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Work and Life Balance
It’s a bit counterintuitive to enter finance and then optimize for work / life balance, but there are some very comfortable finance jobs out there. It is entirely possible to earn >$300k and work <50 hours by your early 30s if you pick your spots right.
Before I left my role in private equity, I gave serious consideration to a couple of roles that promised a better life without sacrificing too much earning potential.
Had I stayed in high finance, I would’ve definitely tried to recruit for one of the following jobs. I will say that these roles are generally not the highest-earning roles in finance, but the trade-off can be worthwhile for lots of people.
And as you read about the roles below, it can be helpful to keep in mind the two following characteristics: business model and owner expectations. These two characteristics will often dictate why and how a job can be comfortable to work at.
Think About the Business Model - How Does the Firm / Fund Earn Money?
Regardless of industry, the specific business model of a company is going to be the primary determinant of what your life is like. For example, all deal-reliant professional service roles (like investment banking, law, and parts of consulting) are going to have unpredictable and lumpy hours with short sprints.
Even if you become a senior deal team member in investment banking, you’re still going to have to take calls over the weekend at some point. If a business earns money based on the number of deals or number of transactions, you can expect your role to focus on high velocity and constantly filling the pipeline with new deals.
Think About the Ownership Expectations - How is the Company Financed and What do the Shareholders Expect?
It is also very useful to think about how the company is financed and what the owners of the company expect. As an example, portfolio companies of private equity firms often have high expectations placed on them by their private equity managers. These companies are also often saddled with debt, which adds pressure on employees.
This dynamic is also extremely obvious when you look at hedge funds. Hedge funds trade public stocks, so their investors can track performance extremely accurately. This tends to bring a high level of pressure, as investors know exactly how well you're doing on a daily basis. Less liquid asset classes like private equity and venture capital might have less day-to-day pressure to perform.
Career Options
1. Long-Only Fund / Hedge Fund
The first category we’ll cover is long-only funds, which sometimes take the form of mutual funds. Long-only funds and mutual funds are technically hedge funds, but functionally often feel distinct from the long-short hedge funds and “pods” that tend to offer a higher earning potential and more intense lifestyle.
Long-only funds typically focus on realizing a company's intrinsic value and want to hold investments for the long run.
In contrast to long-only funds, long-short hedge funds also “short” companies in order to reduce their overall risk exposure.
Many of the largest mutual fund asset managers like Fidelity and Vanguard have long-only funds within them. There are also "purer" mutual funds like First Pacific Advisors and Select Equity that tend to focus more on stocks than other asset classes.
Pros:
Get to critically think about businesses and make strategic investment decisions
Often have a longer-term time horizon and can take multi-year bets
Culture and hours tend to be better than long-short funds or other hedge funds
Cons:
Often have lower earning potential than long-short hedge funds and other top-paying investing jobs
Fund performance and earning potential may be severely hampered during bear markets due to an inability to short
As with all hedge funds, investors may withdraw their money if performance is poor
These long-only funds often have a much more tolerable culture than their long-short cousins. Long-only funds tend to also have a smaller number of investments than long-short funds. Long-short funds often hold positions for a shorter amount of time, which makes them a higher-velocity business.
The main draw for me to a long-only fund is that it has the fun of learning about businesses without the same level of stress or intensity. The pay also seems solid (although well below the median of top long-short funds).
2. Pension Fund / Family Office / Endowment Fund
The next category of jobs that tend to have a great work / life balance are pension funds, family offices, and endowment funds. These are essentially investment funds with extremely stable capital.
Pension funds receive pension payments from their constituents (e.g., teachers, firemen, all employees in a nation).
Family offices are funded by a single family (like MSD Capital or Soros Family Office) and manage the wealth of a small group of individuals.
Endowment funds are established by a foundation, most commonly used by universities (with Harvard and Yale having huge endowments, each >$40B).
Pros:
Extremely stable capital leads to higher job security and less attrition
Culture at these types of funds tends to be relatively better and less cutthroat
Pension funds are some of the largest money managers in the world and their AUM commands respect around the world
These funds are often given many special “co-invest” opportunities by virtue of their size
Pension fund / endowment fund employees may have an easier time feeling like they contribute a net positive to society (“we’re helping teachers retire earlier!”)
Whereas the majority of good private equity and hedge fund seats are in New York or San Francisco, many different states and regions tend to have pension funds. If you’re looking to move back home or to an obscure region, a pension fund might be the best job for you
Cons:
Earning potential tends to be lower, with many funds not offering carry or points
The stakeholder base tends to be more risk-averse, which may restrict certain kinds of investment ideas
The stable nature of this capital often makes a fund’s future more predictable. Most hedge funds face the ever-present risk of redemptions from investors if their performance sours for even a few quarters. The stress level of that business model can lead to substantially worse culture or working conditions. The risk of redemptions is significantly lower at these sorts of funds – it’s a near guarantee that teachers in Ontario will still contribute to the Ontario Teachers’ Pension Plan and that Harvard University will continue to manage its assets.
Note that this category has more to do with the fund structure as opposed to the specific investing role. If you work at a pension fund, you could be investing in private equity, public markets, real estate, credit, etc.
The work / life balance here is predicated on the structure and business model, not the job itself. The largest pension funds and endowments resemble the largest mega funds and invest in virtually every major asset class.
3. Investor Relations / Business Development
The third category of finance jobs that tend to have a palatable work / life balance is investor relations and business development at an investment firm.
This could be investor relations at a private equity firm, venture capital fund, hedge fund, etc. Lots of larger corporates will have investor relations teams as well, but the roles are different (no fundraising) and salary ceilings tend to be lower at corporates. Many investment bankers tend to migrate to these investor relations roles as they can build on their capital markets knowledge without having to endure as much suffering.
The role of investor relations / business development employees is to communicate with investors on how the fund is doing, answer requests from investors, and raise capital for funds. To effectively do this job, you generally either need direct private equity experience or have had lots of exposure to capital markets.
These roles tend to be more survivable because they don’t operate on short sprints or have to work on live transactions. Raising a fund and running an annual meeting can still involve a lot of stress and timelines, but it doesn’t tend to be as intense as working on the deal team.
Pros:
Get to interface with top investors from around the world
More reasonable work / life balance and more predictable seasonality (busiest around quarterly earnings or reports)
Learn about fund metrics and what prospective investors care about
Cons:
Earning potential may pale in comparison to the deal side
May be less likely to receive carry due to indirect impact on investing side
If you prefer the selling mindset and interfacing with “clients” or potential investors, you might enjoy a path in investor relations. A lot of top private equity folks on the deal side will switch to investor relations when they want to focus more on their personal life.
Investor relations employees at a fund may arguably have more insight into the entire fund performance than an individual deal team member. Even if you’re an MD, you may be fully dedicated to a specific vertical and not get to see how the rest of the business comes together. In investor relations, you get to think big picture and craft a narrative for the fund as a whole.
Conclusion
A lot of top talent stays laser-focused on long-short hedge funds and private equity mega fund roles due to their prestige and earning potential.
However, if you’re willing to make some compromises, there are still great career paths in finance with a decent work / life balance.