At a crossroads in SS ER

Hello,

I'm trying to decide between a few paths that are likely available to me in the near future. I'm currently a senior associate (i.e., the title after the junior analyst/associate after undergrad) at a BB in SS ER. I eventually want to move over to the buy side, staying in equities (fundamental, L/S or long-only), and I hope to make my own fund later down the line. Also important to note is that I have an interest in international equity as well. It'd be good to hear from other folks in ER who have made similar decisions.

The options I could have are:

1) Stay on the SS and get some coverage as a VP, then move after a few years to the buy side. The upside here is that I have pretty good visibility into this opportunity now, and have performed well in my position to date (with recognition). The potential downside is maybe the level of seniority I'd have when I decide to move to the buy side. I'm unsure if opportunities to move as an SS ER VP may be more limited.

2) Go for an MBA at H/S/W without promotion, and go directly to the buy side afterwards. I'd have to get in, first, and I could consider Chicago/Columbia too. The downside here is I will be giving up a fuckload of money in opportunity cost and tuition. The upside is that a top MBA network and recruiting engine could give me more options for buy side recruiting. Also, the brand name would be helpful later down the line when I want to make my own fund, particularly if I focus on international equity. My window for getting an MBA is closing quickly, so this is a decision I'll need to make. Maybe this could be achieved with an executive MBA, but not sure.

3) Move to the buy side directly, before promotion at my current firm. I'd give up some stability as I have good visibility into promotion now, but I'd be where I want to end up anyways. The downside is that I do genuinely feel like I have more to learn on the SS that could help when I make the move later on, and the visibility to promotion and coverage in my current firm is nice (not to mention the compensation potential is attractive). I'm not necessarily in a rush to make this buy side switch, which is why this option isn't as obvious of a choice as it may seem. I just want to make sure that I don't limit myself too much later down the road if I go with option 1 or 2 above.

Any advice or shared experiences would be appreciated. I'm grateful that these options are coming closer to reality, but I want to make the best choice. Thanks.

Comments (15)

Dec 12, 2021 - 4:48pm

All depends on how committed you are to public market investing. If you are, do #3 and save yourself real cost and opportunity cost. MBA just gives you more shots on goal but it's not a magic bullet to a seat (you will compete with people with similar if not better backgrounds if you go to one of those 5 schools). 

I advise against using MBA to "figure out" what you want to do. It's almost always better to know clearly what you want to do before you start MBA

Dec 13, 2021 - 4:59pm

Thanks for the response. I would certainly know what I want to do going into the MBA - I'd want to move to a public equity L/S HF or long-only, and I have preferred sectors in mind. I wonder if an MBA would make it easier to make that transition, particularly for long-only funds as those seats tend to have less turnover? In that sense, maybe the MBA is worth it even in the shorter term?Transitioning to an HF seems quite doable without the MBA, though, at least from my current experience. In this sense, losing two years of potential experience on the buy side in exchange for the MBA may not be worth it. My only reason for going at that point would be for the network later down the road, given my interest in international equity.

Dec 13, 2021 - 5:09pm

Speaking from my experience, MBA to LO AM is not a guaranteed path at all, even if you go H/S/W/Booth/CBS. That's my only point. 

With MBA, you are also making an implicit call on what the public equity market will be like 2 years later. If you have a view that active management will add value again in two years, MBA makes a ton of sense if you turn out to be right, but again, I continue to emphasize how difficult to get into LO AM even at top MBA programs (if you cannot get into those 5 schools, do not even bother doing MBA for the purpose of breaking into public buy-side). 

Dec 13, 2021 - 5:44pm

Makes sense. I do believe that active management will continue to add value in the future, and am willing to make career bets now on that view.

As far as the MBA, I have spoken to some alumni who have gone the route of MBA > LO fund, and I got the same sense that it is quite difficult even at those five schools. Do you have any thoughts on how material the difference in opportunity would be among those five, specifically for recruiting at either LO funds or L/S HFs? Just by looking at their published lists of firms that graduates go to, there looks to be more opportunity at H/S/W than Booth/CBS, for example. Is there a world where a Wharton is worth going to but a Booth/CBS isn't, or is that lending too much credence to generic MBA rankings?

Also, I read through your posts on your own buy side transition. They were very helpful, thanks for those.

Dec 13, 2021 - 6:02pm

The only thing I can think of is CBS is still (maybe I am wrong) perceived as a value school, though they are very aggressively trying to change that perception. If you want to do more traditional value / deep value shops, CBS is probably better than the other schools because of the value investing program (which requires a separate application). The other 4 schools are great too, Booth might have some bend toward quants but that's not surprising given David Booth runs Dimension and Booth is known to be a quant b-school (with Fama and all). I doubt you can do wrong with GSB, HBS or Wharton. 

A side joke is I presume down the road CBS might change the program name to "investing program" just to rebrand out of traditional value. 

Most Helpful
Dec 13, 2021 - 6:47pm

Fantastic article, appreciate it. I've heard or read much of the advice in the piece elsewhere, but a lot of it is new to me, particularly on the timing of recruiting while in a program. The structure that the article provides on recruitment preparation (especially for stock pitches) is great stuff, too, even outside of an MBA.

Appreciate the color on the MBA programs, as well. My only remaining question here is whether you think it's easier to go to an LO fund through an MBA or directly from SS ER, considering that an MBA adds 2 years to the process versus starting off-cycle recruiting today.

Also, not too surprising that Columbia is shying away from the value investing label, given how value has done relative to growth over the past several years. The more intransigent (or optimistic) believers in value/deep value might argue that the strategy is due for a comeback story soon, but we'll see how things shape out. If the optimists are right, maybe Columbia will come back around and perform a (in-hindsight) victory lap.

  • Associate 3 in ER
Dec 12, 2021 - 9:02pm

If you are interested in the Buyside #3 is a no-brainer. A few years off sell-side is useful in that you learn the baseline skill-set but extra years past that is little to no value add to being a buyside analyst (ie makes no difference if you move now or after a few years with coverage as a VP you will be starting at the same point). If interested in continuing sell-side than option 1, MBA is not needed to move up in SS ER, and unlike say PE, MBA is not needed at all to move up in HF, you either make money for the firm or you don't (and will be fired if thats the case). Don't waste time on MBA either way. 

Dec 13, 2021 - 4:55pm

Thanks for the response. For some added context, while I am a senior associate, I did not start on the SS. I moved over as a senior associate, but my total ER experience is actually 2 years. (However, my current position is what I'd likely be at even if I started in ER.)

I'm curious on your point about transitioning to the buy side as a VP in ER, though. Would there really be no major title or comp difference if I transition as a senior associate versus as a VP, even considering my comp at the time? Title is less of a concern on the buy side, I'm more thinking the comp.

  • Associate 3 in ER
Dec 13, 2021 - 8:29pm

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