Following The Herd: Will You Get Trampled In The Stampede?

Hey WSO,

I'm back- if you missed my last (first) blog post, I'll be dropping in every couple of weeks to share some stories/thoughts/concerns I have; I'm not conceited enough to think that my writing is incredibly riveting and/or will be life-changing for you, but rather hope that by writing these blog posts I will elicit thoughts and feedback from the wider WSO community that I and other WSO readers can learn and benefit from.

Today's topic is the herd mentality that seems to underpin the goals and efforts of many (most?) aspiring and current finance professionals. You know what I'm talking about: the buy-side.

This post was inspired by an amusing story I heard not too long ago. A current investment banker who wants to move to a hedge fund, who will go into interviews claiming that he loves the markets more than his mother and has wanted to work at a hedge fund all his life, reached out to a friend of mine (who is still in undergrad) to ask for a good stock to pitch during interviews. He wants to move to the buy-side but knows almost nothing about, and displays little to no interest in, investing! Does this seem crazy to anyone else out there, or is it just me? Before you aspiring and current investment bankers jump to his defense and talk about how busy you are, and how you'd display more interest in investing if you had the time blah blah blah, I have spoken to plenty of current and former bankers who are genuinely interested in investing and who are able to find the time to pursue their interest alongside their work; so for the sake of this post, let's assume the subject of the story has little to no real interest in investing.

Let's go a step further, and assume that he didn't enter investment banking because it was his life's calling, and probably doesn't love the work- I believe this is a fair assumption, given that he is looking to leave the job after a relatively short two year stint. Why, then, is this banker trying to move to the seductive buy-side? I imagine it's (unsurprisingly) because of the money and lifestyle associated with the buy-side. Questioning that mentality is the subject of this post.

At this point I should mention that I am heading into investment banking, and am leaning towards one day working in investment management. I must confess that I am at least a little (but not entirely) guilty of subscribing to the herd mentality that plagues aspects of the finance profession; learning about the money, "prestige" (in quotation marks because I've realized that most people who aren't in finance couldn't care less about what you do- a blog post for another time) and lifestyle (initially monetary, and later work-life balance) associated with investment banking and investment management led me to consider them as potential careers, but only finding a genuine interest in and compatibility with them led me to pursue investment banking as a starting point for my career.

Therefore, I want to stress that I'm not condemning the jobs as career choices or the people who pursue them out of genuine interest. However, I do think that people who enter banking and investment management purely for the money, "prestige" and lifestyle are making a grave mistake, for a number of practical and emotional reasons.

Firstly, consider those who enjoy/are suited to investment banking, but leave for investment management (in which they have no significant interest). Assuming- I believe safely- that a lack of genuine interest will lead to average performance, I believe that this person could make more money as a good banker than as an average performer in investment management. Only a small percentage of exceptional performers in investment management make the kind of money most people can only dream about. In this scenario, I believe the person would be better off staying in banking- they could potentially make more money over their career, and I'd argue that the lifestyle would be better overall. Although the hours would suck for a little while, they'd get better, and you wouldn't have to deal with the stress associated with potentially having a lot of money that's averagely managed on the line.

Secondly, consider the person who displays no true interest in banking or investment management; they're in it purely for the money. These people are the most misguided and honestly speaking, I pity them slightly. Call me hapless, a romantic or whatever else you will, but I strongly believe that job satisfaction is more important than money (as long as you are making enough money to live comfortably and without significant financial stress). I know from my experience in a commission only, pure sales job that I had between high school and university that even incredible money isn't worth disliking your work almost daily.

I consider myself extremely fortunate to be genuinely interested in a potentially very lucrative career, because while I (like most of you) want to be wealthy, I couldn't (and wouldn't want to) force myself to pursue a career I wouldn't enjoy. I know of someone who worked in insurance for over forty years, and each Sunday night for decades would get horrible migraines thinking about having to go to work the next day. He stayed in that job for the money, and I am fairly certain that at the end of his career it became the biggest regret of his life. To those of you hoping to enter (or currently in) banking or investment management disinterestedly and purely for the money- when you look back on your career at its conclusion, will it have been worth spending most of your time for decades doing something you didn't really enjoy?

Paraphrasing, Robert Frost famously wrote that he took the path less traveled, and that made all the difference. So tell me fellow WSO readers, are you pursuing/in a career for the right reasons? If not, are the money, "prestige" and lifestyle enough to compensate for a lack of interest and enthusiasm? Or will simply following the herd get you trampled in the stampede?

Comments (2)

Nov 20, 2013

Prepping for a buy-side gig is a lot of work, especially if you're not passionate about it.

The amount of hours that it takes is unquantifiable. It has to be something you eat, sleep, and breath. And even then the competition is fierce and you may not make the cut. Just my .02

Nov 27, 2014