Tech over Finance?
Hey monkeys,
So nowadays, it sounds like many post-MBA finance professionals are unhappy with their current positions; most are unsatisfied with their employers, but some are just overall unhappy with the industry and leaving it all together.
Some big players in the tech industry are now offering compensation that rivals those of Wall Street firms, which is attracting many people.
According to a survey, the professionals left the industry for tech mainly for
...flexible work schedules, office location, vacation time and sick leave, and telecommuting.
For those in finance, what do you guys think?
Would you leave your current positions for tech firm?
Other thoughts/comments?
I quit finance earlier this year, so I'm going to take the liberty of acting like someone still in finance so that I can answer your question. Read this as the voice of me around February.
"Fuck yeah I'd quit. My boss is an idiot who thinks his "qualitative touch" is going to outdo the quants who are clearly gunning for our entire team's budget. I'm going to trade these 60-hour workweeks for 35-hour weeks and a nice raise. Plus, I won't have to wear this ridiculous suit every day, it being ridiculous because we don't even talk to clients. And our office coffee is garbage."
If you don't mind me asking, what do you do now?
Data science. Learn to code, come back to finance when you have money and seniority. There is 0 reason to grind out excel files / pitchbooks / Krupp coffee when you can go to "work" in pajamas for a few years, work half the hours, and (unless you're in IB/HF straight out of college) make more money. Do a MS/MSFE/MBA and come back as an associate or to buy-side when you're 30. Or cook up a trading algo and don't come back at all. The non-informed will tell you it isn't possible because they don't know anyone who does it, but that's exactly it: anybody who does that doesn't spend time talking to office scrubs.
I would keep in mind that the comp numbers you hear about in tech for the most part only apply to the large/well known tech companies. Not every software engineer clears 200k their first year out of college. That being said, I would quit IB and become a Data Scientist if I had the chops to.
Finance is DUMB and OVERRATED. How can you INNOVATE if you're stuck in a CUBICLE?
True. But can innovation be attained if one is stuck in, say, a sex dungeon?
Hmmm I would be surprised if anyone in SE clears 200k as a college graduate. I have a lot of friends in SE and yes they make a good starting salary (~$90-$100k) but honestly it starts to plateau after a while. Most of my CS professors and other people "high up" in the tech industry weren't able to crack $200k even as a senior SE developers or product managers.
I know a few software engineers at the large companies (such as FB, Amazon, and Netflix) who clear $500k+ (a lot is stock) and I know data scientists who make $300k+. Cash comp in tech is capped fairly low; the big money is in the options. I'm based in SF, for reference.
FYI these guys literally eat, breathe, and shit tech. Finance work sucks so much there is a clear distinction between work and home, but everyone I know in tech will just hop online at random times and start working, and they're constantly talking about work with their "friends" (people on their team at work). Work has been integrated into their daily lives with no real separation.
What are the exit opps of doing data science for two years then going to an MBA. Do you think tech-focused VC/PE? or do you need 2 years of MBB consulting or IB to get those jobs?
Even for smaller tech companies, if you compare the hours people work in tech, it's way below the hours people in finance work. Tech is so much more highly compensated than finance. If I could restart my career, I would start it in tech.
If you think the junior guys in big tech like Uber are working significantly less, you got another thing coming.
"Some big players in the tech industry are now offering compensation that rivals those of Wall Street firms, which is attracting many people."
It is my belief that tech is like engineering where the junior and post mba salaries are similar to finance, but as time goes on finance guys make more as they move up the chain but tech/engineering income levels off.
You don't hear about 40 year olds programmers/engineers making $400K, while 40 year olds in front office Investment Bankers are making at least $400K.
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You're on the money with this too. It's a different landscape - tech is for people who either want to build stuff via their own startup, a startup they work at, or who simply don't want to work >60 hours per week and still earn good money.
Most programming gigs will hit a wall comp-wise around $150k. I reiterate: all the shit I said above is for people who don't land an IB/PE/HF/VC gig and who are at junior stages of their career. Post-MS, post-MBA people should probably stay the course.
That's the key point imo, money isn't a huge factor for those types of people vs the finance types. Is $150k a year good money? Seemingly yes but if you take into account taxes, what city you are living in (and the majority of great tech jobs are out on the West Coast which is more expensive), basic living expenses, it's not really that great imo.
Unless you are a C-suite exec or close to it at a big tech company, you aren't going to be making high six figures or more. And to even get to the aforementioned level takes years and will not happen to the majority of people. But you also have to consider the fact that engineers or programming types don't really care for making a ton of money and would rather have a great work/life balance. That's their definition of success.
not saying you're wrong, but you don't seem qualified to be writing this dude.
There are programmers making that comp in their late 20s to early 30s at top tech companies.. In fact, I'd guess there are probably many more software guys making that than there are bankers (in absolute terms not relatively).
The ceiling for staying in a technical role in a prominent tech company is pretty high (as in very high six to low seven figures) but very few people get there (just as very few make it to MD), the soft ceiling is more like $500-600k for someone who's equivalent to staff level at Google. Of course, most of this comp is in stock and most software guys at these companies don't make it past senior level i.e. ~$250-400k comp.
Not even mentioning directors, managers, VPs etc who all make a pretty penny too.
Now outside of the top end of tech and outside of "high finance" these numbers will be a hell of a lot lower.
I think this is kind of a tough thing to say unless you have strong skills in structured programming and went to IB.
The tech industry isn't as glamorous as most would think and the pay is nowhere near comparable. Yes, initially SEs do make good money out of college however the pay plateau hits at around $130k - $150k.
The other difference is in the type of person that moves into tech (SE in specific). Out of college, students are expected to have a much stronger background in math as well as many structured languages learned and mastered (though it isn't as difficult as getting the first language). The type of student/employee it takes between finance and tech are kind of different and rarely have the same type of characteristics.
With regards to the vacation time and office location and flexible schedule, this all depends on where you work. Yes at Google, Facebook, and Amazon you will get good benefits but worked incredibly hard (60+ hrs a week). Along with this, if you continue to move up to a PM position, maybe your salary will increase but so will your travel and work hours.
The other problem that many do not recognize is that the skills in SE are constantly being updated and renewed. Meaning every 2-3 years you have to get re-trained in different languages (i.e. C++ 1998, C++ 2011. C++ 2014), making it harder to compete against the younger generation as you continue to be in SE.
In all the world of SE isn't as "liberating" as one would hope and there is a ton of BS that you have to face.
Comparing Two Lucrative Industries: Finance & Software Development (Originally Posted: 05/31/2016)
Hi Monkeys,
I was inspired to make this post, because my brother got headhunted and flew out to Uber a few days ago to interview. He's been headhunted for months now by other top Silicon Valley firms (Microsoft, Apple, etc.) as well as many top financial firms (Goldman, Chase, etc.).
One of the first things he always does when he gets contacted is look up the average salary at said firm. He looked up Goldman's salary for a software engineer, and their all-in comp is just shy of $115,000. I was absolutely shocked that he was complaining that a $115,000 starting salary is low. In fairness, his current full-time offer is $100,000 in Atlanta, which has a significantly lower cost of living and is comparatively much higher than $115,000 in New York. Either way, I was shocked how high his standards were. He told me that he probably wouldn't consider Goldman, because it wasn't respected in the CS industry and he would rather go to Silicon Valley, where they also pay upwards of $200,000 starting salary.
I've repeatedly told him how stupidly overpaid I think the CS industry is. In his defense, he tells me that the salary is extremely high because its frontloaded. If you go into CS, you have to stay on top of your game (learn new programming languages, which can be challenging when you enter your 30s and 40s) in order to stay competitive. As a result, firms are paying you a premium since you're young. I understand that aspect, but I still think it's ridiculous how overpaid that industry is.
Finance has great salary growth potential and great advancement opportunities. CS is definitely much harder to move up the ladder.
Monkeys, I'd love to hear your thoughts. In particular, try to keep it revolved around the difference in compensation, as that's what I think the major point of discussion here is.
In my personal opinion, Silicon Valley (through entrepreneurship) offers the higher starting salary and a better chance of becoming a billionaire these days. However, I still believe Wall Street wins out on the risk-adjusted chance of upper-middle class (>300K/yr).
+1
In response to your comment about billionaires, I guess I technically agree... But that's only because finance isn't really a field for entrepreneurship. The industry is age-old. Entrepreneurship in technology is possible because it's new. Several prolific names come to mind: Bill Gates, Steve Jobs, Jeff Bozos, & many more I'm leaving out.
I get the sense that there is relatively little room for entrepreneurship in the finance world today--whether that's due to regulation, market saturation, or a combination of the two. Last I checked, only 3 banks have been started in the USA since Dodd-Frank.
Anyone else observe this? Or am I just another Millennial displaying economic pessimism?
Lol I think we have different definitions of upper middle class.
I can program and I know finance, my all in comp is around 14k euros annually. **ck me right?
Salaries for software devs are actually on the rise, it's pretty awesome. Nowadays, finance has bonuses but the top tech firms dole out RSUs with vesting periods that overlap so as to create a domino effect on comp. It is pretty standard for a decent engineer to make $250k after a few years at a big tech co (FB, Google, Microsoft, Amazon, Twitter etc) in SV. Even better is, the more 'levels' you go up, the higher your overall comp. There are tiers of engineers pulling in >$500k/year, >$1mm/year in all-in comp (albeit the $1mm mark is a bit more opaque and rare).
In Tech, the best technical people (Product Managers, Software Engineers, Designers) can opt to stay on an individual contributor ladder rather than join the management ladder. According to a bit of reading around Quora, the average individual contributor earns more than the average manager.
All of this whilst only working 40-50 hour weeks, on average.
Source: https://blog.step.com/2016/04/08/an-open-source-project-for-tech-salari…
I genuinely think either of the two fields, when comparing the best talent will yield a solid return on income and lifetime earnings. Finance has the standard IB > PE/HF/VC path, tech has the engineer > early employee path. FO finance has the the rise up in seniority til MD or Partner, tech has massive 'cool' companies with clearly defined promotion tracks for technical people. Overall, if you want to make money, the opportunity is there in either field.
>$200k out of undergrad? Unless your friend is coming out of MIT/CalTech/Harvard and is the most highly sought after recruit in the valley then that's nonsense. $115k is a median offer, even here in the land of milk and honey (SF/SV)
You sure?
Standard technical grad packages at big companies are as follows: $105-110k base $50-150k RSUs (over 4 years, so ~$12.5- 37.5k a year) 10-15% target bonus $20-100k signing (only FB pays the higher end and only for top returning interns, median would be more $20-50k)
All-in first year (without signing) between $130-180k.
Some unicorns are handing out insane equity but of course, they'd be worth near $0 until the parent company exits.
The overarching idea that the Valley is where shit turns into gold is a complete joke.
Only way you're getting 200k+ all in out of undergrad is if you're a programming stud from a top engineering program. The same package goes to Wharton Studs out of undergrad at your fav PE shop.
Lastly, if you aren't employee #5 or earlier in a company, then your equity stake is comp to a fcking 401k match. If you are in that select group of a company, the probability of your startup getting past B round is very low.
The majority of programmers make 100-200k all in, few are making above that and even fewer are making 500k +. The structure is similar to finance, use common sense.
Irony: a student telling someone on the buy side that 200k straight out of undergrad to a top fund isn't feasible.
Ignoring PE, just look at Centerview if you're going to include signing bonus.
$200k all-in is definitely possible out of undergrad, but it's not the norm and requires negotiation. You'll see those at Google, Facebook, Microsoft, etc. I'd say a more standard offer (aka you don't suck at coding and went to a top engineering school) would get $130-150k all-in, with incredible lifestyle (aka I can get in an hour earlier and fit in a full round of golf after work before the sun sets).
You'll see offers valued at $200k from Uber, Airbnb, Pinterest, and other unicorns, but it's definitely not liquid. The big public tech companies give RSUs, whereas the unicorn start-ups give stock options.
This is definitely right. Thanks for this clarification. The bigger companies want to try to preserve equity while unicorns want to try to remain liquid
this dude got 230k right out of some coding bootcamp....
http://haseebq.com/farewell-app-academy-hello-airbnb-part-i/
Selective word choice I see... Guy was a former pro poker player, Director of Product @ a coding academy after boot camp...
Those coding bootcamps are not what they seem. I have friends who recruit for the start-up companies in SV/LA/Elsewhere. Literally 1% will stay working after a few months, and you'll find your unicorns here and there.
When I went through the interview recruiting process at Intuit, it should be noted that undisclosed salary for "top" tier engineers were $250k. That went for Amazon, Google, and what have you. A lot of the kids I ran into were from Rochester Institute of Technology. Smart brilliant kids who had their A-Game whenever we collaborated. There is a beer dispenser party that was held on every other Friday hosted by the company.
Data Scientists salaried at 100k+, depending on the project and team they worked on. My time at Qualcomm was spent with Test Engineers with $80k+ 30k bonus yearly (pulled monstrous hours though). The software dev guys at QC worked 40-45 hours a week with flexible time to work at home at their leisure. I wish I had gotten approval to transfer over to them.
I came from a community college life and networked my way into these companies. It isn't easy, but the talent that gets paid the most also has to be the one paving the way for the company to generate new streams of revenue. At the end of the day, it is hard work.
Let's not forget intangibles, namely, where to summer. If you're at the geographic epicenter of your respective industry - finance you get the Hamptons, tech you get... what, Napa? And for those who will jump to Napa's defense, don't get me wrong, I love the place, but you're telling me you can stomach back-to-back limousine wine tours every weekend for 15 weekends every summer? If so, you're lying. I'll take the beaches and actual summertime weather in a heartbeat
Ummm.... Lake Tahoe?
Having lived in SoCal, SF, and one of the traditional "finance cities," I can say that SF blows the rest out of the water. You can surf, head to wine country, go skiing, canoe/kayak in the rivers, hop on a 60 minute flight down to the beaches in Santa Barbara or LA, on and on. Sure as hell beats a few nice months a year surrounded by 6+ months of misery in NY/Boston/Chicago etc. Damn I miss SF...
MarkBaum
Excellent analysis, are you from a technology background as well? The two issues I see forthcoming, having seen what the industry is like, are the: 1. Constant updated skill set (I am agreeing with you). 2. Workplace environment can be hazardous, projects shutdown, unemployment despite being a perm. team member.
Getting an offer, let alone an interview as a SE or Engineer with the top technology companies you virtually have to fight teeth and nail, it is never easy.
Kassad
+1 on the data science. I worked at Intuit not too long ago, and the happiest employees I met there were the Data Science team. Given other technology companies (and banks as well), I have yet to hear anything bad with the position. Starting pay for mid-level technology companies are around 100K+ starting from what I was told. Managers and senior data engineers were killing it at +$250k.
I reconnected with a few of the managers at the company, and many of them told me that most do not possess the proper work ethic they were looking for, so the positions are hard to fill.
Yes, I have a background in tech, though interesting it's not my thing.
One of the biggest things that bothers me with posts like this one is the way that people approach a new field. Tech and SE in specific, are not fields that one can simply waltz into. It is completely different than going into IB.
IB (from what I understand) is about networking and presenting the best self while attaining a good GPA for a pretty fluid degree. I don't think anyone can disagree that finance/business admin degrees are pretty non-technical.
CS is literally all math and logic and the only way to get a job at a top company is to be the best student or be an expert in data structures and algorithms. Coding is not difficult, however writing efficient and effective code, is. That is the difference between an entry level C++ student and a student finishing their compilers class as a senior. I think @DeepLearning makes the best points.
Still the most important thing to realize is the fact that people in CS hardly do it for the money and usually do it for the pure love of the field. People working at Google, Microsoft, LinkedIn are not their just for exit opps, they got their for being the best.
I like the tech industry as a whole as it is very interesting and there are so many new innovations every single day. Tech is the future and I think we are all aware of that. That being said, I would rather be involved in an investing role (PE/VC) and identifying new opportunities than actually working in a developer or software engineering role. That's what is so fascinating about VC to me, you are working in finance yet are still involved heavily in the tech space. Is it a more sideline role versus actually changing the world and innovating? Yes, however that's a fact that I am comfortable with and don't mind at all. Do I love tech? Yes. Do I love making money? Very much so. Closest I would want get to working right in the tech space would be is if I was founding my own startup.
Those saying SE comp plateaus at 150k are full of shit. If you are mediocre, yes, but I know senior engineers at Google, Uber, etc pulling 600-700k/year in total comp. If you are brilliant you can pull 7-8 figures.
Yes that is exactly it. Just like in any field, there are professionals making obscene amounts of money, but people in the field in general do not reach those obscene amounts of money like they do in IB.
If you are brilliant at anything, you can pull a ton of money...
For data science, specifically, it's really hot right now and the pay is great at the junior levels directly after undergrad or Master's AND working at a large tech company (Google, FB, LinkedIn, Amazon, etc.). But what are the exit opps? I have a really hard time imagining transition to PE/VC or related buy-side in the tech space even if you go to a Stanford GSB or an HBS. Don't buy-side firms seek out Goldman/Morgan Stanley/JP Morgan IB Analysts and McKinsey/Bain/BCG Consulting Analysts like a hawk?
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I somewhat agree. For PE—almost exclusively IB, previous PE experience, or MBB consulting. VC is less standard. You have tech-focused IB guys, former consultants, product managers at Google, biz dev at dropbox, and the likes.
The exit opps would mostly be in the hedge fund space. Even fundamental and non-quant hedge funds are starting to hire data science talent. I don't think there are PE exit opps for a data scientist.... Doesn't seem to be a relevant skill set.
The best data science exit is probably managing teams of data scientists at a tech company or leading a data science practice at a non-tech F500 company. Product management is probably another good exit opp. Depending on how far into the weeds you are as a data scientist, you can get good exposure to the operational side of things. Cause you have to convince people to change the business based upon the model that you have developed so I definitely see data science as a potential avenue to breaking into upper management of a firm. 'Data Scientist' is a relatively new term so we will see if that ends up being the case.
This is all pretty spot on. Most people in data science aren't usually looking for "exit opps", and even if they were, the field isn't really developed enough to have a set exit path like IB does. Data Science really isn't as simple as most of WSO is making it out to be. Machine Learning, one of the chief tools in data science, is usually a graduate level class in CS programs, and most people, especially those without a rock solid background in Linear Algebra and Probability, will find it really difficult. All that being said though, DeepLearning is spot on when he says that it can be a ticket to upper level management. Most non-tech F500 data scientists work on internal consulting teams that are basically corp strat teams on steroids. They get exposure to basically all corners of the business, and have an opportunity to make a substantial impact on the business pretty early on. It also helps that basically everyone in every industry wants them right now, so job security is rock solid for the foreseeable future. Excellent career path with tremendous upside, if you can cut it.
When you're working in Silicon Valley/Tech, i think the mindset is very different about exit opps. When you're in finance, it's clear what exit opps are cuz the industry has been around long time like IB --> PE. The tech industry is rapidly changing and when you're going in there, you really have no idea what you'll be doing down the road as an exit opps. Like no one just a couple years ago would predict Data Scientists would be popping up in Fundamental Hedge Funds liek Third Point LLC. The point is people in tech prob care less about having a set "exit opp" compared to finance people.
This is very true. Most of my friends (and myself) are in tech and almost nobody thinks "2 years this then 2 years that then ..." I think it partially stems from the culture here, where people don't really give a shit about what most people do, or what 'successful' people do, so there are very few structured paths. As a result, you have people in VC who are former entrepreneurs, execs, PMs, journalists, lawyers, bankers, etc.
On the point of 'data scientists', this term is very ambiguous as it can mean anything from SQL monkey to hardcore AI research. Personally I think most 'data scientists' aren't doing anything that interesting, mostly basic stats and data engineering. The AI/ML stuff on the other hand, that's where the hype and $$$ is.
We should make a section on WSO for "tech vs. finance" posts considering we get three of these a week.
Not one mention of sales? Enterprise sales guys make an absolute killing.
I've worked in the finance division at a tech firm, and I've also been exposed to writing programs at my job. I found that you shouldn't chase the "hot" industry. Figure out where your true interests lie. And I don't mean that you think AI is cool. I mean what fascinates you enough that you stay up all night studying ever detail. Is it finance, is it computer science, medicine, engineering, law? Really find something to obsess over.
I definitely agree, but the problem is that most people don't find something. Unfortunately, myself included.
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