Finance Careers for Earning to Give

post by kbog · 2016-03-06T05:15:02.628Z · EA · GW · Legacy · 14 comments

Many altruists are interested in earning to give, but don’t know where to start. Finance is an attractive option, and with good reason. It offers very high expected earnings, opportunities to use a wide variety of skillsets, and a wide range of career possibilities with different combinations of competitiveness, demandingness and compensation. Finance can be a good fit for someone who is good at analytical thinking, works well with other people, and willing to work hard in a serious environment.


If that sounds like you, then congratulations! Even if you have literally no idea what you are doing, you have come to the right place. In this short guide we will go over the basic types of careers in finance, make some points about various aspects of the finance industry that aspiring altruists should think about, point you to further resources and send you on your way.


Link to full article which I wrote

Special thanks to Kit Harris, Alex Foster and Robert Wiblin for looking over the draft.

14 comments

Comments sorted by top scores.

comment by joshjacobson · 2016-03-06T06:04:39.519Z · EA(p) · GW(p)

(as I said on FB) This is really well done and I suspect highly useful for many.

comment by Jorgen_Ljones · 2016-03-06T15:58:23.719Z · EA(p) · GW(p)

I would love to see more of the same kind of overview for other careers like computer science, consulting and economics. 80.000 hours should consider integrating such concrete, practical guides for choosing sub-fields.

comment by johnadam111 · 2016-03-28T11:55:52.128Z · EA(p) · GW(p)

you are doing very nice job..keep it up

comment by kbog · 2016-03-28T15:46:01.004Z · EA(p) · GW(p)

Well thanks.

comment by Dale · 2016-03-07T03:36:15.650Z · EA(p) · GW(p)

Woah I strongly disagree with much of this. For example

If you are new to finance, inexperienced and unsure of what you are doing (and don’t have a 4.0 from Harvard), your time is probably better spent looking for work and connections with smaller and less prestigious companies [than applying to bulge-bracket firms].

You definitely don't need a 4.0 from Harvard to work at budge-bracket firms. In fact, at least one of the firms you listed hired literally no-one from Harvard in their latest analyst class! I would say that all undergraduates looking to get into finance should apply to all the bulge-brackets, not none of them.

Many minorities and women do make it big in even the most competitive areas of finance, although some people believe it is harder for them. A web search will get you more info and websites on this topic.

Many of the big banks run affirmative action programs; it is easier to get hired if you are not a white male. Indeed, I know one bank's HR complained that there were no good black undergraduates for them to hire because their competitors had been offering them internships and scholarships since freshman year.

Investment banking

You should probably mention that IB is full of jocks and every EA who tried it has dropped out because of poor culture fit.

Hedge funds and asset management Equity research: Analyzing stocks and making recommendations for investors (sell side) or working for investors to select investments (buy side).

You are double-counting: buyside research is the same as asset management. But when people say 'equity research', they typically mean sell-side.

However I did like the joke about The Goldman Sachs!

comment by kbog · 2016-03-07T04:55:25.678Z · EA(p) · GW(p)

You definitely don't need a 4.0 from Harvard to work at budge-bracket firms. In fact, at least one of the firms you listed hired literally no-one from Harvard in their latest analyst class! I would say that all undergraduates looking to get into finance should apply to all the bulge-brackets, not none of them.

Depends on what you mean by "apply." If it's someone who just read this guide, has been studying finance for a few weeks and goes ahead to fill out the online app for the next internship program, there are much better ways for them to make use of their time, unless they're very well qualified on paper. These positions are insanely competitive and they mostly go to either people with extensive networks and contacts in the firm, or people from target schools.

If it's someone who has networked with people in the firm and has contacts/alumni who will push their resume forward, then they should apply, but at that point the person will have learned enough to surpass the bounds of this guide's advice.

Many of the big banks run affirmative action programs; it is easier to get hired if you are not a white male. Indeed, I know one bank's HR complained that there were no good black undergraduates for them to hire because their competitors had been offering them internships and scholarships since freshman year.

True, but some people believe there is difficulty in terms of long term acceptance and fit in the industry. And small firms don't have affirmative action programs.

You should probably mention that IB is full of jocks

How many investment bankers do you know?

every EA who tried it has dropped out because of poor culture fit.

How many? If the number of EAs who tried it was small, then this isn't good evidence. It's not even clear to me that "being an EA" is a sufficiently descriptive reference class.

Either way, I should definitely not mention that fact, because that will give people biases and preconceptions. When they are learning about a career for the first time, they should start out with good, neutral sources, not secondhand rumors about people dropping out.

You are double-counting: buyside research is the same as asset management. But when people say 'equity research', they typically mean sell-side.

I have seen people talk about both buyside and sellside ER.

comment by Dale · 2016-04-02T21:34:45.870Z · EA(p) · GW(p)

These positions are insanely competitive and they mostly go to either people with extensive networks and contacts in the firm, or people from target schools.

This is not my experience at all. I know many people who got jobs at top banks despite (seemingly) no connections or prestige. They are more meritocratic than you give them credit for (and the average applicant is worse!).

True, but some people believe there is difficulty in terms of long term acceptance and fit in the industry.

Yes, some people believe that. On the other hand, I've seen people be promoted to senior positions, over more qualified people, explicitly because the firm needed more 'diversity'. You shouldn't deter people from applying to the industry on the basis of "some people believe" while not even mentioning the fact that they receive objective advantages that will help them.

I agree that this applies much less at smaller firms.

How many investment bankers do you know?

40 or so? I did work in investment banking for a while.

It's not even clear to me that "being an EA" is a sufficiently descriptive reference class.

You're writing a "Finance Careers for Earning to Give" guide and don't consider "being an EA who is interested in applying to banks" a relevant reference class? These weren't a random sample of EAs, these were EAs who thought working in IB might be a good idea for them.

Though perhaps it has worked out for some more recently and I just don't know who they are.

Either way, I should definitely not mention that fact, because that will give people biases and preconceptions. When they are learning about a career for the first time, they should start out with good, neutral sources, not secondhand rumors about people dropping out.

No, if everyone trying something (EtG in a bank) decided it was a bad idea, that is definitely valuable information. It's not a rumor, Ben could tell you who they are. We don't want neutrality, we want accuracy.

I have seen people talk about both buyside and sellside ER.

People in the industry? Who?

comment by kbog · 2016-04-03T05:36:07.243Z · EA(p) · GW(p)

This is not my experience at all. I know many people who got jobs at top banks despite (seemingly) no connections or prestige. They are more meritocratic than you give them credit for (and the average applicant is worse!).

Doing investment banking? Or doing other things at investment banks? It's a very rare phenomenon. You might see some people who were accepted that way, but you're not seeing the hundreds of equivalent people who weren't. If you want a job then you network your way in or go to a target school - that is the standard advice you will get from any good source. I wasn't speaking from anecdotes, I was speaking from sources (anecdotally, I did learn that it's extremely rare for anyone to get accepted by a cold online application, but I wasn't relying on that as a source).

Yes, some people believe that. On the other hand, I've seen people be promoted to senior positions, over more qualified people, explicitly because the firm needed more 'diversity'.

Well thanks for your anecotes. When people look up the issue on their own like I referred them to, maybe they will find other stories like yours.

You shouldn't deter people from applying to the industry on the basis of "some people believe" while not even mentioning the fact that they receive objective advantages that will help them.

I don't think I "deterred" anyone. I pointed out that it was a possible issue and referred them to do their own research. I don't think it's better to make accusations of anti-white discrimination and call it a day.

40 or so? I did work in investment banking for a while.

Good for you. I've met a couple dozen investment bankers, and I've been sufficiently convinced that it's not "full of jocks." You do realize that culture varies by city as well as firm, right?

You're writing a "Finance Careers for Earning to Give" guide and don't consider "being an EA who is interested in applying to banks" a relevant reference class?

Nope. It's very small, and being an EA encompasses many kinds of people who are essentially distributed across the same demographics and characteristics as people who join investment banking for non-EA reasons. It's not much better than taking a random sample of bankers. What kind of mystical, deranged idea do you have of all the other investment bankers, that you think they're really passionate for their job? They're doing it for money and for exit opportunities, just like EAs would.

No, if everyone trying something (EtG in a bank) decided it was a bad idea, that is definitely valuable information.

No, if a few anecdotes turned out to be people who didn't like it, that's not valuable information. It's a very small sample with a weak prior for there being a significant difference. It's also a sample of people that is consistently being told that investment banking is too demanding and who is consistently being warned about "burning out," and therefore entering with all kinds of preset expectations about how they might react to it. If you want a self-fulfilling prophecy, it sounds like a great example.

People in the industry? Who?

Sorry mate, I don't remember the references.

comment by turchin · 2016-03-06T12:08:01.450Z · EA(p) · GW(p)

One thing I consider important for altruistic career is that it should be both productive and altruistic itself.

if I find the way for 1 million people just to pay me one dollar each (without them getting anything good), I will get 1 million dollar, which I may use for my altruistic goals, but the price is that one million people will not be able to spend this dollar in their needs. Many of these people have good understanding what is good in their life. And for some of them marginal value of this 1 dollar may be high like one day more survival. My spending of this million will be better, in two cases: if I am cleaver in understanding human needs or if I use effect of concentration of capital.

It is clear that such estimations are subject of many biases. And in result collecting money from people will make more harm than good.

Many financial careers are not productive, but just clever instruments to find hidden ways of taxation of ordinary people.

comment by zackrobinson · 2016-03-06T18:34:36.775Z · EA(p) · GW(p)

Isn't one purpose of effective altruism to be "clever in understanding human needs"? If we aren't spending dollars in any more effective ways than regular folks are when they spend their paychecks, we have failed miserably. In the current climate, it is still quite possible to do a tremendous amount of good with relatively few dollars. There are probably several organizations that can either save or drastically improve a life for less than $5,000. I can't imagine that ordinary people are spending their money during the course of their day in a manner that even approaches this sort of highly leveraged effectiveness.

The purpose of charity in the first place is to do more good than we would normally do when spending our money. Otherwise, we would have no good reason to ever donate to any charities. The purpose of effective altruism is to identify the very best ways of spending money in order to do the most good. If we aren't even beating the average Joe's personal spending habits, why are we here?

comment by Linch · 2016-03-07T06:00:53.016Z · EA(p) · GW(p)

One other thing to keep in mind is that "taxation of ordinary people" is only true for a very specific (and to me, bizarre), definition of people who are "ordinary," ie, people making at least an order of magnitude above the median world income, and quite possibly two:

https://80000hours.org/2015/07/is-wealth-inequality-so-extreme-that-its-ok-to-be-a-ruthless-trader/