The Buyside
Looking through this forum I hear people mention top investment management firms like Fidelity, Vanguard, PIMCO, etc as being amazing jobs with amazing pay/easy hours. If so why do more people try to get into IBD if it is easier to get a buyside gig at Fidelity, etc?
Not an expert here but I'll take a crack at it. I think people pursue IBD for better exit opps than a Vanguard or Fidelity may offer (PIMCO is a different story). Also, many funds, both hedgies and boring old mutual funds, don't offer the depth of training that you get on the sell-side. I would welcome insight into the pay/responsibilities/career track of a junior guy at these types of buyside shops. Any buyside analysts/PMs out there care to contribute?.
People don't talk about it because with very few exceptions these jobs are not available without experience. Since most of the board is undergrads no one has the opportunity to even interview.
It is NOT easier to get a buyside gig, and in fact many buyside gigs require previous experience which most people on this board do not have.
I've interned at an investment fund it seems that most people start out doing equity research at a BB then move to the buy side as portfolio manager, director of research, etc.
The hours these people work are a sliver of what bankers put in; hour+ lunches, leaving to run errands, out by 5pm. And even if the fund is just boring fundamental investing all you have to do is convince a pension fund that your tracking error is low enough and get handed a bunch of cash at no marginal cost. Balance the portfolio, make an investor conference call and your done for the day.
These jobs are not harder to get than banking, consulting , etc. I had the opportunity to get multiple of them.
The thing is, the amazing, high paying stuff is. like questions said, only available to those with experience. These are the portfolio manager jobs where u get paid $500k/yr for managing a mutual fund portfolio. They take some credentials/ qualifications (ER role, MBA) and most people that gun for it can't do it till their mid to late 20s.
The money, as I mentioned, is very good, but if you were a gunner in banking you could be making just as much/more in the same time. Banking work, however, is nowhere near as cool (IMHO, others could certainly disagree on that point).
Mid to late 20s???? I've never met a PM in their 20s (not saying they don't exist), very few PMs are even in their low 30s. It typically takes roughly a decade of experience to get a chance at a PM job.
To put it in perspective, in my mid/late 20s when I go to an investor conference I'm typically one of the youngest guys there with only a few people in their 20s and hundreds in their late 30s.
Having said that, as I said above, if your fund has a great year you don't need to be a PM to make more than a banker. Lots of Analysts at funds don't want to be PMs and guys make well over $1 million all the time, it just depends on fund returns. But for every Analyst pulling in a million or more there are probably 500 pulling in 200k. Being on the buyside is an investing job while being a VP or an MD in banking is a sales job, very few people do both well and they are vastly different jobs.
I also have to disagree with people saying these jobs are not harder to get. Take right now for instance, go to any popular job website and compare the number of job postings for investment banking jobs of all levels vs. buyside jobs, you are probably looking at 200 to 1. In the current market even junior positions are going to people with 5-10 years of experience. The only buyside shops hiring junior bankers right now are the places that want to use them to build models all day and night and not actually participate in the investment process.
Forgetting about job boards but talking about networking, I know tons of banking spots open right now and I know just a few buyside spots open. The competition is incredibly more intense for buyside jobs right now.
There's a difference between investment management and asset management
On the buyside investment management and asset management are the same thing, are you talking about being a stock broker and calling yourself a portfolio manager?
My thoughts after working on the buyside:
Difficulty of getting a job: like "lotsofquestions" said, there are very, very few spots open in IM. This stems from 1) low turnover, particular at the analyst / Post MBA level 2) much flatter org. structure compared to an investment bank. IM interviews aren't particularly more diffcult than IB interviews, but the IM industry hires fewer associates and analysts and thus can afford to be picky. Fit is also important, since the firms are generally smaller.
Compensation: at the pre-MBA level, there is no doubt that the pay is lower than IB but higher than the average corp fin or consulting job. From what I can tell, the post-MBA level pay is very similar to an IB. Also, it seems like many funds rely on deferred comp (i.e. phantom carry, profit share, etc.) vs. big cash bonuses. The cash bonuses are definitely smaller on the IM side to prevent "short term behavior". Deferred comp is also highly correlated to fund performance and AuM.
Hours: IM hands down wins. I almost never work weekends and generally work 60-70 hours a week, sometimes much less. You can also actually take vacation, sick days, holidays, etc. without being looked down upon.
Frankly, I think most people go to IBD because the prestige and higher upfront pay. IBD definitely opens a lot of doors, which shouldn't be underrated. It's also much easier to land a IBD job if you're a marginal candidate due to the sheer number of openings. I'd say IBD makes a good job, i.e. stepping stone to next position, whereas IM is a good career. Hope this helps
Questions and bottles are clearly a lot more knowledgeable than me on this.
The mid to late 20s comment was based on some examples that I suppose are pretty untypical.
I think the responses actually support my thesis though that amazing pay/ hours does not apply as much to entry level ugrad jobs at these places, and that the awesome jobs are hard to get.
Am I right?
dazedmonk, you are pretty much right, they pay is good but not shocking at the junior level and the awesome jobs are definitely hard to get.
why not buy side question (Originally Posted: 01/24/2011)
Would the interviewer ask you "why not buy side"? What are the advantages of sell side over buy side? Thanks!
I was wondering the same thing... like why trading over asset management? when you say I got interested in trading because I invest my own portfolio, you are more geared towards asset management
you get to actually have more than 3 buddies in your division on the sell-side because the incoming analyst class is large. if you mention that most people try the sell-side first so there is some merit to starting out there they'll be satisfied; adding the fact that analyst-level buyside jobs are much rarer shows some basic industry awareness.
I asked my sales coverage this question at one of my internships (I was in AM). He worked on both sides and he gave me this answer:
In sell-side you keep your work at the office. You go hard for the time that you are there working but at the end of the day (unless your in IBD to which there really is no end) you go home and have the peace of mind that there's nothing more you can do. You can relax, hang out with friends and just go in the next day ready to bite the ass of a bear.
In buy-side you can't help but worry about your positions. Even though you leave the office, you never really stop working since you are tied up with the market. If one of your positions takes a hit when your off-guard, your toast. It's a lot more constant stress where as sell-side is all packed into those hours you put in behind the desk.
You can use the above information to pitch to your interviewer why your specific personality fits the specific area of business your interviewing for (or why it doesn't fit the opposite side).
Imagine you are the salesperson and recommended a position to your biggest client. As that position is going down the tube, you arent going to be sleeping too soundly that night I bet
Thank you so much for the answer... but I'm in IBD....
Oh ok well in that case I would just say its the thrill of the deal. Pulling off a successful IPO or PIPE deal and seeing it on the front page of the of the WSJ. There's recognition and pride there that the buy-siders don't get.
Seconding what Biznazzman said-some people like the thrill of the deal. One of the guys I work for has been on the buyside for over 10 years and told me one time he's never been as excited as when his team closed a deal as a lev fin analyst back in the mid 90's.
Thanks! I'll try that
The appropriate response to Why Sell-Side is that you enjoy client service type positions where you can provide your clients with valuable advice in a timely manner. You enjoy managing all aspects of a deal from pitch to close and excel in the following areas: attention to detail, time management and critical thinking. You can also elaborate on your ability to communicate effectively and work collaboratively with others to find solutions.
You need to learn how to bull shit if you are going to make it in this world/industry.
I would also say being on the sell side presents a great opportunity for building a network that will last you decades. Lets face it, in your analyst class there are a couple people who will make it to the upper echelons. I find the most effective networkign isnt with someone above you, but someone who is at the same stage as you now, but can potentially open doors for you in the future.
I doubt very much that they would ask this in an IBD interview. If they do though, you can refer to the responses about about loving the opportunity to help in deal execution, etc...
When I was asked this, I responded something like this:
Enjoy the buy-side but I believe IB is much more beneficial for me for the next 2-4 years due to the variety of skills I'll get, transactions I'll see, etc. Steep learning curve. Rather do IB than merger arb at a HF b/c I won't be pigeon holing myself, etc.
Jonathan Knee quote:
"An important first step is to examine the salient characteristics of the key types of job opportunities. When business-school students announce that they have narrowed down their career focus to investment banking, private equity or a high-growth start-up company, in reality they have not narrowed their options down at all. These three kinds of jobs are all distinct categories of occupations, each of which draw on different talents and in which different kinds of people are likely to thrive.
Like all service professions, investment banking is fundamentally a sales job. Individuals who feed on human interaction, and have natural empathy (sales is about putting yourself in your customer's shoes), do well in sales. Being good with numbers, often assumed to be the key to banking success, will be of little use in getting a big office with a view if you do not have sales aptitude.
Private equity, like hedge funds and other investing jobs, is essentially analytical. These are solitary professions, and one is judged on the quality of the analysis produced. The quality of this analysis is in turn assessed on highly quantifiable metrics – like whether the stock you recommended went up or if the investment in a private company you sponsored turned out well. If the classic sales person is a deeply social being, the typical analytical person is a bit of a loner."
IB Analyst to buyside (asset management) (Originally Posted: 12/06/2007)
Why isn't this more common? What are some of the considerations?
I'm a 2nd year at a BB Investment Bank and my current plan is to work for 1-2 more years and then enter bschool. However, I'd like to get out of banking (don't like my group) and asset management seems like a good option. I know the pay will be lower, but the lifestyle has got to be a huge improvement. Are there other things I should be thinking about? Downsides?
I'm particularly interested in real estate and/or infrastructure type of funds - but open to other ideas.
Ultimately (post mba) I'd like to levarage the combination of my two experiences: banking + buyside AM to look at PE and/or principal investment funds. Is this a workable strategy? Anybody gone down a similar path?
Finally - I actually have a 2nd round interview coming up with a fund - any tips or suggestions on how to prepare?
Thanks for your feedback -
Sorry I'm not within the industry now but am wondering why don't you just try to move into a PE fund pre-MBA? Wouldn't that be more relevant?
yeah...try to get into PE before MBA...there are several firms out there that make you an associate without an MBA...and they pay well...
yeah thats not gonna happen right now. im gonna give it a shot - but this is one (more realistic) option.
stupid question but.....isn't a private equity fund classified as an asset management fund? I know that PE goes under the alternative investment management umbrella along with hedge funds, but arent they they the same thing as AM as well.
Or when you say asset management do you mean like a mutual fund? Any clarification would be appreciated, these terms are used so interchangeable that it gets confusing sometimes.
PS. portfolio management can basically describe all of the above, correct?
I think there is definitely some overlap - especially when you are talking about funds that invest in assets directly rather than public securities. I guess one difference might be in the "exit strategy" of PE. Also PE is more likely to get involved in the management and operations of an asset - whereas AM will just take an equity stake.
Those are my thoughts anyways - anybody else care to shed more light on the difference?
Dedtomato --
"Also PE is more likely to get involved in the management and operations of an asset - whereas AM will just take an equity stake" is not accurate.
PE is clearly an asset management product. As is RE, equities, FX, hedge funds, etc. Typically, though, when someone says "work in asset management", they are referring to a mutual fund, an endowment, or a bank's asset management division. Most of these banks have hedge funds, RE, and PE in this division, but again, most people will be more specific if they mean one of these positions.
RE on the asset management side is private equity, except for the public (REIT stock) portions most funds have in their allocation. Any REPE company or group will definitely be taking an active role in the management of the asset. While there is clearly the equity stake, when you invest $100M in a property, you don't just assume GGP or whoever your partner is (there usually is one) has your interests in mind.
Sorry if this is written poorly -- really hungover.
Also, dedtomato, be careful in assuming one is more attainable. The groups are usually pretty tight knit and small. This year's class took on 4 analysts and 1 associate in REPE at my bank. Most of the applicants for the associate spot were IB laterals, who lost the job to an recent MBA with RE experience.
Best of luck!
Thanks for the clarification krakauer. One question for you - if you do land in a RE or Infra fund which you say is basically PE..are you paid comparably to a PE fund?
Just curious, but why is it that PE firms tend to work the crazy hours of bankers whereas AM-type firms work much more reasonable hours (I've heard as low as 45-55)? Or is this a misconception? They are both on the buyside, which is always the explanation that I've heard for the decreased hours in AM...
Nebanker -- The culture is simply different. AM hours vary significantly from firm to firm, ie. Blackrock AM works extremely hard, whereas Barclays Cap is more relaxed. Why? cultures just vary from place to place, and AM can abide more on its own schedule, unlike the sell-side. Things can be planned without too much variation. PE and HF's vary in hours too. Culture-specific firms is just another trait of the buy-side.
FYI my hours typically varied from 55-60, usually 7a-7p m-f.
dedtomato -- Not at my bank. The reason is probably because we don't only focus on opportunistic properties. At a firm like Blackstone, you aren't doing any core property funds. The pay potential goes up the more senior you get though, ie portfolio manager etc... where the pay is likely comparable depending on which fund you are the PM of. FY in my group is like 10 sign + 60 based + about 20k eoy bonus. 90k all-in and a 60 hour work week.
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