HF vs Career Banker @ CVP/PJT?

Have summer offer @ one of those 2 in the bag for next year, and wanted to get everyone's take on this. Not sure if I want to spend my career in banking or not, but I know I don't want to do PE -- it'll either be banking or HF (L/S). Assuming I can manage to sway some partners and get them to vouch for me in HF recruiting from the banking gig (btw I plan on doing CVP/PJT out of school), would you guys rather have a seat at a top HF, or work your way to partner @ a top EB? Culture seems about the same honestly, banking obviously has the stability edge, I have no idea about comp, and there's a lot less stress with banking. What's everyone's take on this? I suppose I'm shunning myself from Tiger Global caliber funds by not being open to PE, but what kinds of HFs would I have access to from CVP/PJT?

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Comments (44)

  • Analyst 2 in IB - Cov
Jul 3, 2021 - 12:11am

It really depends. I think people overestimate their performance capabilities when they look at HF's. Because most people can't swing it at MM's, let alone kill it at a Tiger Global, Lone Pine. So from a comp perspective, I think the stability of a CVP could far eclipse that of a patchwork quilt resume of someone who struggled to hack it at HF's. 

Obviously, if you are the exception to the rule and murder it in an HF, then there is basically no better industry to make a ton of money sans pro-sports. I just think that most people are delusional and will never reach these levels of HF comp, whereas in IB it's far more about surviving the hours and then LSD 7 figures becomes a very real possibility. 

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  • Principal in HF - Event
Jul 3, 2021 - 2:19am

Hedge funds offer more upside at the tail end outcomes, but banking (not just those 2, but in general) absolutely offers greater comp from a median and risk adjusted basis as far as careers go. Reaching MD level and carving out a long term career as a banker isn't necessarily easy per se, but it's definitely easier to achieve than a partner or senior level role at a HF where you can consistently earn 1-2 million - there are simply vastly more spots available as a banker. Additionally, banking compensation at every level is much more stable with guaranteed increases/promotions at each step of the way. When it comes to HFs, your pay can swing wildly to the downside and there isn't really a clear path for upwards trajectory past the mid level. You can be fired far more easily, oftentimes for reasons beyond your control. There is a huge element of luck inherent in a successful HF career that doesn't really exist in banking, and that luck can turn in any given year. The competition for good seats is fierce and there are numerous perfectly competent people that couldn't quite make it for one reason or another. Whereas in banking, if you have the requisite skill/competency and are willing to put in the work and lifestyle sacrifices (obviously easier said than done), there's a high probability you will make MD. And I say all this as someone that works at a large HF and has done well thus far. 
 

You should really only pursue the HF path if you truly enjoy the investing process - not just the idea of it, but the actual day to day work which is far less glamorous. In many ways, charging HF fees for fundamental investing in public markets is a declining industry (despite the banner year last year) that is falling out of favor with LPs on balance. If you are strictly focused on maximizing career earnings and value stability/certainty, investment banking (or even private equity) is generally a much better bet. 

  • Intern in IB-M&A
Jul 3, 2021 - 11:20am

I have a very similar situation to the OP, and this was a super insightful answer. I think I speak for most guys in out situation, we have a passion for investing, but also see ourselves as dealmakers. The natural combo would be PE, but I'm also just not interested in PE haha. Also what kind/level of HF would a partner be able to consistently make at least $1-2mm? Also once you're a partner, would you consider that to be a stable seat -- sounds like it'd be hard to lose your job unless you royally fuck up right? Or AUM takes massive hit. 

I'm probably going to take my EB FT offer, do my time as an analyst, and if I really like it I'll stay, if I don't, I'll leave to an HF. Now would I have a hard time recruiting into the top top HFs that seem to prefer PE associates? I could also stay until end of associate years, then go to H/S/W, and try to recruit for HFs from there I suppose. 

  • Associate 1 in PE - Other
Jul 3, 2021 - 3:12pm

Yes, do your two years and make a decision from there. But HFs will not look at career bankers out of B school. The career decision has to come earlier. 

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  • Investment Manager in HF - Other
Jul 4, 2021 - 1:45am

The partner seat is stable, but there aren't many and while the seat itself is stable, HFs are a lot less stable than an IB. So the chances of losing your job are very low (and there are a ton of contractual obligations that protect you), but there is still a chance the firm loses a lot of AUM or blows up. Remember, a HF starts at 0 every year. And every year you only get that performance fee if you can generate positive returns (and not just levered passive returns, although those still exist), and a down year can ruin everything (look at the number of funds that close, or even what citadel went through in the financial crisis). 
 

edit: I see someone gave me MS saying this is inaccurate. I should add that I am a partner at a HF, so this is my experience (as far as stability and contracts).

Jul 24, 2021 - 6:48am

Principal in HF - Event

Hedge funds offer more upside at the tail end outcomes, but banking (not just those 2, but in general) absolutely offers greater comp from a median and risk adjusted basis as far as careers go. Reaching MD level and carving out a long term career as a banker isn't necessarily easy per se, but it's definitely easier to achieve than a partner or senior level role at a HF where you can consistently earn 1-2 million - there are simply vastly more spots available as a banker. Additionally, banking compensation at every level is much more stable with guaranteed increases/promotions at each step of the way. When it comes to HFs, your pay can swing wildly to the downside and there isn't really a clear path for upwards trajectory past the mid level. You can be fired far more easily, oftentimes for reasons beyond your control. There is a huge element of luck inherent in a successful HF career that doesn't really exist in banking, and that luck can turn in any given year. The competition for good seats is fierce and there are numerous perfectly competent people that couldn't quite make it for one reason or another. Whereas in banking, if you have the requisite skill/competency and are willing to put in the work and lifestyle sacrifices (obviously easier said than done), there's a high probability you will make MD. And I say all this as someone that works at a large HF and has done well thus far. 

You should really only pursue the HF path if you truly enjoy the investing process - not just the idea of it, but the actual day to day work which is far less glamorous. In many ways, charging HF fees for fundamental investing in public markets is a declining industry (despite the banner year last year) that is falling out of favor with LPs on balance. If you are strictly focused on maximizing career earnings and value stability/certainty, investment banking (or even private equity) is generally a much better bet. 

Do you mind explaining why charging HF fees for fundamental investing in public markets is a declining industry?

  • Analyst 2 in IB - Cov
Jul 4, 2021 - 6:34pm

Kind of a ridiculous question IMO. I think you need to actually do your time at EB before making a decision. Not sure how you have already ruled out PE without doing your FT role yet. You don't really get a sense for what banking is like until a few months into your first year and people trust you enough to put you on meaningful staffings. 
 

I quickly realized that I absolutely hated nearly every aspect of investment banking. Couldn't stand the culture, hierarchy / clearly defined roles, clear promotion path and timeline, transactional nature, topical coverage of each client, emphasis on form over content, etc. No matter how much you paid me, I would never be happy in investment banking or successful. I had similar quibbles with MF/UMM PE
 

For me the choice about what I wanted to do post-IB was simple and money was not a factor. Either I wanted to move to the HF space or go back and pursue a PHD in economics (I absolutely loved school / econ coursework, but didn't like lack of execution or ability to get feedback on quality of hypothesis). 
 

if you actually enjoy banking, I would consider yourself blessed and never leave. HF might have higher potential, but I would bet the majority of people who stick with banking end up better off that those who go to HFs

Jul 6, 2021 - 7:33pm

These careers are not as fungible as you might think. The decision will be dictated more by what you like / dislike doing and what you think you will potentially be good at over the long run. There are actually very few people that I know who would be equally good at both jobs, because the skills required to be good are quite different. People tend to gravitate towards what they are good at because that is what is most enjoyable, what suits their personalities the best, and what will yield the highest probability for success for them. 

  • Prospect in IB-M&A
Jul 6, 2021 - 7:37pm

What if you're an insecure (albeit brilliant) overachiever that feels they'd be great but not amazing at both? What steps should one take to inform their decision better?

  • Research Analyst in HF - EquityHedge
Jul 6, 2021 - 11:14pm

What if you're an insecure (albeit brilliant) overachiever that feels they'd be great but not amazing at both? What steps should one take to inform their decision better?

HF: Research stocks and see if you enjoy it. Are you able to spend nights / weekends going through filings, transcripts, building models. Do you find this enjoyable? Are you intellectually curious? This is easy to evaluate as a student. 

IB: work in BB or EB IB out of undergrad. Harder to replicate this experience on your own, and it's the best starting ground anyways. Do you like the work of a VP? Do you like preparing presentations, executing transactions, working with clients, etc. 

Jul 6, 2021 - 10:36pm

These are two entirely different jobs (especially when you compare being an MD in banking to being a PM at a hedge fund). And if you're successful in either career path you'll earn a ton of money. So the decision should be made on what type of work you like doing (and what you're good at).

Banking is process-driven and at the senior level is as much a sales job as anything. Clear career path / defined roles, long hours, transactional, etc.

HF is generally more analytical / intellectual, but also more volatile of a career path. Most of my peers who have done well on this path just really love public markets investing, and are willing to sacrifice career stability because of this.

  • Analyst 2 in IB - Cov
Jul 8, 2021 - 1:26pm

CVP analyst here, I would say the framework I would use to think about this decision would be thinking what options / routes are you looking at long-run (even outside of high finance), how would you "score" your desire to be in each field based on the qualities of the job (ie level of responsibility, type of impact, team dynamics, industry, etc), and which bank will give you the highest likelihood of getting to your best options.

I would enter banking with the idea that these places are launchpads, you shouldn't be trying to say XYZ position is exactly what you're wanting out of school cause you have no idea. Instead, thinking of the qualities you like and where those can be found (ie corp dev, startup, high finance) may help drive your screen. 

PJT would set you up better for the HF route in all honesty. CVP is a mixture of consulting and banking since our advisory engagements take a lot of our time so we have more of a pipeline to corp dev, startups, VC, GE, and MF PE. I personally haven't seen as many people go to HF's but it still does happen with good placements. PJT, on the other hand, has some solid mandates in the distressed and turnaround space that pair well into HF's. Also not to mention the deals there are much more transaction-focused. 

Bit rambly but feel free to respond with any questions. 

  • Prospect in IB-M&A
Jul 8, 2021 - 1:34pm

Hello, current SA at CVP here (ignore flair). When discussing the PJT mandates, you're referring to their RX group, correct? When I networked for their M&A team, it seemed that their M&A group (sans COVID where they crossed over to work on some RX mandates), still primarily works with megacap M&A. I had thought that CVP provides opportunities via the generalist platform to work on RX/transaction/consulting, which, early in a career serves as a better foundation, or launchpad if you will.

Tbh, I'm pretty sure I want to pursue HF or late stage GE and am not sure if I want to do 3 years as an analyst at CVP (sidenote, do the hours chill out for your 2/3rd years?). I am fairly confident I could FT recruit at PJT (M&A not rx), but I thought it would be ridiculous to even try, although your comment has me second guessing. Would really appreciate more color, thanks.

I also realized I wasn't really clear with my question but I am exhausted and adjusting so please bear with me :)

  • Analyst 2 in IB - Cov
Jul 8, 2021 - 2:20pm

I work in one of our West Coast offices, thus industry-focused, so not as familiar with our generalist program and what type of cross-product opportunities you would get in New York :/ .

I will say the interns probably work more than the analysts since we tend to overstaff you all since 1) you all take longer to do the work 2) we want to ensure you have work and aren't just sitting there. The hours vary a lot based on your projects and staffer.

If you are still open and deciding between many routes, CVP is better for sure since, as you mentioned, we have deals in the consulting / RX / and transaction spaces that give broad experience. We also have better hours, respect for time off, vacation, and pay lol. Also don't feel like you have to stay for the entire 3 years, you just can't ever mention to anyone you plan on leaving and need to be very careful about your exit (ie don't use your work laptop to network, work email for calls /  scheduling, etc). I personally will bounce a bit earlier around 2.5 years to get that sweet sweet bonus in December.

We have some solid exits in GE, VC, MF PE, and had one of our top analysts go to a top HF and now clears north of $1mm a few years out. My perspective is west coast so the opportunities in HF's just aren't as visible since I personally don't want to go that route and many people out here don't want to either. I know i you wanted to do corp dev / strat, go work for a solid VC shop (AZ16, Sequoia, etc), or something else we have more and more alumni going out that should make the process easier. That would be a solid question to ask some of our NY team.

TLDR: I'm west coast so don't know as much about our NY team and cross-product opportunities that lead to HF exits. From my perspective, PJT comes off as a more in-n-out bank that would be better for HF's but CVP has better optionality if you have no idea what to do / want to exit the traditional high finance rat race. Also, we pay more, have better hours, and honestly a better model of driving deals that leads to better work satisfaction. 

  • Intern in PE - Growth
Jul 8, 2021 - 2:43pm

Thanks for the insights!! What caliber HFs would be feasible from CVP? Also have you ever heard of 3rd yr analysts at CVP going to H/S for MBA? Problem I have w/ PJT HFs is that I feel like most of them are distressed, and that's a space I don't wanna be in haha. 

  • Analyst 2 in IB - Cov
Jul 8, 2021 - 5:31pm

I haven't really heard of people going to W/H/S since if you're in banking what is the point lol. 

My GF is eastern and so I get the pressure to get an MBA from the family but really there's only 4 reasons to get one: 1) to find a husband / wife 2) you wanna work in some dark ages PE / HF fund that requires it (most don't nowadays post-2008) 3) to network / start a company 4) to take an expensive holiday. 

If you already work in banking option 1 makes sense, option 2 really isn't needed as most funds this day in age don't require an MBA, option 3 you can do by working for CV using your in-depth advisory connections for some sweet corp dev positions or just start one yourself (one of our clients is literally trying to snipe our analysts for corp dev), option 4 is just personal choice - is it worth a couple of hundred thousand dollars and years of your life to be an alcoholic and travel when you can just take time transitioning between roles or make a "startup".

If you can't tell I am very anti-MBA for people at EB's and BB's since you're already at the top. Beyond clout / prestige, I personally don't think they're useful so take my opinion with a grain of salt. 

To answer your point on the distressed space, yes the main advantage of CVP would be it is more of a generalist program. We work on companies of all shapes and sizes that can give you more to talk about. However for the HF space, the distressed scene is poppin and having a stronger background at PJT may suit you if this is what you want. 

The way I recommend thinking about it is how is each firm different? While they all seem the exact same - given they compete on the same exact deals - they compete in very different ways. Better understanding the type of responsibility you're given, the type of impact you have, the type of clients you work with, etc all can play into the story of your next step. You just have to understand what each firm does differently and can decide from there.

If you have any other questions, feel free to come off anon and I can PM you. I am writing these on the desk so not the most polished thing in the world. 

  • Intern in IB - Cov
Jul 8, 2021 - 5:28pm

Of the pipelines you listed, which are the most common out of CVP? Do you know which HF's CVP has placed at historically?

  • Investment Analyst in HF - EquityHedge
Jul 9, 2021 - 8:49pm

I would definitely do the 2 years of banking and see if you like it (although Analyst years obviously different than MD so try to see past the shit)

Pretty sure you will know quickly if it is for you long term

You will either find that:

a.) you are energized by working on a structured/hierarchical team, being a part of a more stable, larger place, and working with many people being social

or

b.) you find most of those things inefficient and stifling and you would rather read and be independent most of the day 

I will also say is that I thought I was the first one until I started to get a little older and realized I wanted more ownership of my day/life, although obviously you are still the market's bitch. The stability of banking is extremely appealing, but even as an MD in banking, it is still working for a client, so it's not without a cost

Jul 11, 2021 - 9:23pm

I haven't responded to a post in years, but randomly logged on, saw this and felt compelled. As a first step, I think PJT is the clear winner here. I have been in the HF industry for 7-years now and its pretty accepted that PJT is at the top both in terms of experience and exit ops. RX will not pigeonhole you (as some posts suggest), if anything it will widen your exit ops from doing traditional M&A. Don't want to write a book here - feel free to PM. 

Jul 18, 2021 - 1:03pm

A top hedge fund paying $1-2m in a good year? That sounds far too low but I guess that's what you get if you're just a salaried guy. I run a much smaller HF but I founded it, and pull millions a year. Some of my friends who started their own funds easily pull $10-20m every year. A few I know even pull $50m pa. Goes to show the real money is in starting your own business (whether it's a Hf, bank, consulting shop or a tapioca chain)

Jul 18, 2021 - 2:12pm

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