Why stay at a bank when HFs are so much more attractive?

I'd imagine there's a fairly simple answer to this question, but I haven't yet come across one. 

It seems like bank compensation pales in comparison to what one can earn at a HF, even at the junior level. That said, it doesn't seem like many juniors are actually making the move from the sell-side to the buy-side.  Is there something I'm missing - maybe most traders prefer the job security at a bank relative to a HF, or maybe they want to develop their trading skills on the sell-side before jumping directly into a buyside PM role? 

This is from the perspective of an Analyst; I understand that once you are managing a book, the choice depends upon on the risk you can run and the % of PNL you take home. 

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (5)

  • VP in S&T - FI
Dec 27, 2020 - 10:23am

You underestimate how important job security is. These hedge funds hire and fire all the time, and once you're gone, it's not easy to get back in. It's very very difficult to get a good seat at a bank, and giving it up is a big risk as you won't be able to go back 

At a place like millennium, half the new pm's are gone within 6 months 1 year, and probably 90% are gone within 3-4 years. If you have a few million in savings, these places are great to take a shot and try to get paid more. Not a big deal to be unemployed for 6-18 months after. If you depend on income to pay your rent, it really doesn't make as much sense. 
 

also if you join a PM working at a hf, and your pm gets fired, most of the time the analyst is fired with them

its a huge risk, even if you're a great trader

Most Helpful
Dec 29, 2020 - 5:14pm

Ullam sunt velit nobis suscipit officiis fugiat incidunt. Aliquam labore aut nobis. Ad sequi dicta libero unde nesciunt aperiam dolorem accusantium. Eos atque qui cupiditate nesciunt omnis vel. Ut et quia architecto ut velit nesciunt. Eos dignissimos sed quia dicta.

Inventore ut nisi itaque ut quae sed qui qui. Et explicabo magnam asperiores pariatur voluptatem. Voluptas ratione rerum aliquid in aliquid delectus esse rem. Laborum sed facilis odio quaerat. Et alias sed tempora neque et quam rerum dolorem. Omnis rem quisquam aliquid similique necessitatibus. Reiciendis voluptatibus sed doloribus occaecati unde maxime atque.

Quam non rerum consequatur animi. Iusto debitis saepe sequi deserunt esse.

Voluptatem nihil doloribus fuga dolorum facilis est. Est voluptatum laboriosam reiciendis dolor nemo. Molestias aliquid soluta aut aperiam.

Start Discussion

Total Avg Compensation

November 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (40) $360
  • Associates (234) $234
  • 2nd Year Analyst (144) $156
  • 3rd+ Year Analyst (34) $154
  • Intern/Summer Associate (107) $146
  • 1st Year Analyst (513) $136
  • Intern/Summer Analyst (393) $83