Where are smartest guys in Finance ?

What are most jobs in Finance with most intelligent / smart people ?

IB is full of hardworking people and sometimes with great sales skills but to be honest not the smartest guys on earth. Some very senior guys are truly impressive but majority is average.
 

where do you find real smart / impressive guys in Finance ? Are PE people more intellectually stimulated and therefore stimulating ? What about HF? When I read Equity research or rating advisory papers it makes me think that people there are quite clever given the level of the analysis 

… or perhaps my question doesn’t make any sense and you find smart peoples and stupid guys in each segment and the difference is more firm driven ?

 

If you’re talking raw intelligence I would guess that places like Jane Street and peers have the highest average given that is such a central part of their screening criteria

Sell-side/IB probably lowest average - larger number of people in these jobs and a lot of meathead MBAs

Everyone else in-between

Raw intelligence alone doesn’t make you successful in the bulk of finance careers. Being reasonably smart but sociable/well-liked generally will get you further in life than being an awkward dweeb who is trying to get by on smarts. Nobody likes awkward dweebs.

 
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The smartest guys in finance are usually found in RX and distressed debt / special sits funds.

Note: Special sits fund of course means an actual goddamn special sits fund and not a direct lending fund that thought they could put that on their website after one of their portcos - in which they were probably a minority participating lender - had to be restructured.

Hope this helps man. 

 

Those awkward deebs are smart enough to learn how to be like-able ( or pretend to be like-able ). But they choose not to, because they don’t have to. They don’t need to be likeable to succeed or survive. They have other leverages to lean upon. Being likable drains their energy that they deem it not worthwhile.

Ibankers are very sociable and like-able because they need that to survive. When you’re intern, you need to please the associates to get an return offer. When you’re an analyst, you need to please the VP to get a high bonus. When you’re a VP, you need to please the MD to get promoted. When you’re the MD, you need to please the clients to not lose the MD position. It’s all about pleasing the people whom you must please.

 

HF then PE then IB then stuff like ER, sales etc. 

It's not always about being the smartest know-it-all in the room though. Having tact, being polished and high EQ matters a lot more in many types of roles on top of being smart.

 
Controversial

Order:

  • Academia/ Post PhD hires at hedge funds. Generally physics or math phds.
  • Analyst hedge fund hires
  • Mega fund PE Analyst hires 
  • Special situation/ distressed/ one-off family office/vc/new fund hires 
  • IB analyst hires
  • PE Associates
  • IB associates
  • ER
  • Sales/wealth management roles 

I think the pushback would come from people claiming, “but but PE associates are almost all former IB analysts, so how could they be dumber? Well, the top IB analysts usually don’t stay in PE long especially now. Usually they are going for hedge fund seats or something more entrepreneurial, and the ones that stay are the ones that haven’t figured out trading your late 20s and early 30s for carry that will never show up is retarded. All the really smart people minus 1 I knew bailed on the PE bait and switch (Can work to get to hbs or gsb though if that’s your thing).

 
Most Helpful

Sure, I’ll answer some questions and provide a few tidbits and questions for you:

  • First question: Why do you like PE and want to do it?

If you read my post on the PEAC, you’d get that what people idolize as PE and what it actually is are very different. People think PE is like shark tank where you look at companies, buy the most interesting ones, and then work with amicable people to find exciting ideas to grow a business. This breaks down at all 3 steps in reality.

In terms of the purchase, rather than looking at exciting companies and evaluating things like shark tank. It instead is a political and very hierarchical process of selecting an investment. Additionally, once one person with political power decides to assert, you are simply dragged along for the ride, whether you think the company is cool or not. The main reason PE is so political is the long investment cycle and small number of investments makes it very hard to tell who is good. Many changes take years to implement and even longer to understand the results of those changes. So the lack of mutually understood truths can cause a great deal of wiggle room, posturing, and politicing. In terms of the people inside those companies or doing operations work/ running a company, it’s actually incredibly messy and usually involves dealing with resentful or unmotivated employees. As a financial buyer, it’s hard to convince employees of a company you actually have their best interests in heart, so employees will want to do the minimum and will generally be very skeptical and distrusting of you. Also, many times the age of hiring for these roles creates a weird dynamic where ops work is often given to those in their mid twenties and the employees in their 30’s, 40’s, 50’s and 60’s really despise having a “kid” give them any input.

  • The carry question

Carry refers to carried interest. Generally PE firms promise workers a lot of deferred compensation tied up in a certain % of the assets they hold. So they will say x is salary/ cash bonus, and the remainder is x% of whatever asset gets sold or x% of a fund or exit we get.

Now, this creates problems for a few reasons:

  1. The investments used to be 5 years for PE and now are inching closer to 7-10 years. The longer the exits take the longer it takes for you to get paid out. Many times in order for you to get paid, a fund needs to hit a high water mark or a certain amount needs to be given to investors.
  2. As someone above noted, you might leave and give up a portion of your carried interest because the job is so miserable or you want to do something different.
  3. Being even more nasty, it might actually be in the interest of people above you to have you leave or give up the interest you could have a claim to because then they will get paid more. Generally you need to be at a firm for awhile for your interest to vest and often people are conveniently shown the door in a way that benefits the people at the top of the firm.
  4. If the fund struggles or underperforms, it could be a very long wait for something that isn’t worthwhile. While many PE firms have done well historically, there are loads of reasons that going forward it might be harder to do well.

That make sense?

 

I generally agree with this ranking but not sure about the dumber ppl going into PE part. The people I know who went to PE had a true passion for finance and investing on top of being smart and this was something I could tell from even in uni. Also under your reasoning, why are the analysts going to PE who are chasing a carrot still ranked smarter than kids who chose relatively more stable and higher income career paths then? One could say people have a better chance of making big bucks going in the path of IB, ER, etc than getting to partner at a MF. Under that same reasoning, the analysts going to HF would then be the least intelligent bc they chose the most difficult field to stay in long term, and the exit opps from there are usually much more limited if they decided to leave or lost their jobs compared to people working in PE or IB..

 

Kids leaving college have no clue what they want to do. I don’t really fault people for the first job they choose and think few college kids think about career stability when starting out.

Analyst PE roles at large firms are so competitive, you are only getting those positions if you are a perfect test score, academic and networking freak. Lots of PE associates are hired simply because they landed an analyst role at a brand name bank.

Also, I will counter on the people going into PE being the ones that like finance. Those that like finance in my experience, generally care more about black scholes or reading academic papers on factors in international markers or something over making a deck look fancy or cranking a retention model or headcount projection. I also would argue the administrative, time intensive tasks of PE are substantially worse than many of the other jobs listed (aside from IB).

Being more blunt, it isn’t about expected value of the career path, it’s about PE having really shitty work relative to the other paths.

Finally a needed disclaimer, these rankings are general like saying Goldman analysts are generally sharper than those at mm banks. It doesn’t mean there aren’t out of this world smart ER people who found a path to make a ton and love what they do. Just like how there are certainly mm bankers who are way smarter than people at Goldman. There are really smart people randomly dispersed everywhere, it just seems there are higher averages in the list I provided.

 

I would say it’s because the kids going into PE analyst programs are the ones who know what they want and go after it. Whereas the IB crowd couldn’t in many cases land PE analyst offers and have to go in through the side door. They also get 4-5 years of PE experience compared to 2 for the PE associate before most people get pushed out. At that point you’re much better suited to get another PE gig at another firm, pursue something entrepreneurial, etc. compared to the IB to PE associate crowd who aren’t really experts in anything.

IB in my opinion produces cookie cutter types that lack differentiated critical thinking skills largely because the job doesn’t really require it. Your value is as an excel jockey and not as someone adding value to a deal, which you won’t do until 5+ years into your career. I’d argue the only reason the buy side hires from IB are the excel skills and training programs. My firm has hired a handful of former IB analysts and they’re all incredible at excel but dog shit at the investing + markets piece, which is why they never stick.

You also mention optionality in your post and there being a higher expected value of an IB career, which isn’t what the spirit of this post is about. If you’re really good at what you do then no matter how high the risk is plenty of the smartest people are going to succeed. Optionality is also at best net neutral because it implies you don’t know what you want to do which is fine or are too risk averse to bet on yourself. Should also add that people don’t go into the HF space for exit opps, it’s the final destination. If you go in worrying about being able to pivot into Corp Dev, PE, etc. you’ve already lost. 

I’m obviously biased as I chose the HF route and would agree with the assessment above, however think the line between non PHD HF Analyst down to Distressed fund analyst is pretty equal. I think it’s at the top of the pyramid because it’s the only career where you’re given a fair amount of responsibility off the bat. You have to be able to do everything an IB analyst does with no training, be able to critically think, and add value or you’re at the door within a year. No other job on the street in my opinion has that kind of pressure that early in your career. As a result, the cream rises to the top and those that can’t cut it change careers or go to work at a bank. 

 

I would say it’s because the kids going into PE analyst programs are the ones who know what they want and go after it. Whereas the IB crowd couldn’t in many cases land PE analyst offers and have to go in through the side door. They also get 4-5 years of PE experience compared to 2 for the PE associate before most people get pushed out. At that point you’re much better suited to get another PE gig at another firm, pursue something entrepreneurial, etc. compared to the IB to PE associate crowd who aren’t really experts in anything.

IB in my opinion produces cookie cutter types that lack differentiated critical thinking skills largely because the job doesn’t really require it. Your value is as an excel jockey and not as someone adding value to a deal, which you won’t do until 5+ years into your career. I’d argue the only reason the buy side hires from IB are the excel skills and training programs. My firm has hired a handful of former IB analysts and they’re all incredible at excel but dog shit at the investing + markets piece, which is why they never stick.

You also mention optionality in your post and there being a higher expected value of an IB career, which isn’t what the spirit of this post is about. If you’re really good at what you do then no matter how high the risk is plenty of the smartest people are going to succeed. Optionality is also at best net neutral because it implies you don’t know what you want to do which is fine or are too risk averse to bet on yourself. Should also add that people don’t go into the HF space for exit opps, it’s the final destination. If you go in worrying about being able to pivot into Corp Dev, PE, etc. you’ve already lost. 

I’m obviously biased as I chose the HF route and would agree with the assessment above, however think the line between non PHD HF Analyst down to Distressed fund analyst is pretty equal. I think it’s at the top of the pyramid because it’s the only career where you’re given a fair amount of responsibility off the bat. You have to be able to do everything an IB analyst does with no training, be able to critically think, and add value or you’re at the door within a year. No other job on the street in my opinion has that kind of pressure that early in your career. As a result, the cream rises to the top and those that can’t cut it change careers or go to work at a bank. 
 

What do you suggest for a college student who wants to break into HF then? IB seems to be the tried and true path, as hedge fund analyst seats out of undergrad are very hard to come by even if you’re at a target. Appreciate any insight, especially ways to develop investment/markets acumen to avoid being like the underwhelming IB types you mention.

 

Cookie Cutter: 
Network like crazy, I spoke with hundreds of people over the course of 2-3 years while in undergrad and was able to break in from a non target.

Take the best jobs you can get that will allow you to build the skillset for the job you eventually want. I took various SA gigs that gave me access to different credit products so by the time I graduated I had seen how IG, Mezzanine, and HY deals operate which gave me a foundation few people my age have to build off of coming out of school. 

Read voraciously about anything and everything. 

Other:

You should be able to talk about all of your experiences for at least 45 minutes to an hour and be able to sell them effectively. Some of my resume bullets I have stories and talking points that go 5 deep, which I can tailor to how a conversation is unfolding. You should also work to be able to do this in other areas of your life. I could probably on command do 5-10 minutes on topics I know superficially and be charismatic. 

You should be able to read almost anything and take a view on it. I’m not saying you should have your mind made up but you should have an idea of where to look next to answer the next piece of the puzzle or answer any outstanding questions you may have. I’d then track that over time to see how accurate you are and adjust accordingly. 

Being strong in excel is the price of admission to staying in this industry but will never move the needle in your career as you move up. I work with guys that are technically excellent and smart people but they largely lack creativity. I’m probably the worst person on my team in excel but am just good enough to where it isn’t an issue. I make up for that by being great at taking calculated risks and thinking outside the box, which is why I’ve noticed has helped me progress in the industry. Anyone can build a model but it takes time and a track record to gain a PM’s trust, which I think I’ve done well to this point. 

 

My take:

If you mean smart like raw intellectual horsepower, I would think most of these people who are still in the finance workforce are at various hedge funds working as quants or working for a quant strategy hedge fund. Outside of the few people in the aforementioned group who have an absurdly high comp package and choose to remain employees, I suspect that the most intellectual quant people eventually leave their firms to run their own personal money under the radar after spending a long enough time working for others, and of course after accumulating enough of their own capital. That's just my hunch. 

Outside of the for-profit arena, I think when these folks have made enough money they end up straddling the public-private fence and doing something in academia part-time, such as teaching at universities part-time. And some of this same group of people probably eventually end up doing something completely unrelated to finance, like pursuing one of their random passions full-time. The common denominator in every chosen path is having enough money to be comfortable basically doing whatever you want in any field so these people are probably pretty broadly scattered based on their personal interests.

 

smartest people in general become pure math professors in academia, where their peak career earnings at the ripe old age of 50 are less than a 1st year analyst's in IB

 

Thanks for all the responses which all “make sense ;)”

Obviously the question can be understood in various ways, just like smartness/intelligence can have different definitions depending on the focus.

My idea here is not at all to narrow the debate here which is truly exciting but just to try to precise the initial direction of my question.

By smart, I didn’t really mean “higher IQ” people as it is true that the kind of intelligence of these people is often (not saying always) unbalanced and leads to nerd type / awkward personalities which are a good fit for quant jobs but are rarely very inspiring. I was instead thinking of it more as “most inspiring people with a full stack skill set, in analytical, communicational, situational, behavioral ect. terms”. Guys who are inspirational and great to work with and to learn from, who are excellent at their jobs as they are themselves excellent and as they love the job, leading to a very dynamic and intellectually stimulating workplace where the bests are working with and learning with the bests, having high level theoretical with passion and intellectual integrity, then methodically and sharply applying their conclusions to maintain an edge vs competition in competitive markets and earn some hundreds of thousands or a couple of millions of $ every year while being excited by the job and by the work environment for themselves.

should I wake up from my dream ?

 

Biotech ER mainly bc I’m there right now.

But in all seriousness it is a tough field with truly exceptional people. My boss has an MD/PhD/MBA from top schools and has helped discover a drug…

 

All I can tell you is that they’re definitely not on wso

 

Despite me certainly not being near the sharp end of 'smartest guys in finance', I feel like most have suggested the wrong answer - philosophically-speaking, anyway.  The smartest guys in finance are the happiest guys.  I have a rainmaker MD who pulls in ~$5mm and really enjoys life, travels quite a bit - still always connected - but job is done off the phone mostly and in-person with a lot of dinners/events etc.  I've met and known, in contrast, some miserable people who earn 2-3x that.  They just radiate the vibe of someone who's achieved a lot but still hasn't impressed themselves.  If you run into a few Apollo partners, you'll see what i mean.  Give me the first option any day, which to be fair, is my only option at this point anyway,

 

Objectively it's Ren Tech or one of the other private quant funds that run secretly but whose founders have donated 100s of millions and where even top PHDs in academia have been rejected from

Go look up articles on these private quant funds that are killing it. They're run out of these discreet office buildings with all those guys driving 20 year old cars to detract from any outside attention. 50% yearly returns, most definitely multi-billionaires 

Jane Street is child's play for those guys, let alone any puny HF/PE/VC fund

 

From my experience around really smart people, this is the correct answer. 

Though I'm 95% certain that Ren Tech is an NSA front and doesn't play by the same rules as anything else, that's a different story.

People here shitting in nerds/awkward types need to realize that very smart people don't depend on personality games to succeed. 

My tested IQ is 145-160 depending on the tests I took, though don't consider myself that brilliant compared to some others I've met. I wouldn't even mention this for any other reason besides to set up a frame of reference for my next point.

The smartest person I know has some sort of savant autism. He's awkward, prone to random violent fits where he throws chairs around, and has tons of other serious personality issues. In undergrad, we met during a freshman advanced calculus class. The final exam took 2 hours to complete. I was working my ass off while he fell asleep during the exam (he also has narcolepsy). With 30 minutes to go, he finally wakes up and starts frantically writing. I score a 92/100, he scores a 99. He then later proceeds to argue with the professor about losing a point. This is a guy who would write mathematical proofs for fun while riding a bus. He was one of only two people in the US to get a perfect score on the physics GRE. He just finished his math PhD at MIT. 

People like this, when properly managed, are worth 1000 lesser minds, because their insight is needed to solve some of the hardest problems around that nobody else can. It doesn't matter that he can't make breakfast or get dressed properly- you can hire normal people to help him. 

Really smart people love knowledge. They love to tinker and develop things. They don't waste their lives realigning logos or turning bitchy comments at 1 am. They either work at places that recognize and support their intellect, or they start their own ventures. Some become pure academics.

 
FlyingBoat

In terms of raw intelligence, proprietary trading > quant hedge fund >> S&T > PEVC > ibanking. However, if we consider skills in relationship-building & sales & presentation & charms: ibanking > PEVC > S&T >> quant hedge fund >>>>>>>> proprietary trading. Note that the the rank reversed LMAO.

WRONG. s&t (especially at a BB) is the only job where even analysts have to be relationship managers/charming and smart. only thing they don’t do is build complex models/presentation decks. otherwise it’s WAAYY above IB and not even close. teams are so small now no one on this site even realizes that. 

 

The smartest guys are the ones in lifestyle groups who found a way to make 85% of the money with 50% of the hours lol

 

Think it really depends on how you define "smart." Pretty subjective term. If smart means raw analytical ability, then yeah, I'm sure guys at Jane Street fit that mold. However, if you are thinking of human skills, then a person in another role, like VC, may be smart.

 

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