Gen Z = IB and PE less competitive?
As more Gen Zs, who on average prioritize WLB, mental health etc. more than millennials, graduate and enter the workforce, would we expect less of them to want to go for IB and PE jobs, and therefore they get a lot less competitive? Is this good for those Gen Zs who don't mins grinding it out as much?
What's the medium term impact? That in the next 3-4 years quality drops significantly?
Many of the smart kids from top schools alr chose the tech path, now just have a lot of softies and zoomers who want to work 50 hrs a week mostly from home
I am a zoomer who likes to wfh as well
Who works 50 in tech?
Once people start hitting the 2nd level promos (l5 maybe equivalent to hiring assc) hours at FAANMG can be around 50. 300-400k TC
I do.
And anyone who doesn't judge the industry by anecdotes about Google. But even Google isn't a vacation home anymore.
Most I know do 40, you do 50 when you're starting cause you don't know shit, but once you get good at your job you can easily pull 40 a week and make a ton
Absolutely becoming less competitive. I have been in the industry for ~6 years and the quality of candidates has decreased materially over time. Based on conversations with friends, this is widely consistent across the board, including IB and PE. At my firm specifically, we are struggling to find any competent, hard working candidates to hire and have burned through 3 of the top PE recruiting firms in the past 12 months because no one can find good candidates. Even analysts from top banks just aren't the same anymore. For context, our latest fund is ~$5B and returns have been consistently top quartile, so definitely not an awareness issue. For anyone who has marketing experience, our industry is having a top-of-the-funnel issue (not enough smart 22 year olds choosing to go into IB), and the competition for the few hungry & competent kids is very high. I think this will ultimately result in the industry becoming very saturated with older professionals at the top and younger generations never moving up the ranks (similar to our government today where most representatives and senators are 70+). It may ultimately result in some very difficult years within PE and IB over the medium term (10-20 years) as Gen X ages out and retires...
at a top target and can honestly tell you the issue is not about a shortage of smart kids trying to get into IB, but rather the fact that the firms choose the shitty candidates, for whatever reason, especially the BBs. I know a lot of brilliant kids who didn’t get great offers or any offers while retards who can’t walk you through an LBO got top BB offers. Don’t blame gen z, blame the banks’ shitty HR/recruiting practices.
Fuck the recruiters
100% recruiting is broken, too much focus on factors that don't make for better candidates
I think we all know the reason...
At my BB, I would say 70% of hires were based on nepotism (MD connection, or children of clients mostly). The remaining 30% were either minorities or super targets (HYPSW etc.)
Honestly. Some of the posts I read here about the people who get in who are absolute dumbasses makes me sad and demoralized. Somehow they can get an interview and get in but I can’t and they’re orders of magnitude less intelligent or capable than I am.
Part of recruiting at BB and cannot agree more!
Completely agree with the person who replied above me.
The issue was never to find people who grind by and are willing to succeed - the firm I’m at currently (not a big name bank), we’ve had conversations internally why we’d prefer a female hire next either for our junior FT positions or intern positions because “we aren’t able to get good diversity PR”. Completely defeats the purpose of having an intern when the person becomes more of a liability than help.
While I’m not against diversity recruitment, I strongly feel this has been overdone. Guess we are yet to see worse impacts of it.
who cares about PR if you build a successful firm
So with this logic, would you argue that the non-diversity hires are the same quality as they've always been? Not sure how long you've been in the industry, but I'd wager most experienced PE professionals would say the quality has gone down across the board.
Increased emphasis on diversity hires has also been during this same time period.
I really feel like I should add in a comment here on this. I did my IB summer stint during the COVID-19 pandemic lockdowns and learned materially less during that time. I also feel behind my close peers who did not have to WFH for several years. I think this combined with the early recruiting cycle, where those who want to pursue IB and PE and are the best among those who want that type of career are meaningfully less competent that those who were more thoughtful about their career choices.
In summary:
1. The industry (at the bottom) is filled with people who didn't think meaningfully about their careers because they were forced into recruitment quickly thusly leading potentially more competent candidates unable to work in the space
2. Were undertrained or learned less than their slightly order peers due to genuinely unforeseeable circumstances and the expectations that those circumstances later created (COVID-19 and WFH demands)
3. Now find themselves unable to climb the corporate ladder as those above them were far more ahead and had different expectations of the job
Assist. VP in PE - LBOs: Do you think there will come a point where many of these firms will be forced to promote Gen Z talent who won't have the "chops" to take on higher level jobs, leading to decline in industrywide performance?
Completely agree with all 3 points.
Regarding your question, I don't think that early Gen Z / "COVID analysts" will reach the highest echelon of the industry at the same rates as those that came before or after them. Perhaps the picture looks better for late Gen Z and early Gen Alpha. That being said, I totally hear the recruiter difficulties and fully acknowledge that banking recruiters have a ton of power and can skew all of this dramatically. I know that most of PE is crying out for better candidate, it is just sad there is a "speedbump" withholding eager and able undergrad students from entering the industry.
Can this community be a force in helping solve the issue?
What kind of things in interviews are you seeing that are making you pass on candidates? Lack of technical understanding? Lack of deal experience?
I think both OP’s take and the prevalence of diversity are true. Banks have opened their doors to scrappy, smart nontargets which wouldn’t have been done in an age where all of the motivated Ivy kids wanted to do banking. The truth is there are more attractive options than ib for the best of the best: quant if you’re cracked at math, swe if you want chill hours, straight to buyside if you want to do investing.
Also probably because of America's bias against master's SA applicants, unlike London
Same cycle as a lot of other "new" spaces.
>IB/PE go from niche to $$$ in the 80s. First gen of PE guys are all cowboys.
>Attracts a lot of smart people.
>Earnings potential reduced materially
>Smart people go somewhere else
You can make well into 6 figures working in tech for ~30 hours a week...hard to justify going to finance unless very passionate. And if you make ~$400k instead of $600k do you really care? Not really. It's all "a lot".
> IB/PE becomes a traditional career like law/medicine/etc. and people close their eyes to the downsides and historical reductions in salary just for the sake of working in IB/PE
The point of PE isn't 400 vs 600k and being a random cog. It's a risk adjusted path to 15m+ net worth
How common is it for people in PE to reach these levels? Seems like most places are 2 and out
all that for only $15m 🤮🤮
It's all fun and games until your firm has a bad fund that doesn't clear its hurdle rate (or just barely surpasses it). Happens more often than you think.
i actually disagree. I think it's still as competitive (i.e. as many students vying for slightly more slots), but standards have dropped tremendously.
How come? Given people don't want to work as hard anymore (no judgement on that, IB hours are insane and it's a very reasonable choice) shouldn't the number of people applying and going for these jobs be like half?
they still want the pay but they don't want to work as hard and think they can be more "efficient" than their seniors. but sadly their seniors are not boomers like their parents and actually know more excel shortcuts and modelling best practices than just "alt w f f for freeze frames bro"
and tbh, it's fact that standards have dropped since covid. so perhaps they heard these people balling and not doing much and just applied. banks also took what they could get. and now, fresh analysts in covid (2020) are getting promoted to associates or associates already so standards have dropped.
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Eh… suggesting it’ll be less competitive is wishful thinking. Tech may have taken some of the talent with the great WLB but finance continues to be a better alternative than most other high paying industries like law and medicine. People have started moving away from those two due to the time and money commitment, especially medicine.
Technology has also made it easier for people to learn about the industry whereas a lot of people could go their entire lives without knowing what IB or PE were back in the day. It’s basically a wash.
I'm thinking more around less interest in working those long crazy hours I'm the first place (generational differences) rather than quality going down because tech is now a viable career path that pays very well
Like before if there was 100 people willing to work 80hr weeks for $200k it's now 50 people with the other 50 rather working a normal corporate job for 40-45hrs a week at 100-120k, purely cause of gen Z valuing WLB
Maybe, just maybe, firms shouldnt start hiring for summer analyst programs in the sophomore fall / winter, where their application pool is full of students who havent finished their core classes, let alone any higher level finance courses. I understand the attraction to lock up young talent early, but you inadvertently hire a lot of idiots
Hard agree, but also that's a different point - I'm thinking even if they wait they'd just have less interested candidates as people prioritize other things cause Gen Z care about their life
Maybe also hire mSc students like London does for analyst internships
the 4.0 kid from wharton has been crushing it for at least a half decade. the idiots being hired are rarely the ones from top targets with ultra high gpas and relevant freshman summer internships (non nepo ones that they networked for on their own). maybe they’re less interesting, but just saying there’s no need to reinvent the wheel to get good analysts. if you’re wondering why analyst quality has declined, it may be a good idea to look at how the screening criteria have changed…
Decline of quality of hiring process and also a pure luck of finding that one great candidate amongst the sea of something that HR believes is great becomes a real challenge… When I started in IBD in 2014 in American bank, CV screening was done on campus basis. I would get allocation of students who went to the same uni as I did so I could easily see who was great and who was average plus I could back check with professors or actually career coach based at the uni. Those days are sadly gone in exchange of random hirevues that I do not think even I would be able to personally pass.
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