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Wall Street Banks and Private Equity Firms Compete for Young Talent

nytimes.com

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Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#21

Post by spuiszis »

MaxScheiber wrote: post #11

One reason that you see this sort of behavior in the first place is that very few people are able to successfully become lifetime bankers. The skillset required to be an excellent investment banking analyst is extremely different than the skillset needed to be an investment banking vice-president (or higher). Modeling skills and pitchbook formatting knowledge will do little for you if your job is to try to bring busi…

> Analysts know that the internal track will end at the associate level (or, more likely, they'd be booted out after two years with no internal promotion to associate at all) > What's interesting is that a similar thing happens after two years as a private equity associate, in that almost all PE associates are booted out after two years

Many PE shops, VC funds and banks do this because they want you to get an MBA. This is why many of the associate hiring positions are described as pre-MBA associate and post-MBA associate. Post-MBA associates are the ones that will go onto internal promotions and potentially the partner track.

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#23

Post by hacknat »

MaxScheiber wrote: post #20
hacknat wrote: post #18

The Epicurean Dealmaker's thoughts (he's an MD for some big shot bank): http://epicureandealmaker.blogspot.com/2014/07/you-go-first....

"The solution to this dilemma, of course, is simple. Private equity firms have become large and rich enough that they should do their own damn recruiting at colleges to hire junior personnel." This is already the case, at least at Wharton. A number of the PE megafunds recruit undergraduates here, specifically Blackstone and Silver Lake. I only really know of one or two offers being extended per year, but that's becau…

Interesting, thanks for the feedback. It's good to hear the other side of the story.

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#24

Post by blibble »

mr_doobey22 wrote: post #12

I can't speak for the PE side, but on the IB side be prepared to work with some truly awful tech and systems. Seriously crappy. Given the tech budgets and spend, it is amazing how much duct tape and band-aids hold together the IT systems across the bank.

I think it really matters which part of a bank you end up in... I've heard some horror stories about back office roles, but I work on a front office trading system and it's the most technically challenging, interesting and plain old geeky role I've ever had.

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#25

Post by dkrich »

michaelochurch wrote: post #19
foobarqux wrote: post #15

Earlier quoted context omitted.

Plenty of high IQ people in PE and hedge funds, especially those who entered direct from college, skipping IB. They seem to be people who can tolerate grinding though. It may be true that the work gets boring but the alternatives aren't significantly better (how many people at Google are doing substantially more interesting work?) and pay and career advancement are much better.

I acknowledge that there are plenty of very smart people in finance (especially in quant roles). I said: There are plenty of 135+ in finance, but either they go for trading and quant or even IT roles, or they move to "the soft side" at a higher level: usually at least VP. Smart people tend to avoid competing on hours. Why? Because if you're putting out a 17-hour day (which is necessary at the entry level on "the soft…

I don't think it's a solvable problem. People who tend to make the hiring and pay decisions are seldom those who understand the intricacies or value of good engineers. An engineer could make $500k a year, but the business case for why that is a good investment for the company has to be made, and that's where it falls apart.

Most people capable of making that decision believe that somebody with a Harvard MBA is worth a particular sum because that's what the market, their experience, their network, and conventional wisdom tells them. For that same person to believe that a top engineer with or without a strong pedigree is worth the same amount would require that person to understand a lot of details that few are willing to learn.

I don't think this is necessarily a setback for all engineers- it just creates different but highly lucrative opportunities for those that are able to make the business case to those who write the checks. Instead of relying on your pedigree and the fact that the market at large widely agrees what certain pedigrees and jobs are worth a lot (which is what makes top schools and PE/IB jobs so competitive), you have to convince people of your value on your own.

Edit: To be less abstract- an example would be starting a tech consulting business in which you bill $200/hour. Not necessarily an easy task, but if you can show that you're worth more than that to the business, you can convince them to pay you that much.

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#26

Post by [deleted] »

michaelochurch wrote: post #7

I think it's important to dispel a certain myth about this sector of finance. Around and past an IQ of about 135, work boredom is a chronic risk and sometimes a disability. If you're in this set, entry-level banking ("analyst" programs) and private equity aren't where you want to go. Past 135 (much less at 140, 150, or even 160) even 8 hours per day of grunt work is impossible, much less 17. There are plenty of 135+…

[deleted]

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#27

Post by X4 »

blibble wrote: post #24
mr_doobey22 wrote: post #12

I can't speak for the PE side, but on the IB side be prepared to work with some truly awful tech and systems. Seriously crappy. Given the tech budgets and spend, it is amazing how much duct tape and band-aids hold together the IT systems across the bank.

I think it really matters which part of a bank you end up in... I've heard some horror stories about back office roles, but I work on a front office trading system and it's the most technically challenging, interesting and plain old geeky role I've ever had.

how did you get in?

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#28

Post by foobarqux »

michaelochurch wrote: post #19
foobarqux wrote: post #15

Earlier quoted context omitted.

Plenty of high IQ people in PE and hedge funds, especially those who entered direct from college, skipping IB. They seem to be people who can tolerate grinding though. It may be true that the work gets boring but the alternatives aren't significantly better (how many people at Google are doing substantially more interesting work?) and pay and career advancement are much better.

I acknowledge that there are plenty of very smart people in finance (especially in quant roles). I said: There are plenty of 135+ in finance, but either they go for trading and quant or even IT roles, or they move to "the soft side" at a higher level: usually at least VP. Smart people tend to avoid competing on hours. Why? Because if you're putting out a 17-hour day (which is necessary at the entry level on "the soft…

I'm not convinced that smart people gravitate to quant roles. The hours may be longer on the "soft" side but it is more prestigious and the work is less taxing and doesn't require continually learning new skills.

I don't know how you can enter "soft" finance at the VP level.

> Absolutely. This is completely true. Any idea what we should do about this in engineering? (Or just call it hopeless and exit for finance?)

I think the ship has sailed for many people, you can't get into PE or non-quant HF mid-career. When I was younger I often thought along the lines of "if only everybody..." but I realized the hard way that it is much easier to change yourself than to change the world.

When I give advice to smart kids entering college I tell them they should strongly consider targeting PE/HF: If they hate it they will know from experience and still have superlative exit ops, trivially able to land a management/executive-track job at a tech company or elsewhere.

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#29

Post by pling »

mr_doobey22 wrote: post #12

I can't speak for the PE side, but on the IB side be prepared to work with some truly awful tech and systems. Seriously crappy. Given the tech budgets and spend, it is amazing how much duct tape and band-aids hold together the IT systems across the bank.

And if you think that's bad, you want to see the insurance sector! Data loss is good for insurance businesses in the long run...

Re: Wall Street Banks and Private Equity Firms Compete for Young Talent

#30

Post by jessriedel »

rayiner wrote: post #5

This situation is always painted as a "prisoner's dilemma" because otherwise talking about coordinating with regards to hiring smacks of anti-competitive collusion. However, I don't think the timeline is, on the net, disadvantageous to recruits. It's hard to argue that folks on a two-year contract at a bank are somehow disadvantaged by being able to line up their next gig a year or more in advance. It's also hard to…

I'm not so sure. The high-energy physics community created an ethically (but not legally) binding agreement on the date of theorist postdoc offers to prevent a useless race for ever earlier commit dates.

>In recent years, we have seen a growing number of early offers with short deadlines for high energy theory postdoctoral positions...We are worried that this practice is preventing young researchers from making a free and fair choice among their job opportunities. And, while there may be some short term advantage for the institutions which do this, we believe it will have serious negative effects in the long run....Thus, we commit to make no postdoctoral offer for the fall of a given year, whose deadline for acceptance is earlier than January 7th of that year.

http://insti.physics.sunysb.edu/itp/postdoc-agreement.html

I think all the postdoc applicants generally like this, so it does seem to be in their best interests.

It's very plausible that various private companies have a harder time than HEP professors coordinating on a pledge like this given legal restrictions and the fact that they do not have the common framework of academia. So I think this really could be a prisoner's dilemma.

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