Work Hard, Play Hard: The Benefits of Working at a Hedge Fund

May 20, 2015

Everyone talks about how much CEOs make. Lloyd Blankfein, the CEO of Goldman Sachs, made $23 million in 2013. He was the highest paid CEO on Wall Street. Congratulations to Mr. Blankfein, but his annual compensation is just one week’s compensation for some hedge fund managers. John Paulson (Paulson & Co.), George Soros (Soros Fund Management), James Simons (Renaissance Technology), and Philip Falcone (Harbinger Capital Partners) all make over $1 billion per year. The employees at these firms, including traders, analysts, and attorneys, are some of the highest paid professionals in the entire financial sector. Even if you are a relatively “small” manager in the hedge fund industry, you are still looking at $5-$10 million per year, which is more than most people make in a lifetime.

The average hedge fund manages $170 million and receives at least a 1% management fee every year, along with 20% of any gains. If a fund achieves a 15% return, they would receive $6.8 million from $170 million of assets. Hedge funds often receive a tremendous amount of attention in the press. The hedge fund life includes chauffeurs, private jets, the best cuisine, vast art collections, and hotel-sized mansions. In 2011, David Tepper bought a $44 million oceanfront mansion in the Hamptons. Then he demolished it so he could build one twice the size. It has two hot tubs, a large fountain, a gazebo, and a tennis court. The largest hedge fund managers can afford to destroy mansions to build even larger ones with more features.

The work-life balance at hedge funds is surprisingly good. The financial industry is infamous for its 80-hour work weeks, especially for investment bankers, who often stay late to work out the details for a new deal. While hours at hedge funds can fluctuate occasionally, they are nowhere near the amount of hours put in by investment bankers and other financial professionals. The hours tend to more closely reflect those of a more traditional job.

Besides financial benefits, there is an enormous reputational bonus for working at a hedge fund. You will be respected by professionals in other areas of the financial industry. Especially if you are at a larger firm, your name will really stand out. Some hedge fund managers are larger than life. They are more than just money managers – they are political activists, public figures, spokesmen, and philanthropists who can be spotted at charity dinners. They are not captains of industry – they are captains of life.

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