Breaking Into Tech: Five Common Myths That Investment Bankers Have When Evaluating a Career Switch
Curious about what work is like outside of finance? Know what you're getting yourself into before you make the switch.
In 2017, I worked at an investment bank and was ready for a change. The other paths in investment banking — “buy-side” investment, investor relations, and corporate development roles — didn’t appeal to me. What did, however, was a career in the tech industry.
I had trouble finding useful information online and from my network about how to transition into tech. I didn’t know what roles existed, how to ask the right questions to understand a role, how companies across various growth stages differed, how to evaluate compensation, etc. Even after I transitioned into tech, the culture, responsibilities, and navigating my career were quite different from financial services.
It’s now been five years since I transitioned into tech. Since then, I’ve advised dozens of early-to-mid-career finance professionals interested in switching to the tech industry.
Specifically, my goal is to help people avoid the mistakes I made during my journey. If you’re interested in leaving finance for tech, steer clear of these five myths for a successful switch.
Myth #1: Getting a job in tech should be easy because finance skill sets are very transferrable.
In investment banking at the junior level, the common perception is that you can learn on the job as long as you are intelligent and hard-working. This is different in tech (or most jobs outside financial services). At tech companies, it is difficult to obtain a role without prior experience.
I have heard several of my friends in finance who want to transition from investment banking into product management. This transition is challenging. The roles are entirely different from each other. While interviewing for positions without prior experience is common in junior-level finance roles (e.g., from college to investment banking to private equity), this is unheard of in most industries.
Instead, I recommend switching to an “equivalent” role in tech, similar to finance, so the job responsibilities are transferable. Roles transferable in tech from a finance background are strategic finance, business operations, corporate development, and financial planning. Additionally, these roles often seek candidates with a financial services background, making the transition easier. Once you gain experience in tech and have opportunities to work with other teams (such as marketing, product, or sales), it becomes easier to switch internally into those roles.
Myth #2: Tech has chill hours.
Financial services is an “up and out” model. You work an immense amount of hours because you must “exceed expectations” to advance. You have 2–3 years to prove you can move up, or they will let you go. This is not the case in tech, where you could be stuck at the same level for years.
If you want to exceed expectations in the tech industry, be prepared to work long hours. When I was trying to get promoted in the past, I was easily working 12-to 14-hour days, similar to investment banking or private equity hours. While tech hours can be better than those in finance on average, the hours are very comparable if you want to get promoted. Additionally, in tech, promotion is based on if there is even an opportunity to take on a larger scope.
Myth #3: Joining an early-stage startup means getting rich.
While money is not everything, I appreciated how employees openly discussed compensation in financial services. As a first-year analyst, I knew how much the base compensation and performance bonus buckets were. Compensation was also cash-based and straightforward to understand.
At a startup, it is shunned to talk about compensation openly. The reasoning makes sense; you shouldn’t join a startup for high cash compensation. You must believe in the mission and that your hard work will be rewarded with equity. However, this is a large cultural difference for someone transitioning from finance into tech. Additionally, startup options are complex and hard to value. For example, there are ISOs, PSOs, RSUs, and Cash. ISOs and RSUs have different tax treatments. ISOs also incur a personal cost to purchase options, and many startup equity employees have to take out loans to buy ISOs and pay alternative minimum tax (“AMT”).
Equity is much harder to value and compare across private companies. And unfortunately, most startups will fail. As for startups that succeed, many employees’ equity gets diluted every fundraising round. So even if their startup is one of the few that makes a successful exit, the payoff is not much more than if they worked at an established tech company during the same time.
Myth #4: Career advancement is just as straightforward as in finance.
Again, finance is an “up and out” model. You know if you will advance at the end of two years, or they give you 4–6 months to find a new job while still technically “employed.” At some firms for junior roles, they even offer to write a glowing business school letter recommendation.
This is not the case at a tech company. As we see now, tech companies are laying off thousands of people without advance notice. Even in an economy without layoffs, career trajectory is not straightforward. There is no guaranteed number of years until you get promoted like there is at the pre-MD and partner levels at investment banks and investment funds. In tech, promotion often happens through skill and luck based on the right opportunities, projects, and managers.
Myth #5: Tech careers are fulfilling and will be more enjoyable than finance.
At early-stage companies, a “business” role is a generalist role that covers operations, sales, marketing, business development, and more. The position is often ambiguous and constantly changing. There is also limited opportunity to focus and gain expertise through specialization, which is desired as you progress in your career.
This type of environment is not for everyone, nor should people feel ashamed if they don’t like this environment. We all have to find the environment where we thrive. In financial services, there is more structure. Some people thrive with structure, while others thrive in ambiguity and chaos. Neither one is worse than the other — it’s just a matter of preference and understanding one’s strengths.
Remember: The journey doesn’t stop after the switch.
Since I switched to tech, I have had several roles across business operations, finance, and product management. In every position, there were parts I enjoyed and disliked. Although I love my current product manager role, there is no such thing as a perfect role.
The self-discovery journey does not stop once you switch to tech. Every few years, we must assess what “season” of life we are in and what we want to prioritize or learn next. Regardless of the industry — finance, tech, or anything else — it’s our responsibility to figure out what we expect for ourselves and our careers.