GUEST COMMENT: The myth of the investment banking career path

So, you want to start your own hedge fund, make $1bn a year in cash, and retire at 30 with enough capital to buy several countries?

I am going to outline what you need to do for this. Copy and paste the article below, fill in a few gaps, and you'll be well on your way to becoming the next hedge fund billionaire.

Just kidding.

There is no magic bullet. There is no set of precise steps you take to become the next MD at a bulge bracket bank, or the next partner in your own hedge fund. Just because you went from year to year and progressed linearly in education, that doesn't mean it happens that way in the real world.

Yes, there are some situations in which you will need to do x to achieve y. For example, it's very difficult to get into private equity unless you've been an analyst in an investment bank. It's also very difficult to move from a hedge fund trading weather derivatives to one investing in technology companies in Israel if you've been at your fund for 10 years already.

"Path" implies that you can get to your destination without much effort: you can just stroll along, and no matter how slowly you go, eventually you'll reach the end.

But what if we called it a "career twisty, crooked, spiral with boulders falling down" instead?

Dangerous.

No one can tell you the exact set of steps you need to follow over 20 years to go from MBA to MD.

You "normally" don't break into finance from law or engineering or real estate or sales or non-profit work, but that doesn't mean you can't.

The real route

There is a "path," but it's not the elite university, elite bank, hedge fund/private equity, greatness route you've been thinking of.

Make money, move up. Don't make money, move out.

If you're working in IBD, what really matters are relationships and specifically how well you can leverage those relationships for profits.

A lot of people get "stuck" at the mid-level: they're good at execution but can't bring in new clients or generate profits or ROI on their own.

This is what happens when you "fail" in finance: you reach the mid-level but can't go any further. They keep you around for a bit and then show you the door when you can't transition to profit generator.

And at that point? You can either move into industry, or set up a surf shop in Croyde.

A version of this article appeared on Mergers & Inquisitions, a website dedicated to helping people break into investment banking, and to maintaining their sanity while doing so.