So I’ve been offered an investment analyst position at a small investment management firm that deals with private clients (and no, it is not a financial advisory firm that also does other things such as estate planning, life insurance etc.).
The position seems to give me exposure to quite alot of things that should put me in a good learning evironment for my career as a portoflio manager in the future(equity research, interviewing company investor representatives, CEOs etc. asset allocation, dealing). The company invests directly in equities, but the other asset classes are all managed by investing in funds, so I should also get exposure to fund managers and build relationships with them too.
I always wanted to work on the institutional side previously, but have never been able to get past the final interview for this. While I definitley want to give the private-client area a try and am going to enter the role with an open mind (because I won’t be working on relationship management so much), do the senior folks here reckon that moving to the institutional/fund management side in the future will be a possibility still available to me in this role? What sort of career progession do you think I can expect from this type of role?
First of all congrats on the job offer. From what you’ve described it sounds like a really good opportunity. What sort of role are you in at the moment?
I wouldn’t get too hung up on the idea of working for institutional clients rather than HNW. If you are at a good quality firm the investment process should not be dissimilar.
What kind of job do you have in mind when you say work on the institutional side? The grass isn’t always greener and it seems to me like you have somewhat romantic notions of working with/for large institutions that doesn’t necessarily reflect reality.
It’s always difficult to move to the institutional side (i.e. asset management or hedge funds) but it sounds like you are getting the right basic type of exposure, especially if you’re doing a lot of equity research. In my experience meeting dozens of people in PWM over the years, many of them are relationship managers that allocate client portfolios across different index funds or mutual funds whereas some of them actually do quite a bit of active stock picking. It all depends what you are interested in.
I work at a hedge fund and I can say that the thrill of picking stocks is far more exciting to me than picking funds and managing relationships, but I’m also certain that my general stress level is much higher than that of a typical PWM employee.
@Carson: I currently work for a firm of financial advisors in a fund advisor role. I basically help advise on mutual funds for client portfolios based on their risk and time horizon preferences, as well as provide economic outlooks and draft answers to client quieries for the advisors. So this new role is a significant step in the right direction for me.
@Numi: I couldn’t agree with you more. I much prefer analysing companies rather than just plopping money into mutual funds and this role is a chance to at least start doing that. The only thing that concerns me a bit is that there appears to be a big emphasis on broker reports and interviewing local companies, rather than indepth modelling because the firm is small and the universe to be covered is very large. I think I would like to work on the institutional side one day though, because I enjoy modelling companies in my spare time and is one of the things that attracted me to investment analysis (BIWS really has taught me a lot of good stuff). Do you think the lack of detailed modelling will hinder my chances of working on the institutional side in the future? I’m still going into this job with an open mind, but i know my chances of progressing in a research focused career on the private client side aren’t as great as institutional money management.
Well each to their own. There is certainly nothing thrilling about SS equity research. It’s not a bad job per se, but it can be tough in terms of hours and travel and ultimately you are part of a sales and marketing team flogging product to your clients. On the buyside, if you have discretion over where the money gets allocated rather than writing up a report and having the PM ultimately decide, then yes I think that could be pretty cool.
But if you are the head of, or in a relatively senior position in, a HNW business, you can have similar levels of discretion as to where capital is deployed and can potentially have a better salary and work/life balance. So I wouldn’t focus on the end client - institutional or HNM - more on the particular role in the organistion that you want to get to.
But I think your last point is fair. If you do want to get to ER then it is far more likely to happen on the institutional side. For me though, a better distinction than Inst/HNW is BS/SS. Not that people can’t have an interesting career on the sellside, but for me the more interesting perspective is in managing and allocating money.
Well, if you just like modeling and writing reports then sell-side may be for you. However, buy-side is about a lot more than modeling stuff. It’s about having savvy business judgment and investment acumen, and picking good stocks.
It’s good that you took the BIWS modeling courses. You’ll see in the articles in my signature that I recommend them. Generally speaking, the more able you are to do a job, the more likely you’ll get hired. Is modeling a big part of an institutional equity research job? Yes. As a potential entry level employee, do you need to know modeling BEFORE you start the job? I would argue yes as well.
I prep all my clients on how to best position themselves for equity research and investment banking. Many of them have gotten these jobs. So, if you don’t know how to build fully linked three statement models, you are at a big disadvantage. That’s a complete certainty.