There are a lot of ways out of banking. Monasticism, the French Foreign Legion, or consulting are all valid options. For most serious bankers, however, there are really only two agreeable exits – private equity, or a hedge fund.
The primary motivation to leave banking is the work-life balance. More specifically, the lack of it. Bankers are worked liked dogs by any metric. The opportunity to work fewer hours whilst earning as much as before (which disqualifies monasticism and consulting) is what draws bankers to the buy-side.
Our compensation report, using results from nearly 3,500 responses to our annual survey, analyzed the breakdown of pay and working hours at hedge funds and private equity funds. The results confirmed suspicions that people on the buy-side work less.
Our survey responses suggest that working hours at both hedge funds and private equity firms are pretty much identical (just shy of 51 hours a week on average, well below investment banking’s 60). Compensation at hedge funds is somewhat higher than at a private equity fund - $196k a year on average, compared to $167k – a difference of around $10 an hour in the hourly wage.
Crucially, carried interest was not included in the private equity pay calculations, mostly due to difficulty in counting it on an annual basis (given payment schedules), but also due to a small number of exceptionally well-renumerated individuals, who obliterated any sense of accuracy in the numbers.
Bearing carried interest in mind, however, suggests that whilst hedge funders earn more in the early stages of their careers, private equity might provide the bigger pay packages with seniority. Carried interest can reach the 8-figure range for senior people at big funds.
Have a confidential story, tip, or comment you’d like to share? Contact:[email protected]in the first instance.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)
