Curious to hear what the average MD's net worth might be (not income)? Maybe my perception is blurred but it seems that every MD in my group spends money on the absolute dumbest things, lives a lifestyle where they need to continue being slaves to their job despite making millions of dollars. Is this generally true across the board or just me? Where does the average MDs net worth stand including property/business stakes etc.?
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I dont know why my MDs are ever stressed. theyve been clipping million dollar bonuses for a decade plus.
who cares if you are fired.....they should have tons of money
Plenty of MDs succumb to the lifestyle with au pairs, second homes (summer), private schools, etc. and aren’t as high net worth or liquid as you think
A lot of senior people live well beyond their means - especially if they have kids and a wife who doesn’t work or make significant money.
It seems like everyone has at least one additional summer and / or winter home and kids in a NYC private school like Dalton / Spence. You’re highly dependent on your bonus in that construct. Also a divorce can absolutely set you back years.
I’m a more junior MD in my 30s with no wife or kids and I’m pretty confident I’m more liquid than a lot of the more senior guys. I always said I want to be in a position to be “done” by 40 so hopefully I’m close
To the question at hand, it’s so variable because their tenure in banking matters, marital status (single / divorced / married), presence of kids, and most importantly financial acumen. There are surprisingly quite a number of people on Wall Street who are just terrible at managing money
What’s your net worth? You are anon anyway.
Out of curiosity what industry do you cover/how did you make MD by 30s?
Also did you ever consider switching to PE? If so, why not?
No networking cliche bullshit. I want to hear your story - I don’t have a lot of exposure hearing advice and such from seniors
On variability - don't forget inheritance / family money - that will drive a lot of the variance
It seems like there's an ocean between the lifestyles of the junior MDs and the senior MDs at my bank. Which makes sense I guess, but it was still cool to see.
It can vary widely depending on lifestyle, how long they have been MD, and if they made investments.
I've noticed older MDs or senior MDs (i.e. been in IB for 20+ years) seem to have the most wealth. A lot of them probably made a lot of their money prior to 2008, made good investments and been clipping 7 figure paychecks for the last decade.
A lot of the junior MDs seem on the surface to live pretty average lives.
Bruh if you think the way MDs live is "average" you really gotta get a reality check on how most families in America live.
Eh, I see his point. You get an Audi instead of a Toyota, live in a more expensive zip code, and send your kids to private school. But life isn't really that different. Just more comfortable and with nicer stuff in the background. So what.
When I say "average", I should have clarified I meant as in relative to the amount of money they supposedly make and sacrifices taken to make MD. People tend to overestimate the lifestyles of MDs.
For example, there are a few junior MDs in my bank, early-mid 40s, who drive Camrys/vans etc., rent or own an apartment. Maybe they are all aggressively saving but to me that is pretty average considering the sacrifices and time it took to reach MD level.
bump
Depends on what bank/group etc and stock performance. Long-standing coverage banker at MS could be worth $20M+ in their 50s while an ECM banker at DB could be worth $5M. Also, depends on how smart they are with money
i am surprised its not more-even its a low 7 figure and compound that shouldn't it be more?
2m income is 1m after taxes. Nanny, private school, two mortgages, decent travel, etc. I'm not saying super luxurious, and I'm also not saying they're pinching pennies. They're probably spending 400-700k per year, which means savings 300-600k per year
Can't be high, my MD dresses like shit and drives his wife's Ford. Maybe he's just a cheapskate (which I can dig), but in his position I'd rather go a bit nuts.
This attitude is what locks folks in with golden handcuffs
It's probably high because he lives like that, not the the other way around.
Every dollar you spend is a dollar you can't save or invest. Your MD may be looking to build their net worth for optionality / retire early. It sounds like if you were in his position you would rather work until you're 60
Talk to the MDs at the regionals like Baird Milwaukee or Piper Minneapolis or HW Richmond. It’s no wonder they never leave. Imagine cashing checks in those cities for 2 decades. Home prices, a few private schools half the price of those in nyc. Lower taxes across the board. They’re the ones who could actually be building wealth comfortably without the major keeping up with the Jones’s stressors
Those cities sound boring as fuck
You clearly haven’t been to Milwaukee or Minneapolis. Both are very cool.
Once you're married with kids though you're likely to be living in the suburbs anyways, not the city core, so I don't think there's that big of a difference.
Plus Milwuakee and Minneapolis are still actual cities with things to do, not some random rural village in a flyover state.
These guys cash out - can confirm. Also helps that middle market banks often time pay more than BBs lol.
Can confirm. MDs outside of HCOL cities are considered very wealthy on relative standards. NYC, LA, and Bay Area set the bar so high in comparison.
Here’s a simple example. One of my family friends makes probably $500-600K a year in a VP role at a F500. With that money he’s got a massive lake home, two cabins, 3 boats, multiple jet skis, and is a part of a country club. Helps that his kids have are moved out and his wife makes ~$100K a year as well. For comparison sake, I know multiple MDs that consistently bring in solid fees, likely pulling $3M+ per year after tax and they invest most of it. I’d guess the older ones have a net worth of at least $30M and the younger are probably close to $10M with how little they spend and how lucrative their investments have been (real estate, proprietary deals, public equities, etc).
Poor financial management and deferred comp lol
6.9
Not nearly as much as they used to be able to back in “the good old days (1980s - 2000s). Today maybe you can get $20M if you shoot the lights out and are a successful banker at a BB or EB, but the vast majority would have less than this I would say from my experience in kind of just noticing how they live and from what I hear.
The other day I peeped my MD looking at his personal bank account. It had ~$1.25M. Obvi a lot of money but tbh I was expecting to see more. He of course has money elsewhere but still. Think lifestyle can really drain the savings.
Why would you even have that much sitting in a personal bank account, not earning a return? I have 20k in my checking account at best, everything else is in various investments (much of it liquid and can be withdrawn within 24 hours)
That's fairly low to have on hand, you never know what could happen. I keep half my annual salary in my checking account.
Could be putting money together to buy a primary or secondary home
What’s the point of investing then lol those must be super low grossing and function like cash
Why would you ever have that much cash
Why would you have ever have that much in cash?
You should be able to get to $20M or so by 50 if you do most things right and have 15 years or so as a MD with $1.5-3.0M Income. Taxes take roughly half your income at that level and most MDs have a non working spouse and a few kids and spend $400-600k+ a year in NYC/CT. Seems easy on paper not to get sucked in but the majority of MDs seem to get knocked off track in a number of different ways.
Divorce, bear markets, job loss, taking a lower paying corporate job, bad investments, private schools, wife with extravagant taste, burnout, expensive hobbies, second homes, watches, cars, boats.
Feel like many MDs have brushes with some or most of these and move to a corporate job in a LCOL area with $3M in their 40’s.
Man,...I highly doubt the average MD is spending 400-600k a year, has to be more these days.
A mortgage on a 2.5 million home is 12k per month + 4.1k per month conservatively on property taxes/maintenance. Thats 200k annually right there. NYC prep schools are close to 60k a year now, so take 180k off if you have three kids.
OP... a W2 job will never make you extremely rich. But you'll have a somewhat consistent high disposable income. There's a ton of value in this (FWIW, women don't care about your assets, but the income and lifestyle you can provide them) if you want to live a certain lifestyle and don't care about building a large net worth. Good number of MDs have multigenerational wealth or their wives do also, so they aren't really too concerned about saving.
Other issue is how net worth is composed. Sure, maybe a successful MD might have 20 million, but it could be compromised in a largely liquid portfolio thats subject to high capital gains taxes upon sale and inheritance taxes if passed down. Comparatively, a self employed person, could have a multifamily real estate portfolio of 15 million, but has great tax advantages that a banking MD doesn't.
The other issue is longevity of the industry. My MD retired at 55 with x amount in net worth. I doubt its grown much since then since it was largely liquid and he's been living off his savings over the last 5 years. The amount he retired with was a "wow" amount at the time in 2017, but can't say the same now as money is worth a lot less than it is now due to decline in purchasing power, inflation, etc. So, yes, you could retire with 20 mill, but that 20 million isn't going to hold the same value in 30 years when you die if you're eating from your capital base.
My MD is somewhere between 20-30M
think an MD is maybe worth $20m only if he is an actual rain maker for 30+years in the biz ... an average MD not as much
how the eff are MDs moving to corporate jobs in their 40s with only 3 million?
I'm a senior associate with close to 500k. By end of my VP years I hope to have a 1mm net worth.
Then, if I make MD, after clipping a few 1mm dollar bonuses (post tax), that should easily be north of 5 million after just a few years. As a mid level MD you should be approaching 10 million.
Hell, my own father worked as a random IT manager and with his house appreciation (seattle area), and the bull market of the past 10 years, hes a multi millionaire even though hes had a "middle class" job most his life.
3-4 million is pretty dang low. this is depressing to read!
Lots of MDs started as post-MBA associates with a -$200k NW at 30-32.
Agree with this. Net worth is influenced far more by your lifestyle choices rather than your income. Anyone can plug numbers into a compound interest calculator to see that. If you have $1mm by 30 (like you've planned for), then you should be set for a very comfortable retirement, assuming you don't get fired and assuming decent market returns.
Ah yes, the "I'm an associate", and here are my clear, incontrovertible career and net worth projections into 2032.
No hardcodes, all formulas.
Somewhat similar experience. I think the big thing is the high finance / NYC lifestyle / peer pressure. They're all sending their kids to expensive private schools. Even with a non-working spouse, a lot are hiring a nanny. Date night can be $500 - $1,000. So the spending really picks up.
If you're lucky to get to making high six figures / low seven figures in a non-finance job, you don't feel as much pressure to do those types of things. You can keep spending 150k-200k and bank the rest
$8.234MM on average, based on my detailed analysis conducted over the TTM period
You must have forgot to unlever Beta in your CAPM formula. I'm getting $7.38137M
I am getting vastly different numbers, what’s the D/E ratio you used (Obviously D=divorces, E=extramarital affairs)?
Keep in mind there's a difference between the lifestyle of an MD in Trading vs MD in IB.
How so? The ones in IB seem like they have wayy worse spending habits
Your job is on the line everyday as a Trader, most comp comes from bonus and that varies heavily. Can make 600k one year and then multiples of that the next, or get fired.
This uncertainty and volatility in career earnings means you need to be smart about personal finance esp if you have a family.
Yeah that's the point. The traders have it in drilled in their heads since day 1 that they can make their moolah via their bonus which is inherently unstable. Bankers on the otherhand (including me) are more comfortable since we don't really rely on trading performance for our bonuses and more of quality of work at the junior level.
Mid 40s
c15mm
exoect to be 30mm by 50 since I’m at the point where I’d have paid for my real estate funded kids education and can build up savings and invest well
at that point, 10mm in real estate (at least some of which earns an income), 10mm income generating and 10mm to invest for serious capital appreciation.
I won’t stop working either then but def will either go buyside or vice chairman type role
Nice - how did you accumulate wealth? Living below your means and investing aggressively?
yeah, almost all of it in the last 5-6 years when I started really making money, I didn’t adjust my lifestyle upwards other than kids education. It sounds ridiculous because it’s a shit ton of money but I try to keep my costs at sub 400k a year, so it’s a large after tax saving every year. And at least I think I live pretty damn well. But I also know MDs who frankly make less than me who spend 1mm a year and save nothing and I have no clue why.
Can you give us approximate ages for significant levels? $1, $5, $10mm?
I came from a middle class family that hit some serious financial issues in the GF. so saved practically nothing until I was 35/36 since I was sorting all that out. Much of it has come in last 6-7 years when I started getting paid really well.
Not so liquid but we make it work. Lots in deferred comps. With recession coming up, have to watch spending. Lol
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