Leaving Hedge Funds
Why Life on the Other Side Isn't So Bad
Walking away from the hedge fund world is a big decision. For some, the day-to-day didn’t meet their expectations. For others, it’s time to move on—whether from burnout, shifting priorities, or the search for something more fulfilling.
When I left my hedge fund job in 2022, it wasn’t because I hated the job. I enjoyed the research, but the constant chaos and the short-term focus of a start-up hedge fund wore me down. More than anything, though, I couldn't see a path forward where I could add more value to my employer because of a philosophical misalignment. I did not have the passion to make an effort to learn the 20 ways to ask management questions to sniff out whether a company would miss or beat earnings next quarter.
A few industry veteran gave me invaluable advice and I was convinced I could not do anything to salvage my situation, so I decided to leave without a job lined up.
If you are a long-time supporter, you know what happened afterwards. If you are new, here is my story:
As someone who helps others break into public equity investing, I unfortunately have a great perspective on leaving the profession. So I’ll share the good and bad.
Why people leave the buy-side
Geographic Constraint
When you're younger, you can chase opportunities anywhere. I did that, even though I didn’t want to endure eight New York winters. It was worth it. I’ve always loved finance, and New York is the place for it (and it still is.)
As you get older, life brings more constraints. Maybe you’re in a relationship, or your spouse has a great job. Maybe, like me, you want to be closer to your parents. When I broke into the buy-side and moved back to California in one step, I felt lucky. But I now realize it was too good to be true.
After leaving my hedge fund role without a plan, I had many interviews for buy-side seats in Boston, New York, or Miami. However, I felt I am done moving around for my career, and I have no regrets about that. That’s when I decided to take a very unconventional path to entrepreneurship.
Style Constraint
The longer you invest in a certain style, the harder it is to adapt to another. Firms from a different investment style are also more hesitant to task a risk on you.
I’m set in my ways as an investor. I love my moat GOATs. The problem is, firms that align with that philosophy aren’t easy to find. There are few in California, but people don’t leave those firms—why would they? Once you’ve got both geo and style constraints, staying in the investing industry becomes impossible if you are not based in New York City.
Instability and Stress
Hedge fund returns are memoryless—no matter how well you did last year, on January 1, your P&L resets to zero. Sure, you’ve gained more experience, but none of that guarantees success moving forward.
Market shocks, policy changes, management mis-execution, and competitive threats—you’re always one step away from something unpredictable derailing the fund’s performance. If your firm fails to generate alpha, the best outcome is a $0 bonus—the worst is losing your job.
For those with families to support, the financial upside no longer justifies the constant stress and earning volatility.
Some decide they’d rather have more control over their income and future—whether that means starting their own business or transitioning to a more stable career path. For others, once they’ve made a few million, bought a nice house, and settled into a comfortable life, the marginal utility of another dollar decreases. They lose the drive to continue to perform at the highest level as a hedge fund idea hunter.
Even as an entrepreneur, I feel more in control than I ever did as a hedge fund investor. In investing, your success is dependent on how other market participants behave. But as a business owner, at least I have control over execution.
Career Stalled
Hedge fund investing is not a “doer” industry. You’re not judged on effort—you’re judged on results. If you don’t produce, you’re out.
In corporate jobs, mid-level managers can survive by navigating politics and hoarding key information to stay relevant.
For those analysts who don’t ascend to managing money (or don’t want to do so at a pod shop), their earning potential is capped. Eventually, the math and quality of life no longer add up, and they walk away.
Grass is Greener
I was talking to a close friend the other day, wondering how our net worth might have looked if we had started our careers as lowly FP&A analysts at a tech company and worked our way up. With the right firm and stock options, we might not be buying a place in Hillsborough or the Hamptons, but we could likely afford property in one of the two most expensive real estate markets in the U.S.
Instead, I followed my passion for finance—starting as an actuary, then moving to New York for meaningless middle-office work. I took on MBA debt, broke into my dream profession—and ultimately left the industry. It wasn’t the path I had planned, but looking back, I realize that if I hadn’t learned all that finance stuff I love, Richard Toad wouldn’t exist, nor everything that followed.
So, no, I don’t regret the winding road I took. And I firmly believe that all the zigzags in my career gave me a unique mix of technical and entertainment skills—an interdisciplinary setup that allows me to do what I do today as an edu-tainer.
As investors, we understand value creation and capture. Hedge funds aren’t a nascent industry anymore. David Einhorn started Greenlight with $900,000 in 1996. Today if you are not starting off with at least $100-200 million, good luck with being institutionally relevant.
If anything, the hedge fund industry is overcrowded—with great storytellers who can raise capital but can’t generate returns, and talented money-makers who can’t raise money. And most funds fail to consistently create value (despite the public misconception of comparing hedge fund returns to index returns), so the industry is slowly declining.
The economics remains attractive with high operating leverage, but a big percentage of a shrinking pie isn’t a great setup—especially for those of us who prefer to invest in fast-growing, secular trend, big-TAM stories. And to the current hedge funders: Be honest—how many of you have ever invested in a publicly traded public equity investment firm?
This has left a lot of people disillusioned with the grind. Meanwhile, social media has given high-finance professionals a front-row seat to people working 20-hour weeks at mega-cap tech companies while cash flowing $300K–$400K a year. So, many start trading the outlier upside for more stability, which I argue has contributed to a talent drain in the finance profession.
Whether the decision to join a “greener grass” (such as tech) pays off better financially is up for debate. But for most of us who won’t become the next Dan Sundheim or Gabe Plotkin, I’d bet lifetime earnings—if you’re not in the top 1% of your new field—aren’t all that different.
Recently, I’ve seen many of my buy-side connections transition to corporate finance or investor relations roles, likely for a mix of these reasons.
The bad (of leaving hedge fund)
Pay
Let’s get straight to the most obvious point—money. Hedge fund is one of the highest-paid career paths, right up there with law, medicine, and PE/VC. You’re paid well for the hard work, long hours, and high stakes. But there’s a catch.
Unless you’re the founder of a hedge fund, you’ll probably feel like you should be making more for the value you bring. The reality? You’re not the owner—you’re a salaried employee (granted, with more variable pay than most other fields). In most single-manager funds, the owner keeps the lion’s share of the economics. You can call that unfair, but try starting a hedge fund yourself and see how tough it is.
You can make good money in hedge funds, but if your goal is financial independence, you still need to create enough value to either be the owner or be given ownership as a partner. Otherwise, hedge fund work is just another high-paying job.
Take Diane Hendricks, the richest woman in the U.S. She made her fortune in roofing—not exactly a glamorous field. But she created and captured value in a way most of us wouldn’t even think about. It goes to show there’s money in everything—if you can create and capture value.
Bureaucracy and politics (of corporates)
Bureaucracy and office politics were two things I dreaded most when I explored "going corporate." The idea of dealing with obnoxious mid-level managers hogging airtime on conference calls or sitting through pointless 30-minute meetings to get just two action items was enough to make me cringe. And this is coming from someone who worked in corporate roles before high finance—there’s always that one person in your department who you wish would just find another job.
On the buy-side, my PM would simply say, "Take a look at this name, seems interesting," and I’d run with it. A few days later, I’d report back with my findings. The only meetings were calls with company management—rest of the time is focused research turning over rocks. As a solopreneur today, that efficiency is taken even to a more extreme level, in a good way.
Then there’s the politics. It’s inevitable as long as there are more than one person at the place. All the power struggles over clout and internal resources. It accomplishes nothing but sucking time and energy. But that’s how human tribes—and even chimp tribes—operate (which is why Mason Morfit of ValueAct recommends reading the book Strategy — he’s seen all the corporate behavior that mirrors chimp tribes).
No longer revenue-generating
I don’t care about prestige or others’ perception of me - it’s side effect of being a creator. But being a non-revenue-generating part of a company is a tough pill to swallow because of the point I made about the value creation and capture.
I’ve had similar discussions with my MBA classmates who transitioned to corporate finance roles after working in investment banking. When your salary comes out of a company’s G&A line—that’s the definition of being a cost center. This can be a hard adjustment for someone who’s spent their career in performance-driven cultures, from IB and PE to hedge funds.
That’s the reality in many corporate finance roles—you’re part of the machine, not the engine driving it forward. You have to accept there is no eat-what-you-kill anymore.
Losing institutional resources
When I started producing Moat GOATs, I realized how much the landscape for retail investor resources has changed over the years - some vendors vanished while others have added paywall.
I even had to ask a friend for an Analyst Day transcript. It feels like there's a ripe opportunity to create a lower-priced offering with a high-velocity sales motion to serve this market, which has been neglected by vendors all increasingly focused on the institutional investor market.
Without being in the ecosystem anymore, I also no longer have access to company and sell-side conferences. I loved those events to meet like-minded investors.
And then there’s access to company management. While I didn’t need it for anything specific, it’s nice to have—both for career purposes and to stay in the loop.
Adrenaline
One of the biggest draws for me in the hedge fund world was the caliber of people I got to work with. I’m fortunate to still retain that access because of the audience I’ve built—many of whom are investors who are more experienced than I ever will be.
When you move to a corporate setting, the vibe changes. Of course, there are smart people everywhere, but I argue on average, someone who’s been in a hedge fund for 10 years likely has a different level of intellectual rigor, and more importantly hunger, than someone who’s spent that same time in a corporate setting.
For many, the idea of moving from a hedge fund to a corporate job and working with—or, worse, working for—someone you perceive as less intellectually capable can be a terrifying thought.
That said, you can always find your own mentors in any field. And let’s be real—not all hedge funders are smart. Thankfully, the labor market is often efficient the not-so-smart hedge funders’ lifetime earnings are more like a bond—steady, but not built for growth, because they don’t create value for their employers (maybe their employers don’t either).
Intellectual stimulation
As an investor, you’re constantly exposed to different industries, business models, and market shifts. That to me, is a major draw.
In a corporate job, especially at a large company, your role revolves around a small division (or a small line item that rolls up to a revenue segment). You quickly realize it’s impossible to see every detail across the organization—there just isn’t enough time.
You can still learn, but you’ll only get a broader perspective as you climb the ranks into senior executive roles—which, realistically, won’t happen in your 20s like it can as a hedge fund analyst.
Fear of the unknown
The hedge fund career path is straightforward: start in IB/PE or equity research, move into a hedge fund as an analyst, work your way up to a senior analyst, and eventually become a portfolio manager.
But what happens when that path falls apart? Suddenly, you’re staring at a blank slate. The fear of figuring out what’s next can be paralyzing, especially for those who’ve thought about starting their own hedge fund since kindergarten (provided they ran a “target lemonade stand” pre-kindergarten of course.)
Speaking from personal experience, starting over entails doing three things:
Understanding where you can add value—you’re not suddenly going to become a Caltech Ph.D. working at OpenAI.
Identifying paths that create growing value to the economy — meaning industries on the right side of secular trends
Ideally, you like the industry—so you actually enjoy the work and work hard to grow your value-add to the industry (that hopefully is growing rapidly)
It’s not as daunting as it seems. A blank canvas does mean uncertainty, but it also means more optionality than you’ve ever imagined.
The good
You Are Not a Failure
Stepping away from the hedge fund world does not make you a failure. It just means the path no longer aligns with your priorities. A career as a hedge fund investor is not for everyone. And just because others are still in it doesn’t mean their lives are perfect. They might be glued to their phones, dealing with a position blowing up. The outside perception rarely matches the reality of the grind.
It’s just a job
At the end of the day, investment management is just a job. You get “eat what you kill” earlier than your peers, but only if you’re good—and that’s a big if.
Some of you think hedge funds are a get-rich-quick scheme. Sure, it happens, but those are outliers, not the norm. The power law is everywhere: for every Dan Sundheim or Gabe Plotkin, there are hundreds in the industry working 80–100 hours a week to sniff out every growth acceleration story from their 60–80-stock coverage list, making only base salary because of $0 P&L at year-end.
The real ones understand: it’s not about following the career path with the highest pay, but about choosing a path that creates the most value for the world and where you can create the most value. When you can do that, you’ll either find an employer who lets you capture that value or build your own business to do so. That’s why billionaires exist in every industry, not just finance.
Stability
Corporations do have layoffs, but they’re generally less fragile than a hedge fund. That stability is valued by people as they get older.
Corporate life also means a better work-life balance in most cases. You’re no longer glued to news about 40–60 companies and stressing over positions. At a hedge fund, you’re always on because you’re driven to generate new ideas —it’s an entrepreneurial role.
As a corporate employee, you're not paid enough to worry outside of work hours. That gives you the freedom to explore other projects, whether it's incubating a business or pursuing a passion.
The analyst skill set remains invaluable
Leaving hedge funds doesn’t mean leaving behind the invaluable skills you’ve developed. You know how money works, how businesses create value and what drives different businesses. Even some founders don’t have this knowledge because they are technical people focusing on getting the product right.
Whenever I attend networking events with non-finance people, I’m reminded of this. I was surprised when a young software engineer doesn’t understand why their company isn’t IPO’ing because of abundant private market money or why their employer doesn’t venture into a particular end market.
These things come second nature to me, but I forget that without business school or exposure to different businesses, you wouldn’t know them.
Before my MBA, I didn’t even know the difference between the three types of cash flows on a cash flow statement. I’ve come a long way, but even I forget sometimes.
Geographic flexibility
Your hedge fund career often forces you to live in expensive metro areas, especially when the profession mostly mandates in-office five days ago (which I strongly advocate).
Once you leave the profession, you gain more flexibility. You might start your own business or join a remote-friendly company. With the right setup, you can live anywhere. If you have a family, your cost of living can decrease while you enjoy a better quality of life and a stable income.
Final Thoughts
I am not encouraging everyone to leave the investing profession. However, leaving a hedge fund career isn’t the end of the world. The skills and grit you’ve developed mean you’ll be valuable wherever you go. And, I might be biased, but I know you’ll be a strong professional—dependable and resourceful (unlike people who ask Google-able questions).
For those who are exploring leaving the profession: What’s there to fear? You’ve faced uncertainty everyday and survived. You’ve spent years making probabilistic bets—that’s what investing is.
And for those aspiring to break into hedge funds? There will always be seats open because people are hanging up the gloves. You’ll experience all the good and bad I’ve laid out about the profession. If you’re good, it remains one of the most intellectually stimulating and financially rewarding careers on the planet. If you are not, well, you will find this article helpful one day.
Let me know what you think. Thanks for reading. I will talk to you next time.
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I left for 7 years and then returned, ultimately starting my own shop. I've seen those that leave do really well. But I struggled. The longer you spend in the industry, the more you lose key skills that are important outside of the investment industry. And when I ended up in Corp Dev, I discovered that operators with some finance background are more valuable than finance with no ops. Oh, and my diverse knowledge of different industries offered only marginal value. I think it works best if you do it while still an analyst, ideally with narrow sector coverage. Just my 2 cents.