Reorienting life & career priorities
Ignore title/position. Mid 20s. Just found out my parents have been spending everything they earn, not saving or investing. Their retirement and financial future looks bleak, even with a yearly income ~$500k. There is some equity in a business, but it is a minority stake and a liquidity event is not on the cards.
My priorities and long term goals have completely shifted from career fulfilment/personal goals to income/investments. As a current grad student at a good school, I feel a pressing need to make my way back into IB and PE (I have some internships and really enjoy the work), and build up my own assets. I have already wasted some very valuable compounding years post undergrad and feel extremely motivated to make up lost time after I graduate in ‘26.
Am I thinking about this the right way? Is the target of IB -> PE an appropriate one or are there opportunities in spaces I haven’t considered (strategic finance, etc)?
Based on the most helpful WSO content, here are some insights and considerations for your situation:
Career Path Considerations:
Additional Considerations:
Operational Exposure:
MBA Program:
Long-Term Financial Planning:
Conclusion:
Your target of transitioning from IB to PE is a solid one, given your goals of building up assets and securing a high income. However, do not overlook the potential benefits of strategic finance roles, especially if they align with your long-term interests and provide valuable operational experience. Balancing immediate financial needs with long-term career fulfillment will be key.
If you need more specific advice or have further questions, feel free to ask!
Sources: IB -> PE -> MBA -> IB -> PE, Q&A: Corporate Strategy, Best Path Before Entrepreneurship / Search Fund, Advice from people who left?, Why are you doing this?
I'm not sure how to help, other than calling in living legend thebrofessor ...who may have a word of wisdom.
In my view, if you like the job and can picture yourself going this route for the content and fulfillment, great. If for the money, I'm not so sure. If there is something else that motivates you more (engineering, whatever), I would certainly reconsider. In any event, banking provides a good set of skill and experience, mostly well remunerated.
Btw. The financial mess of your parents is certainly not your responsibility or obligation. Get that monkey down from your shoulder. If needed, have "the talk" with them, but don't throw yourself under the bus, just becaise they chose not to save and spend.
Good luck!
Def will not be throwing myself under the bus, but will try to improve their situation internally.
I do love business (grew up surrounded by it, resulting in pretty solid instincts/acumen), and love the strategic and high octane nature of finance/investments.
Def do not want to be a career banker, I want to invest/operate. EtA is the chosen goal.
Would welcome any advice from thebrofessor as well
thanks for the bat signal bro, hope all is well wiith you and your family
OP you're approaching this question wrong, as if IB/PE is the only path to financial independence (what your parents don't have), which is total bullshit. I've seen people who were delivery guys for a dry cleaner become financially independent, just like I've seen people who have 7 figure incomes not be able to retire. if you want to avoid the financial straits your parents are in, simply live below your means & save the balance, most data indicate that to get yourself financially independent by medicare age, 20% a year is probably more than enough if you begin before 30
if you want to retire in 20 years, you need to save like 35-40% per year, it's really that simple, savings rate over time. and by definition, if you're saving >0% of your money you're living below your means
I'm betting you didn't come here just for a simple formula that's easily found via google, so here's some more stuff to chew on, because living below your means entails you trading some of the following things, because you quite literally cannot have all of these simultaneously unless you're your own boss: good health, high income, loads of free time, independence at work, impressive lifestyle. figure out NOW what's important to you and eschew the rest
in my case, I wanted everything but an impressive lifestyle, which I'm sorry to say that's where your parents went wrong. if you are constantly measuring your dick against your neighbor's, you will NEVER be satisfied, because there's always someone with more. the moment you get off of the hedonic treadmill your worldview completely changes. you're comfortable driving a toyota instead of a 5 series/porsche/s class, living around people who make 1/3 of what you make instead of other bankers, and your spending habits naturally don't have to change just because your income goes up. for me all this meant is more savings, more charity, and more vacations.
so sure, if you want to do IB/PE because you enjoy it then by all means do it, but if you're doing it solely for the money that may or may not workout, your mindset has to be right, and you have to prioritize saving over almost everything else
regarding what to do about your parents, how did you find this out? have they asked for advice? my guess is they're aware of their situation but don't want you to help out. if there's an expectation that you help them out you must figure that out now, because you only have the right to express your opinion if you're asked for it or if you're asked for help. otherwise, do nothing more than refusing financial help from them to show them that you're OK
Thanks for taking the time to write such a thought out reply.
I am also not the “impressive lifestyle” type. I’m much more of a “reliable used car with low maintenance/insurance costs and good mileage, or fruit of the loom basics $12.99 hoodie” kind of person. However, I do desire a relatively high income that I can efficiently convert into appreciating assets. I grew up around people with 8-9 figures of wealth (some family, some school friends), and saw how money buys more than just ‘nice things’. Spending all those years “on the outside” of wealth has really left an impression.
I fully intend to live well below my means, and I want to be able to build a solid financial foundation that I can rely on in the future. Childcare costs are rising, as is cost of living, education, healthcare etc.
Regarding IB and PE, I’m definitely open to other options. IB I would 100% be doing just for the training, compensation and exit opps. I do not envision myself as a career banker. My internships showed me enough to know that I do not want to be a sellside banker forever. However, private market investing and entrepreneurship are things that I am genuinely passionate about. I mentioned that EtA is a goal of mine. The true source of that was in high school, when I learned that a businesses assets can be used as collateral to raise debt. I knew I had to find a way to use this for myself somehow, and the resulting obsession resulted in my intro to PE and Buy Then Build.
Short caveat, my career advisor suggested I look at consulting as well. I’m interested, but not sure how I will parlay the skills towards entrepreneurship.
I recently saw a post that described a strategic finance role at a private company that sounded like an ideal situation, but most similar roles I have seen are catered towards ex-Bankers with refined skills. IB seems the prerequisite for most roles that appeal to me.
I found out my parents financial situation by asking questions over a long period of time. More recently, I asked them about their investment account and they said they don’t have one. I asked them how they paid the down payment for their new house and they said they cleaned out their savings. I thought I misheard them at first.
You never disappoint my friend! Thank you for stepping in and offer your views.
This kid seems legit and with the heart on the right side. Caring about family, being grateful about what he has received, hard working, looking to make a contribution to his world. The world can certainly need more of them.
OP @markymarkowitz , godspeed with your choices, remember to be proud of you and of your decisions in life; not to be too harsh on you and forgive and learn from your mistakes.
I think either way you'll be alright and your folks can be proud of you.
Jesus, what are they buying to spend it all?
Yeah work in something that'll at least pay you $200k and can scale up to mid-6 figs over time, and make sure you save 40%+ of comp. You'll be fine
Poor financial decisions for short term benefit vs long term growth. ie: art work, holidays, house that is too expensive because it needs to be “impressive”, supporting my older sibling’s lifestyle etc. I try to warn/guide/stop them every time but they don’t listen.
But, they did pay for my private school, undergrad, and are paying for my grad school. I do bear some responsibility, compared to how much they have spent on me I haven’t come close to achieving anything yet that would make it worthwhile.
If you hated IB or PE and would be miserable going back, then do not feel pressured to do so. Recognize that with some diligent savings and a decent first year income you have plenty of runway to be set.
On the flip side- assuming you didn't hate IB or PE, don't feel bad about going back in order to maximize your exit opps and ultimate net worth. I have a similar situation with my parents- they have nearly nothing saved for retirement and will have only a very modest inheritance from their parents (low six figs). I don't expect this to last their whole retirement.
I used to be salty about this- an important goal of mine is to plant the first seedlings of generational wealth, and it frustrated me that not only are my parents damming up any trickle of generational wealth from their parents, they will also likely require support from me and my siblings. I won't go into detail, but it was largely a conscious decision of theirs to make less money and focus their time elsewhere.
I came to the realization that if I went with my gut and told my parents they must reap what they sow and that I won't diminish for their sake what I am trying to leave for my descendants, I would be modeling an example contrary to the values I am trying to pass to my kids. That is- I'm trying to pass a mindset to my children that they are a link in the family chain, and they are stewards of what they are given and are expected to improve on what they are given and to pass that along. If I turn and metaphorically flip the bird to my parents, I should expect nothing less from my children. It sucks, but I think the lesson and example are worth far more than however much money I need to spend to take my parents in when the time comes.
Did not hate IB, but even though I am in a pretty good grad school I haven’t been able to secure an SA25. Getting looks feels like drawing blood from stone atm.
I must admit, I am a bit of a nerd. Love history, economics and business. I grew up surrounded by family owned businesses, and absolutely love the strategic and high octane nature of the finance and investment sectors. But the number of IB/PE aspirants has skyrocketed, and I don’t want to be a career banker but rather an investor/entrepreneur.
Def will not be flipping my parents the bird. My culture is very family oriented, with many parents even living with the children when they are older. But, will also not entirely shoulder their responsibilities. It’s a tightrope act.
Are you able to get involved in the family businesses as a career? Frankly, in your shoes that is what I would be trying to do, provided I felt like there was an opportunity to grow those businesses. I'm only a few years older than you, but I've seen across the companies that I've worked for that the creme really does rise to the top- Even if you don't go back to IB, as long as you are in an environment where talent can lead to improved results you should be fine.
You mentioned in another comment where your parents spend their money- How many years do they have until retirement? Perhaps you've already done this but having them sit down with an advisor to map out their retirement might be the wakeup call they need- that they need to work a few more years and drastically cut back on spending. Many people take a head-in-the-sand approach and need to be brought to the table to make some forecasts and understand what their future actually looks like.
I don't understand how making more money yourself will help your family in any way shape or form. They don't have a money making problem, they are dumb wrt personal finance and decision making. They/your siblings will just start spending your money. Fix the root issue dont break your back going after the symptoms.
you need to sit down with parents/siblings and keep it very real with them, hell even bring a professional advisor in if need be. Agree to a plan with them (incl budget, retirement accounts, asset sales, etc) that makes sense and create accountability (monthly finances review maybe).
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