7 ms·

As someone who works in the industry, I have a few issues with the article. Firstly, I feel the average salaries are inflated, even more so at the junior level.

by osrec 9y ago

As someone who works in the industry, I have a few issues with the article. Firstly, I feel the average salaries are inflated, even more so at the junior level. I find it a common tendency amongst finance workers to exaggerate, especially since real data is rarely made public, so it's an easy, unverifiable boast. Also, the finance industry seems to thrive on selling limitless upside to bright grads, in exchange for their best years and hard work. The truth is, not everyone makes it to star hedge fund manager status, and your personal earnings, while higher than a lot industries, will rarely be spectacular. My experience tells me that most people at hedge funds are doing just okay - enough to be comfortable, but not enough to quit their jobs for good. And yes, there is a lot of luck involved; for example, Paulson & Co - once considered a genius, now a garnering one-trick pony status. A little message to the intelligent engineers, scientists, mathematicians out there: don't be taken in by the propaganda of the finance industry. The upside is potentially good, but on average, nowhere near as good as you are made to believe (and certainly not worth giving up your passion for). Ditch the hype and focus on contributing something more meaningful to the world - you'll probably be happier and perhaps financially better off!

lordnacho 9y ago
I second this. Been in the industry for many years now. Typical people you run into: - People who are constantly looking for a new gig. They have a model, they have experience, but either they can't find the appropriate fund for their style, or they have a bad streak. - People who can make money, but only in small size. Some guys I know sit and home and trade. Enough to pay themselves, but not enough to even get a fund job. - People who were on the team or near some star trader. Amazing how many of those there are, and how little it rubs off. On the whole I'd say don't believe the hype. It's very hard to get a seat, and hedge fund managers are not smarter at recruitment than tech people. So you'll spend a long time in that support style role, wondering whether you'll ever get to be the main guy.
- dave_sullivan 9y ago
  That's eerily similar to the people you meet in startups: - most consultants - "lifestyle businesses" - "worked at facebook, give me money" So much hype in both industries, for similar reasons. There are always ways for smart people to make money. Most people with some experience in either industry are doing better than the national average but hardly wealthy and generally spend too much money. I do get the impression there's better pay in finance though. $250k as an experienced engineer strikes a lot of people as high. $250k for someone w/ a few years at a good hedge fund is... about right, maybe even low.
  - hkmurakami 9y ago
    Sadly the "I worked st google, give me money" angle seems to work pretty well since there's a lot of dumb money in the valley lately? (Small upstart seed funds with partners with very little track record / weak deal flow)
    - JohnnyConatus 9y ago
      Ugh, yeah, I've recruited a few of these people. They're the worst because: 1) they're used to the benefits that come from a company that is swimming in cash 2) they didn't personally take any of the risk to create that firehose of cash but they want you to treat them like they did. 3) they don't realize it, but they're used to working in very protected environments. Typical career paths look like top-tier college -> Google / FB / Twitter / whatever. None of this prepares them for sitting in a room with some shitty Ikea desks and trying to make hard decisions that will have a direct impact on the companies growth. No, we don't have the time or resources to build a new JS framework. I'd much rather higher someone from a second-tier US college or from overseas that can show me a time when they took significant risk / projects they built from scratch. ^ All of this is in relationship to < 20 employee companies trying to get from zero to 1.
- infinite8s 9y ago
  Are the people in point 2 able to make hedge-fund level money? Or are they just pulling the equivalent of a decent tech salary would get you?
  - lordnacho 9y ago
    Well one guy I know works 20 mins a day and makes maybe £30K a month. Not enough to turn into a fund, but a comfy living trading from home. If things had worked out differently he could easily sit at a fund and punt larger size.
user5994461 9y ago
The mean and average upsides are still better than what one would get at a typical startup.
- osrec 9y ago
  What makes you say that?
- thaumasiotes 9y ago
  What do you mean by "average"? Unqualified, it refers to the mean.
eleumik 9y ago
+1 too many brilliant brains lost
rglullis 9y ago
Genuinely curious: why haven't you applied your advice to yourself?
- osrec 9y ago
  Oh, I have! I spend my days building software for a variety clients, and some happen to be investment banks and hedge funds, so I am still heavily involved with the industry. I am not employed by a fund or bank anymore. I quit my job in finance, not because I was doing badly or making less money, but because it was a terrible use of my time; all I could see was stagnation. It got to a point where I was earning a healthy 6 figure salary for "attending meetings about other meetings". A monkey could have done my job (the only reason a monkey wasn't doing my job is because it couldn't get past the damn finance interview, which is incommensurately harder than the job itself). When I quit, it took guts, because a job in finance does give you a false sense of comfort and security. But looking back, I was infinitely happier from day one, and am better off than my peers who stayed in their front office roles (this, of course, is not guaranteed and ymmv). I also feel my potential to grow is much more than my past colleagues, who still seem to be trapped in their job's safety net. Now I'm a passionate engineer and building good products makes me happy, so that's what I do. I have, through my company, launched a couple of private SaaS products, and hope to launch another, more public product soon. I also do a bit of property development in the UK. Whatever time is left over, I use to play tennis or spend time with family. It's great!
  - lloyd-christmas 9y ago
    grass is always greener though. I have friends that moved into finance from elsewhere and regretted it quickly. For some of them, the pay boost was drastic enough to suffer through the misery. That pay change isn't so meaningful when moving from one high paying career to another. As an aside, the software engineer complaints about technical interviews always makes me laugh. Finance ones were even worse. Mostly useless and much more intense and time consuming. Engineering is tough because it's hard to point back at prior performance in a tangible way. Anyone can sit in a large corporation and write some for loops. It's much easier to hide in the background in software. Trading was easier to vet: "someone gave me $30m and I didn't lose any of it".
dpweb 9y ago
Getting someone to give you a job, what kind of job, is not the important thing. In both finance, tech as well and every other field, if you can make money for other people, you can make money for yourself. Traders who can make money consistently always have options, they dont need worry about who can give them a job.
leroy_masochist 9y ago
As someone who has worked in the industry, I second this. Also, the article does a poor job of delineating what strategy-category he's talking about. From context, it looks like he's talking about more of an algo/quant driven fund, which as a category is a low % of the AUM out there (most of the capital in hedge funds goes to equity long/short); in other words, to the extent the picture he paints is accurate, it's a picture of a pretty small slice of the pie.
ska 9y ago
This: ...funds are doing just okay... Made me chuckle. Most finance people I know (like some areas of tech) have a funny idea of "just ok". Making at least couple hundred grand 5 or 10 years into your career in any context is not merely "ok". The idea that there is some entitlement for FU money is deeply unfortunate. It's understandable that there is a reality distortion field created when you are adjacent to wealth, but it's good to be aware that it is there.
- monochromatic 9y ago
  "Just ok" also means different things in NYC compared to San Francisco compared to Austin compared to Cleveland. Most of the finance guys I know in New York make what I would consider great money... but their lifestyle is such that they save almost none of it.
  - UncleMeat 9y ago
    Even in NYC or SF, 300k is way more than "just okay". There are people living in the region making 1/10th that.
    - hkmurakami 9y ago
      Tell that to the $300k earners in SV who feel that they are not doing okay because they cannot afford to buy a nice house in a nice area.
  - graedus 9y ago
    The different costs of housing and living in different areas is of course a valid factor when it comes to comparing incomes. I disagree with your second sentence though. > Most of the finance guys I know in New York make what I would consider great money... but their lifestyle is such that they save almost none of it. I don't know, is how well you're doing really based on how much money is left after you choose to spend a bunch of it? If I make $2m/year but have several expensive mortgages to pay and therefore I don't save very much, that means I'm doing "just OK"?
arcanus 9y ago
> A little message to the intelligent engineers, scientists, mathematicians out there: don't be taken in by the propaganda of the finance industry. ^ This. I was greatly disillusioned. When looking for positions after PhD, recruiters told me people were making 800k (after bonus) and I got an offer from a supposedly top hedge fund for... 120k, with an expected 50%-100% first year bonus. Not guaranteed, of course. I'm not saying that isn't nice money, but in NYC it is not absurd. Plus, one can make that with a less risky lifestyle at many of the BigCo software firms. Finally, as a science PhD, I was skeptical of completely going 'zero sum' in terms of my contribution to society in life.

by osrec 9y ago

lordnacho 9y ago

I second this. Been in the industry for many years now. Typical people you run into: - People who are constantly looking for a new gig. They have a model, they have experience, but either they can't find the appropriate fund for their style, or they have a bad streak. - People who can make money, but only in small size. Some guys I know sit and home and trade. Enough to pay themselves, but not enough to even get a fund job. - People who were on the team or near some star trader. Amazing how many of those there are, and how little it rubs off. On the whole I'd say don't believe the hype. It's very hard to get a seat, and hedge fund managers are not smarter at recruitment than tech people. So you'll spend a long time in that support style role, wondering whether you'll ever get to be the main guy.

dave_sullivan 9y ago
That's eerily similar to the people you meet in startups: - most consultants - "lifestyle businesses" - "worked at facebook, give me money" So much hype in both industries, for similar reasons. There are always ways for smart people to make money. Most people with some experience in either industry are doing better than the national average but hardly wealthy and generally spend too much money. I do get the impression there's better pay in finance though. $250k as an experienced engineer strikes a lot of people as high. $250k for someone w/ a few years at a good hedge fund is... about right, maybe even low.
- hkmurakami 9y ago
  Sadly the "I worked st google, give me money" angle seems to work pretty well since there's a lot of dumb money in the valley lately? (Small upstart seed funds with partners with very little track record / weak deal flow)
  - JohnnyConatus 9y ago
    Ugh, yeah, I've recruited a few of these people. They're the worst because: 1) they're used to the benefits that come from a company that is swimming in cash 2) they didn't personally take any of the risk to create that firehose of cash but they want you to treat them like they did. 3) they don't realize it, but they're used to working in very protected environments. Typical career paths look like top-tier college -> Google / FB / Twitter / whatever. None of this prepares them for sitting in a room with some shitty Ikea desks and trying to make hard decisions that will have a direct impact on the companies growth. No, we don't have the time or resources to build a new JS framework. I'd much rather higher someone from a second-tier US college or from overseas that can show me a time when they took significant risk / projects they built from scratch. ^ All of this is in relationship to < 20 employee companies trying to get from zero to 1.
infinite8s 9y ago
Are the people in point 2 able to make hedge-fund level money? Or are they just pulling the equivalent of a decent tech salary would get you?
- lordnacho 9y ago
  Well one guy I know works 20 mins a day and makes maybe £30K a month. Not enough to turn into a fund, but a comfy living trading from home. If things had worked out differently he could easily sit at a fund and punt larger size.

user5994461 9y ago

The mean and average upsides are still better than what one would get at a typical startup.

osrec 9y ago
What makes you say that?
thaumasiotes 9y ago
What do you mean by "average"? Unqualified, it refers to the mean.

eleumik 9y ago

+1 too many brilliant brains lost

rglullis 9y ago

Genuinely curious: why haven't you applied your advice to yourself?

osrec 9y ago
Oh, I have! I spend my days building software for a variety clients, and some happen to be investment banks and hedge funds, so I am still heavily involved with the industry. I am not employed by a fund or bank anymore. I quit my job in finance, not because I was doing badly or making less money, but because it was a terrible use of my time; all I could see was stagnation. It got to a point where I was earning a healthy 6 figure salary for "attending meetings about other meetings". A monkey could have done my job (the only reason a monkey wasn't doing my job is because it couldn't get past the damn finance interview, which is incommensurately harder than the job itself). When I quit, it took guts, because a job in finance does give you a false sense of comfort and security. But looking back, I was infinitely happier from day one, and am better off than my peers who stayed in their front office roles (this, of course, is not guaranteed and ymmv). I also feel my potential to grow is much more than my past colleagues, who still seem to be trapped in their job's safety net. Now I'm a passionate engineer and building good products makes me happy, so that's what I do. I have, through my company, launched a couple of private SaaS products, and hope to launch another, more public product soon. I also do a bit of property development in the UK. Whatever time is left over, I use to play tennis or spend time with family. It's great!
- lloyd-christmas 9y ago
  grass is always greener though. I have friends that moved into finance from elsewhere and regretted it quickly. For some of them, the pay boost was drastic enough to suffer through the misery. That pay change isn't so meaningful when moving from one high paying career to another. As an aside, the software engineer complaints about technical interviews always makes me laugh. Finance ones were even worse. Mostly useless and much more intense and time consuming. Engineering is tough because it's hard to point back at prior performance in a tangible way. Anyone can sit in a large corporation and write some for loops. It's much easier to hide in the background in software. Trading was easier to vet: "someone gave me $30m and I didn't lose any of it".

dpweb 9y ago

Getting someone to give you a job, what kind of job, is not the important thing. In both finance, tech as well and every other field, if you can make money for other people, you can make money for yourself. Traders who can make money consistently always have options, they dont need worry about who can give them a job.

leroy_masochist 9y ago

As someone who has worked in the industry, I second this. Also, the article does a poor job of delineating what strategy-category he's talking about. From context, it looks like he's talking about more of an algo/quant driven fund, which as a category is a low % of the AUM out there (most of the capital in hedge funds goes to equity long/short); in other words, to the extent the picture he paints is accurate, it's a picture of a pretty small slice of the pie.

ska 9y ago

This: ...funds are doing just okay... Made me chuckle. Most finance people I know (like some areas of tech) have a funny idea of "just ok". Making at least couple hundred grand 5 or 10 years into your career in any context is not merely "ok". The idea that there is some entitlement for FU money is deeply unfortunate. It's understandable that there is a reality distortion field created when you are adjacent to wealth, but it's good to be aware that it is there.

monochromatic 9y ago
"Just ok" also means different things in NYC compared to San Francisco compared to Austin compared to Cleveland. Most of the finance guys I know in New York make what I would consider great money... but their lifestyle is such that they save almost none of it.
- UncleMeat 9y ago
  Even in NYC or SF, 300k is way more than "just okay". There are people living in the region making 1/10th that.
  - hkmurakami 9y ago
    Tell that to the $300k earners in SV who feel that they are not doing okay because they cannot afford to buy a nice house in a nice area.
- graedus 9y ago
  The different costs of housing and living in different areas is of course a valid factor when it comes to comparing incomes. I disagree with your second sentence though. > Most of the finance guys I know in New York make what I would consider great money... but their lifestyle is such that they save almost none of it. I don't know, is how well you're doing really based on how much money is left after you choose to spend a bunch of it? If I make $2m/year but have several expensive mortgages to pay and therefore I don't save very much, that means I'm doing "just OK"?

arcanus 9y ago

> A little message to the intelligent engineers, scientists, mathematicians out there: don't be taken in by the propaganda of the finance industry. ^ This. I was greatly disillusioned. When looking for positions after PhD, recruiters told me people were making 800k (after bonus) and I got an offer from a supposedly top hedge fund for... 120k, with an expected 50%-100% first year bonus. Not guaranteed, of course. I'm not saying that isn't nice money, but in NYC it is not absurd. Plus, one can make that with a less risky lifestyle at many of the BigCo software firms. Finally, as a science PhD, I was skeptical of completely going 'zero sum' in terms of my contribution to society in life.