I don’t see a discussion of selection effect on expected salary. Finance is known for having a high washout rate with a winner-take-all structure.
Edit: I spoke with Colby Davis (LWer) who is a CFA, works for a private wealth management firm, and seems to have a pretty good idea about the job market having just spent a bunch of time exploring his options. According to him, finance works like law. You have the people coming out of the top few schools doing on average very well, and then a long tail of people not doing that well. So potentially not worth it unless you are going to an ivy league and considering finance. These top tier MBA’s and PHD’s in math reap a huge proportion of the rewards.
Also:
“For some reason when people say “finance” they tend to mostly mean IB, when that’s a relatively small part of the sector. You can make a ton of money in wealth management too, and it doesn’t require an IB background (though it helps a lot), but that’s a lot longer path. Nicer work/life balance too, generally”
Job security in the more lucrative sectors of finance may be poor. At the 80,000 Hours blog, Carl Shulman wrote:
While a physician will usually remain a physician throughout her career, lucrative jobs in investment banking and management consulting often come with “up or out” career paths. Either one is promoted “up,” with incomes growing exponentially, as one can see in these links for banks and consultancies, or one is fired “out” and must seek work at a lesser firm or leave the industry. Since most employees will not be around for very long, one must take into account one’s “exit options” in deciding whether to enter.
It is a huge huge component of the EV of a finance career. The whole idea pretty much hinges on the actual base rate of expected success. Some preliminary quantitative work would be highly helpful.
This, in a world where the job description didn’t exist as such forty years ago and probably won’t exist as such forty years from now? I mean, I guess if we’re talking “base rate, pretending the world is a static snapshot of 2014 conditions.”
I’ll take scant evidence over no evidence. Even if we only have anecdotes from finance people that is better than nothing. What we’re really interested in is the washout rate for a person with the characteristics of an average EA, which will of course be even harder to judge. I still want some idea of the chances.
No, not really. The original question is “Where can I make lots of money?” A purely empirical search will point you towards a few occupations. There will be creatives, there will be athletes in certain sports, there will be startup founders, and there will be finance, too.
The list of activities where you stand a chance of being paid more than, say, $1m/year, is not long.
I don’t see a discussion of selection effect on expected salary. Finance is known for having a high washout rate with a winner-take-all structure.
Edit: I spoke with Colby Davis (LWer) who is a CFA, works for a private wealth management firm, and seems to have a pretty good idea about the job market having just spent a bunch of time exploring his options. According to him, finance works like law. You have the people coming out of the top few schools doing on average very well, and then a long tail of people not doing that well. So potentially not worth it unless you are going to an ivy league and considering finance. These top tier MBA’s and PHD’s in math reap a huge proportion of the rewards.
Also: “For some reason when people say “finance” they tend to mostly mean IB, when that’s a relatively small part of the sector. You can make a ton of money in wealth management too, and it doesn’t require an IB background (though it helps a lot), but that’s a lot longer path. Nicer work/life balance too, generally”
Um...
It is a huge huge component of the EV of a finance career. The whole idea pretty much hinges on the actual base rate of expected success. Some preliminary quantitative work would be highly helpful.
Yes, I don’t know where to get data though.
This, in a world where the job description didn’t exist as such forty years ago and probably won’t exist as such forty years from now? I mean, I guess if we’re talking “base rate, pretending the world is a static snapshot of 2014 conditions.”
I’ll take scant evidence over no evidence. Even if we only have anecdotes from finance people that is better than nothing. What we’re really interested in is the washout rate for a person with the characteristics of an average EA, which will of course be even harder to judge. I still want some idea of the chances.
You will need to make sure your evidence is unbiased or it might well turn out to be worse than no evidence at all.
The original premise is subject to the exact same caveat. Finance looks interesting because we notice successful people in finance.
No, not really. The original question is “Where can I make lots of money?” A purely empirical search will point you towards a few occupations. There will be creatives, there will be athletes in certain sports, there will be startup founders, and there will be finance, too.
The list of activities where you stand a chance of being paid more than, say, $1m/year, is not long.