I am going to cover a topic that I thought would never be useful me. After completing my investment banking analyst program, I never thought I would ever experience signs of burnout. I spent three years working 60 to 120-hour weeks, going on only one to two weeks of vacation a year and having absolutely no control over my schedule. I accomplished what my high school / college self never thought was possible.
I studied hard, went through dozens of interviews and was fortunate to receive an offer at one of the largest hedged funds out there. You can imagine my confidence level at that point. Nobody was stopping me from pushing my career forward. Everything was working out perfectly at that moment in time and I was ecstatic.
Despite all those hours and the lack of freedom during my analyst years, I never experienced any signs of burnout. I began to think that I was invincible and that others who experienced career burnout were just not cut from the same cloth as me. Little did I know how wrong I was. After just seven months of working at my new “dream” job, I experienced the classic signs of burnout. Depressed, anti-social, unmotivated, lacked energy, dreaded going to work… all that jazz.
I quit after just one year in that new job. How did it suddenly end up this way? I was a work horse during my three years as an investment banking analyst. Worked more hours than I could have ever imagined. Had absolutely no freedom, little flexibility in my schedule and would constantly worry about cancelling on any plans that I had. Despite all that, I crushed it back then. So why could I not handle working at a hedge fund where I had more flexibility, made way more money and had a lot more autonomy / responsibility?
I am going to walk through the reasons why I experienced job burnout, how I overcame it and what I learned so that you can prevent burnout from happening.
Why burnout happens?
My first six months at a multi-manager hedge fund were extremely exciting. I learned a ton, met with management teams of multi-billion-dollar companies and was given a ton of responsibility. I was on track to make seven figures in a few years if all went well. So, what happened that led me to quit in just one year?
Burnout happens for a number of reasons. You may think that it is primarily caused by just working long hours. However, after personally experiencing it I realized that working long hours in and of itself does not lead to burnout.
It boils down to a combination of the following:
- Lack of longer-term interest
- Extremes of stress / lack of control
- Misalignment in incentives
- Bad direct management
- Poor work-life balance
- Monotonous work
1. Lack of longer-term interest
When you are personally interested in what you do, work becomes a lot easier. You are spending the majority of your waking hours at work, so the more you like what you do the better.
For me, even though I knew I did not want to be an investment banker longer-term (mainly because you are just an advisor with no vested interests), I loved certain aspects of the job. I loved the degree of collaboration with others when working on projects. I loved learning about new companies and industries. And lastly, I loved trying to solve fundamental business problems that each client had.
Once I transitioned to the job at a multi-manager hedge fund, I realized that the job lacked almost all the aspects of banking that I really enjoyed. I knew that I loved investing since it was extremely intellectually stimulating, but I felt more like a speculator/gambler than an investor. My job was primarily to determine whether a company was going to miss or beat earnings, not determine if the company had sound fundamentals longer-term.
There was no teamwork or much collaboration as it was just me and my portfolio manager. I sat in front of the computer screen 12-14 hours a day reading, worked in excel and did not interact much with others. Lastly, I knew the longer I stayed in this job, the harder it would be to transition to a role where the investment style is one that I really identified with. Read the basics of working at a multi-manager hedge fund and life at a multi-manager hedge fund to learn more.
Once I realized I no longer had interest longer-term in the job, it made it extremely hard to stay motivated to perform.
2. Extremes of stress
Aside from working as a surgeon in the emergency room, working at a multi-manager hedge fund is probably one of most stressful jobs out there. You may think that sitting in front of a computer all day long and betting on stocks is easy and not stressful, but that is absolutely not the case.
Imagine being given $350MM as a 25-year-old and asked what to do with it. That alone is not what makes it stressful. But when you combine the fact that the investment style is extremely short-term oriented (~6 months on average), you start to realize that there are many factors outside of your control that can impact whether or not your decisions are right or wrong.
You live and die with each of the four earnings seasons. A company may miss earnings or an analyst could issue a report and the stock that you own could be down 10%+. You may be right longer-term on the company, but because your stock pick lost money in the short term, you are dead wrong.
I could not live with the extremes of the job and the emotional toll it had to my mood and my sleeping habits. You may think I was too weak to handle the job, and you are absolutely right. However, almost all people who manage money in that industry are constantly stressed out and lose sleep, especially during earnings season. I quickly realized that kind of lifestyle was just not for me.
3. Misalignment in incentives
Depending on what type of job you have, you may have some portion of your compensation tied to performance. For me, the majority of my compensation was tied to how much profits the stocks that I covered made during the year.
When I started the job, I thought this was an objective and fair way to compensate me. However, I realized that I did not have absolute control over what positions we had on in my coverage.
Without getting too into the details, my boss essentially used the stocks in my coverage as a hedge to the other stocks that he liked more (stocks that other people covered). My positions were not balanced because of this, making it significantly harder to generate profits relative to a balanced portfolio.
In summary, my boss was managing the portfolio as a whole, but my compensation was based on the performance of a segment of the overall portfolio. Our incentives were misaligned and I did not have much control over changing that.
4. Bad direct management
Who you directly report to has a huge impact on how well you like your job. For me, my boss wore his emotion on his sleeve. Whenever we had a good day and made money, he was very happy and talkative. On the flip side, whenever we lost money, he was huffing / puffing and hard to approach. Every day he would be in a completely different mood. He sat right next to the rest of the team, so his mood directly impacted the mood of the rest of us.
Don’t get me wrong though, my old boss has done very well for himself and has been extremely successful. He just did not know how to create a good group environment or manage people.
5. Poor work-life balance
As I said before, having a poor work-life balance in and of itself does not lead to burnout. If you like what you are doing, then you do not mind working all the time if you have to. I worked way more hours during certain times in banking and did not experience any signs of burnout.
The issue is when your work has absolutely no downtime. I had to constantly be aware of what was happening in all the companies that I covered. My boss expected me to read research in bed right when I woke up as well as right before I went to sleep. Given the short-term nature of the investment style, I had to be on top of every piece of news / research that came out every day since it could impact the portfolio. I was covering over 60 companies, so you can imagine the amount of information flow.
5. Monotonous work
If your work becomes repetitive and boring, then you will quickly get tired of it. You will start to question why you are doing what you are doing and your motivation levels will quickly decline. My job was essentially reading other people’s research and updating models during each earnings season. It quickly became repetitive.
How to overcome burnout
If you are currently experiencing signs of job burnout, I know the first thing you want to do is quit. Before you do that, you should probably think through everything to make sure quitting is the best choice for you.
First, try to see if you can overcome your current state of burnout. You need to realize that it is 100% mental and fixable, even if it is causing physical symptoms such as lack of energy / fatigue. I am not saying that makes it any easier, but if you are able to get out of your funk, then you can make a more rationale decision going forward.
I am not going to lie. It is extremely hard to overcome burnout without leaving your job. At that point, you have likely already decided that your current job is not a good fit for you. However, do the following before you end up quitting:
- Take a week of vacation, or two if possible
- Completely isolate yourself from work; don’t check email or work-related news
- Reevaluate after you had a chance to get away from work
Once you are able to get away and reevaluate, see how you feel. If nothing has changed and you are still dreading going to work every day, then you need to plan your exit.
If you have saved a good amount of money, can live without a paycheck for a year or more, and do not foresee yourself having any trouble getting a job that you like, then it is okay to quit without having anything lined up.
If not, you have to realize that you are working to support yourself. Without your current job you cannot pay the bills. Trust me, your life will become a hell of a lot more stressful if you quit without being able to afford rent. Start interviewing at places and once you land your next job, then quit.
How to prevent burnout and make sure it does not happen again
- Find a job that you enjoy – I know it is hard to figure out what you like and don’t like, especially if you are just starting out in your early 20s. Figuring out what you love to do is the easiest way to prevent burnout
- Find some hobbies to do something unrelated to work – play a sport, join a league, volunteer, work on a side hustle, etc. Working on something unrelated to work counterintuitively boosts your energy
- Volunteer and give to others – helping others makes you realize how fortunate you are and makes you appreciate your life more. I know these are selfish reasons, but why not kill two birds with one stone and help yourself out while helping others?
- Separate your work and the rest of your life – don’t bring your work home with you. It may be more convenient, but you need that separation to be able to take a breather
- Exercise regularly – exercising is a natural stress reliever. It also gives you purpose and helps you feel accomplished every day
- Meditate to manage stress – every morning I sit in the steam room at my gym and meditate for five minutes. I try to think of a few things that I am thankful for during this time so I can appreciate what I have
Really helpful and appreciate your candid sharing!