So kids always say they wanna be doctors, scientists, cops, lawyers, etc etc. Why not finance? What would you think if you saw a kid presenting at show-and-tell that he wants to be an investment banker?
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I would think that kid was a dweeb
Because 90% of the population doesn't know what an investment banker is or what they do. 95% don't know what private equity is. 15% know what hedge funds are, but the most successful figures in the hedge fund world were never investment bankers. Even wolf of wall street wasn't an investment bank they were a brokerage firm that did an ECM deal.Most people on WSO think that bankers are doing God's work, but in reality no one really cares or knows what you do.
Yeah this is it. I grew up in the Southeast and had never heard of IB or PE until college.
Partly to do with lack of exposure.
Who the hell grows up wanting to work 80
hour weeks fixing fonts and formatting logos??
Also, there are much cooler careers when you're a kid than to dream of being an Excel and Powerpoint jockey. Pro sports, astronaut, fighter pilot, etc.
Because believe it or not there’s no universal real prestige to being a banker, the work openly sucks, and for better or for worse the media (outside of a few movies glamorizing it) have shat on the field so much that the typical mouth breather associates banking with greed and evil.
zoomers and millennials these days care so much about purpose driven work, work life balance, hustling and entrepreneurship etc. that it really doesn’t align with banking at all. In fact, banking is literally the antithesis out of all of those trends
And the "greed and evil" sentiment is 100% accurate. If anything the public doesn't know how low Wall Street will go to make a few bucks.
To be clear no division in Wall Street is inherently bad, but unfortunately high finance has a very meaningful impact on the economy, and many have (out of greed and evil) used that tool to harm society rather than help society.
Let's start with the GFC and the lending industry. There is nothing wrong with providing mortgages, or any type of loan for that matter. It provides people with the ability to purchase goods and services that they would not be able to access paying all cash. But the reward a bank gets with a mortgage (accumulated interest) comes with a risk (probbability of default). The bank accepts the risk in exchange for potential reward. In the case of the GFC, all the major banks were fine when they had rewards. But when the risk turned for the worst, they came crying to to the government and got billions in bailout money while mom and pop shops got nothing, and individuals found themselves forced out of a home. Those banks who commonly talk about "free markets" should have gone bankrupt if their loans didn't pan out as planned. But instead, they decided to cheat their way out by bribing the government and swindling money that should have been used to help society.
Now take Investment Banking. IB can be a value add when operational efficiencies are met due to distinct supply chains being merged (such as verticle integration) or the acquisition of a special company (such as startup providing IP). But in many cases IB has decided to create synergies just by firing workers, cutting wages, raising prices, and making life miserable for the workers that remain. How is that not greedy and evil? Bankers choosing to go for deals that hurt hundreds if not thousands just to make a slightly highier bonus is driven by greed.
Now take Asset Management. There's nothing inherently wrong with making investments. But investments come with a risk, that one must accept. Just sit on several earnings calls and you see insitutional investors trying to pressure and guilt trip C-suite into "doing more" to hit arbitrarily high returns even if it means cutting staff (who have families and bills they have to pay too), and raising prices dramatically. Additionally, if the investment return is directly correlated with people suffering, that is purely driven by greed. One current relevant example is the concentrated investment in single family housing and apartment complexes to control supply and drive prices up.
I could go down the line with every single business in the industry making similar arguments. Wall Street jobs are not inherently evil, but the way that evil and greed are rewarded in the industry as well as cheating (through lobbying / insider trading) is mind boggling.
AKA, don't be a Mitt.
AM and by tangent, PWM, are definitely very valued places. Very much so ER too. Afterall ER you help the former and the other former. Trying to guilt C-Suite is not a good idea. Don't try to goad them into editing/massaging GAAP EPS vs non-GAAP EPS scenarios for instance. Or class A vs class B share revaluations.. Just don't. That's how you lose the mess around and find out game with an attorney. When the GC shows up at your office door with the person who signs their email "attorney ESQ" in tow. Been on both sides. Just don't.
While I agree with your sentiment that's schematically not what happened in the GFC. Mortgage originators became disconnected from the trade, since they sold the risk (actually holding the loan) to someone else and just made money on the commission from originating it. They were greedy and were making loans they knew were destined to fail, and they didn't care because it wouldn't come back to bite them (except in the broader sense of the subprime industry collapsing and the economy going into freefall). That was really the crux of the issue, because once they got sold and packaged as a CDO and people were slicing and dicing those, it became so abstracted that the bankers who were warehousing and selling those products didn't even really realize what was in their own products, or if they did they intentionally ignored it and got them rated at AAA and went on their merry way making fees.
Banking and finance are dirty words in a lot of "polite society" right now thanks to what's gone on over the last decade and a half. So the youngins get the downplay from their parents these days and get discouraged. Especially with the push for STEM (which I can agree with). And like others, youngins have no clue of IB but know what a HF is instead for instance.
Because kids come into contact with all of those people on a day to day basis, and moreover, all of those roles are glamorized (rightly or not) on television. There are tons of TV shows about cops, about lawyers, about doctors. Not a ton about bankers. Moreover, ask a kid if they want to be a banker and they'll imagine sitting in a bank branch all day.
Most adults don't understand what investment banking is, obviously kids won't either. This isn't that hard to understand.
"Mommy, I want to sit in a chair all day never seeing any sunlight while shifting logos around in Powerpoint and getting yelled at by people with personal insecurities. It sounds way more fun than being a kid" - Some 5 year old
Yep. Also social media has made this a huge factor.
years ago you found out what jobs were “best” by looking at what made most money, with occasional ones being featured in movies and television.
now, kids see a you tuber making a living reviewing food, or back packing across Asia, or playing video games, of course that will be more interesting than banking
think it always surprises bankers both how unappealing their job is , and how most people don’t even want the job. Not saying it isn’t competitive - it’s unbelievably so, but it’s not for the vast majority of people
The industry in my life and family has been military. My dad is a retired O-6 Navy Pilot, my sister is a retired O-6 Navy Pilot, my brother is a retired O-6 Navy SEAL, my brother in law was an O-5 Navy Helicopter Pilot. My cousin is a Vice Admiral in the Navy (fighter pilot) O-9. My brother, sister, and I all went to military college. When I was 18, all I wanted to do was go into military special operations, never heard of IB or PE at the time. Now, it seems I can't get away from the department of defense. A good portion of my work now is DoD related. One of the portfolio companies where I work is a dept. of defense industry management consultancy. Two people there are retired Navy O-6s and one retired Marine O-6.
Kind of figured there was a reason you seem so down to earth.
brother is navy fighter pilot. mad respect bro. roll tide... fly navy
the only easy day was yesterday
are most of navy admirals promoted from naval pilots? just curious
I think the smaller the unit is, the harder it is to make Admiral. So there are a lot of pilots, but not a lot of SEALs. So it would be harder to make Admiral as a SEAL. So technically yes, a lot of pilots make Admiral.
Because outside of major cities like NYC/London, literally nobody knows what an investment banker is. From my own experience growing up in a small 250k pop city nowhere near a major city, nobody knew what banking was in school (I only found it in university), I thought a lawyer was just someone who defended criminals (only realised what corp law was at university), whereas everyone knew what doctors were because everyone has seen one. I don't know about other people but we were taught so much science in school and if I think about it now, I thought science and research played a much bigger part in life than it actually does. And everyone knows what a lawyer is from TV.
Even now if I went back home and spoke to people I grew up with, maybe a few of the smarter ones would know what the "city/wall street" is and how people make a lot of money there but no one would actually know what an investment banker does.
This is also why I think in working class circles, doctors and lawyers are seen as the most prestigious careers, as in a small city/town these will be the highest earners.
A lot of good points above, basically kids don't say they want to be investment bankers because they don't know what it is, and come from a culture where they don't know what it is (parents, relatives, teachers don't know). The larger point you're boiling down to is outlined below:
1. Kids don't necessary know what they want to be, or what it takes to get there. For example, if they say they want to be a doctor, do they really know what a doctor does, or what type they want to be, or if they can get through medical school? Mainly what a five year old is saying when you ask them what they want to be is a job that (a) makes a lot of money (b) is exciting. (I think it use to be kids #1 job they wanted was actor, now its influcencer.)
2. Kids only want these jobs because its what they see. Go look at TV, how many shows are there about doctors, cops, or lawyers. Now count how many are about banking.
3. Rubber hits the road when people find out what they need to do to get them to where they are vs where they want to be. For example, out of shape people know basically what they need to do to get in shape, but they just don't want to do it. Same thing with why you see kids not wanting to be bankers, but young adults becoming bankers.
4. The dream job usually isn't the dream you have. Take cops for example, kids want to be them because every show about cops is arresting bad guys or shoot outs, when really, thats an extreme small percentage of what most cops do. Also, say you want to start your own bakery because you like to make bread, now making bread is ~30% of your job, the rest is running a business (payroll, hiring, training), might not be what you want to do.
The public view on cops has massively shifted in the past years. During the 2000s there were all sorts of shows that glamorised them but now they’re seen as racist murders by a large portion of the population. They even tried to cancel Paw Patrol at one point lol. This view is egged on by many major media outlets. I support the police but I wonder how many kids want to be cops anymore.
Agreed, I don't think cops currently have a good image in society.
I think police officers have followed the way we think of the military in this country. We use to (like the WWII era) think of the military as heroic and a service, now its seen more of a type of lower class endeavor.
Same with police officers in a way. Not to get to large, but is a society problem in a way. Meaning, jobs like cops or teachers used to be a highly looked upon career; nows its viewed as a lower end type job (lot of reasons for that, mainly because I feel the jobs themselves have changed, but that's a separate argument). Without any data, with just anecdotes, I don't know many people I went to high school/college who I would define as the upper end of "intelligence" are teachers or police officers, and I think ultimately that's a problem.
When I was in the 8th grade, my math teacher did a project where everyone in the class was supposed to choose a job, get a starting salary, and needed to build a basic budget. Being the clueless 13 year old, I asked my dad. He said I should put investment banker and a compensation level of $150,000/yr (this was around 1998 for context). So I presented that to my teacher who obviously had no idea what an investment banker was, so she said "you mean investment broker" and changed it to something like $35,000/year. Obviously not knowing any better, I just accepted this and moved on with the assignment. Little did I know that a decade later I actually would be an investment banking analyst making a bit less than $150k/yr (top pay on the street was around the $125k - $135k range in 2007/2008)!
did u tell this story in interviews. I think it would rlly fly, honest
Nope. I don’t think it would have really helped me in interviews. I didn’t even know what an investment banker was back then, my dad simply told me to put it as my future career.
I tried including that my dad told me I was destined to deal. In hindsight, I don’t think it flew very well
Growing up I wanted to be an entrepreneur. That still hasn't changed but over time I have learned a lot more about the risk of starting a business, and the hurdles to raise appropriate capital. Also the fact that politicians/laws are written heavily to favor corporations, and stamp out small businesses, including in tax laws doesn't help at all either.
Hopefully one day I'll actually do it, but I'm not entirely sure yet.
For me in high school I always wanted to get into physics research (semiconductors/CPU production). Finance was a side interest and I didn't think it added any value to society.
After doing a physics research internship I realised I wanted more human interaction (and better pay) so moved into trading.
The majority of people I've worked with over the years on trading desks come from science/engineering backgrounds. At least five fluid mechanics PhDs.
Fluid Mechanics 📈
good post like it
I honestly thought studying business would mean I could explain stock prices. Seriously. More than 15 years later and I still got no damn clue nor give a shit about what moves the markets. Over time, this desire for knowledge simply morphed into the desire to being paid, and that, I achieved. Obviously, no kid should ever be so cynic, and it's good that they dream of doing something awesome.
Learned the old adage of "the market can stay irrational longer than you can stay solvent" it sounds like?
You bet your ass I did, more than once.
Because as a kid, the possibilities are limitless.
They will once summer analyst recruitment starts in the third grade
It’s a combination of lack of awareness and lack of understanding. Kids tend to choose jobs that “help” you’ll hear way more kids wanting to be firefighters/doctors/nurses. Also everyone has some level of understanding of these roles. Most people have no idea what investment bankers do or conflate it with PWM or trading.
Finance is given a "greed" and evil perception by the media. While definitely true in a lot of cases
Other industries also have greed and corruption though. Physicians prescribing medications because pharma companies give them kickbacks. I don't want to name anything specific but ... prescribing SSRIs for people with schizophrenia. I don't want to make this information public but https://openpaymentsdata.cms.gov/ - check your doctor and what kickbacks he or she is getting :)
Running 5+ different expensive scans to bill an insurance company that might not be needed. There was a tweet a while back from a resident a who said she wanted to bill patients as much as possible.
Not just limited to finance, all though we get a bad rep for sure
You know how many people went into internal medicine for the money and are now salty AF because they're not making $400k a year?
Check out the resident posts on reddit. Some of them are making a bat shit (in a bad way) amount of money, like under $250k, and other are making well over $400k a year. A lot of them are talking about leaving medicine to consult and make more money.
I recommend you check it out. It seems the average is 4 days a week $200-$350k. In lower to mid COL cities
My friend who is in medicine told me to delete my comment :( and that physician kickbacks from pharma should be a private matter. Idk
Comp doesn't scale based on COL like it does in finance. LCOL cities and more rural areas often pay more to attract talent, so you can very well work in a rural town earning $300K and own a lakehouse, a few boats, etc. Finance simply doesn't compare in this way. The well paying jobs are in equally expensive cities, so the net QOL isn't that great unless you make it into the upper echelons.
I wanted to be a trader by the time I was 12 or so. I read this classic kid’s mystery book where one of the main characters was this stock market genius who also solved the mystery because they were so clever or whatever (I’m sure it was cheesy as hell). Didn’t have a damn clue what banking was or even really what traders did, but I thought they basically used “being smart” to make money and that appealed to me
I told this to my dad, who to his credit opened a brokerage account for me and bought me a WSJ subscription and a copy of like Security Analysis and A Random Walk Down Wall Street. I didn’t read SA. I did read Random Walk, but I didn’t really understand it.
Flash forward 6 or 7 years, I had stopped thinking about careers regularly until I applied for college, at which point I picked the books up again, studied finance, and got a job in a hedge fund. Ended up flipping to private equity for something with more stability and long-term optionality. I think 12 year old me would have been thrilled, though adult me kind of wishes I had one of those backstories that was more like poker or astrophysics instead of hardcharging toward an office job…
that's amazing man, your dad must be mighty proud. He must be very supportive and reasonably knowledgeable too, to get you SA and random walk, and open an account for you
Your old man must be proud
All the careers you mentioned have tangible impacts to people which even a kid could comprehend. It's hard to have a kid understand why an advisor needs to get paid on a sell-side where they modeled and orchestrated a deal which was already agreed upon by opposing management teams and then render an opinion which legally validates their work lmao.
If I saw a kid say he wants to be in IB, I'd immediately know he has family in the industry who got to him/her lol
true, if people saw a kid wanting to do IB, u'd immediately know he has family in it. Interesting social phenomenon tbh imo
Finance is an upper crust field reserved typically for people from families already in it, serving the rich of our country. Look at feeder schools: almost entirely Ivy League. The most ideal IB candidate is Exeter -> Harvard (lacrosse at both) -> GS -> PE -> Whatever comes next.
Medicine on the other hand is the cliché immigrants dream as it’s accessible to all from any school with enough hard work.
Then, for everyone who does know finance but isn’t in it, they are taught to hate it. Look how it’s painted in the big short, WOWS, Gordon gecko. You name it. My parents raised me to despise business because they didn’t understand it and my feminist ass mom thought all businessmen were chauvinists and selfish. You say you want to be a doctor and people ooh and aww.
.
Now that I've thrown myself at it for months and researched it and talked about it they have changed their tune.
I think it is a simple as there are not many investment bankers and you never interact with them. You see all the other people or they are in TV shows and its easy to understand what they do. But I honestly have never ran into an investment banker before I started applying to IB jobs are really searching and trying to set up a coffee chat or something.
I think the issue is that the average layperson or child doesn't know what investment bankers do. It's a field that isn't as visible to the public as cops, lawyers, professors, firefighters, etc. and is harder to understand.
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