So I understand that certain roles, specifically within EBs, require being on-site and within those cities.
This exception aside, why would anyone do BB / MM banking in one of the aforementioned cities? You pay astronomical COL, live in a 10x10 cube, struggle with big city issues (pollution, homelessness, crime, lack of nature, lack of space for physical activity, etc.), and pay astronomical taxes. Overall, I'd bet what you put in your bank account is less than 90%+ of "Tier 2" city bankers (source: my own opportunistic recruiting calls), and for what? To tell your friends that on paper you make 10% more than they do? So you can claim you "made it big" by living in a finance city?
I know my judgement is harsh, as it's intended to be. Frankly I'd love if banks stopped with this nonsense of having to set up their no-name MM or random BB team in one of these shitty cities, because lateral moves would be much more appealing.
Maybe I'm different - let me know if I am - but a large home more in nature with a nice car and a moderate drive to the office on hybrid days sounds way more appealing than having a penthouse downtown and spending 99% of my time inside buildings with no tangible assets to my name. Who needs a weekend in the Hamptons when you can just live in an area like that, elsewhere?
If any MD reads this, hope you get the message. I understand the old way of doing business where you poke your head into different buildings and see someone for lunch, etc. Instead of these random interactions, these can be replaced with doing 1-2 week long "tours" in the cities where you are doing business. These intentional trips will yield the same if not better results than random drop-ins, because they're intentional, planned out better, and clients like that you made a whole trip out just to see them. Why do I know this works? I've seen it - never lived in the above cities my entire banking career.
Cities are just fun to live in. Different strokes for different folks, but I'd rather be in a dense urban area with endless world class food, art, nightlife, shopping, etc. as well as the opportunity to meet the brightest and most interesting folks from just about any field and part of the world imaginable. You're obviously sacrificing a lot to be there (as you noted) but for a lot of people it's absolutely worth it.
Also, I disagree that an "intentional" tour is better than being in person in the office. The whole reason "hybrid" doesn't work and companies are pushing for 5 days back is because the value of in person presence comes from spontaneous and serendipitous encounters that are impossible to replicate without spending the majority of your time around other people.
Prob going to be a hot take nobody asked for, but I think ideologically, nyc embodies a lot of what's gone wrong with modern-day America. Places like NYC/SF used to be reasonably affordable places that truly brought together people from all walks of life. Everybody always pitches NYC as the most diverse city in the world, but is it really?? NYC is now only viable for the subset of people who can afford 3k+ rents with studios starting at 750k+. It's p shocking that without family money, even the "greedy, rich" bankers can't even afford a 1br 1bath in a nice neighborhood until they hit ~VP level. NYC used to represent the social mobility and the opportunities unique to America, but it's increasingly looking like a playground for models, finance bros, or trust fund kids. Likewise, Silicone Valley used to be a working class neighborhood with engineers (who previously weren't paid 6 figures to screw around with company perks all day). People like steve jobs's parents never would've been able to afford to live in Palo Alto based on today's prices, and it's a testament to declining social mobility and slowing innovation (seriously, why do we need 10+ undifferentiated food delivery apps??). We as people in finance no this better than everyone--"financial engineering" = cooking the books to make companies look better on paper. Hopefully, I'm wrong about all this tho
as someone who moved to New York....what I don't get is if this city is so expensive (which it is), exclusive, and a playground for the wealthy, why do I see sketchy shit that makes me feel uneasy every time I step outside my $5k a month one-bedroom? It's an odd place, you can't beat the culture / food / entertainment scene, job opportunities are crazy and dating here is unparalleled but it's also a cesspool in a lot of ways.
Because it's a classic case of an hourglass economy--government policies and technological transformation create a larger upper and lower class with smaller middle class
In NYC, property tax policies are extremely favorable to the mega-rich to the extent of being regressive--despite being a liberal city (https://www.bloomberg.com/news/articles/2015-05-11/why-billionaires-don…)
On the other hand, there are rent-stabilized units and housing projects designed to help lower income people
And then homeless people will always live in nice cities because it's free anyway
Notice that there are basically no provisions designed to help the middle class afford the city?
I know I sound like a raging socialist, but you have to admit NYC is a case of capitalism gone too far
As someone that started their career in BO and am now in NYC I think people oftentimes overestimate the "bountiful T2 opportunities" that pay 85% of NYC opportunities in areas where COL is 50% less. They exist but they're limited to very few types of jobs and oftentimes a stint in NYC "high finance" can be a pre-requisite.
In 3 years I've received 3 promotions and my comp has grown 3x. For me, the professional development alone makes any COL I've incurred worth it. Layer in the social / cultural / cuisine aspect and I'm very happy to live in my shoe box in the sky with an amazing view.
Don't get me wrong, I don't think I'll be a lifer but NYC in my 20s has been a great experience.
Edit: I also want to add that the "big house and white picket fence" dream isn't for everybody. When I was very young we went through financial difficulties. By the time I attended High School my dad turned his business around but we lived in everything from a small apartment to couch surfing with family (8 of us in a 1 bed + den) to a massive house with rooms that went unused year-round. Living in NYC I'm rarely ever sitting at home lounging around. I view my "tiny 1 bedroom" as plenty of space. Whether the square footage is worth the cost vs. other areas is a different discussion and I partially addressed it above for my own experience (worth it).
First of all, can you elaborate on which T2 cities you are talking about? Many of the T2 cities are really fairly undesirable. You are clearly not talking about San Diego, Austin, Seattle, etc., as many of those cities have a relatively HCOL associated with them as well. So I am assuming you are referring to what are really T3 / T4 cities (e.g., St. Louis, Milwaukee, San Antonio, Nashville).
With these T3 / T4 cities, unfortunately there isnt a ton to do in many of them. Yes, they still have bars, restaurants, and museums, but not of the same caliber or variety.
Additionally, you need to bifurcate those who opt to live in big cities for their 20s vs. lifers. In your 20s, it makes sense as oftentimes you will get the best looks and largest number of opportunities working out of a big city. I think many folks would opt for the NYC banker vs. the Idaho banker, all else equal. Working in big cities implies a certain degree of efficiency and candidate quality that is simply higher than T3 / T4 cities. I say this as someone who has never worked in NYC, but understands the value of consultants and bankers beginning their career in the big apple.
Lastly, I find Chicago to be far more affordable than you imply. While I dont work IBD hours and can afford to live a bit further from the financial district, I still work long hours and have a modest rent as a % of my salary. My housing accounts for roughly 10% of my PRE-tax income, and I am not roughing it by any means. This includes parking, an office, and a backyard (to be fair I do not live alone). Additionally, there are still bars in my neighborhoods that offer $2.50 lite beers (pre-Covid at least), so I feel like thats a pretty good indicator of food / nights out being reasonably priced. Do you mind elaborating on why you lumped CHI in with SF / NYC? You should do a COL comparison to understand how different CHI is from NYC / SF. IMHO, the 3 most expensive cities are Seattle / NYC / SF, with Chicago being around #10 in terms of COL. See this link for reference, it turns out CHI is #25
Many cities in the Midwest (including Chicago) and the Rust Belt cities (Buffalo, Pitt, Cleveland, Milwaukee, etc.) were designed for a much larger population than currently exists today. Developers and urban planners were working off of peak population numbers at the height of US manufacturing and projecting forward. Because of this the amount of apartments/houses available in the city and places you can reasonably live given the city infrastructure are much higher than what is being currently occupied today, hence the relatively low (or even bargain prices).
Many other cities that have been expanding and seeing prices soar had a lot of SFH and even mansions relatively close to the city center. The city center itself often won’t have many high rise apartments, public transport sucks and the roads are simply not designed to handle the amount of people so you’re either faced with a long commute or have to pay and arm and a leg. Urban planners had very little expectation for the city to expand and with NIMBY and zoning requirements it’s hard to change things reactively.
Truly believe Houston is the best city for IB. Nerdwallet says cost of living is 62% lower than Manhattan. Median 2br apartment is $1,200. Just about every BB and EB has a Houston office and comp is in line with NYC for the vast majority. Houston isn't as big as NYC but you still get a solid city vibe with tons of sports/shows/things to do. The only "downside" is if you really can't stand covering Energy but IMO as one of the most technical spaces going through a massive transformation there really isn't somewhere more interesting to be.
I don't want a car. I don't want to have to drive everywhere. I don't want to live somewhere dominated by parking lots, strip malls, and urban sprawl.
Give me a gritty, densely populated, vibrant urban ecosystem with crime, homelessness, public transport, connectedness, and mix use communities over LCOL suburban hell any day. Maybe my mindset will change once I want to settle down and raise a family, but for now I don't need a yard with a giant walmart down the road.
16 years in NYC, recently moved to Miami. Start your career in NYC if you have the option and spend some of your 20s here; it will probably be a fun time and fruitful for your career. See if you're a NYC lifer. For me: the value proposition has gone down aggressively the past handful of years and I'm probably going to buy a place in Miami this year.
After the novelty wears off in the first 5-10 years, you're left with a top-5 most expensive city to live in the US in terms of COL and taxes, but you aren't getting many quality of life improvements for what you're paying. Crazy taxes, long winters, dirty/polluted streets, dilapidated infrastructure, backwards one-size-fits-all progressive policies, and of course prohibitively expensive home-ownership options which makes having a family in Manhattan extremely difficult if you're not making $1MM+.
Housing: Homeownership (condo) in Manhattan is a joke in terms of what you pay vs. what you get. I'm the most financially secure I've ever been and could buy an apartment in the city but it's just not worth it. For the price of a studio or 1BR in NYC, you can have a 2000+ square foot 3 bedroom penthouse in Brickell or Edgewater (Miami) in a new building with tons of amenities. You'll still get to enjoy world class restaurants and a very vibrant nightlife, minus the winters, extortionist taxes, and crazy progressives. NYC landlords will continue to charge what you're willing to pay (read: take you to the cleaners on rent). Retarded Manhattan-middle-class finance clowns making 300K-500K gross, who think they're elite ballers, will continue to willingly donate 30%-50% of their after-tax pay for their elite 1,000 sq. ft. apartment with aMeNiTiEs, so management companies will continue to cash the checks.
Same applies for transplant gig economy workers whose entire identity revolves around BrUnChEs and the MaNhAtTaN ExPeRiEnCe paying 65%+ of their net earnings for a grimy Manhattan walk-up that hasn't been renovated since 1985, or alternatively rooming with 10 people while in their late 20s / early 30s.
NYC benefits are there's always stuff to do, a new restaurant to go to, a new lounge/bars, sports, etc. The city has an energy that no other city has. But like I said, the novelty wears off after many years and you're left thinking more about how much you're getting fucked financially through taxes and sky-high mortgage/rent just to freeze your ass off for 40% of the year and get told what to do by your mayor/governor who of course know what's best for you.
It’s more prestigious. More going on. Better shopping. Better exposure high finance. Larger pool of intellectual capital. Better looking people and more of them. Better restaurants. More things going on. There’s something ambitious about it - wanting to jump into an ocean rather than lounge in a pond. It’s seemingly where the most important people are. I don’t exactly understand why people prefer small cities.
Hard to articulate it. If you get it you get it, if you don’t you don’t. You either romanticize it or you do not.
There is a reason movies are shot there and not in Little Rock Arkansas.
Your first three words pretty much summed up everything. Guess NYC is better for those with massive egos
If you want to be around below average looking women and spend your weekends at TGI Fridays after leaving the strip mall then so be it. Different lifestyle. Depends what you’re living for at the end of the day. A life in a big city is far more interesting. I guess it really comes down to interests and ambitions.
90% of the posts on wso and on this thread are from the sub 200k transplants who move to NYC who think they have an in and know the real secrets/deals in NYC and really don't. There is a pretty high amount of rent controlled apartments in Manhattan but you (transplants) don't hear or know about them because these locals don't bounce apartments every month. Case in point, one of my buddies dad is a cop, mom is a teacher combined income around 70k after taxes and he grew up in a rent controlled 3bed in greenwich village that went for 1500 a month. NYC is pretty affordably just not for those who just moved here to mess around in their 20s.
The fact that bankers making 200k+ a year still need to actively seek out rent controlled units is the epitome of how messed up NYC is economically--hourglass shaped social hierarchy which basically divides everyone up into: 1) proletariats--w2 employees who will rent for the rest of their lives and are therefore enslaved to their jobs 2) Bourgeois--rent collectors that sell you on the dream of making it big in the big apple
Everyone goes to NYC to live out their fantasy of making it big, but for 99% of people, you've just been suckered into a trap for the bourgeois to suck the money out of you
NYC is definitely worth it if you're young, have no kids, and am ambitious on building a career.
It is absolutely not worth it once you have kids. This is where expenses begin to rapidly multiply. A family of 4 would need at least a 3BR apartment to live comfortably. Go look at how much this costs in Manhattan. Oh yeah, and schools. The NYC school system is completely broken, so you're stuck with private school, paying $60K+ a year per child for 13+ years. This is over $1.5MM for two kids without factoring in interest.
So then you look to suburbia (Scarsdale/Bronxville) for top public schools, with an advertised 30 minute commute to Midtown. Only problem is the 30 minutes is just the time on train; it excludes time getting from home to station, and Penn/GC to office. And Metro-North is not a subway that runs every 3 minutes; think more like every 30 minutes - you would need to plan your day/meetings on when the train to North White Plains runs. What if your spouse also has a white collar job? Tri-State jobs have increasingly been flowing back into Manhattan so they would have to commute as well. Having both parents commute 1 hour puts a huge strain on a family. No time to see kids or cheer on their games. People genuinely underestimate how much suburban commuting into NYC will take a toll on their lives.
BTW - these suburbs are not cheap either - think $2MM and $50K property taxes for anything decent. Still cheaper than the City, but someone not from money would still need to make nearly MD-level money to afford these places. The days that a run of the mill MD can come from nothing and afford an UES apartment + Hamptons mansion are unfortunately long gone. These people typically live in suburbs like the ones mentioned above. Definitely a nicer setup than 95% of the US population, but still discouraging considering the sacrifices they must have made to get to that point.
Don't know why anyone not originally from the area would subject themselves to this. Definitely make the most of the opportunities in your 20s, but try to network out into a lower COL when the little ones arrive.