Hi all, I've been a long time reader of WSO, but rarely posted anything in the last couple of years. Thought I'd change that and give back to the community helped me out in the past. So here's my story (I'll keep it short): From Eastern Europe, raised and studied there. After uni, joined Big4 audit team in London, did CFA, then moved to advisory (TAS/Valuations/CF), also did a few years in a developing country with the big4 setting up a new advisory team. Then went to a top European MBA and after joined a large pension fund in Europe as an equity portfolio manager. It is a direct investment role in global equity markets. Feel free to ask me anything about my path, the work I did in each place, or anything really. If I can't answer (such as what are my portfolio positions), I'll let you know.
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It's a fundamental equity portfolio, fairly concentrated. They were looking for someone from a principal investing or transaction background, who can analyze industries/companies and see patterns well. The CFA helped slightly. We don't have a lot of investment analysts in house, so even as a PM I also do some of the investment cases (for reference mostly). So I learned most of the portfolio and risk management/position sizing/rebalancing etc. on the job.
My fund's AUM is 1-2bn, entire AUM is over 30bn. Total comp not amazing (it's a pension fund in Europe after all) - about $120k + 30%-40%, with extra perks.
Inflows and outflows not really an issue, as it's a pension fund, so only thing that worries me, apart from performance of course, is reallocation to other asset class, which means I would need to sell large chunks. Of course it could work the other way, but I'm more than happy to get a few more mm to manage.
We have quant PM/quant analysts and quants in risk. The quant PMs came from analysts/risk or external.
I work with quant PM/analysts every now and then. Both fundamentals and quants sit together, and quants are more focused on the core portfolios, smart betas, min vol strategies. But they also look across the entire equity platform, so I talk to them on certain factors risks, performance attribution, or even algo's to screen stocks etc. We also have some quants in the risk team, and we talk on exposures, concentration, tracking errors etc.
The investment process is more bottom up. I would generally get an idea from a conference, analyst meeting, company roadshow, or even a conversation. Then I dig deeper into the idea with research analysts or internal analysts. We have a research company that can do deep dives into ideas, make financial models etc. If I think the idea has potential, I then pick which companies I believe will do well (probably do an investment case on the ones I feel I should add to the portfolio, unless an analyst does the case). Seems a bit simplistic, but there can be a few months of work between idea and some names to invest in.
Before adding new investments, the other PM and I discuss each others ideas and we make a decision based on potential upside vs risk. I then size the positions and send the buy orders to the traders. We monitor positions daily, but try no to trade to often (generally between once a week and once a month - but on multiple names at once).
For my current role, the experience that was helpful was working on transactions (understanding capital structures, financing), being able to do valuation models and financial models in general, and being able to understand a company well just by reading some financial statements. A lot of the interviews was similar to consulting, but the cases were more comprehensive, and there was a focus on independent thinking. I think if you only had financial DD experience, some of the things above would be hard to demonstrate.
CFA Lvl 1 gives you a marginal benefit, as it shows interest in finance and you get some useful knowledge for interviews. But more so if your degree is not finance/economics related. If you are studying a relevant subject, it is less of a benefit to your profile.
Also, analyst is quite a general description. Are you looking at M&A, asset management, research analyst? For IBD, you don't really need CFA. Internships/school/grades matter more. Plus some networking. For asset management or research, it is more relevant.
So, for you, I would say your focus areas are increasing your grades and getting a top internship (not sure if banks/AM firms are still recruiting for the summer). Then you either convert the internship or recruit from a stronger footing in your final year.
I'm looking into TAS at a Big 4 myself - was in a small MM IB shop, deal flow very light, too much filler work (valuations). Definitely up for more challenge and career progression. Seems like a good next step without jumping off the cliff to front office IB with killer hours. I'm Associate level. Can you give me an idea of hours/workload, intensity, and if you feel it's comparable to straight IB? Interesting / high quality work? Good clients? Does it feel like a "front office" role where you're interacting with clients? Any skills that were particularly critical for TAS, or same typical modeling/pitch/presentation/research & writing/deal management skills?
Do you feel like it is a potential step to an IB? Is Big 4 TAS a second-class citizen to a true IB?
Thanks in advance!
By TAS do you mean FDD (Financial Due Diligence)? Different Big4s structure things differently, but the main way to interpret Advisory teams are:
TAS - FDD : Work on big deals, brought in to look at financials, quality of earnings, net debt items etc. Generally more accounting needed than other Advisory teams. Corporate Finance - CF/M&A : Essentially MM IB (at least in Europe), generally do deals below BB, so lower value, but higher volume. I think in the US Big4 CF is not as strong as Europe. Not sure about Asia. Valuations - advise on valuations, financial models, expert for audits etc. More product focused team (ie. work on valuations), but broader in types of clients and reason for valuation (so can help audit with fair value, or work on a PE deal, or do purchase price allocation, or value brands) Financial Modelling - can be a separate team, effectively do financial modelling for various reasons and clients, mandate can be quite broad. Other teams that sometimes would fit in Advisory are Transactions Operational Advisory, Transactions Strategy, Restructuring, Forensics etc., but I guess not the focus of your question.
Overall, to answer your questions: for all teams fewer hours, less pay compared to IB. The more deal focused a role is, generally the more hours you work. FDD and CF can be particularly bad at times, similar to IB. Work in CF is probably no different to MM IB. FDD gets the best exposure to top clients (particularly MF PE), but they're seen as the accountants on the deal. All of them are front office roles, so after a certain level client interactions and selling skills become essential.
In terms of skills, for TAS/FDD, you generally need some accounting qualification. For CF, similar to IB in terms of skills, but big4s will likely make you do ACA/CA (in the UK at least). Valuations stronger on modelling skills, and may do CFA or ACA/CA.
From most teams in Big4 Advisory, you can get a job in IB (in London). FDD/CF can also get roles directly in PE. Sometimes valuations and modelling can go straight to PE as well.