Everything in finance is shrinking - where do you think the opportunity is?

thehalifaxgroup's picture
Rank: King Kong | 1,501

So as you guys are all aware, IB headcount is decreasing, PE/HF positions are much more difficult to secure with the golden years ended well over a decade ago in both headcount and comp. There will still be some opportunity in these opps, but they will be far fewer in number as well.

Where do you guys think the opportunity is these days? Or to put it another way, if you were a recent college graduate, where would you want to be right now/look into getting into over the next decade?

Comments (51)

Apr 24, 2017

Technology

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Apr 24, 2017

Mind elaborating? I ask since of course we all know the founders (Musk, Speigal, etc.) who were able to hit it big with IPO's, but the vast majority of people don't nearly make as much as HF/PE guys (on a percentage basis) or see the same career upside. As much as there is huge opps in tech, it is overstated IMO as to how many actually are able to get the full upside on their work

Apr 24, 2017

I'm no expert, but finance had significant growth in the 1980's, 90's, 2000's. The current growth in the economy are in technology.

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Apr 25, 2017

Disagree about the "or see the same career upside". Finance is a strike mission these days...get in save as much as possible and get out. Finance is not a career anymore. If you are lucky and land some good roles and don't blow your money you will have some decent optionality after saving for a while but odds are it will not be a longstanding career - except for a select few. You can work at a PE/HF, and be really good for that matter, and getting a similar job if needed could be next to impossible. Conversely, tech/engineering is much more a career. You will likely have that job forever in some capacity if you want one. The odds are much much more in your favor in tech than in finance.

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Apr 30, 2017
<span itemprop=name>therealgekko</span>:

Mind elaborating? I ask since of course we all know the founders (Musk, Speigal, etc.) who were able to hit it big with IPO's, but the vast majority of people don't nearly make as much as HF/PE guys (on a percentage basis) or see the same career upside. As much as there is huge opps in tech, it is overstated IMO as to how many actually are able to get the full upside on their work

Actually enterprise tech has become very much like investment banking insofar as career progression goes.

On the sales side (read: front office) of Salesforce, Oracle, SAP, etc. there is typically a two year SDR (sales development representative) + BDR (business development representative) program where you're working for account executives (read: doing bitch work like an analyst).

You would then do 3ish years in small-medium business account executive roles (read: similar to an associate in responsibility level).

After that, you do a few years in small enterprise type roles (read: vice president) before moving on to regional vice president, area vice president, senior vice president (Director, Managing Director, Group Head) and then to executive levels.

These obviously aren't perfect comparisons, but they are a decent rough guide. On average you'll make more in finance at each level, but you'll work way less hours in tech.

Apr 24, 2017

Financial Technology maybe what you are looking for. We are living in an era of big data. I would think there be higher demand for data scientists going forward. What do you guys think?

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Apr 25, 2017

PE secondary market

Apr 25, 2017

The amount of $$s being raised in the secondary market is increasing, but as a result returns are coming down. No different than direct PE.

Apr 25, 2017

Not as easy to get into technology jobs. MS/PhD candidates are heavily sought, and the technical interviews are difficult too.

Data Scientists are a dime a dozen, well-above six figure pay, great hours (35-40 hours), and more control of what they do on a day to day basis. I got the chance to work with a few data groups at the big corp - Intuit, Qualcomm, HP, Samsung, etc. and they were some of the happiest folks to meet.

Apr 26, 2017

Many of the BD&A people that I work with also have the ability to WFH if that is your thing.

Apr 25, 2017

In the short term, it's not like finance is drastically shrinking - it might not be drastically "shrink" in the long run. It's still great to land IB, PE and other roles out of school. Once u get those positions, it sorta leads you on to other finance roles. However, if u don't pursue the finance stream, there are a lot of students going into "unconventional" career paths - starting online businesses, etc.

Apr 25, 2017

Nobody can predict what will happen to industries. IB/finance in general is still an incredibly rewarding field (both in terms of remuneration, contacts and skillset) so don't worry too much about the macro view of the industry. If you want to do finance, do finance.

Apr 25, 2017

For active management I think there are increasing opportunities in the Credit/Distressed Debt world. The credit market is nearly twice as big as global equity markets and are far more diverse in terms of securities.

Best Response
Apr 25, 2017

in all seriousness, finance is a great way to start because it teaches you all about business, every aspect of a company.

what I keep noticing on these forums is kids just wanting to chase the hot dot. yes, it's important to know which industries are doing well versus which ones are floundering, but tech & finance are so massively different it makes me think that most students today don't even have their own identity or know what they want, they just want a job, and I think that's a recipe for disaster.

make no mistake about it, I didn't have a passion for cold calling just like I'm sure no one here has a passion for changing fonts on powerpoints and making up discount rates so the DCF looks good for the client, but writing code and talking about M&A are very, very different. if you want to create, yes engineering will be a good place for you, software or otherwise. if you like deal making, investing, etc., then maybe not.

as much time as people spend looking for the greener grass (internship, SA, job, MBA, job, divorce), you ought to dedicate some time to look inward. I think it's a fine idea to do something like banking, consulting, etc., if you don't know what you want to do, because it exposes you to a broad range of areas and gives you marketable skills, but don't just go into a career path without some deep thought.

same thing with software. I'd imagine that those skills are very marketable, but you have to be into that sort of thing.

industries will wax & wane, secular declines take a while to come to fruition. in terms of a 4 year college experience, just build a solid professional foundation, and look for what makes you happy, whatever that may be.

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Apr 25, 2017

Literally this. I'm always so confused by posts where people are trying to decide between going into investment banking and going into software engineering. It makes no sense to me.

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Apr 25, 2017
DeepLearning:

Literally this. I'm always so confused by posts where people are trying to decide between going into investment banking and going into software engineering. It makes no sense to me.

One significant reason for this panic is that we, as scientists, have failed to effectively communicate and/or emphasise the difference between machine learning and general AI. (Although, the scientifically-illiterate and, often, sensationalist and deceitful media are more-so to blame.) The overwhelming majority of the population think that we will be living in an iRobot-like future within some reasonable time period. The fact of the situation is, no knowledgeable AI scientist even thinks we are close to knowing many of the essential questions required to ask about creating AI; in other words, there is no reasonable time period in which people's fears (or dreams) about an iRobot-like world would become reality.

Now, we will still see a subset of finance jobs become fully automated as machine learning increases productivity. But to the extent that the majority of jobs will be affected by machine learning, it will not be by fully replacing the human.

Apr 25, 2017
<span itemprop=name>thebrofessor</span>:

in terms of a 4 year college experience, just build a solid professional foundation, and look for what makes you happy, whatever that may be.

I think this is a great point. Reminds me of a conversation I had with a professor I spent the summer working for in college. He was in his early 80's and was in the twilight of a distinguished career in biomedical engineering. His CV looked like it had been explicitly designed for a purpose: he was an MD/PhD with an undergraduate engineering degree, and worked with the right combination of academia and industry to basically design the field in the 60's and 70's.

So I asked him how he had done it. He kind of laughed at me and said that the only reason his career looked so well-planned was in hindsight, and that he had taken on projects and positions that 1) were different than what he had done before, 2) were intellectually challenging, and 3) he felt he could devote himself to and do as well as he could. The result of that was his complex career path, which never stagnated for very long, and continued to afford him new opportunities.

He told me that I could lose sleep trying to figure out what I wanted to do in 30 years, or I could accept that nobody knows exactly what opportunities there will be in 30 years, so the best I could do was pick a short-term path, pick it for the right reasons, do it as well as I can, and then see what comes next on the other side.

That was 10 years ago. Since then, I've been at three schools, held three internships, and I'm about to start my third full-time job. My career path now looks like it's been exquisitely designed for my next opportunity, but I can promise that it only appears that way in hindsight.

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Apr 25, 2017

This is why I think consulting jobs are great (especially MBB), it gives you great variability to go into any field you want. Whether it is law School / politics / foreign relations (Mitt Romney, Bobby Jindal, Susan Rice), technology ( Sundar Pinchai), finance (James P. Gorman), or F500 (countless CEOs).

Apr 25, 2017

There is not a lack of opportunity for business/accounting majors (see below).

https://www.wsj.com/articles/where-college-seniors...
If you're looking for a field where a person with a very strong work ethic and slightly-above-average intelligence can reasonably expect to achieve a net worth > $1mm by 35-40, the answers are literally unchanged from a decade ago:

Tech
Finance
Law (though this one you could argue has suffered the most in the interim)
Medicine

For the kids on this board commenting as if learning to code just recently became a valuable skill, a quick reminder:

MSFT IPO - 1986 (30+ years)
Appl IPO - 1980 (30+ years)
Google IPO - 2004 (13 years)

tldr: From the perspective of a junior employee, the world isn't all that different than it was a decade ago. Stop trying to time the market and focus on doing what you're good at + enjoy.

    • 9
Apr 25, 2017

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Apr 25, 2017

Just because you hear people sounding an alarm and creating narratives about the job market doesn't necessarily mean you should panic. It just means it'll be more competitive and if you really want to do something, you'll need to work hard, do it well, and you'll succeed. You should be striving to become better than everyone else, especially if it's something you really want to do.

Apr 27, 2017

Venture capital or the technology industry.

Apr 29, 2017

Is everything in finance really shrinking though?
https://www.forbes.com/sites/jeffkauflin/2016/10/0...
Here's an article by Forbes that says that hiring for Finance & Insurance jobs in 2017 among undergrads increased by 39%. Maybe more of these jobs are corporate and aren't as sexy as HF positions, but I don't think that finance is a bad field of study at all if you're looking for career opportunities.

May 2, 2017

Technology is by no means the only headwind eliminating previously desirable jobs in finance. How about regulation? Regulators destroyed equity research, much of structured finance / credit trading, and prop trading desks. Algorithmic trading and various digital innovations have eliminated many other trading jobs. ETFs and, I would argue, increasing ease of access to information are eliminating jobs in the mutual fund and hedge fund industry. Roboadvisors and passive management are hurting brokers. The specialists at the exchanges were eliminated long ago.

What's left? Investment bankers, private equity, and fields like activist and distressed investing as well as direct lending. I think anything that was based on generating alpha or an excess return on labor if you will, has been ground down due to competition and reality rearing its head. I'm afraid we are living after the gold rush.

It its important to keep in mind, however, that there is more opportunity swimming with the tide of technological and regulatory change than against it. Larry Fink and Jack Bogle have done pretty well in the new era and many others have as well.

May 2, 2017

The quant stuff should be above everything that doesn't involve quant/ programming. That's the world we live in today.

May 2, 2017

Quant is definitely a demanding career but I think financial analyst was top rated because there is the most room for growth

May 2, 2017

Traders first and foremost, I mean its already happening, the quant funds appear to be making good returns so far. Least... I'll put my money on salesmen and investment bankers.

May 2, 2017

Personally, I think you should have stopped earlier than that and narrowed it down a little more. Most people on WSO will say PE, I personally say VC.

May 2, 2017

trust fund baby.. but it is not easy .. you gotta prepare 1-2 generations ago to be grandfathered in...

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May 2, 2017

That would be amazing.

May 2, 2017

You could start your own financial services business. If you're good at what you do, the money will come. Then all of your criteria are pretty much set by yourself.

May 2, 2017

This is such a stupid question. Everyone has a different idea of work/compensation-life balance. You need to decide for yourself what you want.

You might as well ask what the best kind of pizza is (pepperoni and mushroom, obvs).

May 2, 2017

pepperoni is like the Barclays capital markets to the goldman TMT that is bacon.

but yeah, dumb question. the best job in finance is the one that you enjoy parts of, enables you to have the lifestyle and level of wealth that you want in a geography that works for you.

for me, this is PWM (duh). for others, not so much. to each his own.

May 2, 2017

Sitting on your butt and getting $$$$!!
PAID!!

Greed is Good!

May 2, 2017

Stuffed crust = sweet exit opps

"There's no reason to be the richest man in the cemetery. You can't do business from there." - Colonel Sanders

May 2, 2017
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May 2, 2017
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If the glove don't fit, you must acquit!

May 2, 2017