Growing up in a small town far away from NYC, I had no idea how much you can make in a finance career. Even when I was in college, it wasn’t until I started working in the real work when I realized the amount of money you can make in finance.
Working in finance right out of college
I always knew I wanted to start my career in finance. I was analytical, detailed oriented and curious to learn as much as possible. Luckily, I had a friend who was two years older than me in high school that went down the investment banking path first. He taught me everything there was about how lucrative a finance career can be.
After graduating from a so called “target school,” I started my career in investment banking at one of the large firms in NYC. I was extremely lucky that I even got an offer to begin with. I was smart, but wasn’t at the top of my class in college. Didn’t even land interviews at most of the elite investment banks. I went through dozens of interviews, was rejected by all of them and had only one option remaining.
Luckily, I landed that offer which gave me the momentum I needed to keep moving forward.
Moving to the buyside
Once I worked for three years as an investment banking analyst, I moved to the buyside to work at a large multi-manager hedge fund. Getting a job at a hedge fund was almost as hard as landing an investment banking job straight out of college. I was persistent and didn’t let dozens of failed interviews stop me from getting what I wanted.
Funny story: I quit that job first job on the buyside after just one year despite potentially making ~$500K per year. Once you start making the big bucks, you realize that life is too short to be working at a job you do not want to do. Hated the investment style of my portfolio manager and knew it wasn’t for me longer term.
Anyways, I moved to work at a distressed / deep value hedge fund and have been happy ever since.
More about My Life Story Here if interested.
Skills needed to be successful in finance
For some reason, most people think that in order to be successful and land a high paying job on Wall Street you have to be extremely smart. Yes, there are a ton of smart people in the industry, but being smart alone is not enough to be successful long-term in this industry.
Here are the six key traits you need to be successful in finance:
- Analytical
- Detailed Oriented
- Hard Working
- Good Attitude
- Focused
- Persistent
- Able to Handle Failure
You don’t need to be a genius to work in finance; I definitely am not. Early in my career in investment banking I just learned how to be a Top Bucket Ranked Banking Analyst and did better than my peers.
But, if you don’t have these qualities above, especially being analytical and detailed oriented, then may want to rethink whether finance is the right path for you longer-term.
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Highest Paying Finance Jobs Ranked From Lowest to Highest
Keep in mind these compensation ranges below are based on someone who is still early in their careers in their 20s. Of course, once you work in certain field for a long time you can make significantly more, but these are the ranges you should expect during you first or second job out of college.
Highest paying jobs in finance:
- Corporate Finance
- Corporate Banking
- Management Consulting
- Venture Capital
- Sales and Trading
- Investing Banking
- Private Equity
- Hedge Funds
Corporate Finance
Corporate finance can mean a lot of different types of jobs: corporate M&A, corporate strategy, strategic finance, etc. In corporate M&A, the job is somewhat similar to the job of an investment banker, except you are trying to find attractive M&A targets for the company that you work for. You’ll work with investment bankers to help with M&A processes. Hours are definitely better than the bankers, but can still expect some long hours during the end of a deal.
The job in corporate finance / strategic finance revolves around basically helping the company understand where they should allocate capital. Usually you work under a manager who works under the CFO of the company. Hours are better and less volatile than in corporate M&A.
- Est. Weekly Hours: 40-50
- Est. Annual Compensation: $60,000 – $120,000
- Exit opportunities: Other corporate finance type roles, startups, business development
Corporate Banking
As a corporate banker, you will work for clients who need access to the products and services of the bank. You’ll usually work on the credit side to help company’s get access to loans and other services. As an analyst, you’ll help crunch the numbers and execute the deals that come by. When you get more senior, the job turns into relationship management where you try to sell the services of the bank to corporate clients.
If you want to work very hard when you are young and learn as much as possible very quickly, then corporate banking is probably not for you. This is a good work/life balance career path, hours are better than investment banking, but the bonuses are much lower.
- Est. Weekly Hours: 40-50
- Est. Annual Compensation: $80,000 – $120,000
- Exit opportunities: Credit funds, debt capital market groups, potentially lateral to investment banking
Management Consulting
Expect to spend most of your time researching, conducting interviews and formatting PowerPoint slides. I have a friend who used to work at Bain and most of the time he was working at client sites or conducting surveys on the street. Yes, he literally went on the streets of NYC asking people a bunch of random questions about a particular topic.
If you want to be successful being a consultant, then you must be analytical and be able to communicate your analysis effectively. As you get more senior, you will be working directly with the client and presenting your team’s conclusions on whatever your project is about, so you must have good presentation skills.
Expect to spend your Monday through Thursdays traveling to the client’s offices. If you do not like to travel than this job is not for you. Yes, there are some places like Bain’s NYC office where you don’t travel as often as other firms (you can actually say you prefer not to travel and they will try to staff you on projects with clients nearby).
When you aren’t staffed on a project, you are on the bench. At some places this means you don’t have to show up to work and still get paid. That same friend who used to work at Bain went a full month of not doing anything because he was on the bench.
If you can get a job at one of the big three (i.e. Bain, McKinsey, BCG), then you open a lot more exit opportunities. It is much harder to break into private equity or hedge funds unless you work at one of the big three.
- Est. Weekly Hours: 50-70
- Est. Annual Compensation: $80,000 – $150,000
- Exit opportunities: Corporate strategy, business development, private equity, venture capital, startups
Venture Capital
If you are interested in entrepreneurship, technology and/or growth businesses, then venture capital could be a good path for you. There are tens of thousands of small businesses out there and as a venture capital analyst, it is your job to find that one company that fits the criteria your fund is looking for.
You need to essentially find a needle in a haystack. So, most of your time will be spent calling up founders, going to networking events and conferences, and meeting with entrepreneurs. It is a very qualitative job, not as analytical as some think. You aren’t going to build crazy detailed models. Given most startup company’s have little to no revenues and are operating at a loss, venture capital investing is more about believing in the founder’s vision and the market potential of the company.
If you are more analytical, data driven and think you prefer investing that is based on hard numbers/cash flow, then venture capital is probably not for you. You need to be comfortable constantly networking and meeting with people so you can help source deals for the fund.
- Est. Weekly Hours: 50-60
- Est. Annual Compensation: $80,000-$250,000
- Exit opportunities: Startups, business development, corporate strategy
Sales and Trading
At an investment bank in sales and trading, you are either in sales or you are in trading. Salespeople develop relationships with investment managers and alert them of any investment opportunities that the bank has to offer. You essentially help connect buyers with sellers and figure out what your clients are interesting in buying and selling. You are the phone for most of your day talking to all different types of money managers.
Traders are different. As a trading you buy and sell securities on behalf of your own firm or for a client. At the large banks you will likely specialize in a certain product or industry (i.e. equities, commodities, rates, investment grade bonds, distressed debt, term loans, etc.).
There are two types of traders – you are either a prop trader where you get to manage your own book or you trade on behalf of your clients. Post 2008 financial crises, a lot of the big banks downsized their prop trading books given the level of risk they were taking. That said, there are still a ton of prop traders out there and you can make a lot of money if you are successful at it.
If you get to the point where you manage your own book as a prop trader and have a track record of being successful at it, then you can easily transition to one of the large multi-strategy hedge funds.
- Est. Weekly Hours: 50-60
- Est. Annual Compensation: $100,000-$300,000
- Exit opportunities: Multi-Strategy Hedge Funds
Investment Banking
Investment banking is the classic route that most people in finance pursue. It is not only one of the best stepping stones for a finance career, but also one of the highest paying jobs you can get right out of college. All in pay is typically in the mid six figures right out of college and can rise substantially the more senior you become. More on investment banking compensation here.
As an investment banker, you primarily produce materials to advise companies on any matters related to mergers and acquisitions, capital structure and activist defense. As an analyst you will do all the work necessary to produce the slides needed for meetings with your clients. Most of your time will be spent in Excel, PowerPoint and reading company filings.
Hours are highly variable and completely dependent on whether you are working on a live deal. Don’t expect to be out of the office before 10pm most nights. Most people question if investment banking is worth it given the hours. Almost everybody pursues investment banking for the exit opportunities to land their “dream” jobs on the buyside in private equity or at a hedge fund.
Definitely read Life of an Investment Banker to learn more.
- Est. Weekly Hours: 60-90 (more on banking hours here)
- Est. Annual Compensation: $130,000 – $350,000
- Exit opportunities: Private equity, hedge funds, corporate finance, corporate development, venture capital, startups
Private Equity
After investment banking, private equity is the most common career path that people take. Everybody believes that private equity is more lucrative because you work less, get paid more and do less mindless work. While that is true in some middle market private equity shops that are lifestyle firms, it is generally a myth at most of the larger funds.
The job of a private equity associate is similar to buy-side processes in investment banking (where you advise a client on buying another company). You help to analyze the merits of a potential company your firm wishes to acquire – the competitive landscape, strengths, weaknesses, industry trends, financial returns, etc.
Most of your time is spent in Excel building LBO models and presenting the merits of a deal in PowerPoint. Expect hours to be volatile just in like investment banking depending on whether or not you are in the middle of a deal.
- Est. Weekly Hours: 60-100 (Top Private Equity Firms usually have longer hours than smaller shops)
- Est. Annual Compensation: $130,000 to $500,000 – more detail on private equity compensation here
- Exit opportunities: Hedge funds, other private equity firms, roles at PE-backed portfolio companies, corporate finance, corporate development, venture capital, startups (learn more about buyside exit opportunities)
Private Equity Case Study Example + Full LBO Excel Model
Hedge Funds
Even though the industry has been in a decline over the past 10 years, a hedge fund career is still extremely lucrative and ranks as one of the highest paying jobs in finance. That said, pay is highly volatile depending on the fund’s performance. I have seen hedge fund analysts in their 20s make as much as $1 million per year and I have seen others make as little as their base salaries of $120K per year. More on HF compensation here.
On average, expect to make ~$250-$400K per year after a few years as an investment banking analyst. Hedge fund exit options are limited, so you need to make sure it is really what you want to do longer term.
Hedge Fund Case Study Examples Used in Real Interviews
Single Manager vs. Multi-Manager Hedge Funds
There are two types of hedge funds out there: single- manager and multi-manager. Single manager funds on average have been on the decline as most of the money has flown into passive investing or the large multi-manager hedge funds like:
- Millennium
- Citadel / Surveyor
- Point 72
- Balyasny
The investment style at these large funds is usually extremely short term oriented (think 3-9 months) and differs significantly from the traditional value investment styles you read in the classic investing books. The investment style at single manager funds can vary significantly depending on who runs the shop.
On the Job
Depending on who you work for, the job can be extremely introverted. Expect to spend most of your time reading filings / transcripts, building models and analyzing data. Yes, time to time you will talk to sell-side research analysts and management teams, but that will only take ~15% of your time on the job.
To get a job as a hedge fund analyst, you must show that you have a passion for investing through your own investments and what you have read. Read the Step-by-Step Guide to Landing a Hedge Fund Job and the Most Frequently Asked Hedge Fund Interview Questions and Answers if interested in pursuing this career path.
- Est. Weekly Hours: 60-70
- Est. Annual Compensation: $120,000 – $750,000 (Hedge Fund Salaries and Bonuses From Analyst to Portfolio Manager)
- Exit opportunities: Other hedge funds, corporate finance, startups
Private Equity vs. Hedge Funds vs. Venture Capital
It can be confusing to know the differences between various jobs on the buyside. Make sure you learn more about the difference between private equity, hedge funds and venture capital before choosing a path that you think is best for you.
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When you discuss compensations, is there truly any difference between careers on the West Coast, L.A more particularly, than in NYC?
Not really. All depends on the size of the fund and your seniority.
What about risk management/ private banking/ long only fund analyst/ trader in the buyside? Thank you.
If you are a prop trader and run your own book successfully, then can make a lot of money. Risk mgmt/private banking are not high paying. Working at a long only yes can get paid a good amount, depends on level. Less than working at a HF though.
I wanted to know if it’s hard to get into investment banking (hedge fund). is it competitive?
Thanks for the article.
Here you spoke about the compensation at entry levels. But I am wondering if at more senior roles it is still true that HF pay more than PE or if it is the opposite (in term of total compensation and taking into account carry)?
Hedge fund pay is more volatile, depends on PNL in a given year for senior employees. PE pay is more consistent and last decade PE has been on fire so carry checks have been large.
Thanks for this informative article. Is there a difference in compensation between quant and discretionary hedge funds?
Not as familiar with quant payouts unfortunately, so not the right person to ask. But at the end of the day, if you can consistently make money on a quant or a fundamentals team, you will receive very large payouts.