Somewhat confused on why most people don't second guess jumping into PE. If you play your cards right, you can go from analyst to MD relatively quickly and then make $2 - 3m/yr by age ~32. You probably won't be in a position to make the type of 9-figures seen in PE, but if you're a great banker at a Centerview, Evercore or PJT, you can surely reach the 8-figure mark.
Why then do people not stay in banking?
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Most MDs don’t make close to $2-3mm, especially in their early/mid 30s
It happens more than you'd think
No, not really, especially in your early 30’s. By the same time in PE, you should be a director, making just under $1MM cash comp annually (at equivalent places to the ones you mentioned, i.e. MFs) with several million in carry. Comp in PE is usually higher at top places. But for many people who made the jump from IB to PE, I suspect they actually would have been better off staying in IB, and so I agree with your point. People should be more skeptical about switching over to PE.
$2-3m in banking MAYBE hits 1 or 2 years out of 10 if the stars align for you and certainly not as a relatively jr MD. If you’re a star banker at Evercore, sure, you’ll consistently pull $3m+ but thats a top decile outcome. If you’re the head of LevFin at JPM, then sure you’ll make $5m consistently, but there’s literally only a few handful of group heads at top banks on wall st.
The real reason to stick to banking is if you really love the client service/deal chase. Sounds kind of crazy, but when you meet a REALLY good banker, you know they love it. They also incidentally clip $3-5m+ p.a.
PE is compelling because a mediocre PE outcome is a stellar banking outcome. A Principal level at a MF is clearing ~$1.5m cash comp plus another $2-3m in carry (non-cash). Maybe you handicap that 2-3M down to 1-2, but that’s still like 3m all-in p.a. pretty early in life, before even graduating to MD/Partner. At that point the cash comp is not that different, but the carry is $5m p.a on top of that.
Banking is underrated. PE is massively overrated.
This.
Do people really make MD at early thirties though seems like big caveat to this question though?
Some, but rarely. Know an MD at BofA who did it in 12 years, a few studs at GS made it in 7 - 10 (GS goes from VP to MD), but the current MDs I sit with did in in 20 and 16 respectively. It's a really hard game and would say that average is 15+ (anecdotal from my experience)
yah that makes more sense thanks, so average MD starts around 35 or later. This is another reason why the question is off and wouldn't hold true to reality.
Is that 15+ mostly applicable to A2As? So starting from MBA associate would take 2-3 years off of that?
I think not the comps but people should question if they enjoy the work. For me personally - I made the move to PE and only found out I don’t really the more “research” kind of mentality in PE where you need to understand businesses a lot more in depth - I honestly don’t care about all the operation details. I also don’t enjoy portfolio work which is a big part now of my day to day. Sometimes I miss banking because a transaction is a transaction and think I might be better off if I had stayed.
Guessing if you start as an analyst at age 21-22 and stay in IB, you could be MD by mid to late 30s and ideally make high 6 to low 7 figures at that point
2 years as an analyst, 3 years as an associate and 5 years as a VP/D means you would make MD at 32. The comp seems closer to $2 - 3m for junior MDs at a Centerview or PJT. Probably closer to $5m for more senior MDs. I think the range you quoted is true for low / mid tier banks.
It's hard to balance a career in client-facing business like banking that requires crazy hours while trying to marry / settle down with kids. Know a few IB partners at two separate firms who seemed to have pulled it off but it came with a sacrifice. I don't think either of them spent that much time with their kids when they were little.
Make lots of money AND not have to spend a lot of time with kids in their mouthbreathing toddler years? Sounds like a good situation to be in lol
lol please don’t have kids
Yes I want to be an advisor bitch being told what to do till I retire. Sounds great
I love how delusional this forum has gotten. 9 figures in PE? Come on. You are talking about a fraction of a percent of people.
Also $2-3mm in early 30’s is NOT common.
This + in my limited experience, there is a massive difference between the MDs (most make 500-800k while a few are making 1-2 mill)
Edit: comp for MDs not based in NYC
Definitely not the same anecdote at Centerview or PJT. Just wanted to clarify. That comp is Associate- fresh principal money there.
There are better ways to make money than grinding non-stop and being in call 24/7 with limited vacations. I would rather make $1M with a good lifestyle than $2M traveling 2-3x a week and grinding on deals / pitch work.
Name them. What are the better ways?
There's diminishing returns on each additional dollar made, especially compared to other careers that are still very high-paying but less life-ruining. When you're making $700k in your early 30s, it's not worth missing your friends' weddings, working nonstop on vacations and holidays, and having zero control over your life just to make $900k.
Delete
This shit is stupid there’s kids dropping out of hypsm running startups making that 200k in month and having the time to do whatever if you are a partner in finance you are a cuck cuz you won’t have time to enjoy the money like there’s no point rather make 600k-1mm and be free from the matrix then work and make 5mm at mfpe or eb and be slave till I retire and finally be free and be crusty af. Your time is the most important asset and you can’t get that back once it’s gone but you can always get money. Think about it the money you make in finance represents a time of you life full of sacrifices and once you leave the industry you can’t replicate it. Food for thought.
So maybe ppl should prefer VC
Indeed
you had me at free from the matrix
(1) Basic probability says you won’t make it to that level in IB.
(2) PE has the opportunity for you to make even more. And you can also have a more consistent schedule.
The probability that you can make it to the senior level is higher in IB than PE though
Making it to that level in PE is much harder than IB
Says the slave laborer to his master
do you want to keep a full head of hair?
Baldness is genetic bud
I think I would legitimately rather just leave PE and go be a personal trainer / tennis coach for lonely CT milfs than return to the sleepless indentured servitude that was IB. And my group at an EB was considered one of the better ones in terms of WLB. Is PE all rainbows and sunshine’s, certainly not. But I’m at least able to have some semblance of a life when not on a live deal and the work, at least at the earliest stages of diligence, isn’t mind numbing. Seniors at my bank would just make up work for the sake of doing it with no real value-add in mind. They were good people and made bank, but at a certain point, your life is worth more than that.
IB from analyst to vp/dir is a more clear path if you’re solid. From there you may see people move to other fields.
I think in PE you could be one of the best as a junior but still have to really really grind to move up at each level
I was at a holiday party this past week and a some GS M&A VP thought he was having a Heart Attack after a few drinks. Dude was having a cardiac event or couldn't handle his alcohol.
They had to call him a doctor. Stress buddy, it's real.
If ib was that great, why do so many people want to move from ib to pe?
Do people in pe ever wonder if going back to working in ib was better?
More predictable hours
Grass is greener mentality.
to your second question, it’s tough to say for sure. I have a buddy who said he works more hours, has the same if not more stress, but makes less. Others I know enjoy PE more. Very luck and fund dependent. Also important to remember as well that he was speaking as an IB analyst - maybe he would’ve enjoyed the work more as it’s less grunt work at the associate level, but now he won’t know that unless he does go back
"Do people in pe ever wonder if going back to working in ib was better?" - At least for me, never in a million years.
Not reading the whole thread but as an older WSO member, I would highly advise you find something you truly enjoy that pays well vs. just pushing on for top dollars. You'll find once you earn $X (whatever that is for you) and don't really require more to have a very full life, the rest doesn't matter all that much. In order to reach these levels (MD, Partner, etc.) in any industry, you have to have staying power and be really good at the gig. Money doesn't provide the juice necessary to stay there. Motivation comes from setting and reaching goals, liking what you do, etc. After awhile, the money piece becomes less importantt and therefore easy to ignore. When you have enough, you have choices. When those choices are go on that great trip / see my kids events/ develop that cool hobby vs. work on that new deal, you have to really LOVE working on that deal. Most don't. So find something you love and get really good at it.
Either path makes a lot of money once you’re senior enough and good at what you do. The people who get there probably do very much like the field they’re in and feel passionate about dealmaking.
Both different jobs that pay very well. You’d probably enjoy the job a lot if you get to MD/Partner at either place
How well do the secondaries advisory roles pay? Is it the same as IB?
.
Rumor is a few VPs at Evercore pulled 7 figures in 2021 (peak of the market) so, yes. Also, many of the banks that are building out PCA teams have offered $2m+ per year guarantees. Market is still relatively small though so the number of high paying seats like that is limited - that will really only change once the amount of dry powder in the market catches up to the supply of deals, which will take time.
Wow .. maybe secondaries advisory was the place to be? What is the nature of the work there / what are the main responsibilities for people in these groups? I’ve heard its less modeling oriented and more process driven like in an M&A process, but don’t know much overall
Depends on the firm. Top shops pay at/above M&A.
Comparison is the thief of joy... do what you enjoy, try different careers, if you're truly talented and a hard worker (table stakes if you're even entertaining this notion of MD by 32 at the most elite firms) no door truly closes, not at that level.
Not sure if there's anything that would've convinced my younger-self to abandon the never-ending dick-measuring contest, but most will learn that once you're at the income levels we're talking about it isn't the money that brings you happiness.
The marginal utility from each incremental dollar pales vs. the marginal utility of experiences, good friends and family, healthy relationships, and discovering new hobbies / interests.
Lol at all the Sternie virgins hatching a master plan of “becoming a personal training or tennis instructor to bang all the lonely Greenwich housewives”
There is literally no one safer to leave a lonely wife with than a 20-something year WSO inhabitant who learned everything he knows about women from TV and anime.
People make lots of money from doing what they’re passionate about and what they’re great at. To be making 7 figures consistently year after year, you’d have to be the best in either of these fields in addition to numerous other qualities.
Students these days are often so caught up with wanting to join a field but don’t even know half the time why they’re applying
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