Leaving industry - mid 30s
Looking on LinkedIn, seems like a ton of people leave the industry by 35 (both SMs and MMs, across analyst and PM roles). The ones who stay past 40 are all in PM or senior level roles.
Is this because they get pushed out/can’t move up? Because they have made enough money that they can retire? Seems like some go into corporate or entrepreneurship and others just aren’t working/cannot find another role? Also seems like there is prob a dilemma for “mid level successful” analysts who have a few million saved up, can’t find a job that pays them more, but also not worth it for them to work in corporate for low 6 figures because they can make similar amounts on their own.
Five's a nightmare. Can't retire. Not worth it to work. Oh, yes, five will drive you un poco loco, my fine feathered friend. The poorest rich person in America. The world's tallest dwarf. The weakest strong man at the circus.
How much do you think is enough to retire in mid 30s?
It's a quote from Succession.
30mm
I mean i think you pretty much summed it up. A lot of those (especially on the MM side) were fired and if they have a couple of blow ups on their resume they may be out of the industry entirely. This is especially true if you see them drop down a tier or two in terms of the fund quality they are at, then they no longer work at the lower quality fund.
Many PMs do move on voluntarily if they are rich enough given the constant stress, but would venture to say most of what your seeing is those that got fired.
Corporate is a massive paycut and they arent exactly going to care that you used to make $1.5m at Millenium, if your lucky youll get a Director of IR title and a $180k base and $40k bonus to still work 50 hours a week.
So then what do those folks who got fired let's say at the analyst level do? Can't imagine most have made enough to retire, so what roles do they move into?
It remains a big misconception.. but IR pay has changed a lot over past 10 years. It's now a pretty coveted role that pays 500K into $1M+ (depending on market cap and sector) for a lower stress 40 hour work week job. Analysts taking these roles are also increasingly getting responsibility over other segments of the biz such as treasury, finance or Corp dev which raises your pay and profile. If you can get a combo role you have a really good path to CFO.
cope
I never see IR people become Treasurer or head of Corp Dev.
It definitely happens though seems more common in some industries than others
MMBanker14 "I never see IR people become Treasurer or head of Corp Dev"I'm not going to spend too much time responding to this because you can quickly get a lay of the land doing a LinkedIn search.
A couple of people-
Jimmy sexton, snowflake, head of IR and finance
Chris merwin, datarobot, cfo now after starting as head of IR/ FPA/Treasury (was a VP in ER prior)
Charles macglashing, hubspot, Head of IR corp dev and Treasury (spent 11 years on Buyside at Putnam)
Aaron turner, smartsheet, head of IR and treasury (sellsider)
Jayson Noland, now CFO at hackerone, was head of IR / strategic finance and treasury at cloudflare.
As someone who has done IR in Hong Kong, which I suppose is a backwater compared to the USA if those are real numbers, how does one get those US roles? That’s about 3x what we get paid am I previously ran cap intro for a BB for Apac.
seems high for IR?
a strange dynamic borne of the last few years of public market listing frenzy. like software engineering positions; supply demand is shifting now.
this secret still remains completely misunderstood, as you said.
these kids will be surprised how many seasoned sellside/buyside professionals are making the move for the reasons you described.
Wouldn't those types of IR roles (sr level, head of IR) be looking for folks from LO side vs HF or even ER?
Can anyone else validate these figures? If true that job is very underrated. Analyst pay with CFO upside and better WLB.
I’m a couple years into my career at HF after 2+2 and this is my biggest worry. I’m making good money right now, but I keep hearing horror stories of getting to your mid-late 30s and not having another seat to go to while my peers in PE are just starting to hit their stride with carry distributions at the partner levels. I’ll make more in cash than them for the next 4-5 years (and have better work life balance as I actually enjoy my job) but who knows what happens after that.
Speaking from the quant perspective. Many quant researchers and devs (and especially devs) eventually move out into tech\startups for career advancements, better work-life balance and more meaningful work. (and during the post-Covid period the sweet sweet RSUs). There really isn't much room for advancements in HFs for those who do not want to or cannot move into the PM role. Working in the same role for 10-20 years sounds soul sapping.
It also helped a lot that tech salaries has caught up during the Covid period with big tech paying 400-500k (total comp) for someone with 5 YOE, though I think that trend is now in reversion.
I can't imagine being an analyst / sr. analyst for more than 15 years absolute max, and that's in LO. In HF it's gotta be way more brutal
Why? As long as they're paying you well and treating you well and gradually allowing you more responsibility (assuming you want that -- not everyone does) what's wrong with that?
If you go to another shop, you'll still be doing mostly the exact same stuff anyway -- different faces and maybe a different IT system to do your work on, but it's not like it'll be any more exciting than the shop you left.
I was really coming from more of a pod perspective here vs tech industry. Hierarchies in a pod shop are pretty flat and there isn't really much more you can take on in terms of responsibilities as a QR at 5 YOE vs 10 YOE. Not to mention that the exit opportunities are more limited as well.
Looking at my peers who left for the tech industry during the Covid period, makes me think that hedge funds can be somewhat overhyped.
This 500k TC are gone for good lol. Those are abnormality, not the norm
I think you can either run a hedge fund, or you can't. And if you can't, at some point someone cheaper is coming up.
I think this applies for business in general, not just HF. Either you can go out and do your own thing or you can't. And if you can't, you're going to hit a ceiling at some point
I could be a case in point. I’m the OP of the thread “financial freedom what next.”
Mid to late thirties, made enough that I could retire, not as passionate as others about building wealth for wealth-building’s sake. I could see myself leaving the industry to pursue other more altruistic projects and also improve my lifestyle.
I'm one of these people. Mid 30's, in a declining seat with few good options. Tough to even get a corporate gig.
Do you have enough to retire or semi-retire (I.E. $3-5M+)?
Nope
Granted this happened in 2019, I know someone in a similar position who switched to SWE and is in a top tier, non FAANG non Finance role and makes over $250k
Early 30s and mid-level seat here (ignore WSO title), not enough to retire. I regret ever joining this industry. There are no exits because I have no transferable skills.
How much are you making in your current seat?
Somewhat successful in a respectable seat but not a superstar
Maybe true, but what other industry could you have joined instead that *would* have exits with transferable skills once you're in your 30s? Not medicine, not law, not PE, not marketing. Maybe tech? But if you'd gone in to almost any other field, you'd now be having the same career doubts with no transferable skills. Cheer up, your life turned out as well as it would have on most any other career path.
If you took a 2+2 route (top IB -> MF / UMM PE) to a scaled SM HF, I don’t understand how you couldn’t have saved up mid-single digit millions by mid-late 30s even without banner years. Maybe I’m missing something, but I would have thought salary progression looked like this:
You probably made an aggregate amount of $10-12M across the first 15 years of your career. Let’s call it $5-7M on a post-tax basis so if you saved 30-50% of your net income and put it into ETFs with annual rate of return of 6-8%, doesn’t that get you to at least $2-3M? Understand most of the savings are back-weighted, but the above compensation scale is conservative as you don’t assume any significant bonuses from years 9-15 when you are presumably in a risk-taking / senior role at a HF. It also implicitly accounts for the fact that most investors change their seats 2-3 times.
I should note that the $2-3M also does not take into account any profit sharing / employer matches for your 401K so that would be all upside and if it’s a conservative 2.5% of total comp per year (growing at 7% annually), this ends up being $400-500K at the end of year 15.
Feel free to disagree, but just thought I would lay out the basic math.
Fine. Say you are 33 with $2mn saved. Now say you lose your HF career.
Now what? You probably have a family by this point that is dependent on you for the next 60 years of your life. $2mn is not enough. As others have posted above, trying to even get a corporate job is difficult, let alone one with respectable TC. You’d be lucky to even breakeven on expenses in your second career.
Mine as well take a career with steadier but more guaranteed long-term comp progression from the beginning.
It’s hard to think that if you were able to get the top IB, top PE, and top SM HF jobs that you wouldn’t be able to figure out getting another seat (e.g., HF, long-only AM, start-up, strategic finance in tech, etc.)……
Separately, if you have $2M liquid at 33, I would be fine with getting a second career that allows me to break even on expenses. It will presumably be 40-50 hour week job with minimal weekend work and my $2M will compound at 6-8% which should get me to $4M by early 40s. That’s the extreme downside case in which I make no incremental contributions going forward which seems pretty good? Am I missing something?
you just laid out a path that has maybe 10 seats open a year, if even that. how many people is that over the years, and what fraction of all HF investment seats is that? there's your answer.
I meant to say that if you have the opportunity to take one of these seats after IB+PE, it’s a good role and not one with a ton of risk with the caveat that you have to get it first
While I agree people on here are generally way too optimistic on how many people get huge paydays, it's more than 10 ppl a year who can land a decent paying sr. analyst role at a tier 1 firm (which is about where those numbers are, from experience).
The other thing is that most people are not aggressive savers - I am and have like 4 liquid, 2.5 illiquid after 13 years in, but there are a lot of people who make more than me and have less because of it.
You are correct. I think most who have gone this route should be at $5m+.
I for one, chose HF following MF PE, because I wanted to reach financial independence in my 30s so I have the option of doing other things in my life. Yes, maybe staying in PE would have been more lucrative by age 50 but there is a big difference between freedom in your mid thirties vs freedom at age 50.
Your Y9-15 comp is not realistic for the majority of funds anymore. I’ve had two years in that range but have mostly just sat at my funds minimum due to performance or aum issues (both cases rarely due to me). That’s luck if the draw though. Certainly this hasn’t turned out to be the career I thought it would be and I have a pretty textbook background with no real obvious missteps (BB IB -> mid tier SM HF)
Sat at your funds minimum for 3+ years? Does that just mean base? Why even stay that long then?
Lots of things can cause people to leave the industry around this time. And its usually not because they made enough to spend the rest of their days lounging on a yacht.
- Late 20's - late 30's is when the typical transition happens from analyst to more risk-taking (PM) role at hedge funds. Some analysts aren't content staying analysts and making significantly less than their PM peers but cannot make that transition. Plenty of ways to fail depending on what kind of fund you are at: you're just not as good at investing as you thought and blow up; you are bad manager and can't build a sustainable team. Even if you do make the transition, your edge might disappear in a few years. A bad PM has no value, while a decent analyst does.
- Poor fund performance can really stall a career. If fund does poorly, you typically end up taking a step down in fund quality/responsibility. Hard to get many shots at good seats if the last 3-4 funds have blown up. Nothing you can really do here other than really think about whether the fund you are joining has a sustainable edge.
Currently navigating this career transition myself (late 30s) - I help lead a small team running a somewhat profitable strategy while attempting to build out other ideas/sub-strategies. It's completely nerve-wracking - first and foremost to not blow up on something new, yet not miss opportunities and you can't do the analysis yourself. It requires a completely different skillset than just idea generation: hiring, developing, managing, motivating.
The current economic situation we are in makes a lot of things unclear. I’m glad to hear you are profitable though.
Most people I know who leave (late 30s) leave because they want better WLB. They have families they need to tend to and want to see their kids.
Stress, health, etc., life will throw curveballs at you, too. It is not strictly professionally, so there are circumstances outside of the corporate environment that needs to be considered as a possible variable.
What do they end up doing afterwards typically? I imagine a small % retire, but what about the remaining 80%?
I'm 35 and have spent my entire career in the hedge fund industry. For the purposes of anonymity I am going to be a little vague.
Years 1-2 Junior Analyst
Years 3-4 Analyst
Years 4-8 Senior Analyst
Years 9-13 Transitioning to more of a management role.
I would define "great HF seat" as either established multi-manager (Citadel, Balyasny, Millenium, etc) or great Single Manager (Tiger Cub, Glenview, Taconic, etc). There are cases to the upside sure, if a guy kills it for 7 years at Lone Pine he is going to make a lot of money, but that is a case well into the top percentile of outcomes even in this career industry.
The comp progression laid out above is definitely top quartile for the industry, but maybe "average" for someone that went 2 years banking, 2 years at mega fund PE, and then got a great HF seat. It also doesn't add up to $12M - $15M, the midpoints add up to $9M by the point someone is 37. Which means $5M maybe after taxes. And the 6%-8% IRR may seem conservative, but on a dollar weighted basis the comp is back loaded and the market has annualized at 6% since March 2020 (pre-Covid). If someone has loans out of school, and maxing out retirment comp, they aren't banking a ton of after-tax cash in Years 1 - 5. And Years 9-15 typically involve buying a ring, a house, a honeymoon, having kids, medical bills, etc. Even if you aren't living a flashy lifestyle, cost structure does change.
PE is a much better track in that it puts a lower discount rate on your future comp and outcomes cluster closer to the median. The capital is locked up for 10 years with leverage and no real mark to market. Carry is taxed at lower rates than W-2 Income. Every year allocators are redeeming from hedge funds and putting more money in private assets.
On a dollar basis the HF industry has grown the last 15 years, but as a percentage of alternative assets it has significantly shrunk. By 35 most people are either
1. Out of the Game, hopefully with some cash saved
2. On the margin between getting out of the game, or getting a small GP stake and more upward mobility
3. A rockstar with carry and making a ton of money.
If you took every person that recruited for hedge fund seats as a second year analyst 10 years ago, I would guess that 70% are in bucket 1, 20% are in bucket 2, and 10% are in bucket 3.
Looking back, would you have preferred PE as your career?
Good call. My experience has been top IB -> top MF / UMM PE so my ranges may have been aggressive for the typical analyst exit going to a sub scale or mid tier hedge fund. I think PE has been a great place to be for the past 10-20 years but so have the big HF shops with a growth bent. It feels like your career is fairly derisked if you go 2+2 to HF vs. straight from IB as you probably get a better selection of firms to go to.
From my experience (top IB group), I would say only 20-30% of analysts that exited to PE have a “true” partner track and the median outcome is at a MM firm (most people trade down from MF after business school). The apples-to-apples comparison is probably someone that got on the Partner track at a PE firm vs. someone that landed a good HF? I continue to think the probabilities lead to a better outcome on the PE side, but the best HF seats are better than the best PE seats.
I agree, the median and average outcome is better in PE, with the tails of the distribution being much more extreme in the HF space. Here is a quick summary
Banking MD: Decent Comp, Lots of Variability, WLB ranges from Ok to Bad
BigLaw Partner: Decent Comp, Low Variability, WLB generally terrible
Hedge Fund PM: Great Comp, Very high Variability, WLB generally Ok to Bad
PE Partner: Great Comp, typically Low Variability, WLB generally OK to Bad
Agree, the ib-> top pe -> top hf subset is going to be different than broader set of outcomes
For context, I’m mid-30s ex top MF and now at a HF. A decade or so later, everyone from my MF associate class is doing great, both the HF subset and non- HF. “Great” defined as partner, PM or partner-track MD at top tier firm.
That said I’d also be somewhat reluctant to look at past track record. Associate classes were smaller then, so this is an even smaller subset than today. For those who stayed in PE, it was also a much more favorable environment: fund sizes were rapidly growing even at MF level and mid levels were hollowed out post gfc, so the path up was clearer than it will be now when fund sizes are shrinking and headcount is way up.
very tangential but i was under the impression taconic was a pseudo multi manager/hybrid multi manager type shop?
Why no one mentioning just running your PA after your hf career?
Because a conversation about the small percentage of people who become rich enough to live a good life just from managing their own PA isn't productive or helpful.
I have been lucky in my career to have amassed enough net worth at my current age (mid thirties) to retire. Things have not been going as well as previously in the last couple of years and I’m actively thinking about quitting, run my own PA and transition into something completely new (writing, teaching, non profit).
Are you at a SM or MM? What is your background?
Do you have a SO and/or kids to support?
Because they aren’t confident they can generate alpha reliably.
Those that can certainly consider managing the PA, at least as a stopgap to raising a fund.
Any of you guys wish you joined a LO?
Yeah but it's not like I really had the opportunity to in the first place (at least a large respected one). This is coming from a target undergrad as well. Tough industry to break into.
This thread makes joining a LO sound like a no-brainer unless you’re certain you’ll be a top decile performer in the HF world. Industry has its own issues with fee compression and cost cutting but it seems like the combination of risk-adjusted comp, work/life balance, and career longevity stack up pretty well vs HFs.
You have the correct conclusion
Definitely true. Out of b-school, all my peers thought they'd be the next Ackman, Paulson, Soros... By contrast - I was the guy who went into "sleepy" bonds at a "mutual fund". I'm no Bill Gross - but LO offers excellent risk-adjusted career outcomes. Clear ramp to 7-figures as an analyst, even for those that don't make it onto the PM track.
What happened to your peers? Any of them regretting not taking the LO or going back to PE?
how many non PM analysts at your LO are clearing 7-figures and after how many years? Hearing that is increasing rare these days and mostly very sr guys with legacy partnership stakes. Most get stuck in mid to high 6's and new partners get scraps. Still good / steady pay though.
What about SM HF roles? Those seem like the sweet spot of HF and LO
Go long only - this is the way.
Lot of this is focused on $, when probably one of the biggest drivers is lifestyle and priority changes. By the mid 30's people are married, having kids, and their mindset shifts. Also by this point you have a better understanding of what you like/don't like, what amount of risk you're willing to take, and do you want to be able to raise a family and not be absent? I know family friends who are absurdly wealthy, but they were not there to see their kids grow up... that's not something you can get back. More flexibility in smaller places with less commute, niche strategies you enjoy, and can go to your kid's t-ball game or better yet coach? Sounds wonderful
This is why PE and MM pod shops are so unappealing for most. Those two jobs have some of the most intense days / weeks given the work environment whereas SM HF can vary significantly. I’ve actually heard of the MM spin outs being very tough places to work despite being a SM while Tiger cubs were a good balance between high comp / good lifestyle. Obviously everything is stressful when performance suffers, but all else equal.
But let's be realistic, too, these "balance" comparisons don't mean anything because it's been easy street for a decade with little to no refi and credit risk. People who worked circa 2008 or '91 are the only gauge and probably aren't on here. World of hurt potentially, and firms are gonna learn the hard way the DT's can't originate and manage existing deals anymore (at least thats my opinion)
This discussion is why I chose LO after 2+2 and b school. I really think it’s the most underrated career in finance. Career stability of PE with the day-to-day enjoyment and WLB of public markets. This doesn’t apply to the people trying to retire by 35 as the comp is backloaded. But the risk adjusted returns are really attractive if you can land one of the private partnerships (Capital, Wellington, etc) in particular
You quoted the private partnerships - what's your view of the public / semi-public entities like T. Rowe, Franklin, PIMCO, etc.?
You guys are so unimaginative. Think about the percentage of the US economy that is fundamentally local service. Think of all of the auto related businesses, restaurants, home services, etc. that you spend all your money at. They all need both capital and stewardship i.e. for the most part, you can't just buy them and outsource the management (as you can with rental properties via property managers) as they occasionally require actual decision making and if you're not hanging around enough, your employees will steal from you. The massive glut of 65-70 year olds who have been sitting on these sort of assets for the past 40 years would now rather be retired. If you're 35 with ~$2mm of liquid net worth, throw half of it at cash yielding local businesses and spend 10-20 hours a week running them. You can realistically pay ~3x FCF for these sort of assets so for $1mm, you're getting ~$330k pre tax / ~$250k post tax while also building local clout and influence. At 750 hours per year, the "sweat" portion of your income i.e. ~$260k (based on backing out ~$70k of purely passive income i.e. the opportunity cost of otherwise buying ~7% cap rate rental properties) implies your time is worth ~$350/hour, which is about the same as the big law partner getting smoked 60 hours per week to make $1mm pre tax / $600k post, the difference being you're the one with optionality.
Meanwhile the other half of your net worth will be doubling every 7-10 years so you can still get the country club membership, new car every 6 years, trips abroad, second house even (granted, that one might take an extra few years). Let the 25 year olds commute into the office to get berated by 50 year old, twice-divorced douchebags. who the fuck needs that world. Raise your kids, be a good spouse, influence your community, fuck off with the delusions of being worth $10's of millions, you don't need it to live an amazing life.
Many of the people whom I know own businesses and real estate (apartments) are looking to offload/retire within a few years. I am in the space of exploring of either opening my own shop (local services) and perhaps purchasing a small du/tri/fourplex in a popular area. Sadly their kids do not want to run their businesses (despite the net revenue the business generates), and would rather just sell it and move on. There is value creation in being part of the community. You're also not burdened by being stressed if the company decides that they need to trim a section of the business and you happen to be on the chopping block.
I don't get why a lot of people tend to look down on small businesses in general. They practically employ the most amount of people (if I remember correctly).
I like the concept and I’ve explored many of these SMB ideas. But it’s silly to think you can run a service heavy biz like a restaurant on the side, only spend 10 hours a week, and have it be successful
Also where are you buying these biz? Many times there are issues with the left over opportunities being advertised widely by brokers. So to get a “good” biz you have to spend A LOT of time sourcing.
check out https://www.bizbuysell.com/. Restaurants (which includes cafes, diners, QSR franchises, banana stands, etc. I'm not talking fine dining in Manhattan) you can hire restaurant managers to run. They typically trade at extremely low FCF multiples (~1-2x) because they are some of the "sweatier" of small businesses. I'm more talking about other businesses though i.e. gas stations, car washes, laundromats, etc. You can also team up with other local investors and get leverage on your time by hiring a full time business manager.
One of my LPs made about $20m or so when he joined an emerging fund. Retired in his early 30s and invests his own capital.
The other HF guy I am close with is also an LP. Just works and invests the cash. We turn 30 this year and I assume he could be making $200k - $300k passively per year off his passive investments. Maybe more. He has a roommate still lol
Both guys are pretty conservative. Not flashy at all and invested most of what they made along the way.
So, I think if you only work in the space for 2 years or something, you might be in trouble. But if you make it to 30 and haven’t been living like a fool, you’re probably fine.
I am in this demographic, and probably about 5 liquid. Truly, at this age I feel I am working just to buy more stuff for kids/parents. So the main joy from this grind is solely the win/loss daily at this point. Anyone who no longer enjoys that competition I can see easily switching to a different profession.
People I know who are 5x my net worth, are the ones who can truly travel more freely, invest freely (you need a fair amount of capital to invest in RE/private business freely).
Following another thread, on home/rent costs. I think most finance people I know buy property below their means to keep safe, while most physicians I know are the other way overlevered. Oddly most times they live in the same neighborhoods.
There is a bit of a difference in that even if things go well your finance career won't take you past 50 in most cases, while physicians can and do work until they're 70
Exactly agreed, thats why I think many would rather leave this industry and buy below their means than ever get into that situation.
Similarly physician friends always ask me why if the market is quiet you can go home and relax at 2pm etc…But I feel when they are on vacation they are more relaxed than our profession.
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