Pros and Cons of Working in Private Equity
You think about starting a career in private equity but want to get additional information about salaries, job prospects, future outlook, educational requirements, working hours and much more?
Great! Stick with me since I will show you all the pros and cons of working in private equity in the following chapters.
Private Equity Analyst Job Profile
|Job Description||Private equity analysts perform financial analyzes and conduct research to find profitable investment opportunities for their clients with the goal to outperform the market and achieve above-average returns on investment.|
|Salary||$121,000 per year on average, most people working in private equity make between $92,000 and $234,000 per year.|
|Job Security||Since private equity analysts are highly-qualified and often pretty smart, they have decent job security and many exit options.|
|Job Satisfaction||While most private equity analysts are happy with their salary, they are not happy with long working hours at all.|
|Work-Life Balance||Private equity analysts have to work many extra hours and sometimes even have to work on weekends and therefore have pretty poor work-life balance.|
|Physically / Mentally Demanding?||Working in private equity can be mentally demanding.|
|Future Outlook||Solid future outlook since there will always be many rich people who consult financial experts on how to invest their money in a proper manner.|
|Requirements||You need a college degree in finance, business, economics, mathematics from a renowned university to be able to work for the prestigious private equity companies out there.|
Advantages of Working in Private Equity
- Private equity analysts can make really good money
- You can work with many ambitious people
- Private equity analysts have a rather high social status
- You have an easy time in the dating market
- Private equity analysts can afford many nice things
- You don’t have to worry about old-age poverty
- You can work with people from all over the world
- You can climb the corporate ladder rather quickly
- Private equity analysts have excellent exit options
- You don’t have to work in a physical manner
- Private equity analysts mainly work indoors
- Decent job security for private equity associates
- You learn a lot about how to invest money in a profitable manner
- Private equity analysts can work remotely
Private equity analysts can make really good money
One advantage of working in private equity is that you can make really good money from what you are doing.
In fact, it is pretty easy to make a six-figure income in this field at a rather young age and you will therefore be able to make much more money than the vast majority of your friends.
You can work with many ambitious people
The private equity sector also attracts many ambitious people and you can therefore work with many really smart people and build a strong business network from which you can benefit in various ways since the more talented people you know, the easier it will be for you to get into fancy positions in the corporate world.
Private equity analysts have a rather high social status
Since private equity analysts make good money and they also work in a rather competitive environment, many of your friends will admire you for your career path and may secretly wish to change places with you so that you will have a pretty decent social standing among your loved ones.
You have an easy time in the dating market
Thanks to the good money you can make in private equity and the rather high social status, you will also have a pretty easy time in the dating market and you will have almost freedom of choice and can be really picky in this regard.
Private equity analysts can afford many nice things
Since you can make really good money, you will also be able to afford many nice things as a private equity analyst while welders and many other people who make far less will often struggle just to pay their basic bills and you as a private equity analyst also don’t have to worry about your finances as much as most other people who don’t have the luxury of making really good money.
You don’t have to worry about old-age poverty
Another upside to working in private equity is that you also don’t have to worry about old-age poverty much since you can simply save and invest enough for retirement and once you get older and quit your active career, you will have more than enough money to afford a decent lifestyle, at least if you don’t spend everything on consumption but rather spend your money wisely.
You can work with people from all over the world
Since the private equity industry attracts many talented people from various sectors, you can also meet many interesting people from all over the world and this can make your life at work really interesting.
You will sometimes also have clients from foreign countries and will therefore always face new challenges and also have to adapt to different cultures if you want to stay successful in the private equity industry in the long run.
You can climb the corporate ladder rather quickly
Since private equity analysts get lots of responsibility at a rather young age, they also have the potential to learn quite a lot during those early years and may be able to get into fancy positions before they even reach the age of 30.
Private equity analysts have excellent exit options
Another benefit of being a private equity analyst is that you will also have excellent exit options and in case you don’t want to work in private equity anymore for various possible reasons, you can just apply to more relaxed jobs and may also get into leading roles in the corporate world rather easily.
You don’t have to work in a physical manner
Since you will work with a computer all day long, you also don’t have to work in a hard physical manner compared to garbage collectors or other people who have to work with their hands in an exhausting manner all day long and have to stress their bodies quite a lot.
Private equity analysts mainly work indoors
As a private equity analyst, you also have the luxury of working indoors in an office environment and don’t have to work outdoors while scaffolders and many other people have to work outdoors even during times of bad weather.
Decent job security for private equity associates
Since you will have excellent financial knowledge and will be able to provide lots of value to the financial sector, you will also have pretty decent job security as a private equity analyst and don’t have to worry about getting laid off much since even in case this happens, you will have more than enough other companies which would love to employ you.
You learn a lot about how to invest money in a profitable manner
Working in private equity can also be beneficial for your private life since you will just learn a lot about how to invest money from real experts in the industry and this can also help you make good financial decisions for your own private investment portfolio.
Private equity analysts can work remotely
Working as a private equity analyst can also be quite convenient since you will be able to work remotely quite a lot and will therefore be able to manage your private and professional life at the same time much better compared to carpenters or other people who have to be present at work in person every day.
Disadvantages of Working in Private Equity
- Private equity analysts have to work long hours
- Some people in private equity even have to work on weekends
- Poor work-life balance for private equity analysts
- You may not have enough time for your family
- Working in private equity can be stressful
- You work in a pretty competitive environment
- Private equity analysts are often at risk of burnout
- Many people leave this field rather soon
- You may suffer from sleeping problems
- You have to be flexible as a private equity analyst
- Clients can be demanding
- Only very few people really make it in private equity
- Hard to make a big social impact as a private equity analyst
- Lack of fresh air may be annoying
- You often don’t see real results from your labor
- You need a fancy degree for becoming a private equity analyst
- You may have to pay back significant student loan debt
Private equity analysts have to work long hours
One problem with working in private equity is that you have to work long hours on a regular basis and while most other people will enjoy their leisure after work, it is quite common for private equity analysts to work in the late evening or even at nighttime.
Hence, if you are not fine with working long hours and neglecting your private life, you should not go for a career in this field but rather go for a classical 9 to 5 job instead.
Some people in private equity even have to work on weekends
You may even have to work on weekends from time to time and if you are not willing to make this big commitment, chances are that you will just not succeed in the private equity industry in the long run and may even lose your job sooner or later.
Poor work-life balance for private equity analysts
Since you will have to work many extra hours and sometimes even have to work on weekends to finish a presentation for Monday, you will have a pretty poor work-life balance in general and may get really frustrated with your job in the long run.
You may not have enough time for your family
Working in private equity can also be problematic in case you have a family since you may not be able to see your kids grow up often since you will spend most of your life working and you may regret that in later years.
Working in private equity can be stressful
Another downside to being a private equity analyst is that you will work in a pretty stressful manner and will have to deal with lots of time pressure on a regular basis.
Consequently, you should be a stress-resistant person who knows how to deal with pressure since you will not get happy with this job otherwise in the long run.
You work in a pretty competitive environment
You should also know that you work in a pretty competitive industry with many talented people and only very few people really have the skills and the persistence to really succeed in the private equity sector and you may also have to deal with competitive colleagues and overall working atmosphere may be rather poor.
Private equity analysts are often at risk of burnout
Since you will have to deal with high levels of stress, many private equity analysts also suffer from burnout and other mental problems sooner or later and you should really ask yourself whether risking your health for your job is really worth it in the long run.
Many people leave this field rather soon
You should also know that retention rate in the private equity sector is rather poor and many people leave this industry after just a few years since they are just fed up with working long hours and search for a more relaxed work environment.
You may suffer from sleeping problems
Since you will have to work long hours quite often, you may also have to destroy your natural sleeping rhythm and may suffer from serious sleeping problems sooner or later.
You have to be flexible as a private equity analyst
Since plans change quite a lot and not all things work out as planned, you also have to be quite flexible as a private equity analyst and also have to be open to new things to provide enough value to your clients to succeed in this industry in the long run.
Clients can be demanding
You should also keep in mind that clients in the private equity sector can be pretty demanding and often expect high yields to make it worth it for them to let you invest their money.
In turn, you always have to deal with lots of pressure in this regard and may also have to deal with many discussions and even disputes in the long run.
Only very few people really make it in private equity
Another disadvantage of working in private equity is that only a very small number of people really climb the ladder while the vast majority of private equity analysts quit pretty soon and it is pretty hard to get to the top of the pyramid.
Hard to make a big social impact as a private equity analyst
You will also not be able to make a big positive impact on society as a private equity analyst since you just care about making your clients lots of money while teachers and many other people can have a real positive impact on the lives of many other people on a daily basis.
Lack of fresh air may be annoying
Since you will work in an office environment all day long, you will also not get as much fresh air as foresters or other people who work outdoors in nature and you may also not be able to exercise at work and may have to go to the gym much more often to stay in shape.
You often don’t see real results from your labor
While tilers and many other people see the fruits of their labor on a daily basis and really see the progress of what they are doing fairly quickly, you will often work on complex presentations as a private equity analyst that may not even provide any value and you may therefore just feel useless and frustrated in the long run.
You need a fancy degree for becoming a private equity analyst
Before you can work in private equity, you need to get a fancy degree from a renowned university and this means that you will also have to spend lots of time and money in this regard and you should ask yourself whether this is really worth it to you.
You may have to pay back significant student loan debt
Many people aspiring to a career in private equity also have to take on significant student loans to finance their degree and have to pay back huge sums of money later in their lives.
Working in Private Equity Pros & Cons – Summary List
|Working in Private Equity Pros||Working in Private Equity Cons|
|Private equity analysts make good money||Private equity analysts have to work long hours|
|You have a decent social standing||You sometimes even have to work on weekends|
|You don’t have to worry about old-age poverty||Private equity analysts have poor work-life balance|
|You have an easy time in the dating market||You have to deal with lots of pressure|
|Your friends may envy you for your career||Clients can be demanding|
|Private equity analysts have good exit options||You may suffer from sleeping problems|
|You can climb the corporate ladder soon||Private equity industry is competitive|
|You also learn how to invest your own money||You may not be able to create lots of value|
|You can work indoors||You don’t have a big positive social impact|
|You don’t have to work in a physical manner||Only very few people make it to the top|
Should You Work In Private Equity?
While working in private equity can be great since you can make lots of money and climb the corporate ladder soon, you should also know that private equity analysts have to work long hours in a rather stressful environment and only very few stay in this field for an extended period of time.
In the end, it is on you to evaluate all the pros and cons of working in private equity so that you can better decide whether you still want to work as a private equity analyst or rather want to work in a different field.
If you come to the conclusion that a private equity career is not for you, you may also want to check out the following articles:
Own research and interviews.
About the author
My name is Andreas and my mission is to educate people about the different career paths that are possible in our current state of the world. In my opinion, people often make the mistake to choose their profession solely based on how much money they can earn from it instead of doing what makes them really happy.
This is quite sad and I just want to give people a more objective picture of how a fulfilling career could look like. I did the same when I started working in consulting after finishing my Master’s degree in Economics. However, I’ve quit pretty soon after that since I haven’t found true meaning in my job.
Now I can do what I really love to do and I want to enable as many other people as well to go this exciting path towards happiness instead of money.
I conducted various interviews with employees to give you a good impression of what working in different fields will look like and that you can make the best possible decision regarding your future career choice.
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