10 ms·

Telling people to leave finance

115 points by adunk 14y ago

BklynJay 14y ago
I'll never forget the conversation I overheard where someone who was utterly and completely miserable (at arguably the quintessential Wall Street investment bank) described how miserable he was, but also that they pay him so much money, at age 34, that he'd "lost the ability to complain." The hours, lifestyle, verbal abuse, sociopaths and general disregard for virtually everything except making more money, will eventually wear you out. As an influential managing director at an investment bank once told me in a moment of honesty, "This business brings out the worst in everyone."
- corwinstephen 14y ago
  I can't see how even the pay could justify living such a miserable life. I feel like the life of a miserably rich banker scales perfectly down to a simple conversation I had with a taylor in Hong Kong last month. He mentioned to me that it had been a long day for him, so I asked him what long was. He told me he'd been working for 17 hour, and that he's used to working only 15. Aghast, I said wow! That's a lot of work, but at least it's Friday. He told me it didn't matter, because he worked 7 days a week. He also mentioned that the last day off he'd taken had been over a month prior, and that it was because he was sick. I remember thinking, what's the point of living? This man works all day every day so that he can live, but he's only living to work. And honestly, that's exactly what I see in the bankers. Yeah, you make an enormous amount of money, but your job makes you so miserable that you don't even enjoy having it, so what's the point?
  - Klinky 14y ago
    I think this is kind of a symptom of market economy thinking where people remove all "inefficiencies" to lower costs and improve profit. It seems to be common thinking that two major things which are viewed as "inefficiencies" are work/life balance and working environment. Not getting 110%, or at least the appearance that you're getting 110%, out of your employees is considered inefficient which breeds poor work environment. Humans aren't numbers and when you see them almost entirely as numbers people become inhumane. It's also not always clear when trying to judge the impact a person has or if someone is giving 50% versus 110%.
  - JumpCrisscross 14y ago
    Some people work so they can earn money to live the life they love. Others find living in work as much as out. Neither is better, they're just different personalities and cultures. I've felt compelled to put down a book and get a drink with friends as often as to postpone travel to fit around a client. Just because someone leads a different life from the one you choose to or would choose to if uninhibited doesn't mean they're miserable. Watching Jiro Dreams of Sushi where Jiro, a world-renowned sushi chef, takes pride in doing the same thing every day for the rest of his life (his words) helped me reflect on that.
    - corwinstephen 14y ago
      I actually just recently saw that movie. To be honest, I couldn't help but wonder the entire time whether he really was the happiest person he could be while making sushi, or if he just couldn't bring himself to let it go. The scene where he visits his friends for example, is in my opinion, the happiest he appears throughout the entire film. Obviously his lifestyle is one that I won't ever understand. I suppose some people's minds just work differently. But then again, studies show that the happiest people are those that have warm networks of friends and family that they speak to regularly, and I can't imagine that making money for your family (at least past a certain point) is better than simply spending more time with them.
  - BklynJay 14y ago
    I couldn't agree more. :)
  - mseebach 14y ago
    The point? He could be putting his children through school and paying for his family's health care. The ability to operate solely in the top tier of the Maslow pyramid is a multiple sigma anomaly, not a fact of life. For many people "enjoying life" is knowing you've done all you possibly can to make sure your children will live a better life than you.
- sliverstorm 14y ago
  Well, at least by the time you're burned out and start a new career, you could have a very large chunk of change saved away.
  - BklynJay 14y ago
    I would agree, except having witnessed all of this firsthand, the burnout part tends to affect your outlook on life. The money becomes rather meaningless, if you can believe it.
    - enraged_camel 14y ago
      >>The money becomes rather meaningless, if you can believe it. Of course it does. The marginal utility of money specifically states that each additional dollar earned has less of an effect on the person's happiness and feeling of accomplishment. This is why "more money" stops being a motivator after a certain point.
      - BklynJay 14y ago
        Yep. But even though you say "of course it does," the majority of people don't realize that until its too late. There's nothing obvious about the situation from the outside looking in, unless you possess uncommon introspective abilities or have read up on what you're describing there.
    - sliverstorm 14y ago
      Oh, sure, but IMO it's better to be disillusioned by money and have it, than dream of it an not have it. If only because, even if you're disillusioned, you are always fed etc.
  - michaelochurch 14y ago
    This is not always true. If you're a quant or a trader, you can live in Jersey and send your kids to good public schools and no one gives a shit if you're good at what you do. If you're doing the soft-side bullshit, you have to live in Manhattan and send your kids to fancy prep schools and keep up with the Joneses (management) who have more money than you do, and you often get through the wringer with almost no savings.
nugget 14y ago
Whenever I read articles like this, I try to remind myself that there's an entrepreneurial component to finance as well. One of my friends from school was a trader for several years at a major bank. In 2012, his MD slashed his comp and the theme communicated to him was, like in the article, if you aren't happy with it, then "Just Go". He left. He took a handful of his smartest peers with him, and started a hedge fund where he now runs 500 million dollars and is up 15% on the year. If you lower compensation across the board, you provide more incentive for the rock stars like this to leave and create value elsewhere instead of for your firm. In this case, my friend took risk, and earned a reward, and I don't think anyone begrudges him the many millions of dollars more he will now earn in his new position. It's not too different in tech. I have developers who work for me who I have to pay $250k/year + serious benefits, because if I didn't, I know they'd either start their own company or be poached by an early stage team. For me the challenge is figuring out who the real rock stars are from amidst the vast sea of wannabes.
- fleitz 14y ago
  Yeah I agree, there are stagnant tech shops just like stagnant finance firms.
- zzleeper 14y ago
  Just a tidbit: The market is about 15% up this year, so his investors are probably worst off that if they just invested in an index fund.
  - tome 14y ago
    It depends what the volatility is. The S&P hasn't dropped below about 14% vol this year, and looks to have been about 18% on average. If a hedge fund returns 15% at 10% volatility that is much, much better than the market.
    - fbru02 14y ago
      why is the volatility a factor ? My intuition say that you with high volatility is a lot easier to pick the wrong equities. Is that correct ?
JumpCrisscross 14y ago
I worked in finance (as a trader). And I left. But I loved it. Most people didn't, but I did; I found the history and the mission captivating and I was not shy about showing that passion. I left because they fired my charismatic manager and the firm's culture grew neurotic as the scandals and random terminations piled on. I saw the over-worked, sociopathic, misanthropic archetypes. But I saw the same personalities in Silicon Valley. The capital markets are a critical piece of our modern world. We're still figuring out how these fascinatingly complicated machines work - they act differently in different cultures, in different sentiments, and under different geopolitical constraints. When they work...it's magical. The philosophical dimension of a weighted democracy doing better what kings and emperors through antiquity failed to do is a powerfully individualist statement. And there is so much more that has to be done. There are literally not enough hours in a lifetime of lifetimes to see all the implications and interactions and human potential waiting to be unlocked. Do I sound like a crackhead? Probably. But I love the idea of taking what is not understood, considered "random" or "exogenous", and building something to bring it from the unknown to the known. I understand the historical struggle these resource allocation machines (how I think of them) have faced and why we need people to carry the flag, even if it means being hated and misunderstood by the public. A lot of people go into finance for the wrong reasons. I feel sorry for them. A lot of them are held there by a fear, not of losing the cash flow, but of losing the prestige or business card. These people need help, not derision. But concluding the entire industry is corrupt is like looking at JustFabulous and a handful of overworked founders and concluding Silicon Valley a blight on humanity. P.S. I don't expect a huge salary just for working at a bank. But if I'm coming up with original ideas, I will do the calculation of what I could earn if I went out on my own, and if the bank figure doesn't line up with that figure (it didn't) it makes sense to arbitrage. This is classic entrepreneurship and there is nothing more sinister about JPMorgan having to compete with a star player launching their own fund than there is Google having to pay out to top performers who may otherwise do well launching a start-up.
- zackzackzack 14y ago
  This was a great a comment. I normally rail against Wall Street precisely because I've been around some of the people who go into the business and seen some shitty attitudes about life, but the call out to a higher calling of doing humanity a necessary and useful service really strikes a chord. In your opinion, are there any trading firms that you feel embody that idea that they should be working to create systems to better allocate capital (instead of, say, gaining all of the capital for themselves)? I'm attracted to the problems that banks have to solve and deal with, but the culture around the current solutions is incredibly off putting.
deleted 14y ago
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nikomen 14y ago
Do banks have a monopoly on sociapathic culture? I wouldn't disagree with anything in the article, but there are probably companies in other industries that are just as bad as banking, they just don't pay their employees as much. At least if you're going to work with crap get paid reasonably for it.
- treenyc 14y ago
  Monsanto, http://geneticroulettemovie.com http://geneticroulettemovie.com
- gadders 14y ago
  That's always been my attitude, after 15+ years working in Investment Banks. I could work at a local council, or (gasp!) a startup, but I think arseholes can work in any industry, and if I'm going to have to deal with people like that I might as well get decent money for it. Plus if you're going to work at a non-software firm, it's probably the most exciting industry you can work on. I can't imagine feeling very motivated writing software to manage the manufacture of, say, baked beans.
- justin66 14y ago
  I'm sure they don't, but finance people are actually pretty unique creatures in my limited experience. Talk to someone working in criminal justice, for example, and they'll happily own up to all the ways their work creates human misery and they'll probably float some interesting ideas about how the system is broken. Then go out and try to find a banker, trader or mortgage person and try to get them to accept some actual blame for the highly-leveraged, taxpayer subsidized horror their profession periodically unleashes on the world. It's surprisingly difficult to do, given the obviousness of the problems.
- BklynJay 14y ago
  As an influential Managing Director once told me, "This business brings out the worst in everyone."
- kahawe 14y ago
  Except this excellent pay makes things worse because people are more "addicted" to stay despite how frustrated or downright disgusted they are - and then start taking their own frustrations out on others like the rest is doing. To a degree, I can see it happening to myself - you simply cannot understand it while you are still in college or university and think all positive and idealistic and it is hard to grasp even when you are working a regular paying job... but once you get the bigger pay it is very very hard to go lower and it requires a LOT of very neutral, objective and conscious decision making that most people are probably not capable of because it is hard switching off your own feelings and gut reactions. I can say that in the last three years I have gotten a front-row seat to seeing why a lot of people are so miserable and I don't even have it THAT bad; plus I have definitely become changed in ways I would never have thought possible 3-4 years ago when I was still working in startup-paradise.
jseliger 14y ago
>a majority of them are miserable. They feel trapped and they feel like they have few options. This describes the feelings many of us have towards grad school; by now there's a rich anti-grad school lit that I've contributed to in my own small way. [1] Interestingly enough, here people are risk-averse too—but instead of being awesome, the money is terrible. The interesting thing is that very people seem to be leaving, despite the money issue, which makes her last point less analogous. [1] http://jseliger.wordpress.com/2012/05/22/what-you-should-know-before-you-start-grad-school-in-english-literature-the-economic-financial-and-opportunity-costs/ http://jseliger.wordpress.com/2012/05/22/what-you-should-kno...
cmdkeen 14y ago
As someone who works in finance in Scotland there are several other factors outwith this article to consider. I know people who have left because of the inertia at some banks - systems don't improve and "workarounds" are the norm. Retail banks that aren't risk driven can have horrific IT. But there are reasons to stay in - plenty of institutions manage to be places you can have a lifelong career at, they won't lay you off and you can do relatively interesting work. That is the flip side of the personal risk the author talks about. These places don't pay $400k. And especially don't do obscene bonuses - but they don't treat you like dirt either. Half the reason they don't get mentioned often is that people don't leave very often, there isn't scandal associated with the companies. My employer has a reputation for being the place people come to from other companies.
spaghetti 14y ago
What's a typical day like for a software engineer working in finance? I've worked in a variety of environments so I know that arrival times, perks, leaving time, meetings etc can all vary a lot. However I've never worked in finance or known anyone that has. I'm under the impression that algorithms and data structures knowledge is very important. But do software engineers in finance really deal with this on a day-to-day basis?
- hogu 14y ago
  There's a big spread, and it depends on which institution and where in the institution you are. the closer you are to the money (front office vs back) the more money you make, but the more stress you get the smaller the firm, the more freedom/autonomy, the bigger the firm, the more beauracracy you have to deal with. Imagine working at microsoft vs your own startup. Other than that, it's not much different than any other technology job
- BklynJay 14y ago
  Bottom line: everything about financial software is what Joel Spolsky warned you about. If you want to work on software, go to a software firm. If you want to just pay the bills and are not passionate about software, finance software is..well, read below. I've worked in finance as a software engineer at several large investment banks for many years. The software consists of a mash-up of legacy stuff incorporated into generally very "safe" architecture choices. Unless you work in some highly specialized (and very rare) type of group, you won't be making any decisions as to what language to use, database, environment or any other project specific choices. They do not value the product. Expect no documentation of anything and consider it a gift if you ever see an internal wiki. While documentation may be the exception in some circles, any developer worth his salt knows the true value of writing stuff down, or at least commenting code, so you can come back to it at a later date. This isn't the type of software environment where they're going to appreciate the years you spent in school, learning how to measure time-complexity of various algorithms. For the most part, those algorithms are already written and those data structures have been decided upon for you. I literally have conceived maybe a handful of algorithms over the years. You will spend your time maintaining hacked together code that was assembled by literally 30 other people who came and left before you. There will be little to no testing before software is deployed into production. You will likely not have an adequate test environment. If you are lucky enough to have a test environment, chances are that it won't resemble production in any meaningful way. This test environment may be called "your development environment." You will work with many people who do not understand, nor respect, the art of writing good software. You answer to "the business," ie: traders. Traders for the most part, will not appreciate what you do. Its too nebulous for them, and most people not in tech at the IB, for that matter. I'll never forget when we rolled out our new auto-trading system and the IBank laid off several dozen traders that day. Depending on how your group is organized, you may be on call 24/7. Some groups have coverage structures, with people covering production software in shifts. Expect to be interrupted on holidays. Expect to work on at least one of the following holidays every year: Xmas, New Years, Thanksgiving, Easter, any other national holiday. Projects will be scheduled poorly. Timelines will exceed aggressive-scheduling and wander into "insane" territory. This may be the norm, depending where you work. The quality of the software you write will suffer for it. Your lifestyle, health, social-life, family-life, interests, hobbies and life will all suffer for it as well. Politics will rule everything. Politics will stifle your productivity, unless you have a great manager who keeps you away from all of it. Unfortunately, I've never met a great software manager in finance. I'm sure they exist, but I've never had one. There will be many meetings. The meetings will run on and on and many topics will be discussed that concern none of you, which could have easily been hashed out in minutes over email. But you will spend hours in meetings because thats the corporate attitude, and finance is as corporate as it gets. The excessive meetings will impact your productivity and result in regular 12-14 hour days, year-round. You'll have far less resources than you require to do the job even adequately, because the people making the decisions about funding view tech as a cost-center. You'll frequently realize, when you read hacker news, that there's a great many exciting things happening in software outside of the world of finance software. You will see none of these exciting things. I know this seems like a long, negative entry, but I assure you - my experience was not unusual. I strongly caution anyone passionate about software against going into finance software. I've worked as a software engineer and (unusually) in the front-office on the trading side.
spiredigital 14y ago
I spent my first few years out of college working for an investment bank, and feel the same way as the piece author – I have no regrets leaving. Finance can be a great way to start / springboard your career: I sharpened my analytical mind, saw how companies worked under-the-hood, really learned how to work hard and was able to save some money. But as a long-term profession, at least in the area I was in, it's brutal. The job took a huge toll on the people that stayed with the career for 5-10 years. And like the author said, once you're making insanely great money it's hard to give that up. When my (now wife) and I went to my going away party, she was approached by many of the other banker's wives. They said they were so happy for her that I was leaving the industry, and expressed the difficulties the lifestyle presented to raising a family and relationships. I loved the people I worked with - they were hard working, honest, great people. But only an all-consuming industry could generate this kind of response from the families of my co-workers. After my stint in banking, I left to start my own company which I've been doing full-time for nearly five years. And while banking provided the initial savings safety net to scale-up the business I couldn't imagine going back. For anyone interested in the full story of my departure from finance, I wrote about it in the post below: http://www.ecommercefuel.com/my-corporate-escape-story/ http://www.ecommercefuel.com/my-corporate-escape-story/
justincormack 14y ago
If banks paid less, they would have to pay their shareholders more instead, which they always seem reluctant to do. Banks dont horde cash like industrial companies, or pay vastly more to the executives than the workers, so in many ways theu are model companies. The problem is the level of profits they make, and the amount to which they are subsidised by the government (especially recently).
- rayiner 14y ago
  I actually agree with this. The problem with banks isn't the level of compensation, it's the lack of regulation and excessive risk taking. But the compensation model is great. At Goldman, etc, 50% of revenues go to compensation. The people getting paid are the ones who do the labor, not a bunch of passive shareholders.
- jonnathanson 14y ago
  There are only two real problems with the banking system in our country: 1) it's too systemically integrated, and 2) it's not on the hook for its own risk. Both of these are antitrust issues at their core. Banks need to be broken up, so that they are no longer "too big to fail." From there, we don't need to bail them out, so they can actually fail, which means they will stop taking such outrageous risks and over-leveraging themselves. I honestly don't care if some 28 year old trader is making more money in a year than I'll see in 20. But I do care that I backstop his risk with my tax dollars, and he suffers no personal loss whatsoever if the risk materializes.
  - tatsuke95 14y ago
    >"it's not on the hook for its own risk." Tell that to the Bear Stearns equity holders, who were 99% wiped out, or the Lehman Bros. equity holders who were completely wiped out. >"Banks need to be broken up, so that they are no longer "too big to fail."" Fine, if you want to cripple long term economic growth by requiring banks to hold far more liquid assets. Or, they can rely on the Fed as the lender of last resort to step in when they need liquidity (which the Fed has done). I prefer the latter.
michaelochurch 14y ago
Having seen finance, VC-istan, and a few other places I think finance is better on average. People who bash finance are comparing it to some R&D Valhalla that doesn't exist anymore (except perhaps at a few cultural leaders like Valve) where everyone has complete autonomy over their work and no backstabbing exists because everyone is thrilled about what they do. If you compare typical finance jobs to typical real-world software jobs that are available to people without more published papers than years on this planet, then finance wins. That's not to say there aren't bad finance jobs (there are) or that finance is without its problems. The software industry sucks. Programming is fun, but the software industry itself is a horrible place to be unless you have an edge that can consistently guarantee you a stream of high-quality work and no bullshit, and there isn't a much good work to go around in this industry, so that edge really has to be solid. The way you get good at software (and one of the things I admire greatly about software engineers is that a lot of us genuinely care about being good at our jobs; that's a rarity in the corporate world) is to get good work, but you can't get good work unless people think you're good. Hence, there's that need for some sort of edge when you're starting out. Finance, for its flaws, is a pretty good place to get this sort of edge: it gives you a certain credibility that helps you escape "Just A Programmer" mediocrity.
fatjokes 14y ago
It would be even more convincing if these former finance types gave away (or were forced to give away) their massive bonuses. Until that happens, people will still want to work for finance for a few years of mad cash, then quit and tell people about how evil it was and how glad they are that they left.
dawernik 14y ago
I worked in finance and left when I realized that the people who were successful in finance were typically salespeople. Not necessarily by title, but more by action. It's bizarre how little the industry actually manages itself through data. We all know that a good index fund is going to beat the average hedge fund, but there is something so sexy about investing in a hedge fund. We all know that making 25% annually isn't realistic, but oh to make 25% annually and be able to tell your friends. It's all sales. When I was 25 I swore it off. I was too young to sell versus build. But the cash was good.
rsaarelm 14y ago
If I were a math grad-student type and actually had the talent and skills to get into a high-paying quant job, I'd consider doing the job for something like five years, saving everything I can, and then leaving for more fun jobs with the option to live off the investment income from the savings whenever I don't feel like working for a year or three. If the salaries really go to $400k, saving up a million in the five years seems possible, and investing that with 5% annual return would give you a quite nice for the math grad-student type $50k salary for free.
- ramchip 14y ago
  They may go to $400k, but not until you have significant experience in the field, so you five year would be more like 10 years. Then you have a family, health insurance gets pricier, and so on such that $50k a year doesn't look that attractive anymore...
  - rsaarelm 14y ago
    I did guesstimate that in. You'd only need to save an average of $200k per year to get to $1M savings in five years, you can do that before you hit the $400k rates. I'm not really familiar with US costs of living, where I come from $50k is an upper middle class salary. Quick googling got me 5k as the ballpark for the health insurance fee for a single person, and with a family you'd probably have a spouse chipping in, so that doesn't look like a dealbreaker. Housing is tricky, apparently "live in an apartment, don't have a car" doesn't work in the US for some reason. You could always move to a rural area with cheap housing, but that does get a bit extreme, and then you'd need to figure out the costs of getting everywhere by car.
- ky3 14y ago
  If the salaries really go to $400k, saving up a million in the five years seems possible How good are you against peer pressure? Everybody else is living it up; you sure you can get by being the only one bringing PBJ for lunch?
shicky 14y ago
I'm currently new to the finance world (6 months) and know I'm not built for it. I entered as a top student but a worse than average programmer I feel. I work in production support and though this is good for me in terms of being a person who gets things done, it has zero learning for me. The only dev work is debugging which I'm decent at. Basically I see no learning, no personal growth in this and therefore its value is limited. I suck as a programmer but I'm willing to put the work in to correct this or find something I'm interested in to get good at. So the finance world isn't for me, however now I'm a comp sci grad with worse programming skills than I left uni with....what the hell is next or how do I work that out?

115 points by adunk 14y ago

I'll never forget the conversation I overheard where someone who was utterly and completely miserable (at arguably the quintessential Wall Street investment bank) described how miserable he was, but also that they pay him so much money, at age 34, that he'd "lost the ability to complain." The hours, lifestyle, verbal abuse, sociopaths and general disregard for virtually everything except making more money, will eventually wear you out. As an influential managing director at an investment bank once told me in a moment of honesty, "This business brings out the worst in everyone."

corwinstephen 14y ago
I can't see how even the pay could justify living such a miserable life. I feel like the life of a miserably rich banker scales perfectly down to a simple conversation I had with a taylor in Hong Kong last month. He mentioned to me that it had been a long day for him, so I asked him what long was. He told me he'd been working for 17 hour, and that he's used to working only 15. Aghast, I said wow! That's a lot of work, but at least it's Friday. He told me it didn't matter, because he worked 7 days a week. He also mentioned that the last day off he'd taken had been over a month prior, and that it was because he was sick. I remember thinking, what's the point of living? This man works all day every day so that he can live, but he's only living to work. And honestly, that's exactly what I see in the bankers. Yeah, you make an enormous amount of money, but your job makes you so miserable that you don't even enjoy having it, so what's the point?
- Klinky 14y ago
  I think this is kind of a symptom of market economy thinking where people remove all "inefficiencies" to lower costs and improve profit. It seems to be common thinking that two major things which are viewed as "inefficiencies" are work/life balance and working environment. Not getting 110%, or at least the appearance that you're getting 110%, out of your employees is considered inefficient which breeds poor work environment. Humans aren't numbers and when you see them almost entirely as numbers people become inhumane. It's also not always clear when trying to judge the impact a person has or if someone is giving 50% versus 110%.
- JumpCrisscross 14y ago
  Some people work so they can earn money to live the life they love. Others find living in work as much as out. Neither is better, they're just different personalities and cultures. I've felt compelled to put down a book and get a drink with friends as often as to postpone travel to fit around a client. Just because someone leads a different life from the one you choose to or would choose to if uninhibited doesn't mean they're miserable. Watching Jiro Dreams of Sushi where Jiro, a world-renowned sushi chef, takes pride in doing the same thing every day for the rest of his life (his words) helped me reflect on that.
  - corwinstephen 14y ago
    I actually just recently saw that movie. To be honest, I couldn't help but wonder the entire time whether he really was the happiest person he could be while making sushi, or if he just couldn't bring himself to let it go. The scene where he visits his friends for example, is in my opinion, the happiest he appears throughout the entire film. Obviously his lifestyle is one that I won't ever understand. I suppose some people's minds just work differently. But then again, studies show that the happiest people are those that have warm networks of friends and family that they speak to regularly, and I can't imagine that making money for your family (at least past a certain point) is better than simply spending more time with them.
- BklynJay 14y ago
  I couldn't agree more. :)
- mseebach 14y ago
  The point? He could be putting his children through school and paying for his family's health care. The ability to operate solely in the top tier of the Maslow pyramid is a multiple sigma anomaly, not a fact of life. For many people "enjoying life" is knowing you've done all you possibly can to make sure your children will live a better life than you.
sliverstorm 14y ago
Well, at least by the time you're burned out and start a new career, you could have a very large chunk of change saved away.
- BklynJay 14y ago
  I would agree, except having witnessed all of this firsthand, the burnout part tends to affect your outlook on life. The money becomes rather meaningless, if you can believe it.
  - enraged_camel 14y ago
    >>The money becomes rather meaningless, if you can believe it. Of course it does. The marginal utility of money specifically states that each additional dollar earned has less of an effect on the person's happiness and feeling of accomplishment. This is why "more money" stops being a motivator after a certain point.
    - BklynJay 14y ago
      Yep. But even though you say "of course it does," the majority of people don't realize that until its too late. There's nothing obvious about the situation from the outside looking in, unless you possess uncommon introspective abilities or have read up on what you're describing there.
  - sliverstorm 14y ago
    Oh, sure, but IMO it's better to be disillusioned by money and have it, than dream of it an not have it. If only because, even if you're disillusioned, you are always fed etc.
- michaelochurch 14y ago
  This is not always true. If you're a quant or a trader, you can live in Jersey and send your kids to good public schools and no one gives a shit if you're good at what you do. If you're doing the soft-side bullshit, you have to live in Manhattan and send your kids to fancy prep schools and keep up with the Joneses (management) who have more money than you do, and you often get through the wringer with almost no savings.

nugget 14y ago

Whenever I read articles like this, I try to remind myself that there's an entrepreneurial component to finance as well. One of my friends from school was a trader for several years at a major bank. In 2012, his MD slashed his comp and the theme communicated to him was, like in the article, if you aren't happy with it, then "Just Go". He left. He took a handful of his smartest peers with him, and started a hedge fund where he now runs 500 million dollars and is up 15% on the year. If you lower compensation across the board, you provide more incentive for the rock stars like this to leave and create value elsewhere instead of for your firm. In this case, my friend took risk, and earned a reward, and I don't think anyone begrudges him the many millions of dollars more he will now earn in his new position. It's not too different in tech. I have developers who work for me who I have to pay $250k/year + serious benefits, because if I didn't, I know they'd either start their own company or be poached by an early stage team. For me the challenge is figuring out who the real rock stars are from amidst the vast sea of wannabes.

fleitz 14y ago
Yeah I agree, there are stagnant tech shops just like stagnant finance firms.
zzleeper 14y ago
Just a tidbit: The market is about 15% up this year, so his investors are probably worst off that if they just invested in an index fund.
- tome 14y ago
  It depends what the volatility is. The S&P hasn't dropped below about 14% vol this year, and looks to have been about 18% on average. If a hedge fund returns 15% at 10% volatility that is much, much better than the market.
  - fbru02 14y ago
    why is the volatility a factor ? My intuition say that you with high volatility is a lot easier to pick the wrong equities. Is that correct ?

JumpCrisscross 14y ago

I worked in finance (as a trader). And I left. But I loved it. Most people didn't, but I did; I found the history and the mission captivating and I was not shy about showing that passion. I left because they fired my charismatic manager and the firm's culture grew neurotic as the scandals and random terminations piled on. I saw the over-worked, sociopathic, misanthropic archetypes. But I saw the same personalities in Silicon Valley. The capital markets are a critical piece of our modern world. We're still figuring out how these fascinatingly complicated machines work - they act differently in different cultures, in different sentiments, and under different geopolitical constraints. When they work...it's magical. The philosophical dimension of a weighted democracy doing better what kings and emperors through antiquity failed to do is a powerfully individualist statement. And there is so much more that has to be done. There are literally not enough hours in a lifetime of lifetimes to see all the implications and interactions and human potential waiting to be unlocked. Do I sound like a crackhead? Probably. But I love the idea of taking what is not understood, considered "random" or "exogenous", and building something to bring it from the unknown to the known. I understand the historical struggle these resource allocation machines (how I think of them) have faced and why we need people to carry the flag, even if it means being hated and misunderstood by the public. A lot of people go into finance for the wrong reasons. I feel sorry for them. A lot of them are held there by a fear, not of losing the cash flow, but of losing the prestige or business card. These people need help, not derision. But concluding the entire industry is corrupt is like looking at JustFabulous and a handful of overworked founders and concluding Silicon Valley a blight on humanity. P.S. I don't expect a huge salary just for working at a bank. But if I'm coming up with original ideas, I will do the calculation of what I could earn if I went out on my own, and if the bank figure doesn't line up with that figure (it didn't) it makes sense to arbitrage. This is classic entrepreneurship and there is nothing more sinister about JPMorgan having to compete with a star player launching their own fund than there is Google having to pay out to top performers who may otherwise do well launching a start-up.

zackzackzack 14y ago
This was a great a comment. I normally rail against Wall Street precisely because I've been around some of the people who go into the business and seen some shitty attitudes about life, but the call out to a higher calling of doing humanity a necessary and useful service really strikes a chord. In your opinion, are there any trading firms that you feel embody that idea that they should be working to create systems to better allocate capital (instead of, say, gaining all of the capital for themselves)? I'm attracted to the problems that banks have to solve and deal with, but the culture around the current solutions is incredibly off putting.

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nikomen 14y ago

Do banks have a monopoly on sociapathic culture? I wouldn't disagree with anything in the article, but there are probably companies in other industries that are just as bad as banking, they just don't pay their employees as much. At least if you're going to work with crap get paid reasonably for it.

treenyc 14y ago
Monsanto, http://geneticroulettemovie.com http://geneticroulettemovie.com
gadders 14y ago
That's always been my attitude, after 15+ years working in Investment Banks. I could work at a local council, or (gasp!) a startup, but I think arseholes can work in any industry, and if I'm going to have to deal with people like that I might as well get decent money for it. Plus if you're going to work at a non-software firm, it's probably the most exciting industry you can work on. I can't imagine feeling very motivated writing software to manage the manufacture of, say, baked beans.
justin66 14y ago
I'm sure they don't, but finance people are actually pretty unique creatures in my limited experience. Talk to someone working in criminal justice, for example, and they'll happily own up to all the ways their work creates human misery and they'll probably float some interesting ideas about how the system is broken. Then go out and try to find a banker, trader or mortgage person and try to get them to accept some actual blame for the highly-leveraged, taxpayer subsidized horror their profession periodically unleashes on the world. It's surprisingly difficult to do, given the obviousness of the problems.
BklynJay 14y ago
As an influential Managing Director once told me, "This business brings out the worst in everyone."
kahawe 14y ago
Except this excellent pay makes things worse because people are more "addicted" to stay despite how frustrated or downright disgusted they are - and then start taking their own frustrations out on others like the rest is doing. To a degree, I can see it happening to myself - you simply cannot understand it while you are still in college or university and think all positive and idealistic and it is hard to grasp even when you are working a regular paying job... but once you get the bigger pay it is very very hard to go lower and it requires a LOT of very neutral, objective and conscious decision making that most people are probably not capable of because it is hard switching off your own feelings and gut reactions. I can say that in the last three years I have gotten a front-row seat to seeing why a lot of people are so miserable and I don't even have it THAT bad; plus I have definitely become changed in ways I would never have thought possible 3-4 years ago when I was still working in startup-paradise.

jseliger 14y ago

>a majority of them are miserable. They feel trapped and they feel like they have few options. This describes the feelings many of us have towards grad school; by now there's a rich anti-grad school lit that I've contributed to in my own small way. [1] Interestingly enough, here people are risk-averse too—but instead of being awesome, the money is terrible. The interesting thing is that very people seem to be leaving, despite the money issue, which makes her last point less analogous. [1] http://jseliger.wordpress.com/2012/05/22/what-you-should-know-before-you-start-grad-school-in-english-literature-the-economic-financial-and-opportunity-costs/ http://jseliger.wordpress.com/2012/05/22/what-you-should-kno...

cmdkeen 14y ago

As someone who works in finance in Scotland there are several other factors outwith this article to consider. I know people who have left because of the inertia at some banks - systems don't improve and "workarounds" are the norm. Retail banks that aren't risk driven can have horrific IT. But there are reasons to stay in - plenty of institutions manage to be places you can have a lifelong career at, they won't lay you off and you can do relatively interesting work. That is the flip side of the personal risk the author talks about. These places don't pay $400k. And especially don't do obscene bonuses - but they don't treat you like dirt either. Half the reason they don't get mentioned often is that people don't leave very often, there isn't scandal associated with the companies. My employer has a reputation for being the place people come to from other companies.

spaghetti 14y ago

What's a typical day like for a software engineer working in finance? I've worked in a variety of environments so I know that arrival times, perks, leaving time, meetings etc can all vary a lot. However I've never worked in finance or known anyone that has. I'm under the impression that algorithms and data structures knowledge is very important. But do software engineers in finance really deal with this on a day-to-day basis?

hogu 14y ago
There's a big spread, and it depends on which institution and where in the institution you are. the closer you are to the money (front office vs back) the more money you make, but the more stress you get the smaller the firm, the more freedom/autonomy, the bigger the firm, the more beauracracy you have to deal with. Imagine working at microsoft vs your own startup. Other than that, it's not much different than any other technology job
BklynJay 14y ago
Bottom line: everything about financial software is what Joel Spolsky warned you about. If you want to work on software, go to a software firm. If you want to just pay the bills and are not passionate about software, finance software is..well, read below. I've worked in finance as a software engineer at several large investment banks for many years. The software consists of a mash-up of legacy stuff incorporated into generally very "safe" architecture choices. Unless you work in some highly specialized (and very rare) type of group, you won't be making any decisions as to what language to use, database, environment or any other project specific choices. They do not value the product. Expect no documentation of anything and consider it a gift if you ever see an internal wiki. While documentation may be the exception in some circles, any developer worth his salt knows the true value of writing stuff down, or at least commenting code, so you can come back to it at a later date. This isn't the type of software environment where they're going to appreciate the years you spent in school, learning how to measure time-complexity of various algorithms. For the most part, those algorithms are already written and those data structures have been decided upon for you. I literally have conceived maybe a handful of algorithms over the years. You will spend your time maintaining hacked together code that was assembled by literally 30 other people who came and left before you. There will be little to no testing before software is deployed into production. You will likely not have an adequate test environment. If you are lucky enough to have a test environment, chances are that it won't resemble production in any meaningful way. This test environment may be called "your development environment." You will work with many people who do not understand, nor respect, the art of writing good software. You answer to "the business," ie: traders. Traders for the most part, will not appreciate what you do. Its too nebulous for them, and most people not in tech at the IB, for that matter. I'll never forget when we rolled out our new auto-trading system and the IBank laid off several dozen traders that day. Depending on how your group is organized, you may be on call 24/7. Some groups have coverage structures, with people covering production software in shifts. Expect to be interrupted on holidays. Expect to work on at least one of the following holidays every year: Xmas, New Years, Thanksgiving, Easter, any other national holiday. Projects will be scheduled poorly. Timelines will exceed aggressive-scheduling and wander into "insane" territory. This may be the norm, depending where you work. The quality of the software you write will suffer for it. Your lifestyle, health, social-life, family-life, interests, hobbies and life will all suffer for it as well. Politics will rule everything. Politics will stifle your productivity, unless you have a great manager who keeps you away from all of it. Unfortunately, I've never met a great software manager in finance. I'm sure they exist, but I've never had one. There will be many meetings. The meetings will run on and on and many topics will be discussed that concern none of you, which could have easily been hashed out in minutes over email. But you will spend hours in meetings because thats the corporate attitude, and finance is as corporate as it gets. The excessive meetings will impact your productivity and result in regular 12-14 hour days, year-round. You'll have far less resources than you require to do the job even adequately, because the people making the decisions about funding view tech as a cost-center. You'll frequently realize, when you read hacker news, that there's a great many exciting things happening in software outside of the world of finance software. You will see none of these exciting things. I know this seems like a long, negative entry, but I assure you - my experience was not unusual. I strongly caution anyone passionate about software against going into finance software. I've worked as a software engineer and (unusually) in the front-office on the trading side.

spiredigital 14y ago

I spent my first few years out of college working for an investment bank, and feel the same way as the piece author – I have no regrets leaving. Finance can be a great way to start / springboard your career: I sharpened my analytical mind, saw how companies worked under-the-hood, really learned how to work hard and was able to save some money. But as a long-term profession, at least in the area I was in, it's brutal. The job took a huge toll on the people that stayed with the career for 5-10 years. And like the author said, once you're making insanely great money it's hard to give that up. When my (now wife) and I went to my going away party, she was approached by many of the other banker's wives. They said they were so happy for her that I was leaving the industry, and expressed the difficulties the lifestyle presented to raising a family and relationships. I loved the people I worked with - they were hard working, honest, great people. But only an all-consuming industry could generate this kind of response from the families of my co-workers. After my stint in banking, I left to start my own company which I've been doing full-time for nearly five years. And while banking provided the initial savings safety net to scale-up the business I couldn't imagine going back. For anyone interested in the full story of my departure from finance, I wrote about it in the post below: http://www.ecommercefuel.com/my-corporate-escape-story/ http://www.ecommercefuel.com/my-corporate-escape-story/

justincormack 14y ago

If banks paid less, they would have to pay their shareholders more instead, which they always seem reluctant to do. Banks dont horde cash like industrial companies, or pay vastly more to the executives than the workers, so in many ways theu are model companies. The problem is the level of profits they make, and the amount to which they are subsidised by the government (especially recently).

rayiner 14y ago
I actually agree with this. The problem with banks isn't the level of compensation, it's the lack of regulation and excessive risk taking. But the compensation model is great. At Goldman, etc, 50% of revenues go to compensation. The people getting paid are the ones who do the labor, not a bunch of passive shareholders.
jonnathanson 14y ago
There are only two real problems with the banking system in our country: 1) it's too systemically integrated, and 2) it's not on the hook for its own risk. Both of these are antitrust issues at their core. Banks need to be broken up, so that they are no longer "too big to fail." From there, we don't need to bail them out, so they can actually fail, which means they will stop taking such outrageous risks and over-leveraging themselves. I honestly don't care if some 28 year old trader is making more money in a year than I'll see in 20. But I do care that I backstop his risk with my tax dollars, and he suffers no personal loss whatsoever if the risk materializes.
- tatsuke95 14y ago
  >"it's not on the hook for its own risk." Tell that to the Bear Stearns equity holders, who were 99% wiped out, or the Lehman Bros. equity holders who were completely wiped out. >"Banks need to be broken up, so that they are no longer "too big to fail."" Fine, if you want to cripple long term economic growth by requiring banks to hold far more liquid assets. Or, they can rely on the Fed as the lender of last resort to step in when they need liquidity (which the Fed has done). I prefer the latter.

michaelochurch 14y ago

Having seen finance, VC-istan, and a few other places I think finance is better on average. People who bash finance are comparing it to some R&D Valhalla that doesn't exist anymore (except perhaps at a few cultural leaders like Valve) where everyone has complete autonomy over their work and no backstabbing exists because everyone is thrilled about what they do. If you compare typical finance jobs to typical real-world software jobs that are available to people without more published papers than years on this planet, then finance wins. That's not to say there aren't bad finance jobs (there are) or that finance is without its problems. The software industry sucks. Programming is fun, but the software industry itself is a horrible place to be unless you have an edge that can consistently guarantee you a stream of high-quality work and no bullshit, and there isn't a much good work to go around in this industry, so that edge really has to be solid. The way you get good at software (and one of the things I admire greatly about software engineers is that a lot of us genuinely care about being good at our jobs; that's a rarity in the corporate world) is to get good work, but you can't get good work unless people think you're good. Hence, there's that need for some sort of edge when you're starting out. Finance, for its flaws, is a pretty good place to get this sort of edge: it gives you a certain credibility that helps you escape "Just A Programmer" mediocrity.

fatjokes 14y ago

It would be even more convincing if these former finance types gave away (or were forced to give away) their massive bonuses. Until that happens, people will still want to work for finance for a few years of mad cash, then quit and tell people about how evil it was and how glad they are that they left.

dawernik 14y ago

I worked in finance and left when I realized that the people who were successful in finance were typically salespeople. Not necessarily by title, but more by action. It's bizarre how little the industry actually manages itself through data. We all know that a good index fund is going to beat the average hedge fund, but there is something so sexy about investing in a hedge fund. We all know that making 25% annually isn't realistic, but oh to make 25% annually and be able to tell your friends. It's all sales. When I was 25 I swore it off. I was too young to sell versus build. But the cash was good.

rsaarelm 14y ago

If I were a math grad-student type and actually had the talent and skills to get into a high-paying quant job, I'd consider doing the job for something like five years, saving everything I can, and then leaving for more fun jobs with the option to live off the investment income from the savings whenever I don't feel like working for a year or three. If the salaries really go to $400k, saving up a million in the five years seems possible, and investing that with 5% annual return would give you a quite nice for the math grad-student type $50k salary for free.

ramchip 14y ago
They may go to $400k, but not until you have significant experience in the field, so you five year would be more like 10 years. Then you have a family, health insurance gets pricier, and so on such that $50k a year doesn't look that attractive anymore...
- rsaarelm 14y ago
  I did guesstimate that in. You'd only need to save an average of $200k per year to get to $1M savings in five years, you can do that before you hit the $400k rates. I'm not really familiar with US costs of living, where I come from $50k is an upper middle class salary. Quick googling got me 5k as the ballpark for the health insurance fee for a single person, and with a family you'd probably have a spouse chipping in, so that doesn't look like a dealbreaker. Housing is tricky, apparently "live in an apartment, don't have a car" doesn't work in the US for some reason. You could always move to a rural area with cheap housing, but that does get a bit extreme, and then you'd need to figure out the costs of getting everywhere by car.
ky3 14y ago
If the salaries really go to $400k, saving up a million in the five years seems possible How good are you against peer pressure? Everybody else is living it up; you sure you can get by being the only one bringing PBJ for lunch?

shicky 14y ago

I'm currently new to the finance world (6 months) and know I'm not built for it. I entered as a top student but a worse than average programmer I feel. I work in production support and though this is good for me in terms of being a person who gets things done, it has zero learning for me. The only dev work is debugging which I'm decent at. Basically I see no learning, no personal growth in this and therefore its value is limited. I suck as a programmer but I'm willing to put the work in to correct this or find something I'm interested in to get good at. So the finance world isn't for me, however now I'm a comp sci grad with worse programming skills than I left uni with....what the hell is next or how do I work that out?