What's the Deal with being an Asset Allocator?
Long-story short, I'm coming out of IB after a few years and have been trying to find my path forward.
After some research based on my interests (public markets, macro research, global macro, econ), I've found some people saying an "Allocator" role might be a fit.
Wanted to see if there was anyone in the space or who had any experience who can speak to the type of work, lifestyle, comp, career trajectory, etc. as well as how best to transition from an IB role. Seems most threads are a bit dated.
Is this a doable transition from IB or would it be an uphill battle relative to PE, HF, corp dev, etc?
I ultimately came upon this role because I'm interested in money management and global macro but am not particularly quantitative nor interested in continuing to work a job with heavy modeling.
Thanks
Based on my understanding and experience, it's a downgrade in terms of "prestige". My firm has two allocator type teams and they are more of economists than investors. They stay abreast on economic indicators and choose which asset class will outperform (and depending on the firm, you research and choose manager or you allocate to internal manager of the asset classes and just OW/UW based on your outlook). For some firms they command a large portion of AUM and thus internal PMs do a lot to get on a good note with them, for others, they are in significant.
Granted the type of work is quite different, your experience in IB will likely have less transferable skills than say if you were to apply for a PE role. They likely want some ability to conduct quantitative analysis on macro factors and projections for commentary.
Thanks for the write up. For me, despite the less “prestige” that role sounds far more interesting than traditional investment roles. Any idea on the comp differential?
I think at lower years of experience, the comps should be comparable to SS ER comps (lower bonus but similar base to IB). The comp growth is slower than equity analyst role and lower cap (maybe not for the teams that command higher AUM - not sure)
I’m an allocator myself now and it is the dream role for people that enjoy economics, macro, various asset classes and want to avoid the deal oriented nature of IB/PE.
No pressure to close deals so no all nighters, people are chiller and if in a good group you’ll still perform in depth DD on macro indicators / sectors / asset classes / strategies and portfolios (the latter especially if coinvestments secondaries).
So, overall, great learning experience with no / less bullshit work allowing you to build a well rounded investment knowledge whilst building a solid network and without burning out.
I would highly recommend avoiding IB / PE just for prestige… if you hate deals will crush your soul + being surrounded by assholes n cokeheads all day will make you misserable.
100% recommend allocator route
Really appreciate this. Those interests align exactly with what I'm looking for so great to hear. Could you provide any insight on how best to break into such a role coming from IB? LinkedIn searches for "Asset Allocator" don't seem to yield many open roles so I'm assuming this is more of a networking task to break in? Happy to chat further as well if you're up for it. Thanks
Would you be willing to share how you got into that? It seems like my ideal route.
Bump on this
bump
Every now and then I think about writing an “allocator is paradise” post as a joke except I kind of believe it. I think it’s the best job in finance and I’m so happy that I found my way to it.
There is no one pathway to being an allocator and the roles come in all sorts of flavors. You can certainly move into it from a junior IB role. To be really successful, I think you need to be curious about the world, thoughtful about macro, and have strong people skills - not to say that you need to be outgoing but that you are good at reading people and building relationships.
The work-life balance is awesome as far as finance is concerned. Generally 40-50 hours per week and on average 10-25% travel though this can vary quite a bit depending on who you work for. You’ll never be wildly rich as an allocator but you’ll definitely be perfectly comfortable and if you can become CIO of a large endowment or foundation you can get paid a few million a year.
Happy to answer any questions.
Thank you very much!
My question would be how best to break into the industry from IB and which roles or firms I should be targeting? I'm subscribed to the "allocatorjobs" website which posts openings but many openings seem to be either "manager research" roles (which I'm not sure is what you're describing?) or more niche private market research FoF type roles. There are some broader endowment/retirement systems openings but they all seem to want candidates that have some background in the space even for juniors.
Thanks again!
I am talking about all of the above. Allocator Jobs is a great resource. Trusted Insight is another one. If you follow Peter Madsen on LinkedIn, he also reposts jobs from allocators of all stripes.
I think with two years of IB you can target pretty much any entry level role. Even if they’re asking for some previous experience… it’ll probably be fine. The best thing to do is to try to do some networking. Find people in these roles and understand what they do, what the difference is between a big endowment team vs a small one, how that differs from a FoF or OCIO, etc. I’m also happy to turn this into a Q&A.
Many thanks for doing this. Just a couple questions if you don't mind:
Any thoughts on the comp for someone with 10yrs and 20yrs of experience?
4. What certifications do you most recommend that is attractive as a candidate other than CFA?
Although I haven't seen someone go from LO AM to a FoF/Allocator role, I don't expect that to be a challenge or an issue since LO AM is much more technical and, frankly, harder than being an allocator IMO. Most Directors in E&P/FoFs have been in the industry for forever. In terms of books, there really isnt one singular book that people recommend, its just a cultivation of understanding hedge funds and their redemption periods, any capital calls they might have, and high level portfolio planning/creation (whether it be a large redemption from the client or a large subscription to the fund, you have to know basic excel and "model" this allocation/redemption properly to forecast cash). From my 1 year at being at a FoF there was zero quantitative work and 99.9% was purely investment positioning based on the available capacity a fund has and how much a portfolio wanted to invest into it. Comp really depends on the place and how big their AUM is. I would like to think someone with 10-20 YOE is clearing >$250k. And the CFA is really the only thing people want to have, although some places put a harder emphasis on having it vs other places.
But why would you leave a LO AM seat for being an Alloctor? I feel like that would be a large step back in comp, WLB, and overall happiness?
Yes you can do it, particularly if you are targeting roles that will be focused on publics rather than privates. Comp as I noted in a comment above can be all over the place depending on organization and at your level could be anywhere from 150k to 800k.
Read Pioneering Portfolio Management to start out with.
Interested in allocators as a potential exit from ER for interesting work with better WLB. I would want to come into a level with $200-250K TC. What level would that be and how many YoE would I need?
I would imagine lower bonus % but what kind of range are we talking about here? Hopefully, I can backsolve for salary ranges to find a good opening.
From what I've see (not in an allocator role but also in ER looking to transition to an endowment after 1.5-2 years) $200-250k is probably VP or director level. The comp varies widely based on the fund size, how many people work there, and overall structure. From what I think is kinda accurate the pay would be; Analyst=90k, Associate=100k, VP=120k, Director=$180k (all base, bonus is like 20-30% of base). It feels like if one wants to transition to being an allocator if makes better sense to do it with 4 years of experience.
Are you sure these are endowments and foundations above $2bn?
$110k base and 20-30% is typical for an analyst at large E&F
These numbers are absolutely the low end of the scale and are representative of a small endowment or a public pensions and definitely not the industry norm.
x
Comp? Base and bonus?
At a bank in NYC?
x
Its possible but you need to start doing DCF's on your own and start developing some insight into a sector you want to join. Going from allocator to Research is not a common path.
How would an asset allocator fare vs. a fundamental equity research analyst in terms of career progression and comp?
x
Voluptatem debitis tenetur vero et. Possimus voluptas sed voluptas eaque omnis dolorem laborum. Molestiae nihil et labore iure qui. Voluptatum saepe quo sit saepe sunt consequatur aut quos.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Facere ut ea vel. Tenetur voluptate totam animi incidunt beatae ratione. Sunt optio dicta aut rerum reiciendis deleniti. Exercitationem sed mollitia dolores esse facilis a sit rem. Illo soluta ea velit quia.
Dolor aut est error quia numquam sint reprehenderit. Vero numquam magni sapiente nulla. Cum quos itaque quaerat ratione.