8 figure comp in IB/PE compared to Tech?

Super Target🤓🤓

good post

I’m not sure about your specific question, but I can tell you the compensation market is much more favorable to tech than finance these days. The problem is tech people just don’t talk about money and don’t show off, so a lot of people in finance don’t realize how much less money they make than their tech peers.

Just one example out of many times I’ve been floored by how much people make in tech; one of my buddies works at a prominent tech company. I would’ve sworn to anybody that he makes quite a bit less than me (sitting at about $300k). Earning casually came up a couple months ago and I was floored when I learned he earns north of $500k in his mid 20s. Of course some of that is in stock but still. Working decently hard but not nearly as hard as me, with ridiculous perks and benefits. If you’re in reality at a top target and have the mental faculties to do either, go tech. It’s what I would advise (and do advise) any smart student that is deciding between the two fields. Of course if someone has their heart set on finance, it’s still a great industry, just no longer the top path imo.

I think your question is “are the top 0.01% of banking / PE professionals making $10,000,000+”. Answer to that is yes and % is much higher.

Way way way way more than top 0.01% make 8 figures in IB/PE at the senior level. Would say by the time you're 35+, you don't even need to be top decile to make 8 figures in PE, you're probably good being just by being in the top 1/3rd at a PE MF or MM/SM HF or the top 1/5th at a BB/EB.

Finance pays better at the very top, but tech has way more people that make 300-500k and once you get in, you don’t need to work THAT hard for it. As you mentioned, a lot of that pay is from stock, but comp is comp 

Lol this is like saying the founder of plumbing company ( whom himself is a plumber ) makes 20M per year.

The research PHD at openAI are the top 0.00001% of techies. The top 0.00001% of any industry is rich.

Someone that is a top tier researcher/scientist at a place like OpenAI is VERY different than someone who can scale a PE firm.

I don't really get the point of this Q since both paths are 100% not open to you. If you haven't been winning 1337 math competitions...I have bad news.

Do what you are good at... money will come. 

MS IBD here, made a video with a detailed breakdown on banking comp up to Group Heads

- MDs indeed getting around 1-3MM but Group Heads easily breaking through 5-10MM and more, though there aren't that many Group Heads naturally...

- Regional Heads (e.g. Head of EMEA or APAC) are all pushing past 10MM and of course Global Head (only 1 or 2 guys) in the 15-25MM zipcode depending on market conditions. Rockstars within revenue divisions tend to outperform mgmt e.g. comp for CEO James Gorman, and this is especially true of the rockstar traders

Started a YT channel recently with all the banking insider info you can hope for. Hope it can help people on WSO get the real insiders scoop

I'll give some perspective from someone who's doing (relatively) well on the mainstream (not quant firm) tech/SWE side. I've got 5 YOE and I'll make ~400k this year. If things had gone flawlessly that number might be ~500. I'd say if you're smart and hardworking (and coming from a great school) there's a pretty obvious path to ~750k in expected comp w/in 7 years of starting out. I'd also say the next step to ~1M (sr. staff/principal) doesn't look impossible to me, but its hard and would probably take ~4 years from staff level for most mortals. Beyond L7 looks extraordinarily difficult. At my (very well known) pretty large company there are maybe 6 or 7 ICs at that level. Their comp might stretch to 2.5M. This is just the IC track, though, and if you're aiming for an 8 figure outcome, which is extraordinarily difficult regardless of career path, you'd be better suited transitioning to the management track after becoming a seasoned staff eng, but that's a whole other conversation.

Some other things to consider:

• Lifestyle in your 20s: do you want to work 80-90 hour weeks formatting powerpoints and redoing excel models in Manhattan and binge drink w/ hot city girls on your one night a week off? Or do you want to work 40-55(MAX) hrs a week in SF, run in the Presidio before work, surf/mountain bike on the weekends and split a ski lease with your buddies in Tahoe each winter?
• Coworkers: the average SWE (even at an elite company) kinda sucks as someone to hang out with, finance clearly gets the edge here, but you can fix this by just befriending the sales/GTM/PM people. In finance some of the people you're competing with will be real killers, in tech... not so much, IMO this makes it easier to be an outlier/rise fast.
• Equity: setting aside PE carry (which is a bit of a mystery to me) in finance you're paid in cash. In tech, if you're doing it right you should be getting larger and larger chunks of equity in your company over time. This leads to the possibility of outsized wealth creation if you can put yourself in the right position, and can risk concentrating your wealth in one position for a bit. Plenty of people now have generational wealth from long tenures at AMZN, AAPL, META, GOOG, MSFT and I think there are a few companies out there that can have a similar run now.
• Option to go fully remote: if in a few years I decide I want to live in Park City or Sun Valley or south Florida I can just tell my boss and move there no problem. Pretty sure this isn't the case in most finance roles. 

This ended up being longer than I expected. But TLDR, I like my tech life, and genuinely enjoy my day to day work and my lifestyle. As someone who also went to a "good" school and looked hard at the traditional IB -> PE route, I have never for a minute regretted choosing the tech route. I suppose if you're dead-set on $$$/prestige/power finance is the surer way to go, but tech is far from a dead-end.

I'd also say from my observation the number to hit is more like ~2 than ~10. At that level you can live in a nice house in a nice place, send the kids to private school, and take big trips/eat at fancy restaurants, beyond that seems mostly vanity stuff (or the allure of flying private). Godspeed buddy.

Yes, there is. And the total number of bankers/pe/vc/etc that are in those roles is greater than the $10m-plus AI researchers. But not only that, the career path to that type of wealth on the finance side is much easier.

To be one of those top researchers, you basically need to be on even more of “the track” than you do in finance. To hit that level of AI researcher is basically the equivalent of being a Penn finance undergrad, then joining MS M&A/GS TMT/etc, then a Harvard MBA, and then spending the rest of your career in buyout PE at KKR/Blackstone/Apollo/TPG. That’ happens but that is super rare even among the small group of MF buyout PE professionals.

Before romanticizing FAANG, let's set some context. The big figures for tech are achievable in the US, but still rare. In Europe such figures are beyond the reach, even in the UK. I know the UK/European tech scene pretty well and can assure all of you that finance pays much better. It is actually ironic that some BO folks in BBs London earn better salaries than their counterparts (based on titles, like analyst vs analyst) in large tech companies. Just to give you an example, a manager in a large tech/FAANG earns around 65-100k GBP plus a small bonus. It's laughable when you realize an IB analyst 1 gets a better salary considering the bonus. 

As someone who has achieved i guess very difficult VC fellowships, won awards for AI research papers, and has also followed the tech track to a tee since middle school. It's extremely difficult to make that kind of comp in tech, as a non founder (as in you're not in the driver's seat). it used to be easier in the mid 2000s, and before. the people who achieve this now, are the top researchers in the world (1000/4B people), just look at where they're from and where they attended undergrad. i looked at one researcher i worked in the same lab as and she graduated 23rd at Peeking University, the top university in China, a country over a billion people.

there's also this thing where some startups are capping the potential returns from stock or share grants or something e.g. Stripe. and plus, you have to kind of be a creative genius to be that talented in research. so in a way, it's kind of like having the genes, and suitable environmental factors, to be a top soccer, or basketball player. whereas with finance, i think this is less of an issue.

there are just so many potential issues that would prevent anyone from doing this. for instance, those people who make these comps are hyper-specialists (e.g. NLp researchers, computer vision researchers). because tech changes so fast, some skills become obsolete almost instantly (i can find examples if anyone would like), and this will affect comp.