Stress levels in the financial industry?

[ninevolt]

Hi everyone,

I am a second year physics undergraduate and I have recently become worried about being employed, even with higher education like a phd. Because of such anxiety I've explored the option of becoming an investment banker on Wallstreet, but I would like to know more information.

1. How competitive is it to get these jobs as a physics phd
2. How stressful are these jobs??
Will the demands of this job like (constantly monitoring the markets) impede family life?
3. How much is the living cost on Wallstreet??

 

[I like Serena]

Hi everyone,

I am a second year physics undergraduate and I have recently become worried about being employed, even with higher education like a phd. Because of such anxiety I've explored the option of becoming an investment banker on Wallstreet, but I would like to know more information.

1. How competitive is it to get these jobs as a physics phd
2. How stressful are these jobs??
Will the demands of this job like (constantly monitoring the markets) impede family life?
3. How much is the living cost on Wallstreet??

My brother has a degree in aerospace engineering.
He did a few jobs in that area, but finally decided to become a banker and made a *lot* of money.

According to him he had an important advantage in the fact the he learned to juggle with numbers.
Furthermore there are many jobs in banks.
My brother mostly brokered deals between companies that needed money and investors that had money to spend. In such deals it is not clear-cut what the terms should be.

 

[twofish-quant]

One note here. There are a lot of different jobs in finance. What physics Ph.D.'s get hired for is not sales and trading or mergers and acquisitions.

1. How competitive is it to get these jobs as a physics phd

Not that difficult.

2. How stressful are these jobs??

Very stressful. But it's roughly as stressful as graduate school, and less stressful than working in a startup company.

Will the demands of this job like (constantly monitoring the markets) impede family life?

It's not that much worse than other jobs. One thing that is true with most finance jobs that physics people do is that you have your weekends free. This isn't true for jobs in other software intensive industries, and it's not true in graduate school.

3. How much is the living cost on Wallstreet??

NYC is very expensive. That has to be taken into account when comparing salaries. One particular issue if you have kids is schools. You either live in a place with good public schools, which costs $$$$, or you send your kids to private school which costs $$$$.

Also NYC is a very stressful city. Everyone is there to make it big. Even the beggars and criminals are there are hyper-competitive. Some people like it. Some people hate it.

 

[yg7s7]

So what kind of jobs Ph.D Physics people get in Finance

 

[Aresius]

As far as I know, people with technical degrees generally become Quantitative Analysts (Quant). This involves being really good at stochastic calculus and programming, especially Monte-Carlo simulations.

 

[Katastrofa]

1. How competitive is it to get these jobs as a physics phd

It is competitive but not as competitive as getting a post-doc.

2. How stressful are these jobs??

Somewhat. Sometimes everything's OK and there is little stress, but when the s**t hits the fan, people lose money and get much stressed. People were *very* stressed when Lehman Brothers went bust.

Levels of stress depend a lot on who your manager is and what is his position in the bank (how well can they shield their team from external pressures). The difference with the academia is that it's easier to switch jobs in finance if your manager is a monster.

Will the demands of this job like (constantly monitoring the markets) impede family life?

Yes. You can expect to spend at least 10h each day in the office.But you won't be bothered outside office hours. It depends also on your ambitions -- if you want to beat the other people and be the top 1 guy, you will take stuff home and read/work on it. If not, you will relax and spend your salary on nice things. You can be quite relaxed about your career and still earn quite a lot, but you run the risk of being the first to let go if another crisis comes. Banks tend to hire eagerly and then to lay off eagerly.

3. How much is the living cost on Wallstreet??

In London you can live quite comfortably as a single person for £40,000 p/a (gross), as a couple for £60,000 p/a. The second number is a typical salary for a junior quant in the City.

NYC is said to be more expensive, though.

 

[twofish-quant]

The stress isn't worse than graduate school, and the hours and stress are comparable to other high stress jobs.

Somewhat. Sometimes everything's OK and there is little stress, but when the s**t hits the fan, people lose money and get much stressed. People were *very* stressed when Lehman Brothers went bust.

But one misconception that people get from the movies is the idea that people are usually screaming
at each other. One interesting thing about what happened after Lehman blew up was how calm and quiet people were. People were under massive stress, but it was very controlled and very orderly, and if you walked on the trading floor when everything was happening, you'd hear a lot of typing on computers and a lot of calm, rational conversations about how the world was falling apart.

If you've survived graduate school, you've already figured out how to deal with these sort of stress. What I do is to code C++. It was extremely stressful after Lehman, but I was too busy for the first two or three months to notice. The really depressing time was in Spring 2008, when things had calmed down, and you noticed more and more empty seats in the office.

One thing that I find interesting is that apparently the same thing happened in 10/1929. Most of the reports from people that were there, were that people were just doing their jobs, and people were in a generally good mood. No one really ended up jumping from buildings.

There are times when you do have a "emergency", but in those situations, people are usually quite calm. When production breaks, you have raised voices and the look of fear, but people stay rational.

Because there is a lot of "surpressed stress" there are times in which people just lose it. Those usually happen after the emergency.

Levels of stress depend a lot on who your manager is and what is his position in the bank (how well can they shield their team from external pressures). The difference with the academia is that it's easier to switch jobs in finance if your manager is a monster.

One other difference is that people lose their jobs for reasons that they have no control over. If you get expelled from a university, people will assume that you did something really bad. If you get let go from a financial job, there are a thousand reasons for that.

It depends also on your ambitions -- if you want to beat the other people and be the top 1 guy, you will take stuff home and read/work on it. If not, you will relax and spend your salary on nice things.

One other difference is that academia is "up or out". You either get promoted or kicked out. Industry doesn't work this way. Once you reach VP level, then you can just do the same job for the next twenty years.

You can be quite relaxed about your career and still earn quite a lot, but you run the risk of being the first to let go if another crisis comes. Banks tend to hire eagerly and then to lay off eagerly.

But there is a large amount of randomness. You could get promoted and find that your new job is to be the boss of a division that the company was planning to shut down. Oopppsss...

The other thing is that if there is a crisis, you might find yourself down on the list of people to be let go, but if it's bad enough, then you are still going to get walking papers. Something that did happen during the crisis was that front office people got hit hard. People that were in risk management who normally have lower salaries, generally did not get laid off.

In London you can live quite comfortably as a single person for £40,000 p/a (gross), as a couple for £60,000 p/a. The second number is a typical salary for a junior quant in the City.

In NYC the costs can vary a lot. If you are single, you can get a cheap apartment in an area that is undergoing stage one gentrification. This is an area where you have unarmed gang fights, the occasional police shooting, but no one is selling crack or firing machine guns like they were five years ago. If you have kids, those neighborhoods don't work, because the schools are bad, and you want a house in Jersey which costs $$$$.

One thing about the culture of finance is that you can't separate it from the culture of financial centers, and NYC has a very competitive stressful culture, because *everyone* is trying to make it big. You are trying to make it big in investment banking, and in doing so, you'll find people that are trying to make it big selling pizzas, driving taxis, sweeping floors, delivering Chinese food, selling tacos, making movies, or something else. Even the criminals and beggars are trying to be number one.

One other issue with NYC is that you should be prepared to feel poor. If you make $200K in say Des Moines, Iowa or Jackson, Mississippi, you are king of the city. In NYC, not only are there billionaires, but there are entire industries that cater to billionaires, and if you just walk on 5th Avenue near Central Park, you'll see stores that cater to people with billions of dollars that come to NYC on their private jet so that they can shop with their mistress and blow $100K on shoes and handbags.