What's the difference b/w asset managers, like BlackRock, and the AM arm of investment banks?
What is the difference between buy-side asset managers, like BlackRock, and the Asset Management arm of big investment banks?
What is the difference between buy-side asset managers, like BlackRock, and the Asset Management arm of big investment banks?
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Blackrock is a pure/independent fund house while AM arms of big banks are part of the group. techinically they are doing the same kind of businesses. can both have institutional clients, mutual funds for retails investors, PWM, etc. AM arms of banks or insurance companies could have assets coming from group proprietary resources or channels.
Often the range of strategies may differ too. Generally though, the exposure you get to the markets and the AM industry is very similar.
only speaking for my own firm here (BB), BlackRock traditionally competes in retail & inst'l space with the Asset Management biz through mutual funds and smas. my firm traditionally (and I would guess this is the case in most BBs) only competes in the inst'l space (pensions, endowments, family office, etc.) although we do have a small mutual fund offering. all of that being said, BBs derive very little of their revenue from am (mine is less than 25%), so it's not really a focus if you also do banking, pwm, s&t, etc. BlackRock is not a broker dealer, so they literally put all of their resources into am.
Err to factualbills comment about about how much business is derived from AM, that depends. JPM UBS and GS tend to have bigger am vs ms CS HSBC Jefferies etc
Can anyone speak to career projectory/progression between the two. Or even the pros/cons between the two would be great. Thanks
Asset Management Firms vs. Asset Managment Division within Banks (Originally Posted: 04/14/2011)
Can someone explain whether it is better to work at an Asset Management firm, more specifically RCM and BlackRock, or asset management divisions within a bank (i.e. UBS/JPM). Is career progression / pay / lifestyle similar? Is fixed income more/less lucurative than equities in investment management? Finally, how long does it take until one becomes a portfolio manager?
Any help would be appreciated.
Lots of questions here ...
If you are comparing very large asset managers with the AM divisions at very large banks, the differences are minimal as far as pay, job duties, career paths, etc. The difference is more in the structure - the AM firms only manage money, so that's their number one priority. The banks do a lot of other things, so the AM division is probably not a number one priority. It can make difference when you are dealing with large organizations. That said, the differences are so minimal when you are just starting out that it really doesn't matter.
Fixed income vs. equities on compensation ... not much difference when you are starting out, but long-term pay is higher on the equity side as you gain experience (I'm assuming long-only here).
Time until portfolio manager ... about 5 years if you have an MBA and you have been a rock star on performance, figure about 10 years for an undergrad. Or, another way of looking at it, the youngest PMs are typically in their early 30s.
how do you determine if you want to go fixed income vs equities?
Is one or the other more competitive in getting into? I know fixed income tends to be more quantitative than equities
Once you become familiar valuing and analyzing bonds and equities (from your finance classes) you should know what you like more.
Getting in is about the same, but as always "it depends." Between a well-known bond shop (e.g., PIMCO) and an unknown equity shop it's obviously harder at PIMCO. Vice versa for a well-known equity shop and an unknown bond shop.
All things being equal, I prefer an independent firm focused specifically on Asset Management. An asset management division at a bank is likely going to provide steady revenues, but is unlikely going to lead a bank to post blockbuster earnings (trading and investment banking can do that). As a result, you can be treated as the red headed step child at some of these firms (see recent Bloomberg article on GSAM). And the red headed step child treatment is in the good times for the bank, in the bad times when the bank underperforms because of trading/ib they are going to cut headcount/bonuses across the firm including the steady state asset management group. And no, in good times your bonus is not going to be higher because your firm was at the top of league tables in investment banking. The investment bankers will get those bonuses, not you.
Sure there are bad times at independent asset management firms, but atleast then if your bonus is cut or there are layoffs it is directly a result of your group's performance as opposed to some other division that you had nothing to do with.
As for your other questions, speaking in general terms Equity is more lucrative than FI given higher fees in that space. However, there is plenty of money to be made in FI and if you are starting out there sometimes it can be less competition if you are not intimidated by the FI concepts (many new entrants feel more comfortable with equities even though in reality they probably know very little about either asset class).
How long does it take to become a PM? Depends. How long does it take you to learn the skills, demonstrate your ability to execute the skills, and prove to someone you are their best choice? My guess is it takes longer at BLK and PIMCO given those are coveted spots as a result of their approaches/AUMs and takes less time at small shops that nobody has ever heard of before.
Thanks for the responses.
Actually I am currently interviewing for an entry level position at a BB FI AM division (separate from a formal analyst program), and the interviewers had mentioned that after 2 years I could either expect to become a credit analyst or a portfolio manager... I guess the term "portfolio manager" here is a misnomer?
Thanks for the responses.
Actually I am currently interviewing for an entry level position at a BB FI AM division (separate from a formal analyst program), and the interviewers had mentioned that after 2 years I could either expect to become a credit analyst or a portfolio manager... I guess the term "portfolio manager" here is a misnomer?
bankwanna - I'm not sure what they mean by "portfolio manager" as you will not be running your own book after just two years. You'll probably want to ask some more questions about the career path for someone like you.
West Coast rainmaker - There are a lot of excellent AM firms on the equity side of the business, including the ones you mentioned. All else equal, a FI PM will make as much as an equity PM. I doubt the PMs at PIMCO are exactly slumming it. But as boscfa noted, compensation is driven in part by return expectations and a lot of the FI world tends to be more passively managed which brings the average down. Similarly, an equity index fund manager is going to make less than an active fund manager.
how do I break in? I'm an experienced candidate from a different industry
I've been trying for the past few months and I heard back from a couple of places. However, they ended up being "fixed income relationship associate" or "external investment analyst" type positions. Are there worth it? It sounded really different from the path that I want to head and not part of the investment or portfolio mgmt team.
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