Who makes more money investment bankers or private equity?
Those working in private equity can often achieve a higher salary, but their income may be less stable than those working in investment banking.
Private equity associates are usually older individuals who started out and were successful in investment banking in their earlier years. While there is sometimes quicker money to be made in investment banking, usually associates in private equity have higher salaries and make more in the long term.
- Fast-paced environment.
- Exposure to high profile transactions.
- Surround myself with intelligent and motivated people.
- Valuation & financial modeling work.
- Steep learning curve.
- Passion & love for finance.
Can you become a millionaire as an investment banker? It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year.
Compensation: You'll earn significantly more in private equity at all levels because fund sizes are bigger, meaning the management fees are higher. The Founders of huge PE firms like Blackstone and KKR might earn in the hundreds of millions USD each year, but that would be unheard of at any venture capital firm.
On the whole, investment bankers are drawn to private equity for its long-term focus, greater control over investment decisions, higher compensation, entrepreneurial opportunities, and the opportunity to develop a more diverse skill set.
If the firm likes you, they'll support you in making the move – plus, most PE funds have solid connections to banks, which is yet another advantage of doing a private equity internship first.
Investment banking offers the opportunity to become an expert at building large, complex financial models at the earliest stage of your career. While bankers aren't necessarily great investors, they do spend a lot of time on valuation work, and this can be an excellent way to start your career.
Early in your career, investment banking gives you the chance to develop expertise in creating extensive, intricate financial models. Bankers may not be terrific investors, but they do spend a lot of time on valuation work, which can be a great way to start your career.
UBS is a truly global company with a presence in over 50 countries worldwide. This permits them to serve clients throughout the globe and provide a wide variety of services to satisfy their desires. They focus strongly on wealth management and have been ranked as the world's most prominent wealth managers for decades.
What job in finance makes the most money?
- Chief financial officer (CFO)
- Investment banking.
- Hedge fund manager.
- Private equity associate.
- Actuary.
New York is typically the center of investment banking in the U.S., and salaries there tend to be the highest in the country as pay is commensurate to the high cost of living.
Investment banking is very well paid, but sign-on bonuses and a healthy pay packet come at a price. To survive as an investment banker, you need to have a high stress threshold. You also need to be willing to say goodbye to your social life for a few years.
The three components of salary—base salary, bonus, and carried interest—are higher in PE than in VC. You'll earn significantly more in private equity at all levels because the funds they manage are bigger, meaning the management fees are higher.
Private equity owners make money by buying companies they think have value and can be improved. They improve the company or break it up and sell its parts, which can generate even more profits.
The Bottom Line. Investment banking is a division of banking that provides advice on large, complex financial transactions on behalf of individuals and corporations. Private equity, on the other hand, is an investment business that uses collected pools of capital from high net worth individuals and firms.
Investment banks (often through a dedicated group within the bank focused on financial sponsors) will pitch buyout ideas with the aim of convincing a PE shop to pursue a deal. Additionally, a full-service investment bank will seek to provide financing for PE deals.
A career in private equity is one of the most desired professional pathways for a number of reasons – it can be extremely lucrative, it's intellectually rewarding, and in general provides a better work/life balance than other highly competitive areas in finance such as investment banking.
Compared to other jobs in the financial space, private equity roles can provide a more balanced lifestyle, potential for better pay and more engaging, connected work. Private equity is growing in popularity, and an increasing number of college graduates or financial professionals are looking to break into the space.
A role in private equity is a very competitive yet rewarding career path. Getting started in a profession in private equity (PE) requires strong analytical and networking skills to jumpstart a career at a PE firm.
Can you go into private equity without investment banking?
One potential route to break into private equity without a banking background is via management consulting. It's slightly more difficult than breaking in from investment banking, but it's common enough that you'll still be able to leverage headhunters and participate in standard on-cycle and off-cycle recruiting.
The average during a busy time for associates and analysts is usually around ~60-70 hours per week. But it's all dependent on how many deals and investments are on the go. The above hours will vary based on if there's a live deal. Basically, everything goes on hold, and you need to be available 24/7.
It's very common to work 75+ hours per week in investment banking because of the culture and job expectations. If you're in a top-performing group at a top investment bank, you'll constantly be on live deals that require lots of weekend work and late nights.
Even with education, experience, and enthusiasm, investment banking might not be for you. Investment bankers work long hours and often earn a high income. Lack of work-life balance is one reason to avoid becoming an investment banker. Investment bankers must also be able to manage high-pressure situations.
Nevertheless, the day-to-day work of an investment banker is typically demanding, fast-paced, and may be considered stressful by those who enjoy a more relaxed work-life balance. If you are looking for employment with a typical 40-hours per week and flexible scheduling, investment banking may not be the path for you.
