Did I make a big mistake? Should I go back to IB/PE??
Will try to keep this brief.
I did IB for 4 years from undergrad and was an A2A associate. For the last 4 months I have been working at a F500 in a corp fin/strat role.
Like most people, I didn’t enjoy IB at all. Because of my dislike of my banking grind, I turned down several PE opportunities as I figured the grass wouldn’t be any greener. So figured I might try the corporate world out.
Corporate role is much more relaxed obviously and there is even some element of enjoyment in the work. It’s obviously not a 40hr week walk in park but a far cry from my horrible 90hr week banking days.
However, here’s the rub. The compensation is relatively very poor it seems. I’m making around 150K all-in at my current role whereas my first year as an associate I cleared over 300K. Now admittedly, I was in NYC with banking whereas now I’m in a MCOL so it’s not exactly apples to apples but it’s still an extreme pay cut.
I now feel a bit foolish for getting off the “fast-track” seeing many of my banking and college peers make multiples of what I do. I feel like I may have jumped the gun out of frustration and even though I hated banking maybe it’s better to find at least a more adjacent role (corp banking, cap markets, etc) or a more relaxed investing seat than “settle”. The F500 world seems a lot slower moving with regards to promotions and I hate the idea of in 3 years being at my same level while I could have been a VP in high finance if I stuck it out.
This is starting to make me feel pretty anxious and frankly depressed. my savings from IB are unfortunately nothing great because of a few personal investing/crypto mistakes I made (long story). So perhaps that’s part of why I feel so compelled for more compensation at the expense of doing something I dislike more.
Not too sound out of touch, but I don’t know how people are fine with dealing with such a drop in compensation. Are people who jumped to corp dev/strat just relying on their nest egg from banking or am I just that underpaid?
I would appreciate any thoughts even if they are harsh truths.
You really should look at things from 2 perspectives
Whether you messed up or not is really about whether you have enough money for your lifestyle and whether it prevents you from moving forward in your ideal career end destination. Two examples that might illustrate this:
So whether you are screwing up or not is really about what you want in life. If you wanted to be a PE partner—it was probably a screw up. If you don’t want to be in the role you are in and you took it knowing that, it’s a screw up.
Otherwise, you likely are learning something about yourself that you need to make more money and are willing to make some trade somewhere else to have that happen. I will note however, more money for the sake of more money is a great way to be unhappy. The key is starting with expenses and working backwards. If you want 4 kids in private school, yeah you messed up. If you want 2 in public, probably not an issue. You get the point.
Thanks for the response. I agree with your point about the money to an extent, but I feel on even a F500 salary it’s tough to raise even 2 kids regardless of public school. I guess I was surprised the gap was this wide in comp between this and the IB/PE world.
Ultimately I suppose it just matters if the corporate comp will scale relatively quickly, but unfortunately it seems it’s unlikely to be promoted young.
Eh. It really depends what you need to spend money on and if you are a 2 or 1 income household.
Some places in the Midwest you can rip a really quite great public education and a modest home for a family of 4 with all in comp of like 200k and be chilling. Helps to have 1 big win along the way to not sweat things, but if you are doing public school and diligently save in like a 529, it’s not horrible getting 2 college educations. If you assume you save from 0 to 20, then you need to save like 12.5k annually per kid per per year.
I think a more important question and comment is don’t be in a job if you don’t see upward mobility either outside or inside the organization. Like it’s fine if that organization is a stepping stone, but being in a role where it isn’t clear if there is a path for you to advance or if other firms would value your experience is a bad idea. I saw some of my friends take these roles because they wanted lifestyle and I think they regretted it.
You can find a role that isn’t IB that still has you moving up the chain or with more valuable experience. A great example in my mind is commercial banking —it’s clearly a lighter role than IB, but there’s value to the service provided and it allows for advancement.
The other point I make to people all the time is some times you have to slow down to speed up—if you find your work environment too slow, it should give you confidence and more purpose and happiness when you move over to a more demanding role. Demanding jobs are demanding and I would argue those jobs make sense in certain phases of an individuals life, but can be really bad ideas during other phases.
Grass is always greener on the other side. Echoing with the other commenter said, ultimately it boils down to lifestyle and what you're happy with, and amount you're willing to sacrifice in pursuit of money. Also keep in mind that the things you see posted on WSO have strong survivorship bias, a lot of the posts you see about people making extreme amounts of money in seemingly amazing positions with great culture and WLB are far and few between in real life.
The reality of it is that comp is heavily correlated to hours you spend working. Banking comp is heavily inflated precisely because you're putting in crazy hours - you might've seen many posts here doing hourly breakdowns for pay and it's actually not that great when you consider time adjusted earnings. There aren't many other roles that pay so much for folks fresh out of school.
I used to work in PE and while it paid well, the long hours ultimately wrecked my health and destroyed any semblance of a social life I had as well. I left and work in credit research now, making considerably less (125k all in based out of NYC, so even less than you) but have consistent 40-50 hour work weeks now and the ability to pursue social activities outside of work and a group of great friends that I actually have time to keep up with.
Do I miss the money? Yes, definitely, and it hurts knowing that had I stayed I could be making many times what I do now. But at the same time I'm not willing to give up the current lifestyle I have to go back to somewhere where I was miserable and where my health got destroyed just in the pursuit of money.
Your current comp I would say is actually fairly in line for what I would expect for a corporate finance role, and since you're in MCOL it might even be higher than average depending on your title. In NYC a corp fin senior financial analyst would pull around 100-125k all in (this is based on my own experience interviewing for FP&A positions, a corp dev position might make more depending on the company and how acquisitive it is). At the manager level it would probably be closer to 150ish. Yes, corporate often has slow promo processes and to get to a senior level where you're pulling 200-300 or more requires you to put in the time.
Many thanks for the response. This is helpful. I think the relatively slow promotion cycle is what hurts the most. It may sound silly, but being able to make good comp while young and not 10 years down the line is very important to me.
The issue I think with corporate is even if you are very good, it’s difficult to be promoted young. It’s rare to see F500 director title and up before someone is in their 30s (please correct me if wrong). Whereas a 30 year old in banking is a VP making $400k+ all in.
I know it’s silly to make such comparisons but that’s where my head is at given how life seems to be getting more and more expensive these days and particularly if I want to one day have a family. I frankly don’t see how that’s possible on even a director F500 comp package unless your spouse is working a similar comp as well.
Yeah, in the end comp is a huge component and probably the biggest driver of whatever decision you make. I'll echo the other commenter again though and say that it's not necessarily purely about compensation either, if you're in a role that gives you very good experience in transferable skills that can give you considerable advantage later on down the line if you try to lateral to somewhere else, which is another way to achieve jumps in title and compensation. One of the risks of staying in IB/PE beyond the junior level (where it's easier to pivot to other industries) is that once you hit more senior titles, it becomes significantly more difficult to pivot to other industries because you're perceived to be specialized in whatever you've been working in, and doing only deal work doesn't necessarily expose you to the type of work and soft skills needed when working in the corporate world. Sure, you might be pulling 400k as a VP in IB, but what happens if the firm decides to cost cut and you get laid off?
I think this is especially apparent with the current market, especially with the last two years the banks and PE firms laying many people off and freezing hiring processes, and all those who are cut getting ejected into one of the worst white-collar markets in a decade. I have many friends in this exact situation and a lot of them have turned to looking for corporate roles but have really been struggling with pitching their prior experience in interviews (if they can even get them, because it's super competitive right now), especially those who are more senior, even though a lot of these places like to see IB/PE experience prior.
The other thing I'll say to be aware of is that the speed of promotion cycles that you can see in IB/PE is unusually fast and shouldn't be compared to more standard corporate promo processes, it's actually a bit unnatural for people to come out of school and then suddenly be VP in less than 5 years, which I have seen in my previous roles. Being in high finance with the extremely high salaries and young folks with inflated titles pulling in tons of money really tends to skew the view in other areas.
Imho this comes down to personality, your relationship status and how you view money. I'm at F500 in a role similar to yours, and I do struggle to make ends meet as a single person living in HCOL. If I lived with someone and shared expenses, it would be much easier. For the very same reason, I'd like to get into IB - I started at F500 after graduation. I also relate to promotions part you mentioned. My company recently introduced cuts, the salary bump is almost non-existent, and the promotion is in a very far perspective. Compared with IB (or capital markets), the title difference between corp life and banking is massive. It might work for some, but the ones used to grind will get unhappy/bored in the long-run (myself included).
Interesting. Totally agree on the title difference gap being monumental these days. It’s tricky because the F500 work I will say is still objectively more enjoyably and interesting despite everyone always hyping up how high-profile and large stakes M&A work is. Being on that side previously, I will say the work is just downright stressful and tedious. But the comp differential has made it so an IB/PE-like track seems to be the only way to actually make a decent living given COL these days. Like there’s no choice almost.
You need to get promoted. Unlike PE / IB, there are not scheduled promotion cycles in corporate. This is good and bad: good means you can move up fast (I gained 3 levels in 3 years and went from $180-300K in that time) and bad in that you can get stuck at a level forever.
You've burned the ships and now the only way out is through - focus on maximizing the job in front of you. Get on high visibility cross-functional projects and demonstrate that you are articulate, organized, and responsible. Network aggressively within the company and find internal champions and mentors. You need to approach this job with the same commitment and intensity as you did IB, but you can set far stronger boundaries of when you are on and off work.
On the personal life side, you need to set strong boundaries and lean in heavily into why you took this job. I work out 6 days per week, I spend a lot of time with my SO, I eat super clean, and I fully take all of my PTO (including 2 week vacations). I also committed to activities outside of work that are important to me. You are being compensated in more free time - if you sit around watching netflix and being bored, then yeah it's not a great use of time vs. working in finance. If you go do cool shit, invest heavily in yourself (relationships, health), and go make memories, then you will get a great ROI out of your free time.
People leave finance and think magically their entire life is going to change without modifying any other variables. In reality, you need to fully commit to getting what you want out of your life and view corporate as a job that gives you more control of your time. It's a different vehicle but you still need to drive the car to get to where you want to go.
FWIW - almost everyone I know who left finance feels this way and it takes around 9-18 months to feel "normal" again and get used to the idea that you have to proactively improve your life vs. just mindless going through the motions in finance and believing that as long as you hang on you'll get to where you want to be.
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If I may chime in, think my experience was relevant to the discussion.
I spent 11 years in London, worked across Big Four, IB and asset management. I never broke into that "high finance" 80 hour a week buy-a-house-with-your-bonus type world, but it was something in that direction.
A couple years ago I moved back to my home country, a smaller nation in Europe. I took a nominal pay cut, but in every other sense my life is better:
No regrets.
Adding my experiences as well since I shared a lot of the above. I left PE in my second year as an associate at a UMM shop, did 2 years of BB IB prior. Have been at my current role in Corp Dev / Strat for just over two years and just got promoted to Director.
I instantly become a different person -- my friends commented how they stopped like to spend time with me because I was just a worse person when working in finance (something they didn't share until recently). I started dating a girl when I left PE (was mentally checked out as I knew I was leaving), had enough time to actually foster a relationship (got dumped during PE because I was depressed) and now we are hopefully getting engaged this summer. I also now volunteer coach basketball and lacrosse and am spending more time with hobbies (golf, rec league basketball, even bowling lol). I also work in a niche but cool industry.
But, this came at a pretty big drop in comp. Even after getting promoted, I'm still target below $200k in a M / HCOL city. I max out my 401k and have a little left over to save, but now that I'm saving for big purchases like a ring and ideally wedding then house over the next few years, I am starting to feel the struggle. I have enough saved from banking / PE for retirement, but not really these new expenses. Funny thing is, though, if I stayed in banking / PE, I probably wouldn't be needing to spend on a ring / wedding / house in the near term. Funny how that works.
My hours are a lot better, and would agree that the promotion cycle timeline is key. Something I didn't ask about right away, which hurt, but ended up getting promoted after my second year. That has certainly helped the comp point, but I still think it is too low. My lifestyle creep hasn't helped, but I have a similar base to my PE days so it is mainly a bonus issue, which I used to just save all of anyways (explains why the 'bigger' expenses hurt a bit more).
But, with that said, I'm thankful for the non-work / comp related things that leaving IB / PE allowed. So, it ends up coming down to personal values and what matters most to you. I knew I didn't want the lives of the VPs at my PE shop, so it was hard to stay motivated and want to be promoted. Felt like I was just wishing away years of my 20s to skip forward to when I was done, which was not a great way to look at life. I don't regret it, but do wish I was making 10-20% more in comp. But who knows if I would be happy with that trade off if I was working more. Hard to have it all.
It is going to be hard to find a perfect option -- but once you boil down and figure out what your values are and what you care about, it becomes clear what you are deciding between. And because of that, my regrets are pretty minimal.
This is a pretty common question. Not sure I'll be shedding new light but hopefully my age (wisdom - I'm 60) has some baring on your situation.
The sooner you stop comparing yourself to others (hard to do, especially for those that were driven to get into IB), the better off you will be (mentally, socially, family wise, etc.)
Ask yourself what you liked about IB. My sense it it was primarily the money. If there was a lot more than that, that's a different issue than what you're describing. However, if it was just a money gig and you hated the day to day, consider yourself liberated. Could you continue down that road? Sure! But you don't want to.
Take IB/PE off the table and replace it with other professions, things where you could earn more (lots of ways to make great money). You could own a business. You could be in big law. You could work up the ranks at MBB. You could be a brain surgeon. You could own 100 McDonald's franchises, etc. You could also work your way up the corp ladder and become CFO or Cxx and make WAY more money than your typical IB/PE guy will ever make (personally am good friends with two of these cats who make millions - close to 8 figures. Neither ever did IB. Were Big 8 guys back in the day, got great MBAs and worked their way up. Takes time)
The point is, there are many ways to make tons of money and you need to ask yourself, would you do any of them? If the answer is no, then who cares, you're not interested. If you're not interested, you're not interested.
Spend your time doing something you enjoy. The money will take care of itself. took me many yrs to figure that out, I was always chasing. Then I figured out I like my life and have been happy for 20 yrs.
Thanks for this. I really do appreciate it.
I agree that the only thing I really enjoyed about IB was the money, but I find it hard to see any other profession (that doesn’t involve significant additional schooling/debt) which pays as well and ramps up as quickly with short progression. I suppose owning a a small business is a path but frankly am not in a financial situation to do so and honestly seems like a lot of survivorship bias when it comes to these small business models and success. Maybe I am wrong!
I totally agree though that finding something you enjoy doing is most important. I feel in my case my interests aren’t exactly monetizable and frankly I don’t mind the idea of treating a job like a job and sacrificing my time with the caveat of being actually compensated for my time which I felt IB did provide. Maybe I just had some lucky bonuses, but the gap versus anything in corporate / a relatively slow climb to the C-Suite seems futile.
Maybe I’m just not aware of all the different career paths, but I will say it’s hard for me not to compare myself when I feel like I sacrificed a lot of time/energy/experiences when younger to position my career (target school/high grades/networking/strong analyst program/etc), and now feel like I didn’t need to do all of that and could have just came from a normal background to get in the seat I’m in today. I suppose it’s a sunk cost either way. Still hate the idea of feeling like I wasted my previous experiences.
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