Didn’t See the Light at the End of the Tunnel. Do you?
For context, I’m wrapping up a 2-year program at a BB and had an offer to do MM PE at a shop with decent culture in NYC. Building a family and my friendships / community are extremely important to me. One thing banking has taught me is the most important thing is time.
Anyway, ever since I was in undergrad, I figured I would do 2 years of banking, then 2 years of PE, and then be a VP in PE paradise or have the skillset / resume to be a corporate hotshot making money and not pulling crazy hours. This seemed like the most risk averse way to make real money, gain skills, and control my hours. This was my light at the end of the tunnel.
As I got closer to my PE offer, I realized a few things. On the banking side, the hours don’t ever get “better,” they become more manageable (maybe controllable of when you spend them is a better description) the more senior you get but you are always on call; that’s the nature of the deal. Has an MD ever really taken a 2 week vacation where they can not think about work? That’s aside from the years of grinding and outperforming (and political garbage) you have to do to climb the corporate ladder. That tradeoff of time and effort to make it in banking is not worth it in my opinion. I don’t see a light at the end of this tunnel.
On the PE side, the associate years at MOST places is banking 2.0 with slightly better hours. You are at the bottom of the food chain and again, in deal related work. Yes, it’s more interesting. Yes, you are not selling, but the hierarchy, structure and nature of the deal is similar. When I saw PE VPs asking diligence questions and arranging calls at midnight, and partners cranking in the same way banking MDs do—from multiples buyers in our processes—my thoughts of PE life being chill went out the window. I don’t see a light at the end of this tunnel.
The corporate route, even with some places that have better hours, seems like it just doesn’t pay something that can make you rich. (Corp dev falls into this bucket too in my opinion.)
Maybe B School is a good option for some (I hear the fun, relationships built, credentials gained, skills learned etc.), but I didn’t feel like dropping $200k, and I wasn’t sure there was any job I couldn’t get without it given my background, so I passed on that option.
So….I took a step back (yes I reneged on my PE offer) and thought, where can I see a light at the end of the tunnel.
Entrepreneurship is one, although risky, I feel like I have a solid foundation and resume to try and fail. So I came up with a business plan and did some research, and will be starting something up soon. At the end of the day, if—and it’s a big if—you can create a nice small business and then sell it a few years down the line, that’s enough to be comfortable for a long time / invest in other things. It might make sense (from a risk / return perspective) spending 5 years starting / transforming a business to sell it for some real cash instead of the high finance route.
Small real estate deals is another interesting one where I would like to do some research. Passive income in the right investments, and others can do most of the work. The nature of the deals (for the most part) is not as stressful and each one isn’t as nuanced.
I’d be interested in hearing some other light at the end of the tunnel ideas that offer REAL money, but most importantly—time and real cognitive availability.
I’d also like to hear if any of my assumptions about banking / PE / corporate futures are way off. (I know there are exceptions.)
Again, this is for me; someone who values time, family, friendship and community (but still wants to have tons of cash).
Would like to discuss and hear some thoughts.
Can you explain your business idea, at a general level?
Honestly, think you may be seeing entrepreneurship too positively.
Most startups never make it, so you could be grinding for nothing.
A payout comparable to your annualized salary over 25 years of Pe / Banking would require a similar amount of work, with luck on top. A lot of serious entrepreneurs work 7 days a week / 80+, permanently on call to customers. Most exits are 5-7 years minimum, and depending on your sale price / % of business you own, you likely will never see a 8 figure, let alone 9 figure exit. Whereas by 50 in IB/PE you should be getting close to 8 figs total.
There's no easy + guaranteed way to get rich, sweat and hard work is almost always required, it's priced in. I would choose to do what you think is bearable / interesting.
It's a good point - Making a lot of money and having fair WLB is what everyone in the industry seeks, and therefore is almost impossible to come by. However, working for yourself and starting your own project, although it can be a comparable number of hours to IB/PE, is probably far more interesting work and something you are more passionate about spending your time doing, which is invaluable. Also a really noble/respectable thing to do, so hats off to the author of the post. If it doesn't work, there will always be IB/PE you can try to pivot back into, and given your XP I'd imagine you would always have some opps to chose from.
Think it's a crazy assumption to say that by 50 in IB/PE you'd be making 8 figures... Hardly anybody, even very strong MDs or Partners, are consistently making that.
Personally, I think there are so many smart and qualified people on this site who are blindly chasing PE money, and if they thought more creatively and gave entrepreneurship a shot with the work ethic they brought to banking, many of them would be more successful than they think.
Should have clarified - meaning to say 8 figures in total career earnings (to be equivalent to a successful founder's 8 figure exit).
Agree that many IB/PE professionals would do great working for themselves but are just too risk averse.
Not 100% sold on the enjoyability part. Look up Jensen (Nvidia CEO)'s comment from last week - he would not do it over again if given the choice. Think it's universally a boatload more stress than IB/PE, though the hours are probably similar or slightly less, for much much less risk adjusted pay and a few tail outcomes. On the enjoyability piece my view is it's different person by person and there is no hard and fast rule saying entrepreneurship is more enjoyable.
This is something I’ve struggled with personally, as I think we’re all sold when younger that once you rise up in IB/PE, you’ll have great WLB and no stress. Unfortunately, like one of the comments said, sadly don’t think that exists where even if you become senior in an organization in PE, your stress is 10x what it is as a junior (sure, you’re no longer worried about a small calc error in your model but now you’re freaking out if the deal is a good one for the firm otherwise you’re let go by the firm). Doing any job and making great pay is going to boiling down to working extremely hard and forgoing a decent amount of WLB at the bare minimum in order to advance (entrepreneurship is even tougher, as you need to work long grueling hours to stay in business or your competitors wipe you out and the pay is much more volatile).
Ultimately comes down to what do you enjoy doing (old adage of you never work a day in your life…). At least if you like what you do and you’re good at it, you will have some longevity (vs doing a job, hating it, then crashing and burning).
To be truly good and successful at something, whether it’s ib, pe, entrepreneurship, you have to be very passionate and fully dedicated to the role, even if it means spending 70+ hours a week doing what you do, because it shouldn’t feel like drudgery. I genuinely think everyone who’s great at what they do truly enjoys the seat they’re in and what they do, so if you’re in a seat and it feels dull or not a long term trajectory you want to take, then it’s probably not your calling.
IMO you're reaching for some fantasy land that doesn't exist, or if it does, is the extreme exception
You can't have everything unless you get lucky as shit of course
I guess the answer you're looking for is just buy powerball tickets and become one of the two billionaires that get printed every year
My direct answer to your question is that there's a light at the end of the tunnel, but it's dim. After a lot of thought and conversations, the conclusion from my late 20s existential crisis ("what am I actually doing with my life?") was to hunker down and build wealth, secure my family's future, and then I will have the choice to either do something more relaxed and ride out compound interest or do something more entrepeneurial and swing for the fences. I grew up poor and wanted to start a family on the younger side, so I don't take the risk weighted income part of this for granted.
The truth is that deep down I worry if I'll ever be able to step off the path once I get far enough, but only time will tell. We all know finance professionals who had "a number" but never actually stepped away.
You should be more worried about actually making it to the top of the ladder where there is one seat for every XXX hopefuls, and then once there you should be worried actually realizing successful investment exits, rather than your pretentious existential dread of "however will I step away when I hit my number; I'll just love the grind too much". Yawn.
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We’re probably in the same age group. This is the same answer I concluded to in my 30s. People who never grew up poor would never understand the importance this notion is.
There is generally a light at the end of every tunnel, we just need to make sure we’re equipped for the journey.
Hey you might not make F U money in Corp dev, but it’s generally decent for the hours (and on balance, better than many many corporate roles)
Op is capping so hard which vp or anybody is setting up MIDNIGHT dd calls ??? And I'm sorry which mgmt team is indulging that ?
VDR diligence internal junior team catchups happen often at our firm at midnight or later if we need to crunch for investment committee...don't think this is too uncommon?
Except that's not what I was asking nor referencing
Hey guys!
Anyone know of a job that pays really well, but also has easy hours? I’m super smart and hard working, but I have integrity and I want to make time for family!
Thanks!
Try software development.
Equity Research - hope that helps
following
OP - brilliant post, you raise a lot of great points/questions that tbh I'm not sure are easy to answer/resolve. As an early 30s guy in MM PE, here's some additional points I'd add to what you've said about the pitfalls of sticking in finance for the long haul:
- Accountability and being judged by results rather than effort. As you've correctly pointed out, WLB does get a fair bit better as you progress in IB/PE, especially compared to the analyst years. As a VP say, you have people below you who can pick up a lot of the grunt work - also just through your own experience you can do things so much more efficiently, whether that's building a model or reviewing legal docs or running a certain type of transaction that you've worked on multiple times in the past. However, as well as still being always "on call" even on vacation - you are now judged by results rather than effort. So you worked really hard on multiple deals that fell apart at the last minute? MD won't care, and all that work won't come through in your bonus. The economy nose-dived meaning you've had no live deals or new acquisitions? Same - don't expect a promotion or big bonus.
Of course as an analyst/associate your bonus does vary a bit depending on how well the bank + economy is doing (e.g. 2021 bonuses were fantastic), but other than that your individual results don't matter so much. As quite rightly nobody really expects an analyst to have responsibility for whether a deal closes or not - the fact you worked really hard and made yourself useful is enough. However all that changes as you progress, and personally I think it's a bit unfair - as a VP you get paid well but nowhere near what an MD gets, yet it feels like you're held equally accountable for not closing deals. So that sucks imho.
- As you get older you realize nobody cares about the "prestige" - I've mentioned this before in other posts. Let me just caveat this first by saying that of course people are generally impressed by you having a good job - whether that's your parents who tell their friends you "work on Wall Street" or a hot date being impressed you have money for nice dinners and a fancy apartment. However beyond the minimum of having a good job there is little "prestige upside" (and tbh if that's what you're still focused on by the time you reach late 20s/30s, respectfully you probably don't have a huge amount else going on in your life).
What I mean by little additional upside - honestly 99% of gfs, friends and families you interact with won't know (or care for) any difference between a corporate development job, working back office in Wells Fargo or working in PE at Blackstone. And certainly they won't care enough to make up for any other deficiencies in your personality/character. So just having a good job is enough for the dating scene/to impress people - I mean the equivalent for us might be if you met a hot female doctor - the fact she's a doctor means she's smart, hard-working and earns good money, and I doubt any guy I know would focus on what specialty she did over her other characteristics (looks, personality etc). It might matter to a small number of her colleagues in her field but for everyone else being a doctor is enough - it's basically the same for finance. So what I'm trying to say is that the lure of additional "prestige" won't be enough to sustain you as your career goes on.
- The cost of everything these days means even IB/PE will only give you a "comfortable" upper middle-class lifestyle. I put comfortable in quotes as I acknowledge this is a privileged position to take, i.e. most people will work hard in jobs paying a small fraction of IB/PE salaries. Yet it is nonetheless true - the increase in house prices for instance means that even on high salaries you won't be buying a mansion in a HCOL city. I live in a HCOL city myself and own a nice apartment, but have been looking to move to houses in the suburbs - and honestly it's quite depressing to see what $1m+ gets you these days.
Yes of course making IB/PE money means you can go on amazing vacations/trips, treat hot dates to fancy dinners, buy nice clothes/a nice car etc. But tbh you can do all this on an associate's salary or even in a well-paying corp development job - so I think a lot of people now are thinking what's the point of killing myself in PE when it will just get me a relatively big but not amazing house in the burbs. Whereas you could get the same type of housing taking a lower paying corp dev job in a MCOL or LCOL area.
This was really hammered home to me when I was a) doing my recent house search and b) read threads on WSO where IB analysts are struggling to find affordable places to rent in Manhattan - I mean honestly if you can't afford a share of an apartment in IB, is it really worth it?
You get trapped - again this is a privileged position to be in, but it is nonetheless an issue - you get to VP and above, making mid-six figures and enjoying a nice (albeit not "baller") lifestyle. You settle down, take on a big mortgage, have kids - and suddenly you need that salary and bonus every year to keep up the life you've become accustomed to. And by this time you can be a decade or more into your career - what else are you meaningfully going to do if you want a career change? And how will you cope with the downshift in lifestyle? As mentioned in the point above, I think this is exacerbated by how expensive things are these days - it would be one thing if you could buy a nice house for $500k and pay off the mortgage in a few years, but sadly in a HCOL area that won't go far unless you want to live modestly (and do you really want to have all the hours/stress/responsibility to live the same life as if you'd never gone into IB/PE?)
I will just end this by saying that despite all this, IB/PE remains one of the best career paths especially initially (those first two years in IB suck but they open so many doors in terms of career prospects and you learn so much). Also it's a relatively risk-free path to earning salaries much higher than most other professions. Having said that I find myself getting less satisfied with my career every year (but don't know if I could or would want to do anything else at this point).
Might have to disagree with the idea that PE/IB only gets you an upper middle class lifestyle in the long haul. The partners I know in PE, even at LMM, all make $1MM+, with some of them making multiples of that. Even in the base case ($1MM/year), you could buy a $2-3MM house, send your kids to private school, own a couple of really nice cars, and go on vacations. From where I grew up, that would easily be considered upper class, but maybe people’s definitions of that classification are different
That just sounds like a slightly upgraded version of the middle class lifestyle. There's also downside risk to being fired in that your lifestyle is entirely reliant on receiving checks from an employer
Im a sr vp and my hours are totally fine. So much easier than being an associate/analyst.
I know what I am doing now so I have very little "how do I do this?" Stress I used to have. Even if I work long hours I'm not that stressed.
As I've gotten better at the job it's more fun. People call me all the time asking for my advice(clients..other bankers).
Plus I'm starting to see ib senior lifestyle and honestly.....they don't work as hard qs you think. One md confided in me that "you think we are always traveling and meeting clients...but the truth is many of us are just at kids soccer games or hanging out at a vacation home...juniors really have no idea how much free time we take during the week"
I see light at end of the tunnel.
Is this at BB or MM?
Definitely not in NYC right?
The guys I've seen work hard as shit
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