Staying in IB (A2A) vs going to PE
Am currently recruiting for PE but have been thinking about my future a lot lately. I don't wanna do finance long-term but have no idea what to do. I am pretty frugal and obsessed with saving money because I love watching the number go up (don't worry i splurge on alcohol and coke every weekend and get dinners/lunch with friends every weekend, still manage to save a lot though).
Knowing how competitive and up and out finance is, as well as my lack of intensity... I've been thinking if IB is a relatively safe job till maybe the VP years (so A2A would give me 8-9 years till the end of the VP years when I get pushed out for being average) I can make a ton more money and invest it for early retirement versus going 2 + 2 for PE and then getting pushed out after 4 years when I inevitably am not top bucket at whatever unlucky PE firm takes me... thoughts? I am willing to coast at my IB firm for 8-9 years and then peace out with my saved $ whereas if I do PE I likely won't survive as long (2 years max) in the industry unless I go back into banking (and I refuse to let that happen).
Stay in banking collect that $
If you don't have a specific desire to go to PE and you're overall satisfied with IB, I wouldn't make the jump - for the reasons you describe. PE is a grind in itself and based on your career objectives, I don't think you'd enjoy it. Better off enjoying the goodwill and tenure you've built up at your current firm and continue playing that out.
My entire response below is based on two facts you mentioned: 1. You dont want to work in finance (or at least IB, PE, VC specifically) forever, and 2. Financial gain is the primary factor driving your career path. I am also operating on the assumption that you dont absolutely hate your life at your bank, and that your firm will have street-level bonuses.
PE is the long game, and I dont see a reason to enter PE unless you are willing to commit 10+ years of your life to a fund after only working two years. IB will almost always pay better than PE pre-carry, and carry takes years to earn, and then MANY more years to reap the rewards of the payout. Therefore, if focusing on growing your NW is your goal, stay in IBD where you can jump ship at any time with limited downside vs. PE, where you need to work twice or at the very least, as hard, for less in the short term. Did I mention PE is 2-3x more competitive?
I cant fathom why anyone would make the decision to go into PE these days. Banking makes so much more sense if you dont want to be a lifer. Way too many people do 1-4 years of PE before burning out and leave with no carry and lower base and bonuses than had they stayed in banking.
This is coming from someone who had the ability to do PE and opted to do Corp Dev instead.
So many people are so desperate to say they work in PE that they take material pay cuts to work longer hours, in a more toxic environment. They chase prestige despite entering IB for money.
There are of course the opposites too, people who leave a brutal sweaty IB for a LMM PE shop that grants a much better WLB. Some PE shops are awesome and the work objectively becomes more interesting when you move to the buy side, assuming you are at least involved in growth strategy conversations.
Realistically, it is like ~10 years minimum before you get carry payouts. So, if you want to maximize income within the next few years, there is zero reason to do PE.
Counterpoint is PE has more diverse exit opps outside Finance. 99% of the time the post finance opp is something business adjacent (you’d not go totally renegade and pivot into STEM academia). PE is training for actually thinking of business - so better transferability to any manner of consulting, entrepreneurship, Corp Dev (not to mention any “slower” investing opp including FoF or LO AM) etc.
it is a better job with more thinking period - and that sets you up better for competence / success in life in general. the only argument pro IB is branding (GS/MS/JP or even Citi are more heard of than H&F or Centerbridge outside finance)
I don't disagree with any of your counterpoints, but I am trying to be mindful of OPs timeline. He wants to get out of finance eventually. He also calls out his own work ethic as a negative, which indicates he would be asked to leave after 2 years as a PE Associate. IBD will provide better comp with a lower chance of job loss if he is to receive an Associate promote.
Additionally, lets be real, most of us finance guys jump around a very small set of ponds. He may want to leave finance but it is improbable he totally does, and leaving business as a whole is even less likely. IBD to sales or marketing or any other aspect of business is a very easy jump. If he wants to go into engineering or any STEM role for that matter, back to school it is. At that point, what difference does IBD or PE make?
Again, I think all of your counter arguments are completely valid, but fail to see what career path OP could take where PE would objectively serve him better than IBD. PE does give you more problem solving / critical thinking opportunities and better exposure to business's operations as a whole, but not like one standard deviations worth of improvement, more like 20-40% better. And again, OP wants to maximize his account balance over the short term, which is why I advised staying in IBD
Agree. just food for thought for OP.
OP here, I think work ethic was the wrong word. I am definitely vey hard working but i'm not a hardo. I absolutely think I have the ability to become an MD at an IB or a partner at a PE firm but have no drive to do so, not sure if that changes anything. but really appreciate the write up
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