Would you stay in IB if you had a 25MM trust fund?
Curious how people would approach an IB analyst stint in this position.
Curious how people would approach an IB analyst stint in this position.
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I'd prolly go down the path of PWM for a few years and slowly start implementing what is used in the space currently for my own strategy.
Used to work at GS PWM and my advisor's family was loaded - family sold an oil company in the 80's. He does his job because it's really not that horrible for hours (once you make it, in the early years it blows - in perspective, I worked more in PWM than I do in IB now still with GS), makes great money (sticky business and doesn't have to go win clients / business every year), and can be challenging depending on the client and how sophisticated they are.
All in all, way better than IB, and I know PWM catches a lot of shit on this forum because there's a lower barrier to entry, but that's when you're talking about all the people / shops that call themselves PWM (which they are), but there are levels to it and at the top where you are essentially an outsourced family office, it's great!
del
Friend of mine has a $30m fund. He’s doing PWM instead.
No
If I had that cushion, I would join a startup with an attractive growth rate that I fundamentally believe in. If I were to stay in high finance, I would go into AM, RE, or maybe PE.
I don't have a trust fund and I'm not staying in this job, so no I don't recommend IB if you already do.
I would stay in IB to stop the poors from getting my lucrative job and potentially catching up to my net worth.
Legend
Not a snowballs chance would I stay in IB. It is hard enough to care about the job from somebody with a meager background, I can't imagine how I would muster the courage to care if I had a trust fund to fall back on. But thats the curious thing about people with big trust funds, a lot of them seem to be in a hurry to work harder than they need to work (The amount of colleagues I have with some sort of trust fund working 80 hour days is mind boggling to me). This isn't insulting people with trust funds, its just a curious case of the human condition I guess where somebody with ambition (wants to earn some money for themselves) takes the route that they see other friends/colleagues going (top school -> IB -> exit to VC, tech, whatever the soup de joure is of the moment).
I wouldn't be surprised if a big part of it is image (how they view themselves and are viewed by others). The 'trust fund baby' stereotype is pretty widely mocked. I admit that, growing up lower middle class, I have some of those negative opinions as well. But working a tough job and making their own way can let them prove themselves as capable and trustworthy individuals.
One of the best examples I have was a friend and I discussing a student who was the child of a very, very wealthy banker (like EB founder type). We both highly respected that they were willing to spend time preparing for their career, and choosing a more difficult career like IB, when they could have just been spending their college breaks and summers partying in exotic places and relying on their family money and connections.
I've also read some trust fund people mention that they won't have the money for many years, so they need to provide for themselves anyways in the shorter term.
Ah yes, those 80-hour days are the worst.
Likely would do it for at least a year to earn my stripes then jump to buyside or entrepreneurship. Those connections and work/life experience are valuable. Most of these family dynasties stay intact by following a certain formula (e.g. using MBA as a form of "finishing school", etc).
I would do 2 years in IB for the training and branding - that can help you years down the line regardless of career path. Would skip PE and either do something interesting or something with great WLB after
You think a year is enough assuming top brand?
Yes
No, IMO. Especially if you want to stay in anything remotely related to finance. One year can be worse thean zero years. It's a two year job, which in the span of a career is the blink of an eye. Anyone over the age of 30 looking at your resume is going to have reservations about your unwillingness or inability to stick it out for another 12 months.
The people saying they’d work in IB despite a trust fund like that are fucking nuts. The guy above with a $10mm fund behind him needs to be admitted.
I have seen at least 10 extraordinarily wealthy (talking 50m+, you'd know their families) analysts come through in the past few years. A lot of these successful parents expect their kids to do something equally prestigious, at least for that first bit out of college
There's this buddy of mine -- whose family's net worth is well in excess of $10bn -- who is joining a mid-tier BB for investment banking.
Nopppppe. Went to a top school with a lot of friends in similar situations. None of them chose IB. Few went tech, some straight to the buyside, one or two academia and a decent chunk went MBB / Tier 2 consulting.
What type of buyside firms did they go straight into? MFPE/UMM/MM/REPE/etc?
Mostly MFPE/UMM as those are the only ones with established analyst programs.
why did they choose cons over ib
Better WLB (basically getting your Friday evening and weekend off)
Would be a petroleum engineer for a few years…bc oil is fun
No way. Whole point of pursuing banking for me is the build wealth. I would not do it if I had a $25mm trust.
I obviously don’t know the details…but would probably just buy a couple of rental properties and do odd jobs to stay busy
list of jobs that would be on my list in this priority -
1. protecting endangered rhinos as a wildlife ranger
2. abseiling window cleaner
3. orthodontist
4. alpaca farmer
...
...
...
5340. IB analyst
wtf bro invest the $25M and live your life on passive income
Does this question even need to be asked?
Fucking ridiculous answers above… “do IB for Branding and skills”, you gotta be kidding me. I’d borrow a couple M and get into real estate / buy small businesses / be my own boss. IB logo shifting skills doesn’t really do anything for that.
Y’all care too much. If I had a 10mm+ trust fund, I’d probably go be a traveling author or something. Who cares what other people think of you.
More interesting question would be "what is the minimum trust fund size you'd need to take a path other than IB?"
for me I'd say three, maybe four dollars
I think if you had a million that would be enough.
Don't you only get access to your trust fund after a certain age?
Each fund is different.
Unique situation but mine is fully accessible now, whether that’s fortunate or unfortunate, I am not sure.
I see, well best of luck with the decision. My advice is just to be careful who you let know you've come into money; you'll know the secret's out when everyone starts becoming overly nice to you.
The comments on this post show why its so difficult for a family to maintain wealth
Yes. I actually don't know how much I stand to inherit, but I'm confident it's a solid chunk. Maybe not multimillions, but enough I could technically retire and live off of.
Regardless of that money, I want to earn a great lifestyle in the meantime and coming in as an associate I appreciate the experience I'm getting.
Rising up in banking is also crucial to what I want to do long term if/when I jump back into entrepreneurship.
One thing I'll add is that trusts and wills can/do change. Similar to the sentiment of the post above me about maintaining generational wealth, many parents change their inheritance decisions according to choices by the children. The money from an inheritance is not a guarantee, so there's no point living like it is.
Reasonably smart, creative and drive to win > entrepreneurship
Want prestige > MBB
Low risk tolerance > IB > PE
Want to enjoy life > influencer
Why wouldn’t you?
Grind hard for a bit, get yourself in the real world, potentially make some important relationships, leave with a valuable skillset. Only takes a couple years really
The consensus answer from everyone seems to be "hell no" if its a $25mm or $10mm trust fund.
But what's everyone's opinion if it's a smaller trust fund, like $3 million? Asking because I'm in that situation. Access at 30 years old, so coming up soon.
Personally, I always was told "$3 million is nothing" or that it would run out super fast, that it's meant for me to have extra security and safety net to fall back on rather than live off it.
FWIW I worked / am working my ass off because it felt like the appropriate thing to do to prove my worth to peers. 2 years in EB + 2 years in MF PE. Managed to rack up $500k of own net worth separate of the trust via investing/saving. At this point I'm starting to realize how damn hard it is to turn a buck in this gig, and am thinking whether should I just call it quits and find a chiller, low-paying job to enjoy the rest of my 20s. I do not have an expensive lifestyle. I spend maybe $60k / year, and this hasn't changed since I left college. Does it make sense for me to do PE for the money? Makes me wonder what the rest of WSO would do in my situation.
If you are already having doubts, leave. There is zero reason why a $3MM trust fund won’t be enough unless you plan on retiring in the Hamptons.
Let’s say you take that $3MM and throw it all in VOO with inflation-adjusted returns just shy of 7%. Completely ignoring additional savings/contributions, you would still end up with $10MM by the age of 50, and more than double that by 60.
A decently safe withdrawal rate of 4% means you could pull out $400k every year by age 50 (keep in mind, this is $400k in today’s dollars, so more than enough to live a decent life imo unless you want to live in downtown San Francisco). Clearly, you won’t be all stock and you might decide to only withdraw 3.5% to err on the side of caution, but the above scenario assumes you blow all your $500k savings today and never save a dime in your future jobs. Furthermore it assumes that your trust hasn’t gained anything by age 30. More realistic scenario is you are sitting on about $4-4.5MM (including your current savings) by age 30. With that much plus a conservative small contribution of $30k/year (should be easily doable in a decent 9-5 job with match) into investments, you’ll be golden my guy. Too lazy to run the math on that one but let’s just say you’re retiring pretty.
This is exactly right, and at the risk of nitpicking, the only potential flaw in the plan is the LT 7% real return assumption. i) Right now, with inflation running at 8%, that would require 15% nominal return, which seems a little ambitious. And ii) as you move toward retirement it's wise (and pretty standard I think) to shift your assets out of equities and into fixed income. That too will bring returns down (along with risk), and today fixed income investments are probably generating a real return that's negative.
You're young - have a lot of years left in which you need to support yourself - but also find a way to fill your days!
I'm 45 and I very much enjoyed my 20s and it has taken me quite a while to build a net worth of $1.5M, and support a family of 4, the hard way. On the bright side, I like what I do day to day and I feel like I am adding value to my company - and therefore to the world.
With the benefit of hindsight, I'll tell you what I would do in your shoes.
Keep at it - it's always easier to slow down your career than it is to accelerate it. Once you take foot off the accelerator, you'll get stuck in a lower gear.
If you want to take a little bit of a breather (it's not quite as chill as advertised) and broaden your knowledge base and contacts (and have a great fucking time while doing it) - I'd also highly recommend going to a top MBA program.
On the bright side - you have the benefit of money coming which can not only be a fall back cushion - but also gasoline to pour on a fire.
The more skills you build in PE as an investor, the more skills and contacts you can give yourself to become an investor and business owner and find a way to put that $3M to good use and turn it into something big.
Build your skills, contacts, credentials, get more experience, keep building wealth - and you can start buying businesses and creating value - which will in turn make you a lot richer.
The end game isnt to buy more Rolexes.
It's to say - I was given $3M - but I turned it into $50M. Then you'll feel like you accomplished something in this world (not given everything), make use of the skills and net worth you have, and have something to fill your days with the fun part of the business world (being a boss).
You're in your mid 20s and you feel like you've put in a lot of work, and you have. But you got a long way to go...your 40 year old self will thank you if you keep at it...
Why would you work 80h a week if you had 25m$?? You’d have to be a retard to do that.
It's funny seeing the responses how nobody would do that, but you should recognize how many people in IB come from wealthy backgrounds (whether they have $$ in a trust fund or parents start gifting now or just inheritance that money's coming) or billionaire's children, etc. I've worked with a few $50bn+ company C-suite exec children.
Their reason for doing it all differs - to set up a resume to take over company, they're actually interested in doing it, etc.
If your view is IB is highly paid and it's a good job, don't do it. If you're smart enough to understand that it gives you a skillset and an opportunity to quickly develop while figuring out what it is what you want to do (and then gives you the ability to go do it), then it's worth it
deleted
I don't have a trust fund, but I do come from a relatively well-off family.
The way I see it is that my dad came from nothing and built a pretty nice life for himself. In doing this, he's also elevated the platform in which I was able to start my career. Starting from a better position than he did, I'm extremely motivated to work my ass off to see how far I can get. Then, one day my potential son/daughter can use the platform that I've built to push the limits even further, and then their child can do the same.
At least this is how I picture it. If my child wants to go off and pursue something else, then I'll be fully supportive. I really just want to see what I can achieve, and then give my children all they need to succeed, whether they choose to or not.
Totally agree with this and am in the same boat in terms of dad who came from nothing. I guess the crux of the question was more about leaving the IB to buyside traditional path or to perhaps do something else (that also requires hardwork) but is still intellectually stimulating (more risky probably), and not necessarily solving for as much money in the immediate short term.
Buddy of mine has a trust fund somewhere in that ball park... actually probably more, I wouldn't be surprised if it was low 9-figures... (WSOers would instantly recognize his father's name) Despite having a huge trust fund, he still did a 2-year analyst stint followed by 2 years PE (non-MF)
He now calls his trust fund "long-term committed patient capital" and buys businesses with up to $5M of EBITDA and strong cash flows.
Knew a guy, father practically only pierce and pierce. Stuck with IB because he “wanted to fit in.”
It would be cool to do much more interesting things than work all day though. Go explore the safari, go to the Amazon, go to the artic. Go be a traveling author. Go do opium in a den outside of Hong Kong. Find the ark of the covenant. Or serve your country and the world by stopping spectre. Go hangout in the carribean with Richard Branson. Go take a yacht right up to the monaco casino (town feels very boring and shallow in real life). Idk.
Or you can join the prestigious white shoed firms of investment banking and where cole haan dress sneakers to worth for 14 hour days and bond with the poors planning on your exit opps.
Idk dude. Go be a senator
I would do Mgmt Consulting at an MBB for 2 years (more versatility down the road in case you want to run a company / serve on boards / do something operational or start uppy) --> followed by an investing job for 2 years. I say investing because while i think developing an "investor's mindset/lens" can be acquired from an investing job across any asset class, you should decide which asset classes intrigue you the most that you can make a living out of later. I.e. if you're interested in owning cashflow generative businesses do your two investing years at a PE/GE firm, if you're interested in CRE go into a REPE firm, if you're interested in tech/startups go into a VC firm. Then go get an MBA as a finisher and then invest your own money or keep working a few years.
If anything the longer you wait in a solid job, the more credible you become as an independent investor and the more skills/relationships/wisdom you accumulate. I can't stress the latter enough, there are somethings in life such as wisdom that need time, you can't accelerate it.
This isn’t a troll but im actually going to follow this advice. I have a trust fund worth ~20MM usd setup. Didn’t get a return offer in MM IB this summer and was thinking what I should do next.
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