MBA and still not know what you want to do with your life, but such is life in the great Recession. I finished my MBA in May at a top-3 b-school, and with the economy where it is I am still looking for a job (as are a scary amount of my classmates). I did not pursue finance while on campus, but after some belated (mea culpa) soul-searching I realized that I really do like finance, especially the areas of finance that combine finance and strategy, like M&A, restructuring, and PE. The problem is that I don’t have any finance background. Can you say anything about post-MBA banking and/or point me to any good resources on it? Thank you much!
How can you complain about hundreds of FREE articles? :)
Anyway, it’s aimed at younger folks because the majority of the audience is pre-MBA – but there are articles and Q&As covering more experienced candidates as well. And not that much of the advice is different in many cases.
The problem in your case is that it’s very difficult to get into finance if you’ve already graduated from an MBA program – if I were you, I would cold-call some local boutique/restructuring firms and maybe contact places that are hybrid consulting/turnaround firms and assess how interested they are. It’s a waste of time to even bother with large banks at this stage.
The conclusion that can be drawn is that having 10million and an island is up to the individual and is not guaranteed by what job/industry the person is in.
Another excellent post from you.
I was wondering if it is a good idea to start of my ‘why I-banking’ answer with something like ‘I don’t know if I wanna do banking for the next 20 years of my life but I do want to do it now and here’s why’.
Is something to that effect a good idea?
I would not start that way because you’re starting in the negative. Just jump to the second part and say, “It’s what I want to do most now because…” and then when long-term plans come up just say you don’t know exactly yet, but something in business/finance.
I’m in my senior year at Wharton and have realized that I should have done computer science so I could work in silicon valley. I’m really interested in working for tech companies/startups, but the most exciting ones only hire engineers out of undergrad. I want to work in product management, avoiding their finance departments if possible.
What would be the best way to leverage what I have (finance degree from a good undergrad program) to get there?
Banking. I have an offer from a BB, but I’d only be learning finance which doesn’t translate well. I do see the banking -> VC -> transition and work full time in an operational role for a portfolio company -> move on to more exciting tech companies
Consulting. I know you hate on consultants but I think this should be a marketable skillset to get into management roles.
Masters Degree in Engineering. I know what I want so I should rework my career now, bite the bullet, and do two more years of school before entering the market.
Ideally, in 20 years, I would be in senior mgmt at a tech company, a partner at a VC firm, or one of those guys who serves as an adviser to many small tech companies.
You could do this in many different ways, but honestly if you want to work at a tech startup just get out there and start talking to ones you’re interested in.
Startups are always in desperate need of capable people – it’s not like banking where supply far outweighs demand.
Personally I would start approaching tech companies you’re interested in and try to do some kind of product development or business development / marketing role… you could also try for startups in NYC, as they actually need people far more than ones in Silicon Valley do.
“Prestige obsessed parents” That is me to a T; you’re absolutely correct no effect on your life what so ever.
Hey, that’s my quote at the top! I’m glad that you decided to push the “publish” button on this article as I enjoy reading about controversial subjects.
I remember that you once revealed that you have a “box” from which you pull out ideas to help you decide what to write on M&I. Does that box have anything in it related to how bankers view programs such as Inroads/SEO? Is there a stigma associated with these internships (read: are students given a serious work load and/or extended FT offers)?
I don’t really know much about Inroads/SEO but I don’t think there’s much stigma associated with these internships. I would certainly take an internship via one of those programs if you can get it.
It would be easy to believe a high school freshman would fantasize such things, but professionals and college graduates?…quite sad if you ask me.
Unfortunately I do know a high school freshman who is very eager to enter the jungle of Wall Street…I try to tell him to shy from it eventhough he does get good grades, has a passion for finance, and has the attitude for IB. Great job by the way on this article and I personally enjoy reading your site…it provides me some amusement in my free time away from intense curriculum in my sophomore year of high school, along with Facebook. ;)
Just curious…if NYC and London take a good chunk of cash with high taxes and Tokyo has an unfavorable business climate….what would be great places to do IB where the corporate and social climates are tolerable and you actually have considerably more money to save for retirement? Granted, I know there’s no magic bullet, but perhaps a far-shot quasi-magic bullet? =]
Dubai? Hong Kong?
Keep in mind that you CAN save money no matter where you are.
My point was that most people in finance DON’T in fact save that much – because they spend recklessly.
You don’t need to follow this, of course, but a lot of people do get sucked in.
Since you’re talking about relationships. Is it even a good idea to start a romantic relationship if IB is in your plans for the future?
I would probably not do this unless your SO is extremely understanding. All my relationships failed in banking – only after I left could I actually start meeting people again.
A couple of questions:
1. What is the pay like in asset management at a top firm like BlackRock? Could you give me a figure from an analyst position all the way to the partner level?
2. Is there a Bonus culture in asset management?
3. What is the pay difference compared to banking and PE?
1. I honestly have no idea because I never did asset management and don’t know anyone who did – maybe check the WallStreetOasis salary/bonus database and see if they have anything. I know it’s lower than banking at all levels.
2. There are bonuses, but less than other finance fields mentioned here.
3. Again, less than either one of those. More than a normal Fortune 500 job. Upside/pay is somewhere in between those two alternatives.
You’ve said before that once you get the interview, GPA doesn’t matter. I have a 3.0. However, in my internship interviews last year I was still asked “why is your gpa so low?”. Clearly I have other things to make up for it, otherwise I wouldn’t have gotten the interview. How do you address a low gpa?
“I screwed up my freshman year because _________ however I learned a lot from the experience and have done much better ever since…”
I actually started with a 3.5 and gradually got worse. I can’t exactly tell them my grades were hurt because of fraternity pledgeship (since hazing is illegal). I also tended to prioritize extracurriculars and other activities over grades, while my classes only got harder.
If you can’t cite some kind of improvement trend and you don’t have other excuses then I don’t know what to say – maybe if you’ve done well in your major, or over the past semester, or in certain classes etc. you could say you focused on a particular area or had some kind of family problem that prevented you from doing well in certain periods.
I’m going into analyst recruiting, as a senior. I was able to get a meeting in NY with a (very) senior executive at a bulge bracket bank, but he can’t meet until Sept 30. Ideally, if he liked me, he could get me an interview and I’ll be in a good position for that, since they’re not coming on campus.
Is Sept. 30th too late in the process for him to help?
Not necessarily, I know people who got offers later than that. Obviously earlier is better, but meeting late is better than never at all.
Great. Is Asset Management the same as an “Investment Management” position? I saw several of those posted on my school’s career center website.
Also, are there any websites/resources where I can learn more about this career field?
Yeah it’s sort of the same thing, I don’t know the exact nuances because I never worked in or interviewed for the field. Websites/resources – maybe check out Careers in Finance, I believe they have some material on it.
Sigh. Always thought that once I get an IB gig as a starting career, my financial/sex life would be set… How far from the truth..
M&I: Why didn’t you start this website much earlier??
I was too busy working 100 hours a week at the time…
How hard is it to break into Asset Management? I went to school at UC Berkeley and I never saw any postings for asset management positions… only IBD and PWM. What are the main differences anyway?
Asset management and PWM are almost the same, but asset management is more about institutions and PWM more about individuals… asset management is usually viewed as more “prestigious.”
It’s definitely easier to get into than IBD / S&T, though again the upside is lower.
Great. Is Asset Management the same as an “Investment Management” position? I saw several of those posted on my school’s career center website.
Also, are there any websites/resources where I can learn more about this career field?
Thanks for the answers. I was wondering if you could give me your opinion on some things.
1. In terms of exit opportunities is Barclays the same as the Bulge Brackets?
2. If I get into a place like Jefferies, is it a good idea to go for a masters in finance at a prestegious school and then try to get into a bigger bank?
3. How does places like BNP Paribas/Barclays compare to Jefferies?
Thanks a lot.
1. Too new to say but yes probably.
2. If you start working full-time it’s probably better to get an MBA instead.. a Master’s program after 2 years just to move to a bigger bank seems odd.
3. Generally, bigger banks = better exit opportunities though Barclay’s is relatively new as a major player in banking, so it remains to be seen.
Thanks for the response. Just to clarify, I was actually wondering if it is a good idea to work for a bank like Jefferies right out of college or go to a prestegious Masters of Finance program, try to get a banking internship the summer after graduation (undergraduate) and then look for a bulge bracket opportunity after getting the masters.
Honestly if you have a job offer right now I would just take it even if it’s at a bank that’s not as well-known – I only recommend Masters programs if you really have no other options. There’s risk that the market may actually be WORSE a few years from now.
Great article. One thing to note is not only social life but HEALTH. I have about 10 months left and I can tell you that my doctor already noticed a difference I have high blood pressure and he could tell i was taking sleeping pills. As of now I still don’t regret doing it but I do plan on working in finance after this job (not banking pe hf but probably a corp finance job).
On another note how long is it acceptable for me to take a vacation before interviewers start questioning what i was doign post IB? I hear 3 months is around the max given the time to get a corp job.
That’s true – it definitely hurts your health if you’re not careful.
Yeah 3 months sounds about right, though I was still getting emails and referrals 1 year+ out. Admittedly I wasn’t really “on vacation,” I was just not working at an established company.
is it appropriate to send an email to first round interviewers regarding tips or suggestions they might have for you to prepare for the final round of interviews?? thanks!
You could if you want but I don’t think this will help you much, if at all
You left out the forbidden subject of going the Big Four accounting track…
There’s another (potential) way to become rich – leverage.
The following piece applies very well if you are not a top 1% talent in your field but you are still very good (top 5%). Similarly, one could assume that you are not amongst the top 1% in terms of your risk-taking but definitely have a high (again top %) risk-appetite.
Say you worked in Silicon Valley as a techie (engineer/product mgr) for 3-4 years (say at Google post-IPO) and you probably didn’t make much in stocks (<500K). You are 25-26 years old.
Now you have a couple of options, rush to promising early-stage (perhaps Series A funded) startup as a rank and file employee (you'll get ~0.1-0.3 percent equity). Now, most startups are not youtube ($1.65B exit). So your best-case scenario is when your startup exits for say ~ $200-300M. So your best-case upside is 0.3% * 300M = 900K. Now this is not a fuck-you money by any standards. Plus the probability of this happening is very very low and will take 2-4 years.
Now, an alternate option is to take your skills and talent out of Silicon Valley and go do a startup in say India or any other emerging market, where the entrepreneurial ecosystem is still not as strong as the Valley. On one hand, there would be challenges which are specific to the local ecosystem, but you'll have a huge unfair advantage in terms of skills, experience, risk appetite etc. It's much easier to build a startup in India (and for India) and exit it at $30-50M. All this while you are a co-founder and have atleast 25% stake. The odds of success are fairly low but not any better than betting that your SV startup (where you have 0.3% equity exits for $300M).
Case in point:
– Bazee.com (acquired by ebay for $50M in 2004).
1st founder: Indian IIT grad, who came to the US did his MS CS, worked for a few years at Apple, went to HBS, worked at Goldman Sachs for a year post-HBS.
2nd founder: American Indian (BS Maryland), HBS.
Today both of them are running their own VC firms.
– JobsAhead.com (acquired by Monster for $10M in 2004).
Founder: Indian IIT grad, MS CS UC berkeley. Went back to India and after 3 years, started jobsahead.
Today he's a partner at Canaan Ventures.
There are more that have been similarly made and even more in the making (Komli etc). You dont necessarily need to be an Indian guy for doing this but would need to partner with that Indian IIT guy in Silicon Valley who is looking to go back and do such a thing.
There are other examples of talent arbitrage (outside of entrepreneurship). For ex, it's relatively easier to become a partner in a top-tier PE/VC firm in their India office than in NY/SV where there's far stiffer competition.
Essentially, do you want to fight it out trying to become a big fish in a big pond or would you rather leverage the talent arbitrage to become a big fish in a different pond that's becoming increasingly bigger ?
Or you could just start a website selling niche information products about investment banking, get passive income, and not have to worry too much with far less effort.
Whoops, why am I revealing this… :)
There’s definitely truth to what you said, but it all goes back to a point I raised above: no matter how much money, fame or success you have, you need to be doing something constructive, learning something, etc. or you get really bored. This is the flaw with all the “retire on the beach” scenarios.
I agree it is easier to be successful in other markets, but you also have to take into account that many people wouldn’t want to relocate elsewhere and there are cultural issues at play as well… it’s hard to start a successful company in an emerging market if you’re not associate with the country/culture in some way to begin with.
See the “Large Company” entry… very similar.
“Stop ruining peoples’ dreams :)
Oh wait, this article might have already done that…”
I would say that anyone reading this blog should have realized up to now that just working at IB/HF/VC/PE.. and hoping to become rich in 3-5 Years is not possible. There is no magical way to become rich in such a short period. If the goal is becoming rich, then hard work (and luck) is necessary, independet of what field your working in. The tradeoff is usually that your work-life balance suffers quite a lot.
Otherwise great job, as usual.
So I take it that you hate consultants :) Curious did you do IT consulting or management consulting when you did it (and couldn’t stand making 60 k a year)?
I was never really in consulting, that was Kevin. I did advise a startup tech company in Japan a long time ago, it was sort of a mix between IT and management consulting because it required technical knowledge but it was mostly giving advice on business decisions.
Actually it wasn’t that bad, but I hated living/working in Japan because of the corporate culture there.
How many years will it be until you can start saving? I understand it will not be a top priority for most people in finance, but will it really take until VP or MD level until you can have a nice fat retirement account? I always figured once you start to near six figures after tax you’d be fine (second year associate, four years in the game). Is this completely false? Is saving just not something most bankers even care about?
Couldnt you also get a good job in private wealth management or corporate finance once you have a family and your kids start growing up, and move out to Jersey or LI? I mean, once your maybe in your late thirties, hopefully have something saved up by then. Is this practical at all?
I mean you can start saving at any point in the process if you are careful with expenses and don’t spend too much on models/bottles.
My point was that in PRACTICE, most people don’t save much because they spend a ton on other “lifestyle” expenses.
I managed to save quite a bit by not living in NYC and being careful with expenses, but most people at the time laughed at me for being frugal.
Yes, you could certainly do PWM or corporate finance and move elsewhere if you want the better lifestyle.
Again, this article was meant to be a “reality check,” pointing out how most people in finance actually act and what they really do.
Was the lifestyle different living outside of the city, or did you still reap all the benefits of NYC? Im sure you probably spent 80% of your time there but was it all just in the office?
What career paths might allow for a better lifestyle without taking away too much or all of the upside? I understand IB PE HF etc will all be extremely demanding no matter how high up you get. Im talking with years of experience, NOT after just an analyst stint…or are you just pigeonholed by then?
I was on the west coast so it was quite a bit different than NYC. Honestly if you work in NYC I would strongly recommend living in Manhattan – it gets really annoying to commute a long distance into work each day.
On other paths, this is exactly my point: everything has trade-offs. If you don’t want a demanding or risky job, then you need to accept lower up-side potential… like working at a large company.
There’s no way to make a lot of money without either working a lot, or taking some risks. Unless you want to sell drugs…
And yes, you do sort of get pigeonholed as you move up the ladder, though in some fields (e.g. HFs) more than others. Ex-bankers have more options in most cases.
Dealing drugs is EXTREMELY risky if you’re encroaching on someone else’s turf. But, if you win the drug wars, you get the increased market share.
“Cocaine Cowboys” explains a lot about how we…I mean, they…do business in Miami.
Just curious, what are the taxes like on the West coast?
California state tax is rather high if I remember correctly, but there’s no city tax like in NYC, or at least it’s very low if it exists. I think total taxes amounted to around 40-45% of gross salary, so maybe around 10% less than NYC. I actually kind of forget right now but it was somewhere in that range, less than NYC but still a lot more than “low-tax” countries like HK / Singapore / Dubai.
Just think about where most people are coming from before they get into banking. They’re probably fresh out of undergrad. They probably drove a crap-box car or had no car at all. They probably have no furniture, no pots or pans, no professional clothes, etc. Not to mention they’re probably up to their eyeballs in student loans.
I once thought I could save half of what I made. But then I wanted to buy a house, and before that pay rent. Then I had to furnish it, etc. I ended up being far less frugal than I wanted. Not to mention entertaining your clients / professional friends isn’t cheap. And you think you’re going to get the girls by telling them you work at Goldman Sachs or by owning you own business? They want you to throw money around and drive a nice two-seater sports car. Damn I miss that car.
Stop ruining peoples’ dreams :)
Oh wait, this article might have already done that…
haha not my intentions but those who are falsely motivated or have a weak drive toward banking probably wouldn’t have made it far anyway. I would love to see an article on good reasons for choosing IB and why certain people with certain attitudes succeed in banking. Maybe like a case study of someone who went into banking and stayed in banking, and why. Was it the money, the thrill of the deal, a life experience, or even something as strange to bankers as loyalty or camaraderie?
I actually wrote something like this for FT awhile back, but I think it comes down to being thrilled by the process and always wanting to be busy. Money and prestige stop meaning as much once you’ve been doing it for a long time.
I have always heard that ex-bankers tend to party/travel BIG before they start their buy-side careers. Where does this money come from if costs of NY living and taxes eats the majority of it?
By the time they leave, they have 2 or 3 years of bonuses so they can save a bit by then… and it’s not like you need $100K to travel or have fun for a month or two.
Have you heard about this thing called credit card and america’s love for credit ?
I’ve never had credit card debt… though I might be the only person like that in the US
So why did you do banking? Are you saying to only go into banking if you actually love/enjoy it, otherwise it’s pointless unless you do make it too the top?
I was interested in VC at the time and figured that tech banking was a good way to move in. But yes, partially I was actually interested in it too, coming from a non-business background.
The point of this article was to provide a “reality check”: no matter what you do, there’s no magic bullet.
I’m not saying you should or shouldn’t do anything: I’m merely pointing out the benefits and drawbacks of different options.
This article reminds me of what Bud Fox wanted to do, “get a little bit pregnant.” It baffles me how so many people watch that movie and think Oliver Stone is on the Gordon Gekko side of things. He tries to show that Bud Fox wanted to do the impossible, “make money and get out.”
I’d like to add to the entrepreneur section if I may. Most people think an entrepreneur is like a mini PE firm. You just throw money at ideas and turn a profit. But it’s YOUR money, or worse, it’s borrowed money in YOUR name. And these are YOUR ideas, for better or for worse. You have to be a little bit naive to think you can just start a business from scratch, be your own boss, set your own hours, get what you put in. In actuality, every customer you have is your boss. They’ll set your hours and I promise you they won’t be nice. Unless you have serious capital you’re going to be wearing many hats of the company. You can’t get a personal assistant if you can’t train him/her because you don’t know what the job will entail. Anyone here who would like to start a business after IB, do yourself a favor, work in that industry first. Learn the ins and outs when it’s not your money on the line. Then, go apply for your small business loan and get used to the 100 hour work weeks again only with much, much less pay in the beginning.
Okay, I’m done. Sorry about the ramble.
Exactly. I’m going to send this one to anyone who asks me such questions…
How about venture capital in Silicon Valley? Is it a bad idea to still attempt breaking in?
This is a really broad question, and it depends on what you want to do… it’s honestly very hard to advance to Partner-level in VC if you’ve never started a company. It’s good for business school and may let you move to good portfolio companies, but I think advancement is more limited than with some of the other options here. You could argue that it’s more “fun” but you also spend a lot of time sourcing, i.e. finding companies and looking for the next Google.
I’m trying to network my way into an analyst position (hopefully) and leverage that for business school. Is the pay similar to banking?
Bonuses will be lower – at that level base salary will probably be about the same but you won’t get much of a bonus
Also how would you put working at a valuation firm like Duff & Phelps or the FAS practice of HLHZ?
Similar to what I said above about asset management… sort of a mix between normal company and banking. It gives you more options if you can network properly, but again, pay/upside/hours are all reduced.
A great one.
I just have one question about your comment on “Wanting to stay in finance for just a few years to have enough experience to do something else is a poor strategy.”
What about I want to stay in finance a couple of years and want to have experience found my own P/E or VC? I don’t think I can just do it without enough knowledge or the network in the industry.
The flaw there is that you need a lot more than “a few years” to actually start your own PE / VC firm.
People who do that are already at the Partner-level and have either started successful companies before (think, Vinod Khosla) and have a lifelong track record of success, or have done extremely well making significant investments and again have a very long track record of success.
Great article thanks! How would you put going full time into trading with an M&A internship under your belt? Would that give better exit ops if you have a bad trading year for some reason.
“But when you reach the mid-levels it gets very, very difficult to “jump back in” if you get cut – which is a big problem when you have 2 mortgages, 3 BMWs, and 2 kids.”
But I am imagining it would be relatively easy to go to corp dev/corp finance which does not pay as much but hey you’ll have a job right?
Yes, most laid off bankers go into corporate development / corporate finance. Pay is less of course but there’s always demand for you.
Full-time trading after M&A internship: yeah it might be easier to get back into M&A afterward, but I’m not sure how much just an internship would actually help.
I like the article! Good job!
Another excellent, candid article. Can you go public with this site so I can buy shares? In any case I discussed “$60K-$70K base salary is barely enough to get by in New York” with a few friends, and I have to ask: what the hell do you spend your money on?
So $70,000 after tax, social security etc. is roughly;
Less ~$18,000pa for a decent-ish, mid-town apartment
Less ~$6,000pa for food, including regularly eating out
Leaves you with $28,700 to spend on what you like… I mean you’re not going to drive in NYC, so you won’t have a car-associated costs…
Coming from my background, I’m pretty frugal and I don’t have ridiculous expectations of Crystal champagne on a bi-weekly basis… My biggest expenditure would probably be expensive clothes, travel and some good tech (like my Mac)… And this isn’t even including your bonus! I’m thinking I could save at least $10k-$15k a year.
(For us Brits (also applicable to other Europeans) our breakdown is much nastier:
Base salary: £44,000
After tax, national insurance: £29,320.60
Less ~£12,000pa for decent-ish, zone 1 flat
Less ~£7,300pa for food, including regularly eating out (note cost of living in London is much higher than in NY, particularly food/consumables!)
Leaves about ~£10,000 a year, and that won’t go far on clothes and travel, let alone a £2,500 MacBook…)
Definitely moving to America….
Your estimates of taxes are off – NYC state and city taxes together add up to more like 40-50%, so you only get around $35-$40K post-tax.
So let’s assume $40K – minus $18K for rent, that leaves you with $22K. So then $6K for food, but that’s actually a low estimate depending on how much you go out – a good meal in NYC can easily be $100+.
So on the surface, it seems like you can save at least $10K – but the problem with that is that you’re not factoring in other expenses.
Dry cleaning, the occasional trip/vacation, utilities, having to fix things that broken when you don’t have time to do it, etc. etc. and it adds up to a lot of miscellaneous expenses.
I agree that if you rarely go out and avoid spending much on those types of expenses you can certainly save more – but the reality is that once you start working, you almost need to spend money and have fun because you work A LOT and it will depress you if you never go out.
40-50%, really? Ouch.
I found this:
Your Pay Check Results
Monthly Gross Pay
$3,803.88 x 12 = $45,646.56
Less the aforementioned: $21,646.
And I guess this is where we’re different: I do not need to spend $100 to have a good meal. So $6k a year on food is perfectly acceptable for me. But I definitely see what you’re saying with misc. expenses. Taxes are so damn high… For the British calculation I forgot to add to council tax (like city tax) which is super high in London… Sigh.
So what is the pay difference between PE and working at a normal company?
A lot. You don’t get bonuses or carry at a normal company.
Actually base salary is not that much different in many cases but the difference really comes when you’re talking about the bonuses, which don’t really exist at normal companies.
One of my favorite entries for sure. Hope you enjoyed HK!
Losing all my money in Macau inspired me to write this one…
Any quick thoughts on sovereign funds in Asia? Great place to learn and attractive to MBA AdComs?
Seems like many great minds are heading to these places rather than bulge brackets/consulting.
I’m not too familiar with them and I think they’re generally too new to say much of anything. They could be the next big thing, or it could be the next dot-com bubble… kind of depends on what direction the economy takes and if these governments continue to make massive investments. At least in the US and Europe, I don’t think they have the brand-name recognition of banks / PE firms.
Great article! What about asset management?
Eh it’s kind of a mix between normal company and sales & trading… pay is more limited than in the other finance-related fields, prestige is lower, but hours are also better.