Could someone please clarify the differences in front office middle office and back office in an Investment Management context. Job profile/salary etc…
FO = People who execute the business. So if it’s a trading firm, it’s the traders. If it’s a research firm, it’s people who make the research. And so on… They are paid the most since they are perceived to hold a monopoly on knowledge and experience related to profit generation. MO = This is sort of fuzzy, but it’s generally people who support the FO directly. At my desk, they review all the trades, make sure market data is good, report PnL, and other stuff like that. BO = Cash settlements, documentation, and other misc. operational functions. Typically, these are paid the least. However, this isn’t to say you can’t make decent money in BO if you become the boss of the boss of the boss.
FO generates the revenue for the firm. MO and BO are jobs that DON’T generate revenue, but do work necessary for valuation, accounting, keeping the books. Essentially, these jobs just drain revenue, and don’t bring any in.
^ That’s silly. Anybody who has been around awhile knows that good treasury, accounting, risk management, compliance, etc people are indispensible to running a successful business. Nobody with any sense thinks of those people as revenue drains.
FO/MO/BO is also sort of a label that firms use to say how important you are. For instance, I’m on a derivatives trading desk. We have these so called “Front Office Quants” who design and program all our models. They still support the trading. However, they are also smarter than us and are expensive, so it’s hard to call them MO. So, they ended up being specifically called “Front Office” quants. It seems like other firms also do this, based on job listings I have seen.