NEW YORK is OVERRATED
Love to hear your guy's thoughts on this; I believe as IB tends to decentralize (trend over the last 10 years) NYC is losing its edge over other cities. There is a tendency to put the NYC analysts on a pedestal when in reality other major cities (Chicago, Boston, even Charlotte/Atlanta) are recruiting just as competitive out of undergrad and placing just as well into PE. I will say if you are at a Bulge Bracket in NYC there is still that same advantage (to an extent) but if you are going to do Middle Market IB as an analyst there are all there are a lot of reasons why not being in NYC would be favorable. Plus many firms are now paying close to the street for non-NYC analyst so you walk away with a lot more due to the cost of living. Ultimately, I feel like NYC is losing the shine and prestige. Comments?
IB is decentralizing the same way Tech is decentralizing. NYC will forever be the hub of finance (+ CT if you include hedge funds) just like Silicon Valley will be for tech, no matter how many HQ2s you build in Virginia or whereever
London is the capital of finance
Did you not get a return offer from NYC? SAD.
Sorry this is just not true. Chicago and Boston markets are clearly still regional and the analyst pool there is likely 10x smaller than NY (maybe more). Not saying you won't get good experience in these markets but by and large the power center at basically every top bank is NY - you'll be around the most senior people, have the most resources, etc.
If you want to do tech then fine go to SF, if you want to do oil & gas go to Houston. Beyond that none of the other markets where BB's staff teams of like 15-30 are anywhere near the scale or influence of the NY offices.
Living in NY I think there are tons of other ways it is overrated, but recruiting, deal experience, access to senior people/funds/etc. are not the reasons.
I appreciate your insights, do you feel like this is still true with MM firms? I do see the BBs dominance for NYC analyst but what about the MM firms, genuinely curious
When you think about the major MM players over the last 10 years, they have pretty much always been located outside of NY in more regional areas (e.g. there has been no shift as you allude to the in OP). Blair/Baird are in Chicago, Harris Williams in Richmond, Piper in Minneapolis, Suntrust in Atlanta, etc. Jefferies/Houlihan are probably the main NY-based MM firms along with a handful of other balance sheet banks that play in the MM space because they aren't getting large-cap deals.
NYC is overrated if you glorified it with a tourist's ideology before getting there.. I would never settle down long term but it's a pretty amazing place to be while you're young.
Re: Decentralization (lol), New York will always be the Mecca of finance.
While maybe the influence is slightly less than it used to be, I don't see it completely shifting anytime soon. Tech is more likely to do that and with the whole Stanford/Sand Hill road scene, I don't see that changing either. Ultimately, I think NYC is still the best place to start your finance career and I wish I would have done so. However, after that, your success is far more individual based than geography. There is something to be said for being a big fish in a little pond.
Worked in IB in all three cities. NYC/LA/SF -- SF is shat on a lot here but being in my mid 20's, I prefer SF since I hate winter and don't have a car. If LA paid as much as SF, and I had a car would opt for LA. If NYC didn't have winter and I had enough money to live in DUMBO, I'd live in NYC.
How's the cost of living in SF compared to NY?
SF > NY > LA in terms of rent and restaurants. Just less desirable real estate in SF as there is a ban on construction (in some areas), downtown is much smaller, and no one wants to live in Tenderloin.
I totally agree that SF > NYC, excluding any career considerations.
SF's central neighborhoods--where all the tourists go and top tech companies are located (like downtown, SOMA, the Tenderloin, and the Mission)--are filthy. But all of SF is beautiful and clean, except the SE quadrant. All of NYC is filthy and ugly, except the few nice parts of Manhattan and Brooklyn where all the tourists go. NYC also has severely polluted air and no park space, and the architecture consists mostly of drab and dirty gray and brown buildings. It's also difficult to access anything resembling nature from NYC. The Subway is a joke, and NYC transit is objectively less efficient than in SF, Chicago, DC, Boston and even Pittsburgh: https://smartasset.com/mortgage/best-cities-for-public-transportation.
Then there is the weather, which would suffice alone to make SF better than NYC. Imagine nearly 3100 hours of annual sunshine, infrequent rain and the complete absence of cold weather. (NYC, Boston and DC all get around 2500 hours of annual sunshine.)
The only things that are better in NYC are the nightlife and arts/music/theater scenes, and by far. Restaurants are debatably better; there's more variety, but you pay more for healthy and tasty food.
With regard to dating as a single straight male: it's slightly easier to get laid in NYC, but SF women are smarter on average. In NYC, a woman being hot decreases her probability of being smart. In SF, it doesn't. I'd estimate that the supply of fit, smart and hot women in SF is greater relative to demand than in NYC. NYC's supply of hot women (regardless of intelligence) is greater relative to demand, yet many of them are dumb basic b*tches who couldn't afford SF, let alone help out with a down payment and a mortgage. NYC has lots of hotties in the 0-120 IQ range. Finding hotties with a 130+ IQ is easier in SF.
imagine caring more about IQ than cup size
As disgusting as I find SF, I'm always pleasantly surprised by the sheer number of cute, fit girls walking around in their lululemons. What a waste.
You clearly haven't been to chicago then. If you want to be working on deals great than $1b you are going to find very little outside of EB/BB industrials offices. Everything else that has a big influence in Chicago like Blair, Baird, Lincoln, BMO, Houlihan, etc is going to be working in the $500mm ballpark which is great if that's what you want, but if you're looking for big deal experience NYC is still the place to be.
Note: there are still big deals that happen out of chicago offices but MUCH less than NYC.
Why is big deal experience important for anyone other than an MD who lands multi billion dollar deals? I'd think for anyone else a $500m deal is providing the same benefits as a $10b deal
It depends what you want. Big deal experience is more likely to lead to MF PE. Personally I think working on smaller transactions, but at a higher quantity is more beneficial for an analyst because you go thru the process multiple times and are able to learn it more.
As an analyst, mainly for signaling. By and large we staff the best analysts on the most important/highest profile assignments, so if you're a headhunter looking at our firm then that can tell you a lot (*a bit tougher now especially with early recruiting but for those recruiting 1-2 years out then it is pretty telling)
Overrated for IB, but not for PE/HF.
NEW YORK CITY more like NEW YORK SHITTY amirite
I'd much rather live in GARY INDIANA where the COST OF LIVING is LOW
wonder if Notre Dame is their #1 target
wonder if PETE BUTTIGIEG would let MIKE PENCE top
The US is overrated
you also said that guy from your home country (Germany) with the mustache had some good ideas.
so maybe your opinions aren't all that worthwhile.
Well he did nothing wrong
For two reasons, I don't like cost of living arguments:
Places cost more for good reason. It's not like cost of living is some random thing. You don't have to look up any data for Miami or Kansas City to know which of those two cities has a higher cost of living. You're getting something for that cost - often convenience and the ability to build a stronger professional network, not to mention the opportunity to meet smart girls who weigh less than you do. Those are important things. So I wouldn't just assume that someone making the same amount in a cheaper city is actually better off.
People make the mistake of applying cost of living to their whole income. "NYC costs twice as much as Cleveland so someone making 150k in Cleveland needs 300k in NYC." Nope. That's just bad math. Parity means ending up with the same savings. If the person in Cleveland is spending 75k and saving 75k, then applying the 2x multiplier means they'll spend 150k to live in NYC and thus can end up with the same savings if they make just 225k.
My example for #2 is just a simple example, don't @ me with the additional nuances like taxes, those actually just make my argument stronger so outta here with that shit.
To summarize, I think people grossly overstate the amount of money you need in the more expensive city to be on par with the less expensive city, for those two main reasons above
NYC is a one of a kind place and if you like it there for the typical reasons most people do, its hard to get that elsewhere.
Largely agree with you, which is why I recommend people starting their career start in NYC and reap it's associated benefits.
However, I know this doesn't apply to most of the posters on here but as you get older and if you have kids, the COL of NYC increases dramatically. At that point you need a 3 bedroom place, as well as boarding school etc. Even on a vps comp that adds up. In NYC your only option is to outearn your COL and your commute frequently sucks as well. One of the MDs I work with commutes in from new jersey which is an hour each way door to door (on a good day).
Yeah I recall a lot senior folks making upper six figures and even lower seven figures still feeling like they're just getting by.
A lot of this could be avoided if they could let go of the pressure to keep up their social status. With the private schools for example, I feel like there's a no-expense-spared kind of attitude where questioning the value proposition is forbidden because that's "sacrificing my kids education."
A lot of vacations and summer plans are really overdone too, as another example. I know one MD who makes around ~$1m a year but his wife is friends with the wife of a major hedge fund manager who's worth over $1b and they need to keep up with the social plans of that crowd.
I think if people focus only on what's important to them and not what society's expectations are, they could do just fine on $1m or (heaven forbid) only $500k in NYC.
Although I agree with most of your points I have to disagree with disregarding taxes as a part of the overall analysis. At the end of the day we can only count what gets deposited into our bank accounts and no matter where you live that is net of taxes. Simply put and of course most obviously New York has higher income taxes (along with higher sales and property tax) than a lower COL state like GA or TX. So if we are earning the same street salary and minus maybe ~10% for bonus for not being in the NY hub I’m still coming out ahead. There are EB,BB,MM that pay on par or above average in both of the low COL states mentioned above.
I firmly agree though there is no place better to start your career but unless you have significant ties to the city or generally enjoying living here I just don’t see the point once you are 4-6 yrs into your career and ready to settle down. This is just my opinion and this topic highly subjective but if you’re in finance(IB/PE/ETC)because you enjoy the work but know you want to make $$ and become somewhat wealthy I would much rather chance it living in a low COL state and leverage my disposable income than have to be somewhat more restrictive because my dollars don’t go as far in NY.
I don't need to include every number when I'm just trying to illustrate one concept.
My point was only that people are wrong to scale up COL to the entire number. It should only apply to what you spend.
In fact, most of the COL calculators out there are already counting taxes in their COL number, so you may be double counting taxes by going down the road you propose above.
1 good thoughts here.
2 the problem is that SALT, income tax, and if you own, REtax are not really expenses you get anything out of. $150k vs $75k in expenses where you pay a meaningfully higher tax rates in NYC than you do in the other options means your $150k is buying the same stuff as the $75k. That definitely makes dent in those savings.
It was intentionally simplified to illustrate the concept.
But also query whether taxes are already being factored in as well. When people casually say “NYC is twice as expensive as X” I think they’re talking broadly about everything and taxes may be part of it. Certainly not everything is twice as expensive there. Like, a sandwich and a coffee isn’t nearly 2x the cost. A year of Manhattan transportation in subways and cabs is less than 2x the cost of owning and parking a car, maybe even less than 1x.
So anyone wanting to get into the details has a longer job ahead of them. I’m just saying, don’t take a cost multiplier and apply it to a whole salary if some of that salary is saved because that would be incorrect math. Yet people do it.
New York is great for networking, and above all when you're a junior monkey, being around a lot of other people who are grinding and living an odd-lifestyle.
Once you get to associate and above, a transition to a Chicago, Atlanta, or Dallas becomes far more attractive. You've gotten the NYC experience, you've had your fun, but if you're still in the IB game at that point, where you sit becomes pretty irrelevant. We have practice leads in Atlanta and Chicago, as well as NYC.
The comparisson to SF and Tech is spot-on. There are plenty of great outposts in Tech - namely Austin, Texas. But nothing will compare to the sheer craddle of inovation in Silicon Valley. Same can be said of finance - as it becomes easier to work remote from NYC in other big cities with far cheaper COL, it's becoming a popular option to make VP and move away. However, the people that are doing that are generally looking down the barrell of starting a family. For what a 800SQFT place in the UES costs in NYC, you can get a home (albeit, not a mansion by any means) in Highland Park and Buckhead.
Yeah but I wanna work ON Wall Street plus I lik paying high rent
Park Ave is the new Wall Street
I’m being facetious
I think NYC can be great just out of school, but I shudder at the thought of starting/raising a family there. Add to that that NY folks tend to work more hours than their peers elsewhere, and the city is just in general stressful, I honestly don't know how people (with families) do it. It's fine if you're single or DINKs (regardless of age) though.
NYC is still the capital of finance, but as someone on the buy side I would say that the quality of work I see from people in analyst roles NYC is no better than what you get from people anywhere else. Probably a decent inefficiency in the cost/quality ratio of analysts who spent time in NYC on "big deals" vs guys in other cities on smaller deals.
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