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I think it's worth noting that the idea that selfish old people are hoarding all the goodies and thereby screwing over the young is one that's been around for a while. When I graduated college into a weak job market (30 or 40 years ago) that was a very popular idea. (Allegedly) old people weren't retiring and making room for young people; old people were preventing new housing from being built in order to enhance the value of houses they had bought for a song many years ago; old people insisting on fat social security payouts they didn't really need which would result in an insolvent system; old people pushing the government to take on lots and lots of debt which would have to be paid by future generations. etc. etc.
I kind of believed it at the time, but the fact that it's so persistent makes me a little skeptical.
That being said, assuming AI doesn't destroy us but instead generates a lot of new wealth, it's pretty obvious that the benefits of that wealth won't be distributed equally. And I could easily see a situation where people who happen to own equities, real estate, and other capital goods end up being the big winners while everyone else licks the street. (Ok, that's an exaggeration, but if a utopia emerges where everyone gets UBI and can live the life of their dreams, such people might still be pretty unhappy if there is a sort of permanent aristocracy in place.) And it would make sense that this aristocracy would be disproportionately old people.
I could also see it happening that medical advances allow this aristocracy (and everyone else) to dramatically extend their lifespans, which would arguably exacerbate this problem. From an abstract perspective I would rather be a peasant in a world where everyone gets UBI and a super-long (healthy) lifespan than a fat cat businessman in that world's past. But I can see how people might get upset at being consigned to a permanent lower class.
A lot of the paths that made money in the older generation got institutionalized. For sales and trading type roles or even Ibanking you read a lot of old stories of a guy just met someone then is at major bank. (Epstein, Michael Lewis. High profile on this path. Many others). Now it’s institutionalized and still pays well but there are 5-10 highly profitable firms and to get in you need to be “math Olympiad winner” and the competition is against a global population. Plus you have to a great degree lost the ability to get equity in form because the competitive moats have increased a lot.
It does feel like the current career paths offer less stability and your career can end quickly even with fairly strong credentials. The exception is a huge explosion in government work which I would include health care in.
Probably some new routes are emerging and in 25 years we will see a bunch of rich people who just started doing something.
Lot of this is hindsighting the previous generation's wealth accumulation methods. Stuff like Medicine is pretty evergreen but each decade or two the dominant forms of finance earning will shift violently. I used to work with a bunch of old Floor traders and that is a totally different skillset than modern trading.
There's also generally a hindsight effect where people assume the big trades of the past were bleedingly obvious since the people who hit them now have the biggest pulpit
You can still see in that industry the skillset change.
1970’s - some even no college made it. Still some truly smart people 2000’s - Big Ten Schools and above 2020’s - what was your placement on the IMO
Another way to look at it - 1970’s the best local talent in Chicago or NYC who just wandered into trading. 2000’s The best in recruited from the top schools in the region. 2020’s the best recruited Internationally. So yes it’s much harder today. Finance in general has gotten much more selective. PE is likely very similar.
Ownership seats are also basically non-existent now in PE or trading. If you started in PE in the 1980’s you have your name on the door. If you started post 2010 you work for a listed PE firm and only get a split of the fees. Which is a lot of money.
Tell me about it. Biggest BS ever: even very very good people often don't make it beyond being desk head where the partners siphon off their share. Even the places that say "share of the profits if you come to us!" usually don't offer you more than 2-3% of the returns (before tax, mind you) which you generate for them and you still have to deal with a lot of bureaucracy of the stuff above the pod structure (and pay for it of course). Starting up your own place is also now becoming effectively impossible unless you have mid double digit millions lying around because of all the rules and regulations and partnerships you need.
The money is very very good regardless but there's a difference between having real autonomy vs being a cog in the machine, which is what a lot of modern trading is becoming (remember, the models etc. you develop don't belong to you, they're company property so you can't just up and take them to a competitor firm without getting sued, and nobody (other than the aforementioned pod shops above with their own issues) is hiring you unless you agree that ownership of models isn't yours.
Above desk head it was always internal politics. It’s the same in every part of finance, in tech, etc. Some people don’t realize there were plenty of ultra-smart people in the 80s and 90s who also capped out far below the top because they couldn’t play the game. The ones whose names you know today are the survivors. A lot of the real autists with zero social skills who made it to mega billionaire status (Hohn, Rokos, the Two Sigma guys or one of them at least) were helped along because people who had those skills adopted them and essentially exploited them to get rich themselves.
Even in the quant space that means that smart people who seem to have the ability to handle clients, participate in sales (even if only as ‘the smart guy’) and play that role are most likely to make it to the top. It’s the same in every field. If you’re a really smart procedural lawyer who is kind of autistic you will often never make partner because the existing partnership knows you’re (a) unlikely to leave [autists hate change] and (b) probably can’t bullshit your way through the marketing exercise that is every non-technical part of an interview. Outside of the largest partnerships and public corporations where dilution is negligible an equity stake is often far more about being pushy than anything else.
I also think that like @Opt-out says the field is just too saturated with mathematically / spatially super smart IMO winners, who themselves can do a lot more with AI now than they could a few years ago in terms of speeding up implementation / backtesting / whatever. 40 years ago a lot of the white / Jewish top math grads aspired to a career in academia, the younger generation is more diverse and more financially motivated. The rest go to SpaceX. Meanwhile the dumb as bricks bond salespeople I know who would struggle to precisely define carry and roll or how the post libor forward rates curve is computed in a non wishy washy way, or the commodities guys whose market color consists of calling up their clients whenever some OSINT Twitter with a million followers posts a new satellite picture of a missile attack, somehow seem to continue to make tons of money.
Moving up internally is the same as always. It’s the specific ownership seats that are non-existent. You can still be Lloyd Blankenfien CEO of Goldman Sachs but you can’t be a K, K, or R in KKR. Because things have become institutionalized, scaled, and moated. Pure trading the last time you had a path like that was probably early 2000’s and then when banking got banned from prop trading it opened up a big path to scale as big competitors left the market. That window is likely dead now.
There are tons of ex top pod shop guys who have set up on their own over the last 5 years, often backed by the last place they worked. They usually don’t name the company after themselves, but that’s because this has been in decline since at least the 90s. Functionally they are in charge, they could rename ArcNextGammaWhatever to Miller Patel Sarkisian And Company, what’s the difference?
Yeah and whilst MPS & Co isn't GS today in 100 years from now you never know if MPS somehow manages to make it all that way as a brand. Somebody had to start it.
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