Are the golden handcuffs real?
I’m a junior looking to go IB and lateral into PE potentially. I read a post one day about PE associates regretting it, the next day IB, after that M&A. And in my personal experience, these are tough questions to ask over coffee, but a lot of people I have met in PE/IB enjoyed their work a lot. They complained about the hours, but there was always a sense of drive and purpose that came from people in high finance and I admired that. Each route sounds so miserable yet exciting equally.
Do these high finance roles really suck that bad? Are the golden handcuffs real? Is it really just a trap?
With all that, between the fields I am interested in, if money is the goal, which route in finance would my labor be valued the most at?
Consulting, IB, M&A, PE, or HF?
Ah, the age-old question of the golden handcuffs in high finance! Based on the most helpful WSO content, the concept of "golden handcuffs" refers to the attractive financial incentives offered in high finance roles, such as investment banking (IB), private equity (PE), and others, which can make it difficult for professionals to leave their jobs despite any dissatisfaction they may feel. Here's a breakdown of what the WSO community has to say about it:
Realness of Golden Handcuffs: Yes, they are very real. The term often comes up in discussions where professionals talk about the high salaries, bonuses, and long-term incentives that keep them tied to their jobs, even if they've lost interest or are experiencing burnout.
Job Satisfaction: It's a mixed bag. While many in IB, PE, and related fields do indeed express a sense of drive and purpose, they also often mention the grueling hours and high-pressure environment. It's not uncommon to hear about the toll these jobs can take on personal life and mental health.
The Trap: Some see the financial rewards as a trap because they become accustomed to a certain lifestyle or have financial obligations that make it hard to consider lower-paying opportunities, even if those might offer a better work-life balance.
Valuing Labor: If money is the primary goal, traditionally, fields like PE and hedge funds (HF) have been known to offer higher compensation due to their profit-driven structures and the potential for significant returns on investments. However, this can vary widely depending on the firm, the individual's performance, and market conditions.
Remember, each path in finance has its own set of trade-offs. Consulting might offer a broader range of experiences, IB is known for its deal-making intensity, M&A involves strategic transactions, PE is about investing and managing portfolio companies for value creation, and HF focuses on diverse investment strategies to generate high returns.
Ultimately, the value of your labor in these fields will depend on how well you leverage your skills, the success of the deals or investments you're involved in, and the compensation structure of the firm you're with. It's crucial to weigh the financial rewards against the personal and professional costs to determine what's most important to you.
Sources: Cant do it anymore, Has finance culture become less “bougie”?, Cant do it anymore, https://www.wallstreetoasis.com/forum/investment-banking/jefferies-are-these-rumors-true?customgpt=1, Exit as a VP because lost interest
As someone who went A2A: yes the handcuffs are real.
Most of the time the people who leave are either A) getting absolutely destroyed and want better hours, B) want to go to buyside and do the traditional high finance route, or C) just go an do something different (way less common).
You’re right when you say that folks seem interested in their work during coffee chats and they probably do mean that. Very few jobs give you this level of exposure and access to an incredible network, resources, and skills that you can use for your career. The issue is that if you become a bit jaded and aren’t gung-ho about doing buyside then it’s pretty challenging to actually find an interesting job that actually pays well.
So have you found it to be rewarding/worth it?
For sure, but it really comes down to what you want to do down the line. Also very subjective on group and culture (my group actually has a pretty good culture for Wall Street and my MD gives me some free reign so I’m able to both develop my skill set and not get absolutely smoked).
With that being said 3 years of banking is still 3 years of long hours, some blown up weekends, and a lot of unpredictability. I’m fine staying until the learning curve begins dropping off but if culture changes or anything of the sort I’ll be out. Job definitely is not worth it if you’re in a super sweaty group, imho.
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