Why is everyone here so focused on being in PE, investment banking or being a PM?
There are plenty of other less exciting, less obvious related niches of finance, where you can easily make low six figures after a few years. For me, work is a means to an end (comfortable life, traveling, retiring early), not my life. I am happy making good money and doing well but don’t need to waste my time and energy pursuing long shot goals being in the sexiest sectors of finance.
I know of companies where competition for positions is relatively low but these are not the “exciting” areas of finance however offer solid earning potential over the long run. But I wont waste my time discussing any further…as you guys are all busy looking to be the next BSDs.
Lots of those compliance, risk, etc. jobs that Big4 kid in the other thread was aiming for would fit the bill. Much less competition, make great money, no stress, and I’m home by 4:30. 7 weeks total vacation/time off plus all the regular vacation days, sabbatical, etc.
I do find my brain rots if I don’t have some stuff on the side going on, which is the downfall of this path. Consequentially I’m perhaps looking to make a move in 2014 back to something more interesting, but certainly not finance FO (too much of a long shot and I’d have to work too hard to make what I do now with little effort and no stress).
I see this guy’s point and I’m living that life now and it’s my preferred path. But I certainly see why people aim for the FO jobs. Go get them, if you can and want to. Some people are driven by working (what I would call) insane hours and fighting it out in cutthroat environments. It’s all personal choice.
One myth that I do see often is the only way to six figure life is through the front office. There are PLENTY of corporate jobs that pay that which the charter would provide strong qualification for with a few years of experience. In this sense, this guy is right. But I wouldn’t rag on others for trying to be at the top of the game, if they want to be.
But even if you want a cushy life, there is a good argument for taking a stressful job up front. Not only will you earn a lot more money early in your life, but you will be more qualified for future jobs which involve less work.
Also, people underestimate how much you can make if you survive in IB, PE, or other FO jobs for many years. Young people (presumably OP is one of these) tend to focus on starting salary, which at best, is around $1xx,xxx. However, people don’t realize that the true return comes when you reach VP, director, MD level. This might be enough to change someone’s initial perception of work/return.
Money is not the only motive. Finance people also tend to be driven by ego; they value prestige and the perception that they are doing interesting and meaningful work. There are two layers to this. The first layer is that maybe they actually find that the work is interesting. The second layer is that they feel that they are smart and talented enough, such that uninteresting work is not worth their time.
Of course, I’m not arguing that money is not one of the main motivations for working in finance. If all these guys wanted intellectual orgasm all the time and didn’t care about money, they would all get PhDs or something.
I think when you will have a certain amount of money, many people will go for prestige which can be attained by various ways including money.
The other way to see it, is that if you are a successful prop trader and make it to the HF industry, you may end up earning money much faster. Working a few years will make you the lifetime saving of another person. Therefore you could afford to actually retire and be financial independent.
However, it is unlikely that you will make it if your sole objective is money and if you have no ulterior motive making you compete at 100% of your abilities ? It is like saying that people could manage to be famous athlete or actors only because they want money. Most of people will accept the money if given but you need some real work and conviction to make it that far.
I don’t care much about money beyond some basic level. I would be thrilled to retire with $5mm which isn’t much by finance standards. The prestige doesn’t do it for me either because most people don’t even know what hedge funds are or what I do for a living. It’s not prestigious in the way that playing pro sports is or something else like that. For me it’s about the game. I like the challenge. I like competing with smart people and winning. I guess you can call that ego-driven but I think it’s coming from a different angle. It’s pro sports of the mind.
I actually originally was going to get a PhD and go into academia but it seems very political and everyone I knew who was in it said it was miserable. The market is one of the very few places in life that politics are limited. You’re either right or wrong and the truth always comes out eventually. I like that.
I had a prof in undergrad who thought he was the sh*t, like the school was lucky to have him, though by looking at his resume he had done nothing of any real importance in his entire career. He was fortunate enough about 15 years ago to have a super ambitious and egomaniacal student who graduated from my school to start his own hedge/activist fund that has had some pretty good years just by ruffling enough feathers and annoying people into doing what he wants. Now the prof gets installed on every relevant board of directors and can’t shut up about how important he thinks he is.
I think I didn’t articulate my original point as clearly as I would have liked. Some who replied thought i was talking about compliance or back office positions. There are actually a lot of analytically focused positions where compensation can ramp up nicely after a few years or skills gained can be leveraged in other sectors. Some sectors/industies fields that come to mind where the competition is relatively less stiff (compared to IB, PE, Equity research) are the following: economic consulting (focus on smaller shops), boutique industry research firms (e.g. in energy or technology as an example), positions dealing with counterparty risk, working at rating agencies, real estate finance shops, investment management in a city or state pension fund. These are just a few jobs/sectors/types of firms that can be great starting points for a career in finance…from what I have observed.
Like someone else said, I think a lot of it has to do with ego/prestige factor. Telling people that you’re an “economic consultant” doesn’t have the same impact as saying “I’m an investment banker” or “I’m a PM at a hedge fund.” This isn’t true for everyone, but I think the idea of these positions attracts more interest because these are seen as the top of the food chain. Perhaps “settling” for one of the alternative positions you mentioned leads some people to believe they have failed.
I know you said that you weren’t talking about Compliance/back office, but I’m currently in Compliance and could easily work my way up in a few years to a CCO making low six figures. However, I’d probably end up hating myself and feel like a failure because Compliance does not interest me at all and I’d always wonder if I could have done more.
You can definitely earn a good living in many pockets of finance, but few offer the income growth potential of hedge funds or traders. The reason is simple: the businesses are incredibly scalable. But yeah, it’s definitely competitive, but why wouldn’t it be?
^ True. And I’d say that trading is one of the fairest allocations of outcomes possible as well. Generally, you’re either good and you make good coin, or your bad and unemployed.
You don’t have to be a genius in trading to make money if the underlying business gives you a lot of flow. Most trading is done to facilitate some kind of business, and is not based on hiring some guys to prop trade all day. The problem is that there are extreme downside risks to hiring an incompetent or unethical trader. Because of this, traders who have a competent track record are paid a high premium. In fact, if you work for a big bank, the career progression for traders is much like IB or other kinds of businesses where you get paid based on corporate rank, years of experience, and many intangible factors.
The other thing about working in trading is that even if you don’t manage any people, everyone basically works for you. MO, ops, technology, quants, and sometimes even sales people all support the trading business. Trader decisions and preferences determine what all these other people do. This can lead to an exaggerated perception of importance, and some people become very bossy because of that. There is also some added pressure because if the trader loses money, everyone’s comp goes down and they get mad at you.