Investment consulting questions
Is it similar to AM? Kinda a niche market out there. Are skills transferable?
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Certainly nowhere close to AM. IC advises, and does not manage funds (at least for APAC region)
Do understand that there is a "out-sourced CIO function" trend in US; but am unsure of how significant it is. To answer, IC is not AM yup
it's close to FoF role if you're in the outsourced CIO role. Otherwise if it's purely consulting, it is just doing whatever the client wants you to, including re balancing portfolios (which is very boring). But yeah it's definitely not IM and the only thing you can get with an IC experience in a money management firm is Investor Relations or marketing (stuff that requires you to be good at bull shitting and small talks).
I'm currently in investment consulting in a supporting role. It is very niche and in my opinion a shrinking industry as employers switch from pensions to defined contribution plans. It is an advisory business in every sense. Some of the bigger IC shops have their own discretionary business. But the majority of it is is simply advisory services ranging from portfolio analysis to manager recommendations. I have had exposure to a lot of different strategies. But ultimately I'm headed back to school to try and make the switch to AM.
The only skill that would be transferable is if you are part of the research team doing the due diligence on funds and even then it would only be applicable to FoF in a limited capacity.
I looked at IC briefly earlier this year and talked to some people at Cambridge Associates, one of the biggest IC firms. Although they tried to make it seem like real AM, it was pretty clear to me that it isn't and that it's glorified advisory. Altecvix nailed it with the description.
Having said that, I will be interning at a FoF this summer, working on both PE and HF. We'll see if I end up liking it. Given my core interests in asset allocation and portfolio construction as opposed to security research, FoF seems like it could be a good fit.
Hello, I have a ft interview coming up with an IC shop. I will be meeting with people from the hedge fund group. How did you prepare for the interview? What kind of questions did they ask? Any help would be appreciated.
I will say that a huge benefit that IC has is the network. IC employees from the top firms meet hundreds of portfolio managers and have the opportunity to build a huge network in the AM, PE, HF, and RE space.
I actually landed my AM internship because of the connection through IC.
Mostly fit questions and high level questions about the various hedge fund strategies out there. Also be informed about what the markets are doing. Have an opinion of what the future holds. They aren't going to ask you to pitch a stock or anything technical because you wont be doing anything remotely related to that.
Thank you for your input. I once heard that some people were asked to pitch a fund. If such is the case, any format or frame work that you recommend?
Focus on how it fits into the institutional investors portfolio. IC firms work with corporate and government pensions, endowments, and taft hartleys. This is not PWM so low fees and conservative predictable performance to appease board members while hitting the pensions target return is the name of the game. And don't say index funds because then there's no point in hiring an IC.
Altecvix, are you hoping to transition into actual investment research? What's the pay progression like in IC?
Yes, I'm back in school getting an MSF to make the switch to buy side equity research. I only have one point of reference from where I worked. So its very likely this could be different at other firms that are less keen on screwing new hires out of money.
Pay is pretty terrible as all entry level positions are back office support roles. But coming straight from undergrad expect 40-50k with about a 2-5k yearly bonus. Progression will usually end when you make consultant where you can expect 100-200k all in. Partners pull in about 200-500k all in. This can very considerably depending on how much business you can bring in and retain.
What are the exit opps for Investment Consulting
Many went on to do MBA (depending on firm name), while some others went to FoF. That's the general exit opps though i have seen some went on to the buy-side (not exactly sure of their role though). The above applies only to the FO (ie: consulting & research).
The industry is changing fast and many firms are trying to move to outsourced CIO and discretionary management which makes them more similar to FoF.
PM me if you need more details about the work etc.
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