Investment Bank Or Hedge Fund?

You’ve worked your way up the ladder in the financial industry, and you’re looking to your future. There are many doors that have opened up for you, and they all lead in different directions: some to hedge funds, and some to investment banking. Which do you choose?

Prompt 1

While both career choices are paths to a rewarding career and the potential to make a very hefty amount of money, the two choices are quite different. Choosing investment banking means a steadier, more consistent job and salary. The pay starts out well and will grow even better with time served, and the chances of failure and ruin are much less present than in the more dramatic, volatile world of hedge funds. But it also means longer hours and working your way up the corporate ladder at a slower, more deliberate pace.  For the expert money manager who is comfortable riding out the market and letting long hours pay off in time, investment banking is the smarter choice.

Hedge funds, on the other hand, are for those with much more of a taste for the dramatic. The pay starts lower and the chance for failure is higher, but success means bigger sums of money in your bank account than even the hefty salary pulled in by senior investment bankers. If investment banking is poker, designed for the crafty strategist who plots hand by hand to slowly collect the most chips, then hedge funds are for craps players who don’t blink when it comes time to predict how the next dice roll will fall.

It may be slightly inaccurate to say that hedge fund management is all a guessing game, but working at one does require much more of the gambling spirit than investment banking. Like the world of gambling, hedge funds operate on a very simple principle: win and rake in the winnings, or guess wrong and get shown the door. If the pressure of potentially losing it all on one bad decision sounds like even more stress and sleepless nights than you already have, hedge funds are not the place for you.

There are other factors to consider as well, namely that once you pick one trying to change course later can be incredibly difficult. Many hedge funds obviously look for investment banking experience in their top personnel, but success in hedge funds is much harder to leverage into a career back into investment banking. Indeed, experience in investment banking can lead to opportunities all over the financial industry, whilst the specialized nature of working at a hedge fund gives you experience that only competitive funds are likely to be looking for. As is the nature of the career itself, moving in to hedge funds is a gamble that limits your options, but will pay off the most handsomely if you are successful.

Coming to a decision as big as what the future of your career at the top of the financial industry will look like is one that you need to be well informed on to make. Red Unida is an incredibly valuable resource designed to provide you with as much knowledge as possible on job openings throughout the financial industry. Whether you are still pondering the choice or already know which door you will take, the hundreds of top job listings on Red Unida will help you get to where you’re going.

Top 15 FS Salaries Red Unida April 2014

Current Investment Banking roles available – click here

Joining Red Unida is free, and gives you access to carefully collected data from across the industry and brought together to help you make the right financial industry career decisions. Sign up today www.redunida.com

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Is Job Stability Hurting Your Career?

The Seven-Year Curse

Are you stalling your career by staying with the same employer? If you work in the investment banking industry and have been with the same employer for seven years or more, you may find yourself un-hirable in the eyes of other top-tier firms and recruiters.

This may seem counter-intuitive. A long career history shows you a proven track record of reliability, and all those years working in the industry will save an employer a lot of valuable time and resources on training. How could all that experience be a liability?

Investment banks avoid hiring people who have worked for the same employer for so long because the cost of hiring them outweighs the short term benefit. Since promotions and bonuses are often earned from time spent in a job as much as from performance, those who have held positions the longest tend to be the ones who make the most money, and are therefore the most expensive to hire. The savings your employer makes by not having to train you can easily be eaten up by having to offer an inflated salary and guaranteed bonus to tempt you out of your current position.

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Being too expensive for the job isn’t the only negative perception about long termers. One that’s almost as damaging is that staying in the same place for so long can make you seem too settled into your role. Investment banks want employees with ambition and drive, and the recruiters who are out headhunting want to know that the prospects they’re spending their valuable time pitching have the initiative to take the leap from one position to another. Appearing sedentary is a sure way to be ignored when what is being looked for is energy and ambition.

If your plan is to climb as far up the investment banking career ladder as possible, this can be an especially problematic situation. If you’re successful at your current workplace, it may seem that the smart thing to do is to keep letting that work and dedication carry you up the chain where you’ve already proven yourself and invested all those hours of your life. But the higher up the food chain you get the fewer spots there are. You could find your career path stalled, with no opportunities to advance where you are but considered too senior and expensive to be hired into the same position anywhere else.

If you’ve already shown that you have what it takes to make it in the industry and you want to keep your career prospects open, you can’t be afraid to keep your options open. A recent survey from the Red Unida team about alumni mobility found that almost 50% MBA grads moved roles within 24 months of the survey, and 80% moved within 36 months. Rather than demonstrating a fickle sense of commitment to their careers, most were working in IB or at an executive level in industry and they were on an upward trajectory. The most settled professionals with the longest tenures were those working for carry, which had a longer horizon to pay-off.

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Therefore, i-banking in the middle tiers seems to reflect pharma and C-level career paths, which requires leveraging 24 to 36 month stints. Obviously appearing too mercenary and quick to abandon a job isn’t good for anyone’s reputation, you’re only hurting yourself by not considering other opportunities or being afraid to bite when one appears in front of you.

Red Unida has been designed specifically to help you discover the best next step for you – balancing the worth of internal equity against your value in the market place. We have built the site to not only show you the opportunities that are out there for you to take, but to compare the cost of living between different cities to better inform you of the benefits and downsides of choosing one job over the other.

While the security of a reliable job with an employer that you have grown to trust is never something to scoff at, it can also blind you and lead you into a false sense of security that can damage your future prospects for the sake of short term comfort. Even by just being aware of the other opportunities that are out there and staying as informed as possible about other possibilities in the job market, you are defending yourself against the time when all of your hard work and dedication could turn into a liability.

Red Unida has job and salary listings from thousands of employers. Signing up is free. Join here: www.redunida.com

Prompt 4

The Hidden Factor In Your Salary – The Influence Of The Right Head Hunter

Of the basic influences on your salary, there are five that have the greatest impact. Most people can rattle off employer, location, sector and seniority with ease but what about the value of your head hunter? Based upon our analysis of tens of thousands of roles, the salary variance in just the top 5 agencies advertising during 2014 can be as great as 20%, and that’s before they even start negotiating on your behalf.

When your mobile shows “Blocked Number” it generally means one of two things – a head hunter is calling or the estate agent wants to find out if you’re still looking. Any call from a head hunter is an exciting event. Their interest in you confirms the choices you’ve made and your value in the market place, and the fact that they have chosen you amongst thousands of candidates appeals to your sense of exceptionalism.

Prompt 2

It is a tempting route just to follow passively in to a recruitment process, either to boost your ego or to see whether the grass is truly greener on the other side of the fence. But before you spend time and risk your application coming to the attention of your current employer, let’s consider where the recruiter sits in the value chain.

There are a few common misconceptions about recruiters: they always get paid a share of your salary as a reward for closing the hire; this share comes from the same budget as your salary; they care about your ongoing development after an unsuccessful first interview. Remember that if the first employer doesn’t want to invest time in you, it’s highly unlikely that the recruiter will prioritise you as a candidate for the next opportunity unless you are an expert in your field.

But let’s dig one step deeper. Head hunters are deal-based sales organisations. LinkedIn and other CRM systems have put incredible pressure on their previously lucrative walled garden. Agencies like Heidricks have over a million candidates on their database – a brilliant sales pitch a decade ago, but miniscule in comparison to today’s professional social networks. The pressures recruitment agencies are under is unprecedented, and new business models such as Bounty Jobs which are dissolving the rigid Approved Supplier List process and empowering the corporate recruiters.

These pressures are driving agents to accept lower commissions, or to take more demanding roles. The ROI of an internal recruiter sourcing candidates for an employer has shot up compared to external routes, although as with any sector, great agencies will always retain their key clients.

This is reflected in how the margins in the sector changing. Head hunters might accept salary recommendations for vacancies that they know are not competitive; but still it is their job to sell this to you. Those agents that recruit good candidates at a lower cost are obviously going to be given more business.

We set up Red Unida to help candidates make straightforward comparisons between opportunities. In the first instance, this means seeing simple data on the big choices – employer, sector, location. As we grow, the data behind the logic will offer more depth on decisions such as speed of promotion in certain firms, ease of switching between industries and gap analysis between you and your seniors.

Financial Services Salaries in London (Investment Banking)The data comes from tens of thousands of advertised roles in the sector; these data are extracted and presented in graph format. So what does it show about Investment Banking?

These calculations include middle and junior roles in some cases, which in turn will bring down the averages but when it comes to advertising vacancies all but one of the top ten are recruitment agents.

Does this mean that only head hunters advertise their roles? Not at all – we have hundreds of roles from the top banks such as Deutsche, BOAML, BarCap and others in our listings. Does it mean that salaries are presented as more favourable when published by recruitment agents? Possibly.

The most likely situation however is that when an employer wants to recruit at the £100,000+ range, the ROI is better when using a third party specialist and therefore the higher paid roles go out to the agents.

Whatever investment you are due to make – education, career, property, spouse – you need to remove as much noise as possible from your calculations. Not all head hunters are born equal, so make sure you choose well.

Red Unida provides real-time averages from advertised salaries across a spectrum of sectors and thousands of employers. Join for free at www.redunida.com

Prompt 3