Ranking the sub-fields within the world of finance

<p>I am increasingly getting interested in the influence that could be accumulated through the practice of finance.</p>

<p>Though I have just been introduced to apparently very tip of the world of finance, I am getting very excited to know more about the world of finance and the nature of the industry.</p>

<p>I want to learn which field of finance would represent the very epitome of the finance industry. I came to acknowledge that IBD, Consulting, Hedge Fund, and Private Equity are some of the most hardcore & representative sub-fields within the world of finance.</p>

<p>But I want to learn the exact hierarchy. (i.e. rank, if possible)
Which field would allow a person to accumulate most influence, wealth and political power even...</p>

<p>Thank You</p>

<p>Entrepreneurship</p>

<p>Top dogs at the largest hedge funds (ie George Soros) and at the largest private equity groups (ie Warren Buffett) have a huge amount of influence.</p>

<p>Investment bankers don’t have much macro influence at all, they just try to collect fees from mergers or debt issuance (not very exciting stuff, very small scale, micro oriented). Consultants aren’t even in the conversation here lol because nobody cares about them. Not even worth mentioning really.</p>

<p>So if you want power and political influence, I’d say large hedge funds would be at the top, followed closely by large private equity firms. There is of course some overlap. Mind you medium-small hedge funds and medium-small private equity people are no higher than investment bankers (ie nobody really cares about them).</p>

<p>Private Equity firms hire investment bankers when they do deals…</p>

<p>Investment Banks work with the largest companies in the world-- they are certainly macro oriented.</p>

<p>I don’t think nauru knows what he’s talking about.</p>

<p>Investment bankers aren’t considered macro oriented because that they only affect individual companies. Hedge funds affect entire countries, and can often influence the value of a country’s currency as well. Occasionally they cause mayhem with a speculative attack on fixed exchange rate regime. Investment bankers are not on this level. Sure they work with large companies, but for the most part the interactions do not affect the macroeconomic situation of an entire country. Hence they are predominantly micro (individual businesses and groups of businesses) rather than macro (entire countries, and even groups of countries).</p>

<p>I really appreciate your insightful reply nauru, (do u live in Nauru, btw? :)).
Though the money might be good, I am aiming more for the ‘real tangible influence that is actually independent’ when I consider myself to become a financier…as opposed to the politicians of free world whom are obliged to depend on their people’s support.</p>

<p>Therefore, I’ve been getting really interested in Hedgefund & Private Equity firms.
Though I should be learning more about the natures of these business fields myself,
do you mind telling be briefly on the rough differences between Hedge Funds and Private Equity? And since you stated that “So if you want power and political influence, I’d say large hedge funds would be at the top, followed closely by large private equity firms.”, I crave to know the reason behind you evaluating the private equity firms slightly below the large hedge funds.</p>

<p>Again, I really enjoyed your informative replies!</p>

<p>For differences between hedge funds and private equity funds please use google/wikipedia. Once you read this it should become clear to you which of these tends to be more macro oriented, and which tends to be more micro oriented.</p>

<p>Both PE and hedge funds consider macroeconomic factors, but very few are actually large enough to manipulate them.</p>

<p>Hedge Funds fail all the time and only once in a while does someone notice (LTCM, Amaranth) Very few such funds “influence entire countries.”</p>

<p>Investment Banks have far too many counter-parties and influences in the market to fail (hence the bail-outs.) Also, all trades of Hedge Funds are executed through Investment Banks ( their prime brokerage desks)</p>

<p>

I wouldn’t even consider “consulting” as a part of finance. When people use the phrase consulting on this forum they are usually using the term in reference to management consulting, which is not really about financing business operations.</p>

<p>To answer you original question. Power/influence is most closely related to the ability to make money. It’s far more likely to make a “lot” of money in a Hedge fund than in Investment Banking operations.</p>

<p>@the OP, it’s not very clear what it is you’re after. You keep bringing up “influence”, but what exactly does that mean to you? Finance firms can make and break markets, but as an individual you will likely have little personal impact at the macro level. You can make tremendous money (billions of dollars) if you manage a large hedge fund, more than you would ever make in banking, but even then, you’re still a servant to your investors. You can’t truly have independence unless you only manage your own money.</p>

<p>And it’s useless to rank these jobs based on such vague factors like influence and power. The CEO of an investment bank will yield considerably more “influence” than a random PE partner, and vice versa for the head of a megafund versus a random banking MD. You have to analyze these jobs on a case by case/firm by firm basis.</p>

<p>I would argue that the most powerful and influential finance job is that of Ben Bernanke, the head of the Federal Reserve. Even the particular words that he uses in his speeches can manipulate markets.</p>

<p>Yep, that’s true. Chairman of the Federal Reserve trumps everyone else, including Buffett and Soros. And the truth is, if you’re not at the level of Buffett, Soros and Bernanke, you really don’t have much macro influence at all (with the exception of a handful of hedge fund managers and maybe megabank CEOs).</p>