UK AM Comp Progression and Opportunities
I've been given two offers:
- Investment grad scheme at a major UK AM (Legal & General/Schroders/M&G/Abrdn/Baillie Gifford..)
- sellside Equity Research internship at a bulge bracket (highly ranked for ER)
I've accepted both at this time and do not want to reverse this decision, so I'll be doing a sellside internship next summer and then starting a buyside grad scheme a few months later. But I'm wondering if my career opportunities would be better long term if I accepted a return from the internship. Pay is ~50% more for the sellside internship than the grad scheme, although I expect longer hours to compensate for that. UK-based companies tend to pay less than US counterparts, although I'm not sure how well comp scales later on. Pay seems to be the biggest gripe that employees have on Glassdoor for the AM.
My career endgame is buyside ER/Portfolio Manager which the grad scheme may let me get into - I did a buyside ER internship Summer 2024 and loved it. But I may want to move between different LOs later on if comp doesn't improve e.g. to a Fidelity/BlackRock.
- What is it like recruiting from LOs to other LOs versus from the sellside - do these firms prefer to hire from sellside versus other buyside firms?
- Am I shoe-horning myself too early by going straight for the LO AM out of undergrad?
- How does comp progression look at UK AMs later on (Legal & General/Schroders/M&G/Abrdn/Baillie Gifford..)? Does long-term progression make up for the major difference with sellside and US firms at the junior level?
- Thoughts on breaking contract with the AM and accepting a return from sellside? (I know I'd get blacklisted)
Based on the most helpful WSO content, here's what you need to know:
Recruiting from LOs to other LOs vs. Sellside to LOs: Moving between long-only (LO) asset managers is generally easier if you already have buyside experience. Firms like Fidelity or BlackRock value candidates who "think like investors," which is a skill honed on the buyside. Sellside experience, particularly in Equity Research (ER), can also be a strong entry point into LOs, but transitioning from sellside to buyside often requires proving your ability to think beyond just covering companies. Recruiters for buyside roles tend to prioritize candidates with prior buyside experience over sellside backgrounds.
Shoehorning yourself too early: Starting directly in LO AM isn't necessarily shoe-horning yourself. If your endgame is buyside ER or Portfolio Management, beginning in a buyside grad scheme aligns well with your goals. However, sellside ER can provide broader exposure and potentially more exit opportunities, especially if you're unsure about sticking with LO AM long-term. That said, if you already loved your buyside ER internship, the grad scheme might be the more direct path to your desired career.
Comp progression at UK AMs: UK-based AMs generally pay less than their US counterparts, especially at the junior level. However, long-term comp progression can be competitive, particularly if you move into Portfolio Management or senior roles. Firms like Baillie Gifford and Schroders are known for offering strong career development and comp growth over time. That said, the gap with sellside comp (and US firms) may persist, especially in the earlier years.
Breaking contract with the AM: Breaking a contract with the AM to accept a sellside return offer is risky. As you mentioned, it could lead to being blacklisted, which might harm your reputation in the industry. Additionally, if your long-term goal is buyside, the grad scheme already positions you well for that trajectory. The sellside internship could still be valuable for networking and skill-building, but it doesn't necessarily outweigh the risk of burning bridges with the AM.
Key Takeaway: If your endgame is buyside ER/Portfolio Management, the LO AM grad scheme aligns well with your goals. While sellside ER offers broader exit opportunities and higher junior comp, it may not be worth jeopardizing your buyside trajectory or reputation by breaking the AM contract. Long-term comp progression at UK AMs can be solid, especially if you aim for senior roles or transition to larger global firms like Fidelity or BlackRock later on.
Sources: An old man looking for advice, AllianceBernstein Reputation and Rotational Program, 20 Most Frequently Asked Questions - London Edition, https://www.wallstreetoasis.com/forum/investment-banking/investment-banking-in-the-uk-an-overview?customgpt=1, Asset Management vs Investment Banking for exit opps into value-based hedge funds
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comp at UK LOs is in line with MBB for grad scheme, maybe slightly less (think 50-55 base)
Yep starting salary is in the 45-50 range for UK LOs. I’m wondering how well this scales over time however e.g. 3-5 years in. At what point does (if it does) AM comp catch up to or overtake sellside ER?
Take the BB ER role. UK AM is dying at increasing pace and most are looking to sell or at least spin out they public investment business.
I agree with you on this one. I work in BO, but try to keep up with what’s going on and specifically in the UK it doesn’t look good
The only real advantage of taking the BB ER job (assuming you even get a return offer) is that it opens up doors to hedge fund seats that a LO seat will not. It's a lot easier to join a L/S pod from an ER seat where you were a sector specialist. If you want to stay in the LO game, it is far easier to move from LO to LO as they all do the same thing. LO's love to hire guys from other LO's as they know what they are getting. To give you an idea on LO comp, it's not unreasonable that you could be making £300k all in (as an analyst) after 10 years in the business. If you move in a PM role the comp numbers are much higher.
Thank you for your helpful response! Can I ask your thoughts on what others said about UK LO being a dying industry? Do you think fundamental ER is looking just as bad on sell side? I’ve heard a lot about sell side compression with banks getting fewer analysts covering more stocks with less resources.
It's a consensus view that the UK LO's are a sinking ship. One only has to look at the share price of Abrdn (I think it's the most shorted stock in the UK) as an example. Having said that, it can take a long time for a large ship to sink. Over the past decade, rising markets have offset negative flows for a lot of managers and so overall AUM has been okay. The real issue is fee margin compression which is why you see the LO's desperately move into alternatives where fees are higher and sticky. As the merger of Aberdeen & Standard Life has shown, it's not all that easy to merge LO's as cultures can be very different and these are people businesses. I still think a LO career can be really interesting and, relative to other UK industries, lucrative.
On the ER front, post MiFID 2, what I have seen is that ER departments shifted their product to appeal to the highest fee payers (mainly L/S HF's and pods) which means a greater focus on calling quarters and less interest in deep dive initiation reports and industry analysis. It's one of the reasons an ER job positions you so well for a pod seat, as they are the main customers of your research and you will spend a lot of time on the phone talking to those guys. Juniorisation has and will continue on the sell side but to be fair this is happening on the buy side too.
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