At what point does banking/finance pay better than software engineering?
This is not a whining post - I'm genuinely curious as to when the income disparity between SWE and high finance levels out, both in $/hour and annually. Working in SF made me realize how much more SWEs make - it's almost absurd how much they get relative to other jobs. I have multiple software engineering friends clearing 200k+ 1 year out of college with a smooth ramp in promotion cycles and pay. Granted, I would imagine that plenty of that is in stock, but still, base pay ranging from 130k-180k is still multiples more than what any other new grad would make right out of college, no matter the major.
I'm frustrated at the amount of hours I put in for the apparent lower ROI. Yes, I understand if you're a top PE partner or C-suite individual you can reap the dividends of your labor, but realistically the amount of people who make it that far are a handful compared to the thousands clearing 400k+ as level x SWEs. Is this the proper way to look at it? Or is there is something I'm missing. If not, I'm going to give up studying for the CFA L3 and start grinding towards improving my hackerrank and my coding skills.
Finance has the higher ceiling. Also look at your opportunity, you could go to a hedge fund after IB. But I will say I’d learn coding , I am in the process of it. Yes tech starts higher for sure , probably after 5 years if you are good maybe 8 you make more but dunno if it would be more per hour.
$200k+ first year out of college is not the norm. I worked for Google (which does pay a bit lower than some of the other tech giants, but still higher than most tech companies) right out of college and had several years of experience. I was promoted after ~2 years and was at around $200k until my sign-on stock awards fully vested and then I dropped back toward $185k overall comp. For my team, the average time commitment was around 50-60 per week with rotating 24/7 on-call duties. Going forward though, my promotions will actually lead to tiny raises compared to banking. $400k+ in tech does happen, but it isn't nearly as standard as you'd think. Unless you are in FANG, the cap is closer to $250-300
I'm working to transfer to banking since it sounds more interesting to me and has a higher ceiling (even though I'll be making less than I do now initially)
Just curious, how much of the 50-60 hours are effective working hours? In banking, we spent our time on WSO during the day and we have quite a bit of downtime for coffee etc. while waiting for work/comments? Does it also apply to SWE?
Depends on team and company. They do have fire drills occasionally. But it really is occasionally. Some teams work a lot. Others work 30ish hours per week. Just depends. Talk to more people in the industry and you’ll get a feel.
At Google, I get an hour lunch or so with my team each day and a sync up meeting weekly, but the rest is coding. Not all teams are as head down as mine though.
The short answer is the one everyone hates: it depends.
To summarize as briefly as I can, there’s a big culture difference between FAANG (this includes other firms, including Twitter/ AirBnB/ Snapchat/ others that pay well) and what I know of IB/ PE/ finance from reading on this forum. The reality is that choosing a career for the ceiling is quite stupid. Not saying you can’t reach it, but you don’t reach the ceiling because you’re purely motivated by money.
A lot of people compare SWE to PE Partner. That comparison is dumb at best. Are there terminal SWEs at L5 who stay there? Absolutely. Like the many VPs who are stuck. Is that going to be you? Maybe. Maybe not. Even if not, the amount of money you can make at the top of your game in any field is absurd. Joe Rogan out earns everyone on this site. Why don’t we all host podcasts? Technically the ceiling is some ridiculous number.
Now for the answer you really care about: SWE at a top firm can pay extremely well. Some (read “very few”) Tech Leads clear 7 figures. Most don’t. Some do. People move up in these companies and the pay is more than you can possibly spend. Truth is, both careers can earn you more money than you need. Even if you want this amazing home and the McLaren, you can afford it if you grind away at these two careers eventually. Getting there quickly is another question altogether.
Check out levels.fyi if you want numbers. It’s known for being pretty accurate.
TLDR: You have an easier life and can make comparable (or more) pay in tech at the junior and mid levels. In the senior levels it varies a lot from person to person, but tech can pay as much as finance. Comparison of ceilings are foolish because both are in the billions. If you’re the type to make it to the C Suite at a PE Fund or Bank, you’re likely the type to be C Suite at a tech firm too. And you don’t make it to the C Suite chasing purely short term money, it’s a lot of politics and planning involved.
I think that the connections you make in banking are invaluable as compared to tech. There has been threads similar to this in the past in comp comparison, but overall I think it depends on the person's personal enjoyment in the subject matter.
It takes a particular mindset to get into FAANG. The interviews aren't easy either.
It pays more when your income is tied to the fees you generate rather than the labor you put in. That's generally MD level.
Directors and VPs may also make more than a tech counterpart, but that's more hazy. In their case, its a combo of their longer hours than tech and also their indirect connection to fees. They don't directly generate fees but as mid/senior guys, they have an indirect stake in the fee-generating business (e.g. if I'm the MD I can bring in X number of deals but if I lose my best Director Imay have problems executing on deals or convincing clients that I have the help I need . . so his bonus is going to be high if I'm bringing in a lot).
Below that level, you're pretty disconnected from revenue so you're worth the market value of your labor/skills. These days, its certainly debatable whether finance is ahead of tech on that scale.
"Wake up, will ya, pal? If you're not inside, you're outside, okay? And I'm not talking a $400,000 a year working Wall Street stiff flying first class and being comfortable, I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player, or nothing. Now, you had what it took to get into my office; the real question is whether you got what it takes to stay." - Gekko
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