Life Advice After Banking/PE (Rising College Jr.)
For context: at a top target, incoming SA at an EB next summer. I keep reading about the crossroads people hit after 2 years in banking, 2 years in MF PE, etc., and I've realized career decisions are basically on autopilot until you reach those points.
With that in mind, I don't understand why more people aren't solving for making partner at an EB. Senior pay runs $3-7M+ and inches higher in strong deal cycles. With compounding, that looks like a fairly stable path to a very comfortable back half of life in exchange for the grind to get there. The only other path in finance with comparable pay seems to be actually winning the HF game, whether quant (if you're technically capable out of undergrad) or L/S.
Against that, PE looks structurally worse than a decade ago: compressed returns, diluted carry, tighter promote gates. Yet the entire analyst class still stampedes to on-cycle instead of considering A2A. What am I missing? Is it the attrition math, the optionality argument, or something about the A2A path that doesn't show up from the outside?
For those of you who've stood at these crossroads and wish your younger self had your current perspective: what would you tell a rising junior to think about or pursue now instead, beyond the obvious advice of enjoying college while life is still simple?
The crossroads you're describing is a classic dilemma in high finance, and it's great that you're thinking critically about it early. Based on the most helpful WSO content, here are some insights and advice to consider:
1. Why Analysts Stampede to PE Instead of A2A
2. Challenges of the A2A Path
3. PE's Structural Challenges
4. Advice for Your Younger Self
5. Final Thoughts
Enjoy your time in college, crush your SA stint, and keep asking these big-picture questions. You're already ahead of the game by thinking critically about your future!
Sources: What is the point of doing private equity if you will be pushed out after two years to get an MBA?, Investment Banking to Private Equity - 6 Things You Should Know, Q&A: Former MBB Consultant, https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1
The path to partner at EB is not as easy as WSO makes it out to be, and those partners built their book and grinded at a BB for 20 years before having the opportunity to clip $5m+ after lateraling to an EB.
You also only get $5m by winning deals, which is hard at an EB (and any bank in general - all relationship based).
As for PE, there certainly are some structural headwinds, but run the math on carry even with a 15% IRR, throw in levered co-invest, and your cash comp, it’s still extremely lucrative. Carry / co-invest returns are also taxed much more favourably, further adding to PE’s attractiveness.
Then, the job, PE you are working as part of a team to drive returns. Banking is so structurally hierarchical with so much bullshit - and fundamentally, at the end of the day, you are in client services and thus have no autonomy with your time.
IB can be very lucrative and some people are built for it, but it’s not as easy as you’re making it out to be to clip the top pay, and PE still is an attractive asset class and career, just not as attractive as it once was (and you must be selective with where you go, as some firms are great and some are duds - hint, MFs are probably not the way to go for the vast majority of people).
You don't just clip $ for logging in and doing a list of tasks. You have to originate fees to make that kind of money. And you have to do it consistently through cycles. Not everyone is built for that.
The path to partner is another battle in itself.
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