Can you ever become rich in the Finance industry?
I'm on the private group chat called "Quant Finance" and things are really getting heated up in the chat with people claiming these exorbitantly high TCs.
Okay so the point being, can one ever become wealthy by working at a Finance company for a long time?
I get paid a little more than someone of my age, merely because of my coding knowledge, but this would never get me anywhere with regards to wealth building.
In the screenshot attached, peeps are taking very high number that I've never heard of. Are any of these numbers realistic? Theres some troll but can finance peeps actually make millions, while not being in the C-suite?
PS: I'm pretty sure you can join the discussion through Blind-> Chats-> Public chats-> "Quant Finance" .
These fucking kids can't even spell "finance." What do you think? You're a bunch of moderately well-paid wage slaves.
Rumor has it that the highest paid PM in the company makes $30M/yr.(and the numbers suggest his team is grossing close to a half billion a year depending on the share class breakdown) I think that a couple of director type people I work with are in the high sixes to low sevens. This is alongside a LOT of perks.
It's incredible, actually, what some PM's at shops can make with the right strategy, team and distribution channels. Also incredible how much it can scale with a small-ish team many times.
Aren't most of the richest people in the world entrepreneurs
get an iphone plz
For all I know, they can break the middle-class line and it kinda gets stagnant after you touch the 7 digits.
Any time you're trading time for money, you are not going to create true wealth...
Isn't LeBron trading his time for money? Don't CEOs do the same? Not trying to argue here just want to get your perspective as that's a blanket statement that may be untrue, imo.
Yeah we all have to do it to an extent but nobody gets rich making $350k working in a high COL city like NYC while supporting kids/wife.
I also meant getting filthy rich. Really you need excel at creating systems that scale autonomously.
Raise capital, hire smart people, let them work. Enjoy returns.
Yeah what the hell is that Buffett guy doing, spending all his time researching stocks
Managing Directors/Partners in IB, PE, HF, VC, and management consulting, can pull in mid to high 7 figure total compensation figures. Even 8 figures if you are a big shot. There was an AMA on here a while back with a verified IB MD saying some MDs at his bank consistently pull in 20mil a year compensation for bringing in 100mil revenue to the firm. Comp. at the MD level is highly variable and there aren't many areas where you can get a solid answer but my guess is it isn't unreasonable for a career high finance person to retire at 55 with a net worth of 20+mil. Idk what kind of wealth you were thinking of but obviously certain people in these fields are worth billions but yes, they are the C-Suite/Entrepreneur peeps.
Would be interesting if an MD could step in and give some real numbers...
People in finance are wealthy yes. They manage rich people's money.
Chris Rock had a bit on this.
Shaq is rich. The guy cutting Shaq a check is wealthy.
It's a fun joke but never made much sense. Shaq is worth $400 million+. He is wealthy.
I mean I get it. Mark Cuban would cry if he woke up with Shaq's net worth.
What’s funny is nobody here ever measures someone’s happiness. Sure, it’s perceived and impossible to truly know. But if I had to guess, Shaq seems happy. He’s chillin. He doesn’t try hard to garner attention on himself. He just does goofy ads from time to time. Good for him. Also saying $400MM net worth isn’t wealthy is ridiculous. That’s more money than one can spend. Not directed at you, Bob, but the other commenter.
To put it in a more serious tone; one will never get rich working for someone else. Sure they may become wealthy and live comfortably, but no one with only W2 earnings is rocking a private jet.
I personally know two people who have their own private jet who are technically w-2. This entire thread is ridiculous. Of course you can get wealthy / rich working for someone else. There are THOUSANDS of people in this country who have millions upon millions of dollars who technically work for someone else. You just have to be exceptional to do reach that level.
By the way, you have to be an exceptional entrepreneur to reach that amount of wealth as well. Most business owners end up living an upper middle class lifestyle.
Curious to know what you mean by technically W2.
I think we are splitting hairs but the top earners (working for others) at top industries and companies make a lot of money, and I would personally classify that as rich. These are W2 earners although many times a large part of their compensation (at least in the industry I’m in) is tied to fund performance and their invested stake.
They may not be buying the jet but they definitely have the flexibility to travel in one if they want. 100hrs on a heavy jet a year is ~$1.2mm, which if you really wanted to do, you can do off of $5mm a year.
I think the reason these topics usually end up with all these disagreements is that everyone has their own definition of “rich” or “wealthy”, so asking a question like “can you be rich in finance” is going to lead to these discussions, as opposed to attaching more measurable factors (income, area you want to be, maybe savings and type of lifestyle you want).
The invested stake is a K-1, so it's not one in the same with one who is soley a W2 earner.
Yes we are splitting hairs, the only point I was trying to make was what the comment under mine said. Many times, to get 'rich' you need to be an exceptional entrepreneur. Most people will never get 'rich' by climbing a corporate ladder (sans the few who are tapped for board/officer positions).
Yes, but not in a high COL city like NY.
The high COL cities are a big part of the issue. I recently made an actual budget and now see a path to get there, but it requires a lot of sacrifices that it shouldn't at my comp. If you are a PM at a mega fund or something I think you would be able to become 'rich' if you used the %'s I am using for living allocation. I mean at a point it shouldn't even be incremental anymore (rent as a % of salary, etc).
Apart of the issue is lifestyle, probably a big part of it. If you're a single guy, VP in PE or something alone those lines, you could probably spend the same amount you would as an IB associate. Almost no one does that, hence the not getting rich. Can't fault anyone, I'm guilty of it too.
Interested to hear how your expenses would scale up if you are still single and living in a 1BR apartment.
Well, the types of restaurants you go to, your vacations, clothes, etc. I guess it depends on the person, but I think most people are apt to spend more money as they make more money.
I guess its difficult to understand as a middle class non-target. Even when my parents had money (bonuses) we would still go to outlet malls and shops like TJMaxx to look for name brand clothes. I like to window shop at the mall lol but usually only buy during deep sales (Black Friday). It's probably a function of values a parent instills in a child.
It doesn't have much to do with what you're saying in my opinion. When you're living in a place like NYC surrounded by people who are doing the same you will naturally be going out to more expensive places, buy a watch, do whatever. I know people will refute this, but I think it's empirically true.
Isn't the median income in NYC like 55k tho... ?
You have a point. But it's not always the case. It's a discipline to not spend like your peers. Much like it's a discipline to eat healthy and work out when everyone around you doesn't.
The social pressure is real - even if you don’t get caught up in the luxury goods racket, you’ll need to spend on expensive food, drinks, trips, etc. to sustain your social circle and “fit in” so to speak.
At that point are they your friends anymore? If someone decides not to talk to me because i get a sprite when everyone is getting cocktails (and ONLY for that reason) then what type of friend is that? If something bad happens those people will run.
No you’re not going to lose friends over one cocktail you turn down...that’s fucking idiotic. But (and maybe this is an NYC specific issue), even completely normal stuff costs an arm and a leg. Dinner at a decent, mid-range restaurant (just your basic sit down dinner and drinks, I’m not talking steakhouse) will run you $50 a person pretty easily. Beers are minimum $6 each at any place that’s not a dive. A movie ticket is $15.
Unless you want to live a hermit lifestyle and just drink Natty Light in your apartment all weekend, there’s a level of spending that will naturally come. This is coming from a guy who tends toward the frugal end of the spectrum
So how do the back office/ middle office employees make ends meet?
You are a bit all over the place (rich to make ends meet, etc) which is understandable based on the info you’ve given (student). A few things to keep in mind (especially in this forum):
1) back office/middle office jobs are not crappy jobs (especially from a pure compensation perspective, what you are interested in is more personal), you have to understand that they are still high paying jobs relative to the average person. The more senior “back office” jobs pay extremely well. So “back office” employees are totally fine in nyc; is it tough at the beginning (for any person straight out of school)? Yes of course, NYC is expensive, but $70k a year is enough to live on. Remember all of these people are getting ~$70k out of college, they quickly get into 6 figures. This forum always craps on these jobs, it is a bit weird.
2) people are just calling out that “lifestyle creep” (or whatever you want to call it) happens as you make more money. You eventually don’t want to share an apt, maybe you want to be in a nicer area, take more trips, go to a nice dinner, go skiing on the weekends, etc. There are things you just start realizing you enjoy and now have the funds to do it. That doesn’t mean you don’t save any money, but you end up valuing those experiences more than retiring a year earlier. It is more true if you have friends in similar situations (“hey want to head up to VT this weekend?” “Guys/girls trip?” “Want to go see X broadway show?” “We are going to have dinner at X restaurant want to join?”). It’s not that you won’t have friends, its just that many experience end up centered around things that cost money. Again you can have friends without doing any of this (if they are actually friends) but these things start to happen.
3) as I said before, “rich” “poor” “wealthy” etc is just confusing without context. People keep talking past each other because poor to someone is “middle class” to someone else. Just look at your question you are asking about making ends meet on $70k (+small bonus). Nyc (and other places) can be weird and warp people’s thoughts on “normal”, “rich”, etc. And even this forum has many college students and those a few years in that either think this way (or are saying what they think the “alpha” in finance should think like).
I’ve lived in nyc under very different financial situations so I can assure you it can be done (and that you probably will end up spending more than you think). I understand you are trying to get info but be more specific. Run the numbers on salaries and what you want your life to be like. I think people can be much more useful that way.
As said, back and middle office aren’t poorly paid in absolute terms, just less than front office. I’ve got friends in those jobs...our lives don’t look all that different except that they might be a few years more senior for the same pay (to a point, I think after a while FO just goes off into the stratosphere) might not have as big of a bonus to play with, might have to live in the boroughs or NJ instead of a doorman building in Manhattan. They’re happy mostly with a regular middle class metro NYC lifestyle vs aspiring to have “models and bottles” like gets hyped on this forum.
I'm not saying this to be offensive, but you are waaaaaaay overthinking this. Not everyone you hang out with will work in finance. You'll probably learn there are people in other fields who are doing very well.
That's overrated
Is that how you define yourself? Your entire existence is socioeconomic status and "prestige" of school you went to? Also, CUNY is the top school for MFE for Quants. They place on JS/ TS/ Citadel. But it's a non target on this forum. So target/ non target gets blurred outside of the pure IB -> PE track.
You can become "rich" in almost any industry.
The one piece of advice I wish that someone had told me early in my career was this: You can get "rich" working in any industry by being a well-compensated employee. But, no matter what industry you choose, the only way to move above and beyond that level is to become an equity owner. If I had understood this concept earlier in my career, I think that I would have re-framed my career decisions with the end goal of ultimately becoming an equity owner vs. reaching the top of a well-paying ladder.
I understand, or I think I understand what you mean, and I was also recently discussing this with someone who I look up to who has climbed to the 'top' and is a major equity owner in a number of companies.
Can you extrapolate a little on what you would have re-framed in your career?
Hmm. Agree.
Curious what you do now? Sounds like you were in a seemingly high paying job and then quit to pursue something higher order?!
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