35% Salary Cut for Career Change

lagondavantage's picture
Rank: Chimp | banana points 12

Hi,

I am an analyst in S&T having worked for 1.5 years as a graduate analyst. I am really keen on investments. Having worked in markets in a sales role, it has provided me with opportunities to learn about the big picture and interconnectivity of various asset classes which I do appreciate. However, after contemplating the growing automation, MIFID II, the very flow driven nature of the business and that I want to add value to myself in terms of knowledge (investing, building/helping businesses) and personal network, I am considering of heading into a private equity with AUM of $700m-$1b for an analyst position with a 35% salary cut. The private equity mentioned is rather somewhat respected in one region and is expanding into another region with a rather short track record (which is where I might be placed). Meanwhwile, if I stay in my current role, I might get promoted in another 1.5 years as an associate with another 20% jump in base.

I know that most of you may have had the IBD or management consulting background but would really appreciate any thoughts if you were in my shoe, and can share your career progression or jumps after in PE. Thanks a lot.

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Comments (16)

Jan 3, 2019

Hey lagondavantage, I'm here because nobody responded to this thread after a few days...maybe one of these resources will help you:

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  • More suggestions...

You're welcome.

Most Helpful
Jan 5, 2019

My roommate is in sales (rates flow), will be promoted to VP in a month and shares your same concerns. He is obviously also trapped in his role because of current / expected VP compensation + years of experience vs. not interesting exit ops (he only receives inbound calls for other sales roles, proactively he may get some investor relations jobs).
Going back, he would have made this change if the proposed new salary is enough for a decent living in the city in which you are and there is compensation potential as per the rest of the street.

Reality is that in your role other exit ops are limited (i.e. MBA or maybe try to move ASAP to Corporate Banking or Research if you cover certain asset class; from research you can then do AM or HF).
1.5 year of experience is a sunk cost that you may want to ignore in the big scheme of things if the next role is what you would like to do. 30% comp is a lot but if the later increases pick up the Sales comps, it is not a big deal.

Keep in mind that sales is probably the best job in a hours / money so your choice is hard :) (which is why my roommate has never been serious at finding other jobs).

    • 4
Jan 5, 2019

I say go for it. Worst case scenario in 1 -2 years if it's not working out you can jump to another firm, IBD, business schools or back to your old role. Not only does it help align you with your career goals of working in investments, but also gives you optionality. On the flip side, you could potentially also transfer internally to IBD then leverage to recruit for a PE / HF role. Have you thought about transferring internally?

Robert Clayton Dean: What is happening?
Brill: I blew up the building.
Robert Clayton Dean: Why?
Brill: Because you made a phone call.

    • 1
Jan 5, 2019

Thank you @cruel3a and @goodL1fe yes on top of this potential jump, I am also trying to move to research internally although the move is really really hard and am still waiting if anything works after bonus is out (headcount, coverage, timing). IBD internally (M&A or sector rather than DCM/ECM) was also quite impossible as I have tried networking for half a year or more in vain and decided to drop that option altogether. Yes, I think I might need to also start "cold-call" and shop for other PE firms then if 35% salary cut would mean better value add to me (in terms of investments skills and network). Thank you once again.

Jan 6, 2019

Have you tried negotiating your offer? A 35% cut is hard to swallow, regardless of the circumstances (unless you're switching to non-profits or something drastic).

    • 1
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Jan 5, 2019

How would you best suggest in doing so @DickFuld ? I have a unique background (in terms of where I am from) but the other candidates from my home country with IBD experience may be interviewed and be offered similar salary to what I am offered (but for them it will be a considerable jump in salary already + the more international hub).

Jan 6, 2019
lagondavantage:

How would you best suggest in doing so @DickFuld ? I have a unique background (in terms of where I am from) but the other candidates from my home country with IBD experience may be interviewed and be offered similar salary to what I am offered (but for them it will be a considerable jump in salary already + the more international hub).

"I'm very interested in this position, however, I would be taking a xx% cut to make the move. What flexibility do we have in the comp?"

    • 2
Jan 7, 2019

Thanks for sharing your story.

One of my good friends from university went the S&T route out of college, and he has been doing it for the last eight years. He's very good at what he does, has great hours and makes excellent pay for the hours.

However, the downside of S&T is that you can get pigeonholed in the role / industry, because as you advance your career, you lose the opportunity to have experience at the lower levels PE, IBD and HF looks for. My friend, for example, has been looking for exit opportunities for the last three years, but hasn't had much success, despite his strong performance track record.

If it were me, I would be introspective and think long and hard about what you want to do long term with your career. If you see yourself wanting to do something else, such as HF given your passion for markets, then I would advise taking the PE gig. The private equity evaluation process is very similar to evaluating equity opportunities for long/short HF strategies (that are not primarily driven by momentum strategies like the Turtles).

Since you are early in your career, you may not have a definitive view of what you want to do long term - and that's OK. Getting good experience with a reputable PE shop can open doors to additional opportunities and adventures. You may lose a little bit of comp in the short term, but there are always opportunities to make more money - especially with the right experience.

    • 3
Jan 7, 2019

The magnitudes of income at the more junior level on the sellside aren't high enough to be considering yourself locked in. At this point you need to make a 10 year view, not a 1-2year view.

Taking risks/salary cuts only gets harder as you get older.

    • 2
Jan 7, 2019

I was in basically the same boat as you 6 months ago. Was a VP in IBD, always knew I wanted to be an investor. Was equally interested in both hands-on PE/VC stuff as well as value-oriented public markets HF type investing. Got an offer to join a small family office at a sizable pay cut (more than what you're facing), but with the opportunity to shape both PE and HF strategy within the fund.

Honestly, it wasn't even a hard decision. First there's the little stuff: the financial downside of giving up pay today is roughly balanced by the higher upside that can come with building a successful fund. And that's before we account for better (at least more flexible) hours and more enjoyable work.

But I call that the little stuff because what really matters is that I'm more likely to be a successful investor than a successful banker. I think it's critical that people take stock of who they really are and which game they are more likely to win. Both fields are awesome if you win, both suck if you lose. Same is true for S&T and most other professions.

In my case, I knew that not only did I feel born to be an investor but I was also particularly poorly cut out to be a banker. I'm not a natural salesman/politician type and I have a weak stomach for BS work and BS conversations. So it was an easy question for me.

But I have plenty of friends now on the MD track who are very happy. They would not be happy as investors. If you compare senior people in your current S&T world to senior PE folks, you'll find very different personalities for the most part. So talk to all those guys and figure out who you are. Good luck.

    • 4
Jan 7, 2019
PteroGonzalez:

you compare senior people in your current S&T world to senior PE folks, you'll find very different personalities for the most part. So talk to all those guys and figure out who you are. Good luck.

Excellent point - everyone should take this into consideration. I did the same thing (although different roles/options) and that is when I realized I can shoot the shit with the sales guys all day and at the same time also realized I have 0 fucking desire to sit behind a desk more than 50 hours a week on a regular basis - I enjoy being healthy and sitting at a desk all day is the polar opposite of healthy.

    • 2
Jan 7, 2019

If you can afford to do it, do it but bring this up to them.

Say you're lean and young, but what flexibility is there on pay given where you're at. And wherever you're at add 5% or 10k if they ask.

May be a step back today and for 2-3 years, but a big move up in 5-7 years. But make sure this is something you want, for sure

    • 1
Jan 8, 2019

That pay cut now means absolutely nothing when thinking about it in the context of your career and the additional optionality you will gain by making the move. Unless you are 100% in love with S&T, take the offer. In 24 months you'll wonder how you could have ever considered anything else.

    • 1
Jan 5, 2019

Thank you everyone for sharing your opinions and thoughts which definitely help me more in thinking through things. Means a lot.

Jan 9, 2019

Seems like you are changing city/country too, the pay cut might be relevant if living in a lower COL city. Ie moving from NYC to Denver you can reduce your housing costs by at least 35%.