Can I make the jump? What am I battling? (RIA to HF)

I have reached out to a few people here who were very helpful, but also wanted to open the discussion for any additional opinions / advice/ candid feedback. 

My attempt at a short summary:

-Graduated in 2014 from semi-target/target, went to work for a highly regarded BB but in the PB in NYC as an "investment analyst"- turned out this was mostly comprised of analyzing in house strategies and matching them with the PB clients. Learned a lot, but not enough about real investing. 

-After 2.5 years moved to a $9bn RIA as an equity research analyst. All in house stock picking fundamental analysis work. Mostly long only. 

-After 2 years the senior partners were retiring and I interviewed around. Passed down an offer for a SS ER gig and jumped aboard another $1bn RIA with a smaller team that does the same thing (they made a compelling offer and I decided that I could learn a lot from one of the bosses)- all in house fundamental work, mostly long only, with some hedging strategies + analyzing fixed income opportunities and the odd real estate and PE deal. (similar to first RIA, but some deeper modeling)

  • Running with ~5 years of experience now as a fundamental analyst, doing the basics of in depth 3 statement financial modeling, primarily leveraging DCFs, and speaking with management teams, attending conferences, using industry insiders for due diligence, etc. I also probably spend too much time listening to podcasts, reading books about investing/ the industry, and thinking about the investment biz in general.

Would it be possible to make the jump to a HF with where I am now? I have a long line of reasoning for wanting to make the move (which I can explain if curious), but I got to where I am today because I always thought - "wow I could learn a lot about public equity investing here and can always end up at a HF once I have the skills." Turns out that was wrong and I am probably limited in my options today - I have yet to fully start the attempt at a HF career switch, but am trying to review my options and strategies before I do (or make sure I am not wasting my time). Any advice or candid feedback? 

I know the reality is there are 50 IB+PE H/S/P candidates ahead of me that get first looks, and its not like I believe I am going to lock down a role at D1 or Tiger. Anyways, open to advice + feedback!

Comments (15)

  • Intern in AM - Other
Jun 25, 2022 - 12:05am

I know you were originally asking the question , but could you give any insight into comp or recruiting for the RIAs you worked at? I am very interested in this type of work but there seems to be much less insight into the area than ib, hfs, etc. thanks!

Jun 25, 2022 - 7:33pm
Dominic Toretto, what's your opinion? Comment below:

Not to hijack here, but figure I can help. RIAs will vary widely in comp and responsibilities but I worked at a reputable one in HCOL area - we recruited at a few colleges that the partners had ties to. TC for me was:

1: 90k

2: 125k

3: 160k

4: 195k

5: 225k

Hours were 60-70 per week, so on the heavier end of PWM/RIA world.

Jun 26, 2022 - 12:23pm
mtnmaster1, what's your opinion? Comment below:

The RIAs I work/worked at were small on the headcount to AUM. First one had about $9bn in AUM with 8PM's who run their own books, and at the time 2 dedicated Research Analysts (I was 1 of 2). Each PM did their own investing according to their own style for the most part and did most of their own research, hence only two analysts- but research resources were shared across everyone and most portfolios were quite similar. 

RIA #2 is 4 people on investments side, (including myself) managing $1bn. Two PM's who own the company, one junior PM/ head analyst, and then myself. Here all the investing is the same across accounts.

These places tend to only hire people with previous experience given limited resources for training so it is hard to get in out of undergrad without a connection (like knowing the owners). The very large RIAs (+$10bn) that have been acquiring multiple smaller ones for a while will tend to be less direct fundamental investing and more mutual fund allocators, and they will probably have a more official recruiting cycle with built out HR departments. I can't speak to those as much since I never interviewed with them. 

These shops vary widely in their investment approaches so it will be dependent on what they do for what kind of experience/knowledge set you will need. The places I have worked at do direct fundamental investing, so interviews consisted of pitching stocks over multiple rounds and then eventually a take home case study on a stock they selected and completing a full financial model/ DCF + writing it up and presenting to all team members.

As far as I know (since I haven't worked at other places with this approach), some will be more like asset allocators and you might only due manager due diligence and assessing macro on the investing side, with a heavier focus on client relations, wealth planning, and reviewing client portfolios/ drafting presentations/ moving assets around accounts/ etc. One exception to the very large RIAs may be Rockefeller Capital Management as they have been building out in house investing team (someone can correct me if I am wrong here). 

Comp, as such, will vary widely depending on the type of work they do, AUM, city, etc. I can confirm that my places were similar/ a bit higher comp with the other poster. Generally comp will be higher for the more true investing work you are doing (some RIAs do a lot of PE co-investing). At the end of the day, comp will always be limited to a point as almost all RIAs are running fee only business models- therefore acquiring more assets is a more important driver of revenue for the business. The only way up longer term involves building up a book of clients. One PM at my older firm had built up a book of +$1bn in client AUM and has moved across a few RIAs bringing the book with him/her, charging a 1% flat fee and only does equities. As such, the PM was bringing in +8$mn a year for themselves after sharing agreements with the firm (not bad!)

More than happy to share more info on what I can so feel free to shoot me a DM or comment below. 

  • Research Analyst in HF - RelVal
Aug 4, 2022 - 10:11am

I don't see a reason why you wouldn't be able to make a jump to a L/S fund. I assume you don't get many headhunter looks where you're currently at? Your background may not be cookie cutter enough for headhunters, but you could try some direct networking.

It may be worth a try to get an MBA to rebrand or try to reach out to the business development arms of the large multimanager platforms before trying to move to a more stable single manager L/S. 

Aug 4, 2022 - 10:23am
mtnmaster1, what's your opinion? Comment below:

Other than mercury partners.... yes no real headhunters have reached out. I have been under the impression HH mostly try to work with candidates who fit the 2+2 mold (IB/PE), but I suppose I could try just reaching out to them directly? Glad to hear that it sounds like at the very least I may be able to try and make a case for myself vs. being auto disqualified. Thanks for the reply!  

  • Research Analyst in HF - RelVal
Aug 4, 2022 - 12:59pm

Reaching out to headhunters directly isn't a bad idea, but I meant trying to get in contact with PM/analysts at some funds and trying to get them on the phone. I think you'd at least have a decent shot at getting through to the business development people at a large platform (Point72, Citadel, Milennium, Balyasny, etc.) as well. Working at a multimanager may not be your end goal, but it would be a good stepping stone to getting your foot in the door with the some $1-5B+ single managers.

Aug 4, 2022 - 11:57am
mtnmaster1, what's your opinion? Comment below:

Haven't really reached out to any funds yet or really started networking that heavily. Been more focused on brushing up modeling for modeling tests (since we don't model quarterlies and use basic working capital assumptions/ balance sheet holdovers, and I am probably slower in a timed scenario than what I assume other candidates are). 

More curious on general thoughts for now - earnings season is also a busy time for me so may wait until that settles before I start ramping it up. 

Most Helpful
Aug 4, 2022 - 12:28pm
LehmanRskMgmt, what's your opinion? Comment below:

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