Morning Monkeys,
I've come to notice very little love for pension fund jobs here on WSO. Do they pay as much as PE or IBD? Nope. But there some real highlights to jobs at pension funds, especially public employee pension funds, namely that they tend to be 9-5 jobs, and many really love CFA charterholders (see, they're good for more than just ER and AM!). Also, I hear that many offer these peculiar, seldom heard of benefits called "pensions" where, after a period of time working, they pay you to not work. Crazy!
How good/bad is the pay specifically you might wonder. Since it can be tricky to find NYC pension fund salaries, I'll give you some insight into what employees at VRS (Virginia Retirement System) here in Richmond make (since all Virginia state employee salaries are online and easily searchable). You can adjust for cost living as necessary for your location.
Some quick background, VRS is the Virginia State Employee's pension fund and as of June 30, 2012 the fair value of the fund's total investments was $53.5 billion. They invest in many different asset classes including private equity and hedge funds, with private equity making up 11% of their total fair value (roughly $5.9 billion).
Their investments division - the area that would interest those on this site - appears to be divided into 5 positions below the CIO, which from bottom to top are, Investment Analysts, Investment Officers, Senior Investment Officers, Portfolio Managers, and Program Directors. Sadly, the data I have is from 2011, but this should be a pretty good representation of pay:
Investment Analyst - This looks to be the entry level position for VRS and from the salary database, it looks like the starting salary is $71,400 base. I don't know what the bonus structure looks like for this position, but as you'll see in the remaining positions, one certainly exists.
Investment Officer - What appears to be the next level up, the salaries for investment officers range from $108,200 (which includes a $20,000 bonus) up to $125,250 (which includes a $15,000 bonus).
Senior Investment Officer - Salary range for senior investment officers appears to be $126,000 (no bonus) to $171,500 (which includes a $35,000 bonus). It should be noted, the largest bonus (which they're calling an "incentive payment") that I saw was $40,000 for this position.
Portfolio Manager - Salary range for the portfolio managers appears to be $184,600 (which includes a $25,000 bonus) to $300,000 (which includes a $100,000 bonus).
Program Director - Salary range for program directors, who sit just below the CIO appears to be $360,777 (which includes a $120,000 bonus) to $420,519 (which includes a $180,000 bonus).
CIO - Granted, there's only the one, but he made $733,500 which includes a $340,800 bonus.
Source: http://datacenter.timesdispatch.com/databases/salaries-virginia-state-e…
Take off of this with a grain of salt since I'm getting this data from a salary survey and not an official pay scale. But, all in all it seems like pension funds (well, VRS at least) are a pretty good gig, especially for future CFA charterholders. Any pension fund guys on WSO? What did you think? Have any of the younger guys considered working at a pension fund? If not, why not?
I work for one and I'm a bit on the younger side, sorta. It's a good gig. That pay seems in line with my experience (with a slightly larger fund). And yes, they most certainly love the Charter because it provides a sense of reassurance. Nobody wants a large pension fund to disappear overnight, so it's important that it be run by ethical people.
I would have thought working for a large pension fund would be similar to a large endowment or family office. As you point out, work/life balance should be pretty good relative to the crazy hours you might see in IB or PE. The CFA charter is for sure the way to go if you are considering a move to asset management.
If anyone who works for a pension fund or is an LP reading this and is interested in free alt. asset data (performance metrics, GP profiles and track records, and a list of all funds currently being raised for PE, Infra, and private real estate) PM me and I will set you up with an account
I have some exposure to this field and, although I'm in consulting now, have been thinking about going down this road post-bschool (or a family office, FoF, investment consulting firm, etc.) They look like good gigs--a decent work/life balance along with the chance to take a big picture, macro look at a really large portfolio.
Go work for CalPERS, then come back and tell me how much you love dealing with the State of California, their bureaucrats, and their politicians. From the people that I know at a different pension fund, the worst part about it is dealing with all the BS that comes with working for the government.
Assuming this is true, I'd find it difficult to believe that your average 20-something analyst would ever have to deal with any of the parties you mentioned. That being said, assuming what you say is true, that could definitely be a pain. Although, from what I understand, it seems more likely that CalPERS is the one who calls the shots. Not the politicians or bureaucrats.
I have always wondered about working for CalPERS. It looks really interesting, but I honest wonder if it is wise to attach myself to the state of California...And you have to live in Sacramento.
So is the work most similar to a fund-of-funds? And is advancement / job security closer to the private sector or government i.e. does it take you 5 years to get one promotion?
If that's not your cup of tea, you can try the sophisticated endowments like Duke or Northwestern, or any of the spin off asst managers that peddle "the endowment model." Sexiest gig in the world? No, but these roles are not as difficult to get, pay decently, get your feet wet in the industry/exposure to industry veterans, and you can move on with CFA/grad school. As previously mentioned, great gigs if you're mid career and looking to slow down while still doing work that requires original thinking and pays well. Seconded.
If that's not your cup of tea, you can try the sophisticated endowments like Duke or Northwestern, or any of the spin off asst managers that peddle "the endowment model." Sexiest gig in the world? No, but these roles are not as difficult to get, pay decently, get your feet wet in the industry/exposure to industry veterans, and you can move on with CFA/grad school. As previously mentioned, great gigs if you're mid career and looking to slow down while still doing work that requires original thinking and pays well. Seconded.
If you can get into a pension fund, chances are you can make it into a FoF, which usually gives equal or better pay with less bureaucracy. Especially if you try for a secondaries platform, the pay is usually better and you still have a chill life.
I'm assuming the analyst roles require 3+ years xp with that base salary.
I think they like 2+ years at VRS with some progress towards the charter, but remember, your bonus is highly unlikely to look like the "50%-100% of salary" like I've heard Wall St. firms pitching. Probably not a bad guess though.
If "sexiness" ranks any higher than about 8th in characteristics you look for in a job, I can say at a 99% confidence interval that you are a douche bag
Any advice on how to go about getting hired at one of these places? Do you think being an L1 CFA is a minimum requirement these days?
Pension/Endowment Investment Analyst Experience for BSchool (Originally Posted: 08/02/2012)
Hi all,
I am at a crossroads career-wise and need advice from people actually in the industry and from people who know the admissions process at top American B-schools.
A couple of secondary questions: 2. What are the exits for someone with this kind of exposure into more exotic buyside shops? 3. Do you think a severe economic downturn would lead to a lot of attrition in these kinds of funds?
Some details about me: I have a Bachelor's in Math and a Master's in Financial Economics, both decent schools. Undergrad GPA was low - just around 3.25, Grad GPA was alright, around 3.65. I have a 780 in the GMAT. My other option at this point is to go to a top rated B school in Asia. It is one of the best names in the Asia-Pacific. I'll always have a decent job after this MBA, guaranteed...so it is a very safe option. But the school doesn't have much recognition in the US - which is where I want to end up - that or a big market like HK or London. And I don't know if I want to spend two years studying bullshit at this point. It is a trade-off between doing what I want to do and doing what is safe.
To the OP, I'm very curious about how you got to your current position. Where did you work before you got to the $30 billion fund? Did you get this job through networking/ OCR? CFA/CAIA?
Networking. It's not a hedge fund by the way, in case that wasn't clear in my original post. I had only (no-name) internship experience in finance before getting to this job.
Anyone have an answer to my main question? Or the two secondary questions.
Okay, a couple of thoughts.
On your b-school question, I can't say I know anyone personally with FoF type experience on their resume at a top b-school (at least among my friends at H/S/W/Columbia/Sloan/Tuck/INSEAD/LBS). Then again, all my b-school friends tend to be consultants or bankers or PE types, so my sample size is pretty limited. But if you're working at some place like the Yale Investment Office under David Swensen, I don't think an admissions board would hesitate to take a good look at you. Take my advice here with a grain of salt.
On exit opportunities, FoF type experiences doesn't tend to translate well to direct investment roles because the skill set developed is entirely different (and less detail oriented). Unless you're evaluating co investment opportunities, you won't be developing certain important analytical skillsets which would be necessary to becoming a successful buyside analyst.
Put another way, you're developing a generalist asset allocation type skillset while most direct investing buyside positions require a specialist analytical skillset. The type of specialist skillset required differs from fund to fund (PE and fundamental type hedge funds often have an emphasis on industry and competitive, a distressed fund might want a legal background and credit analysis skills, a macro-type fund would be interested in a strong quant and economics background) but they all require specialization of some sort.
This is not to say movement over isn't possible, but it does mean you're at something of a disadvantage getting in because (contrary to consulting or banking) you won't have a specialized skill to point at and apply from day one.
How does investment experience at a pension/endowment fund look vis-a-vis top B schools?
I know personally a couple people from other FoFs and they tend to do pretty well in going to B school. Maybe not always the top 3, but MBA business schools ">M7 id definitely doable
Your best bet is to go to a good b school then try to do something there. It's going to be tough to be honest, since from your post you mentioned you had no banking or buyside exp prior to your endowment job currently. You will be competing with a other ex-bankers/ex-buyside guys. Just network and learn about finance and hope for the best
I believe economic downturns will lead to a lot attrition to everything...
So pension/endowment fund work would be considered FoF experience? I ask because it's all our own money that we invest. And we do a lot of the investing ourselves...if you're choosing broad asset allocations, many of the asset-specific investment decisions will not be outsourced. I mean if you want to be in gold to the tune of 1% of AUM, then you just buy gold, you don't outsource that. Same way if you want to be in agricultural land or timber or other real assets. Or even broad decisions on which stock markets to be in...say you want to be overweight Scandinavia from within whatever you've decided for your equity exposure, you make the call and structure the position yourself. True, you don't analyze individual securities, which I guess is the biggest value add link of the chain.
Some of the specifics of the job are (I'm changing the language a bit):
...Develop models to manage portfolio investment risk...factor analysis, PCA, time series analysis, volatility and correlation modeling, derivative pricing and strategy analysis.
...Strategic research, quantitative models for asset allocation, portfolio optimization;
...Asset class and market research; industry-specific analysis
...etc. etc.
How does this experience sound for B-School apps? How does this look for exits into more exotic buyside shops?
@PennTeller: if those schools are out (as far as you know), then what schools would be in reach? I mean given this experience and my other stats (degrees, GPAs, GMAT, etc.)
I think you're spot on. The evaluation of an individual security is the most important value add skill that a hedge fund looks for.
What you're describing is a hedging process. We do that sort of thing from time to time (my current project involves looking at various CDS trades right now to hedge out some of our geographic risk) but the core of my job is looking at companies and figuring out whether they are cheap/well run/competitively advantaged. I spend maybe 5% of my time on the former and 95% on the latter. It's a useful skill but a small portion of the job.
To your other post, I wouldn't say that those schools are out of reach, just that I don't know many folks with your particular background at those schools within my limited subset of friends who went to business school. There probably are people with your background at top schools, you probably should go figure out what they have to say on the matter. I'm pretty much useless in offering a good perspective on it.
Pension Fund/Endowment - Work/Comp (Originally Posted: 01/02/2010)
Hey guys,
I have an interview coming up with a $3 bn+ Pension Fund/Endowment manager. From the job description it looks similar to a Fund of funds job spread across PE/HF/VC etc but I don't really know anyone in the field to get a better idea of the day to day.
Does anyone have any info related to Pension Fund/Endowment work and also compensation ?. They're looking for someone with 2-3 years of experience.
Thanks
From what I have heard, people working at Pension Funds and Endowments do not make nearly as much as those managing funds of similar size in the private/for profit sector. Many pension funds are government entities and are therefore run extremely lean to conserve costs and those running them seem to be underpaid for what they are actually doing. For example, I know that the manager of a specific state's pension fund manages a VERY large fund, however has one analyst, no assistant and probably just north of about 150k per year... not exactly the glamourous finance lifestyle.
Billy Ray,
Thanks for the info. That is surprisingly low, but the fund I'm applying is private and not a government entity so hopefully comp will be a bit better. Do you know of exit opportunities from such a role ?
Not a clue... people who do it for public pension funds do it for... well their pension plan I guess
Comp in FoF type rolls is much lower than IB for the most part. Expect a COL adjusted 70k for that much experience. So, in NYC probably 65-75k and in CT 60-70k. The exit opps are basically to other FoF and pension type rolls or b-school.
PowerMonkey, that's shockingly low..damn..I guess beggars can't be choosers in this economy. Thanks
There was an entry level position at my school's endowment this year. A friend of mine got an offer for 55k base and a bonus of like 10k. I know people on this board will scoff at that, but given cost of living and the far lower tax rates that's like making over 130k (perhaps more) in NYC.
The pay is lower than IB, but its good money and you will not work nearly as hard.
Remember, there is no such thing as money for nothing. You work a ton in IB, PE and HFs, this is the reason why you get paid good money.
PowerMonkey, yup you're right. I guess I was just expecting something like 90K All-in, because going through the profiles of the team members of the particular pension fund/endowment I'm applying for, it seems like most of the senior people are from top targets (Wharton, Harvard etc) and have good experience, so I doubt they'd settle for low comp.
Bump for more responses
Is it typical to transition to IM / MF / ER from a pension fund?
I am also really curious about what SonnyCrockett asked...
Also, Billy Ray Valentine does the individual running the pension fund have a masters/mba/CFA?
Bill Ray's data point is not even close for a MD/Partner in charge of alternative investments at a large state pension fund/endowment (+$2b in alternative allocation). These guys are making 800k-1mm all in, and working less than 40 hrs a week.
Pension fund exit opportunities (Originally Posted: 09/04/2015)
Hi everyone, just wondering what are some of the common exit opportunities in life after a PE job at Pension Funds? For some context, I am currently thinking of signing for a pension fund as a PE analyst but am also wondering what happens if I do end up thinking of exiting. Appreciate all your feedback and thanks in advance!
Does this pension do a lot of co-investing? If you get real deal experience from co-investing that'll open up your exit opps a bit more.
If it's only manager selection type work I imagine it'll be very similar to FoF exit opps: placement agent, different institutional investor in their alternatives group, a FoF, IR at a PE shop, etc.
Yes it does, but I don't think I'll be on that team. That being said, would you say that as an analyst it doesn't really matter what the position is as long as the learning opportunities are abundant?
And also just another thought, what are the chances of moving to another comparable pension fund/SWF?
To your first question: I mean, I would agree with that to some extent... but you also haven't mentioned what your goals are so it's difficult to comment. I assume most posters on here would like to be at a direct PE shop so to that, the LP--->GP switch, in an investment role, is very rare. I've only seen one guy make that switch and it was from a role that exclusively focused on co-investments.
Second question: I don't see why that wouldn't be possible.
Thanks a lot for your replies! At the moment I am unclear of my goals but like you said, I, just like most, would like some experience at a direct PE shop or have some experience in direct PE investments. Would you mind elaborating on why the LP to GP switch, in an investment role, is very rare?
It's just an entirely different skillset. Banking feeds into PE because you're getting into the weeds with transactions. As an LP, you're picking managers based on their past investments and investing into a blind pool. You'll get to meet a lot of very smart people and see how they form an investment thesis but you won't be doing any of that on your own.
Also, no disrespect intended but most people in industry don't think highly of pension fund teams. With the exception of CPP Investment Board (and maybe a few others) most pension funds have little resources and pay low wages so can't attract top talent.
Exit Opps at Pension/Endowment Funds? (Originally Posted: 02/18/2013)
Anyone know anything about what the exit opps look like at pension/endowment funds?
Also, how hard is it to break into a pension/endowment fund compared to ER?
I was thinking 40 hour work weeks would be sweet, while studying for the CFA.
um most people stay at pension and endowements and revel in cushiness, its like one of the boston based big AM funds
I have seen some movement back and forth between endowments/pensions and investment consulting firms (Cambridge Associates, Wilshire Associates).
Thanks for responses guys.
Pension fund careers (Originally Posted: 03/06/2013)
Freshman undergrad here.
Obligatory about me:
Non-target (about 20 kids a year out of 400 finance majors go to the Street) 3.8 Involved in investment group on campus Involved in other student groups Trade on my own Networking as much as a freshman undergrad possibly can
So, I know as a pension fund analyst you make less, but also work considerably less hours. Also, the prestige isn't there. But, what exactly are the careers like? Specifically, are there any jobs in an analyst role that involve searching out investment ideas and bouncing them off the portfolio managers?
Or, is it mostly vetting external managers to manage the fund's money?
p.s. I know pension funds are not all the same, but generally, any idea on this?
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