Middle Office vs. Front Office
Hey everyone,
I was wondering if it's worth it to transition from a FO role at a BB to MO at a well known hedge fund.
Does MO have good compensation and are there any good exit opps?
I tried searching for the pros and cons, but couldn't find one that was hedge fund specific lol.
Any assistance would be appreciated.
Are you unhappy in the FO? This is a very broad question but compensation is generally decent but it becomes very difficult to move back to FO from MO so I would not recommend that move if you ever want to work in FO again.
What exactly is your end-goal? I just dont understand why you would be interested in exit opps if youre looking to move from FO to MO isnt that your exit?
Well my goal is ideally getting to a point in a cushy job where I could sit back, relax, and pull in at least 500k-1mil a year. Yup. That's pretty much my entire life plan right there. 500k-1 mil every year for 30 years starting in my 20's.
My jokes aside, do most top analysts at BB's go for this sort of position? Or do they only jump when it's a FO role.
In general - MO does not make 500K / year. More like half of that.
No, most FO BB do not strive for MO HF roles. They may be forced into that position due to lack of options - but not a goal.
Depending on the fund, a MO HF role might not be cushy either.
You may want to reconsider your plan.
Can MO really pull that much? 250k? Lol seems crazy
So you're telling me that even MO at the best HG's don't make much as an analyst in 1 year? But at least there's less chance of getting fired, right?
Don't pay attention to terminology, it's just terms that the sheep like to throw around to feel important
But for what it's worth, in my book:
Front office = functions that directly relate to revenue generation, ie you are making investments, bringing in new business, facing clients, etc Middle office = functions that indirectly support revenue generation but don't directly generate revenue by themselves Back office = functions that do not cause revenue generation, either directly or indirectly. A lot of times these functions are required for the firm to operate or are aimed at preventing loss of revenue already obtained
So based on my definitions, a junior analyst at a hedge fund who is researching companies but has zero decision making authority or influence to actually put names into the fund, and who doesn't meet with LPs, is middle office. I'm sure many on this board would disagree, but again they're doing so to feel important. Just think about it - the front office is the front line, the starting lineup...not support staff.
The good news is that there is a whole range of compensation for each "office" depending on your position, your firm, the type of shop you're at, how successful your firm is, your location, etc etc.
In other words, do what you want and ignore everyone else. If you add value and are personable, you'll get paid
If you want to get back into FO then no do not move to MO. MO jobs are not always simple and cushy either, the traders and PM are under alot of stress and they pass that stress right along to you depending on what the group does. I worked in MO for 2 years unless its a very small shop almost zero chance of going to revenue generating role from there.
I would ultimately like to stay in FO, but I was wondering which of the two paths offer more compensation for less stress. Or rather, competitive compensation for less stress. What about transitioning to a "smaller" bank, like Cantor Fitzgerald or the like? Is it easier to make MD at a smaller bank and make equally competitive compensation???
mergersandacquisitions78 will probably have sound insight here, but based on what I've heard it wouldn't be easier to go to a smaller bank and make equally competitive compensation, as there is likely a smaller bonus pool given fewer deals (ignoring per capita bonus pool) and you likely have to work harder to get in front of clients and deals given the lower reputation of the bank. Some would say it's just as easy (tough) to get deals but you're working with smaller companies and that's the main difference, but I would argue that means lower fees and compensation. A third alternative is moving to an "EB" where comp could rise, but I am sure it wouldn't be any less stressful and perhaps more so.
Thanks for all of your insight. So..on average, the MO guys at good HF's, or at good BB's will earn less and have less exposure than their counterparts who have effectively "made it". But is it any easier to get promoted at the smaller funds? Because I've perused some of the linkedin profiles and some of the MD's at the medium sized brackets are pretty young..30-35. These guys must be absolutely killing it if they're that successful. Do you think these guys probably work hard and get paid less than their counterparts in BB's FO's?
You can make the move, and eventually (at a senior level) you could make 500k - 1mm a year, but that would be more in your late 30s - 40s. It would not, however, be a cushy job. The idea that just because it's MO it will be cushy is entirely mistaken. FO people are not universally 'smarter' or 'harder working' or whatever than MO people or support staff functions...they're just the risk takers.
I will add to this.
When banks start to make cuts, they usually like to cut non-revenue generating roles first. They also usually go after the top ie "why pay this guy $500m when he generates $0?". Whereas, in FO they normally cut from the middles (VP), and it is easier to defend yourself because at least you have a tangible track record to point towards. So a high end MO/BO professional has to prove his/her high income without the ability to generate income (a difficult feat). Aint nothing about that sounds cushy to me.
I have a question regarding this topic. If I come from an unknown shop which is active in a very niche market + non target school, I'm FO but halfway to MO based on the definition above (often researching potential investments and giving opinion but others have the final call), would MO make sense as a way to get a chance to show your skills if you want to transition to a HF with good reputation?
The definition above is not considered MO by the rest of the world, I don't know why GoingConcern made that up except to prove some philosophical point. If you research investments and give opinion but others have the final call, most people would consider you FO. You would not be considered a primary risk taker though. Once you move to the actual MO at whatever fund you will have trouble moving back to the FO, and it is much harder to move within the same fund than people like to believe (we often have people from our MO/BO who went to relatively decent schools with somewhat relevant work experience try to transfer into our group and we always say no).
Every fund is different, I wouldn't write off the transition from FO BB to MO HF just because it's seen as a 'step back.' I don't necessarily agree that it is. At some funds (Point72 aka SAC included) they like to bring their traders up from the ranks IE middle office. And the phenomenon is even more common at smaller funds.
If you're looking for a 'cushy job' making 500k, I don't know what to tell you. Working at a HF is stressful work, but certainly being in a non risk-taking role is less pressure. If you become head of ops at a large HF you will be very comfortable compensation-wise, and the role is nothing to scoff at. Personally, I'd rather be head of ops at a mid-large HF than FO at a bank.
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