Why do people not stay in IB if VP has good lifestlye + great comp?
So I come from MBB consulting. At MBB the higher you rise, the more responsibility, the more the hours. I can guarantee you an AP / young partner won't work less than a first year business analyst. Maybe it eases slightly from SP but even then those people are constantly on the road and need to deliver.
Now in banking I always hear from VP it is quiet decent lifestyle with a pretty good comp package.
PE on the other hand is the polar opposite (much higher stress/responsibility => longer hours).
So I come to wonder: why do so little people actually stay in banking? I kinda came to romanticize the VP+ IBD lifestyle (great comp, limited travel, not so complex/nitty gritty than PE).
If it seems too good to be true, it probably is
Who says people don’t stay? People like you always make these wild generalizations lol.
There are thousands of VPs all across the large banks. So where the hell you get the data point people don’t stay?
And as far as chill lifestyle, there’s no such thing in investment banking. If your juniors suck, being a VP isn’t chill. If your seniors suck, being a VP isn’t chill.
Don’t worry, you’ll never make it to VP and will wash out way dentist, so think about other things.
Like what crappy hotel you’ll have to stay at during your next meaningless consulting assignment.
"nobody" is of course a gross overexaggeration but out of all the graduating class I observed (European target) I know of only one dude who stayed in banking. I just thought more would stay as the ex bankers in PE all contemplate that lifestyle is so much nicer in banking from associate above.
Haha I love shitting on consultants
Now that I’m in MF PE I’m glad I picked MBB over my BB/ EB offers.my overgeneralisation is that bankers work hard but are stupid, consultants are sharper and so don’t need to spin as hard
You scream insecurity
VPs might not spend as much time in the office and may work less hours than analysts and associates overall, but their work is still very stressful and in many ways more stressful than that of juniors.
VPs have to both manage and learn to trust analyst’s work without being in the weeds while also managing expectations from MDs and being the point person for clients on anything execution related.
VPs probably have the most amount of things to keep track of as they have to both manage execution, manage seniors, manage the client relationship, and begin proving themselves as someone who could start to source.
Plus, at least at my bank, if an analyst fucks something up, the VP will face the wrath of the MD, not the analyst. The buck stops with the VP.
Yes they get paid adequately for this level of stress, but it’s still a lot.
Yes
Depends where you are...full-service / boutique covering large cap clients (the people with easy lives typically get let go)...small shop that only do founder sell sides (much easier - less resources but less intensity) as any decent associate should be able to run a process pretty autonomously
FYI - the "good" coverage VPs at my shop are on the road 3/4 days a week...so travel is not that limited
Because the work is generally boring and humans need a purpose in life
Total comp (including carried interest) in higher positions in private equity is higher than investment banking.
but you get carried interest realized when you are like 40+ and that benefits your kids mostly, whereas in HF and IB you get them now when you are young and can let them ride the S&P wave
It’s still possible to earn high earlier in private equity. I know someone who works in pe and earns more than $1.5m in his early thirties
Not sure what you're hearing but junior VPs have the worst job in banking if they're doing it right. not to mention that you can't be a career VP, you are either up or out and so this is not a job for you to coast and enjoy your life. people tend to leave banking at all levels and the reason for that is more interesting; it's because they are largely surrounded by people who do even better than them, whether it's peers or competitors or clients. What they don't realize is that they are simply seeing survivorship bias, but they get FOMO and make exits that more often than not, turn out worse than their banking career in the long term.
Can you elaborate? What is the mistake people make when exiting ?
I would argue that junior VPs have the worst job in banking if they're doing it catastrophically wrong actually. Meaning they fail to manage juniors well, struggle to communicate well with seniors, and wind up redoing grunt work themselves.
The very best VPs are 10000x more efficient and productive without throwing their lives away. senior bankers give them tons of autonomy, the best juniors like working with them, and their deal teams run like a machine
Certainly wasn't my experience but maybe I was doing it catastrophically wrong. You're responsible for all execution, meaning that you bear implicit responsibility for the work product. You are also expected to tag along at senior level meetings and are expected to interface with clients and lead calls in a pinch. Add to all that, you're trying to build relationships and find a niche within coverage that you can start to own in preparation for becoming an account manager. I'm sure people's experiences differ based on bank/group/strength of junior team etc.
You see it more at top paying EBs where it's much more worth it to stay
IB = processes with no stake
PE = processes with a stake
Choose whatever fits your interest best...I'm biased
Name checks out. But actually, you're speaking the truth - people (not me) are throwing MS because the implicit tone is that one is better. I can understand that argument. I just hope that this 'stake' you speak of isn't valued at the pumped up multiples that funds paid for Portcos 5 years ago which will have to significantly re-rate when it's time to sell. I hear that's having just the slightest impact on earnings potential in PE.
Yup, agree. Never said all stakes were positive, but a stake is a stake whether it's accretive or shit
Why do you assume people can remain VPs indefinitely? It is very much up or out at every bank I've ever heard of
Hi OP - fair question. As others have said, a lot of people do stay in banking and make it to VP. But for the ones who don't stay forever (assume it's not "up or out") or who leave before making it to VP, it's usually for the following reasons:
Firstly, being a VP isn't exactly a bed of roses. I appreciate if you're a young kid out of college (no disrespect meant by that btw) that earning $400-500k for an office job sounds like the dream. But whilst the hours are better and the work can be more interesting compared to being an analyst or associate, the pressure/mental load is also higher. As you're in a situation where you have to manage both up and down - i.e. manage your analyst effectively, whilst keeping your D/MD happy. And if anything goes wrong the blame inevitably rolls downhill to you. And you're expected to be more "proactive" rather than just following orders like at analyst-level, so there's a higher mental load. Also by this time you've been in IB for a number of years so most of the novelty has worn off.
Secondly, as you get older the opportunity cost to being a workaholic gets increasingly higher. Yes the hours are better compared to being an analyst - but on the other hand, whilst being an analyst working on the weekend sucks, realistically what did you miss out on? Watching Netflix, going to the gym, meeting up with your bros etc. Yeah that's annoying, but you can always do all of those things next weekend.
Whereas once you get into your 30s and your friends start having kids, in my experience meet-ups have to be planned weeks in advance. So if you miss a planned dinner with your best friends, you can't just reschedule for the following weekend. And if you've got your own kids and a wife, then you want to spend time with them - having to stay till 11pm on a deck for a pointless deck is time you'll never get back with them. And if you're still single - well, do you want to meet someone one day? If so you need to make time for dating and not cancelling on people at the last minute, and that can be difficult in IB even at VP-level.
So what about the money? Yes it's great, but the sad reality is that in this day and age it won't get you the "baller" lifestyle you dream about. In fact in NYC with kids you'll barely be living a better lifestyle than your friend who makes $150k working 35hrs a week in corporate development, living in a LCOL city. Also the money is accompanied by the insecurity - as an analyst/associate it's easy to lateral as you're relatively cheap, but by the time you make VP you're too expensive to leave IB or go elsewhere. So you're trapped by golden handcuffs, and your MD knows it...
Anyway I'm not saying being a VP is all-bad, there are tons of positives and it's a job many people would dream of having. But just saying it isn't perfect and has its downsides.
That’s why being an A2A is critical. Being in your mid-30’s as a VP sucks and when you have to deal w all this stuff.
If you’re A2A you’ll be 30/31 by your last VP year and making closer to $650k - $700k. Then the opportunity cost is not as high and you can still do the hours when needed.
How often is this really the case ...? I know this forum is US specific and a lot of college kids are always throwing around here the picture perfect path "earning 200k as a 22yo, being a vp at 26-27" but in reality, I have seen much less straigh/picture perfect CVs/paths and not everybody is at the end of the VP years at 30.
Why the slow timeline? Much better to start a Youtube/TT channel early on, think kindergarten, clear 1-5M profit a year, and then retire at 18 with 10-25M nest egg at LCOL city in LatAm. Gives you enough flexibility to live a life, rather than being a VP slave at 30/31.
I would say the biggest drawback is simply being a banker and working with bankers. You are a salesperson at the end of the day. Client service is your sole purpose. Compare this to the relative independence of the buy side (yes you answer to LPs but have more lebensraum). There are a lot of subtle lifestyle advantages that come from the nature of investing work.
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