Long term comp differences between IB vs PE career question
I know this has been discussed a million times but had a few thoughts regarding this.
It's well known that the average MF/UMM PE partner will outearn their IB MD equivalent, however I don't think the difference is as stark as what it seems. Firstly, the consensus is its significantly easier to make IB MD vs PE partner as there are less seats available/harder progression. Additionally in PE the quality of people will be higher compared to IB meaning the competition is even harder.
Given this perceived competition, would it not make more sense to compare top PE partner compensation with IB group head MD comp, as the difficulty getting to either is probably more comparable? Yes PE still probably is higher but not as stark as before I.e. group head MD $3-5M+.
I also read an MD post on here, who manages MD recruiting for his bank so he knows about what comp to offer, that IB rainmaker comp is $10M+ of which he estimated there are 250 ish MDs earning this. I'm not familiar with how many MF PE partners there are but is it somewhat comparable, especially when you consider the vast majority of people leave IB for PE?
I'm curious because I think I prefer the idea of banking better, but vast majority of my peers want to go to PE for perceived more money. I still no doubt assume PE is better for long term comp, but someone like myself who likes the idea of banking more I'm not sure the difference its as binary as more money vs less.
Appreciate any thoughts
My $0.02: I would focus on your last point. I honestly think that this whole thing about comparing "MF PE partner" vs "IB Rainmaker" conversation to be pointless. Yes, I believe the numbers say average MF PE partner makes more than average IB MD. Also understand that most people get stuck at the VP level in both. If you enjoy IB, think your skillset is a better fit for IB. it could help you in your climb up the IB echelons. So instead of comparing MF partner to IB rainmaker you may be comparing MF (if MF at all, maybe MM/LMM) VP/Principle to MD in banking. Or vice versa.
Compare what you think, with your personality and preferences, you could compete for and achieve, not what the top people in both camps could make. For you, maybe long-term comp for IB is better because you would be better as a senior IB person (i.e. strong sales/relationship-mgmt skills) and could make it higher up. For some others, PE might be better because they line up with what you need to do to succeed at PE (i.e. more analytical, strong business acumen). I don't think there is an objective, universal long-term PE>IB or vice versa: it's person-dependent, you will not climb and make top dollar if you don't suit a job.
It’s pretty simple man, just make up your mind. The rest will take care of itself. Do you want to a rainmaker or master of the universe…
in my humble opinion being a MD rainmaker may be more prestigious because you're also doing God's work
Can we please agree never to have a thread like this again?
This is like choosing your high school sports option based on whether you think Kevin Durant or Shohei Ohtani is paid more. Just do whatever you think will be easiest to face a week of on a Sunday evening
At this point there are so many threads like this that the replies to them and analogies are themselves becoming trite. I.e. we have run out of novel ways to make fun of these posts
Yeah seriously - the first 85% is pointless naval gazing and has been rehashed five hundred times over on this forum. As far as personal decisions go, they are fundamentally different jobs, with different trade-offs. Do whatever you think that you like better and helps you build skills that you think are valuable or interesting. Trying to plan your entire life when you're 22 is a fool's errand - your priorities and interests shift over time, and even what you think you want in two years can end up very different once the 24 months actually pass. A career is ultimately a war of attrition. Assuming you do actually end up wanting to make Partner or MD, as the case may be, that means surviving until that point. You won't survive if you don't broadly enjoy what you're doing (and if you hate what you're doing and still survive, you're probably going to seriously regret your decisions).
off-topic but are you optimistic about the future of PE?
I don't know if I am optimistic or not. Do I think that there will continue to be a need for capital formation, and that companies will continue to require funding and investment that will come from private market participants? Yes. Do I think that there will continue to be an opportunity to outperform peers through some combination of better access to opportunities and better knowledge of the landscape? Yes. Do I think that the market of funds will become oversaturated and fees (and as a result, compensation) will inevitably decline? Who knows?
These things tend to be a pendulum, and the private equity market's value and payout opportunity is probably driven by broader macro trends around population growth, pace of innovation, and relative attractiveness of other industries. I don't think it's that valuable to try and guess what will happen 20 years from now. When Rockefeller was buying up oil refineries left and right, and electricity suddenly made kerosene lighting look like an industry in decline, it would probably be pretty easy to argue that he should have run away from that space. Then automobiles completely changed the narrative. If you like investing, I think private equity is a good job with a high amount of intellectual stimulation, and it gives you a pretty broad view of the world so that if things really do get bad in PE, you probably have enough knowledge to pick a direction to pivot. If someone doesn't like it, they should go find something they do like.
I planned my career at 18 and 14 years later it's gone nearly to a T vs my plan. So f the haters and plan away
What's ur comp at PE VP?
Progression is more linear and straightforward in IB. PE is more unpredictable, especially if you work for a smaller firm.
Ceteris paribus, if you want to hit $10m net worth ASAP, IB is probably the better option; if you want to have a chance to hit $100m net worth, PE is the better option.
Part of me wonders if I should've stayed in IB - but there are pros and cons to both paths.
A bunch of principals at well known Tech PE got paid $6-$10 Milly. It just varies. MDs at PJT, CVP, and EVR are also known to make it rain crazy. Just choose what you think you will be good at and tolerate man. So much comp variability in these roles.
too repetitive, can we get please a comp difference between YouTuber vs. Fortnite streamer? I'm thinking about a career move and need some guidance ffs
You need to figure out if you like buying or selling more. Do you like shopping? Do you like being someone’s bitch?
Not really related to this thread, but I'm curious as to why there's so much hype around making MD/partner in the US compared with say an India, where cost of living is so much lower. Anecdotally, I spoke with a director at a bb in India with around 25 yoe, and they said that directors in India are worth well over 5-6 million USD, in a country where practically everything is cheaper. Also, they mentioned that it's very easy to move out of a bb into a smaller investment firm where you make an easy $1 million a year. Curious to hear what people think about this. Bear in mind also that hours in a country like India are far more lenient than in the US.
bro why would any westerner with zero ties to india move there purely for a cheaper COL
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