Financial Planning vs IB- my career choice...
Hi all, I would love to hear people's perspectives on my alternative career choices in finance- financial planning or investment banking. For some important context, I am from Australia and the 'IB Pathway' is not nearly as prestigious and lucrative as other places in the world. I write this knowing that ultimately the choice will be reliant on my personal preferences of the benefits, but I am still curious to see what the general consensus of community members would be. I am going into my final year of study as well.
I currently work part-time in wealth management for a pretty solid firm. I know that my graduate salary would be around the $75,000 mark. This role has fantastic hours for a finance job. From working here already, I can say that everyone works a 40-45 hour week. Based off this, the hourly rate for a graduate role is about $34/hr.
My alternative is a boutique IB (obviously I cannot say for sure that I will get this, however, I am pretty confident I can due to having good connections and the desired requirements). The firm's I am looking at, would pay a graduate about $110,000 (including an average bonus sum). I estimate that the hours would be 65-70 per week on average. Therefore, this would be about $31/hr.
So hourly, the wealth management role would be better and I have already secured my spot there. I have a lot of extracurricular interests and pursuits and so the work/life balance would be very valuable for this. However, I can easily work long hours and would probably do so anyway, working on side ventures with the spare time. The Ib role is greater overall pay, is work that I enjoy a more, has more growth prospects and brings about a stronger network of professionals (which I value developing).
Is there a more obvious choice based on these elements? Perhaps it's a win win? Would love to get some experienced insight on what may be more beneficial for my career. Cheers.
I worked in a WM firm in Aus at the start of my career. Made the transition over to IB. For the longest time I questioned why I wasted so much time in WM when I knew the work in IB was more interesting….
I would think about the longer term career prospects…
Financial planning in Aus limits you to an independent financial advisor (IFA) office in the suburbs… most of the IBs in Aus have exited the country (except CS and MS) but you’re pay is pretty much capped at say 200k-300k (unless you’re banking twiggy or rhinehart) - and the HNW base isn’t as sophisticated as HNW in the US or EMEA (as there is less of them)
IB even in a mid market firm opens you up to a lot more different work, from restructuring, m&a, capital markets work. The career path can take you to many more places…
My advice (if it’s worth anything) - do what you’re interested in and forget about the hours. Honestly there’s so many new gen grads that are worried about hours. You’re young and there’s no better time to grind when you can. It’s better to do it when you’re young than when you’re older.
Thanks for that man, great insight.
I’m curious- did you find the move from WM to IB difficult? How did you go about doing this?
I found it really difficult if I'm going to be honest. I worked in WM and made a lateral to a WM at a BB with an IB arm. I mostly networked and had tenure at the firm which helped me get in the door. Added to that alot of the WM clients I dealt with needed IB type work which helped a bunch. That would only be possible through a BB - not an IFA dealer group outfit (if I assume you're going to). IFA dealer groups bank retail clients so the type of work you do wouldn't be transferable if you wanted to make the move to IB in a few years.
It's not impossible but it wasn't easy at all.If you want to do IB do it as early as possible.
It’ll get harder the longer you're not in there. Forget the hours. Just grind mate.
I would also say the IB pathway comment you made isn’t accurate. IB analysts do get paid market rates. And pathways are just as open as the rest of the world (I.e. all the mega funds are in aus, and take IB people all the time)
Comparison of the hourly rate is not the best approach, taking a longer view on what you want your career to be is more important. However, on the IB side of the boutiques paying 110K for grads many have paid ~100% bonuses and realistically you'll land somewhere between 150-200K all in, which is going to be double your PWM salary. Top of the street is paying 190K for grads (before bonuses). Back to my point on the longer view, and since the comp is your focus, in IB you're going to likely clear >500K all in about 5-7 years. You'll have the option to lateral to a different firm / go buy-side etc too. Also it sounds like you've answered your own question "The Ib role is greater overall pay, is work that I enjoy a more, has more growth prospects and brings about a stronger network of professionals (which I value developing). "
110k base for ib grad is substantially below market, multiple BBs are in the 170-175k range.
There are a heap of EBs and boutiques at the 110K mark for AN1 which after bonus are in the 200-250K range that most BBs will end up anyways.
OP said that 110k was including an average bonus sum - which is definitely below market. Agree that 110k base + large bonus is common for EBs in Aus, I was more just referring to the fact that BB base would be higher than his TC.
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