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 multi-billion 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 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!
bumping for visibility
1 last visibility bump
jk here is last visibility bump
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!
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.
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.
Any numbers or ranges you can provide for comp each year at both firms would be really helpful. Lack of numbers in the RIA space is tough as ranges and job responsibilities vary widely.
Hi mate, I was hoping to send you a DM but I’m unable to as you posted anonymously.
could you please send me a DM and I will shoot you a message thanks.
Bumping again!
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.
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!
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.
Bump - any success thus far OP?
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.
Nice. I have a similar background as you in term of roles/responsibilities at a shop with a comparable AUM to your first firm mentioned, although I’m not as far as you in terms of years worked in the industry. I’m also interested in what exits look like and need to brush up on model building as well, as I’m likely less competitive than some of my peers. I attribute longer term thesises and less Q by Q trading making my models less intricate. Downloading SS models and plugging assumptions has also probably not helped in terms of time it takes to build. Anyways, good luck with the search. Although I’m certainly not getting pinged by HH’s for HF roles at nearly the same rate as a few buddy’s in IB get pinged for PE gigs (which makes sense given cookie cutter backgrounds and more PE roles available), I’ve had a bit more success than you mentioned above. I’m reaching here with only anecdotal observations, but I’m pretty active on LinkedIn and noticed a correlation with my activity and profile views. Might help you with head hunters. Anyways good luck man.
Any update on this? Curious to see how things ended up.
OP here! Wow really bringing me back...
So basically the answer is it IS possible. I had some interviews with some tier 1 shops (through networking and sending pitches), but ultimately it was always going to be a stretch for them I think. Remember if you have 15 candidates and all of them have great backgrounds and then you have the top 3, and one of them has my background, its safer to go with the brands. Nothing wrong with that. They also might have just been a lot better than me. I think unfortunately I was always going to be less "plug and play". I got interviews where they were seeking previous investing experience a lot of the time, and my competitors from other L/S funds will always be more plug and play.
I actually got an offer from a good L/S shop with ~$500mn AUM at the time, and I turned it down because there was some other stuff going on in my life... wife wanted to leave current city ASAP, I had final round interviews for another L/S shop in the city we wanted (which I ultiamtely didn't land), couldn't get shop 1 to keep offer open because my offer was in front of their other candidate who had been on hold, yadda yadda.
The answer is it is 100p is possible if you have good pitches and network. You won't be jumping into Viking though... and while I did interview at some pod shops I never had a great experience there (PM first rounds were highly suspicious that I was talking to them at all lmao).
Sweet spot is probably the $400mn-$800mn funds with a similar style. If you really are capable of the job, and work hard at it, it is possible. I don't recommend it as a path to L/S though.
I'm still in my seat and probably going to move over to more advisory focus. I run my own equity strategy at the firm now which is great, and I invest my PA aggressively. Investing profession landscape is tough though... outside of pods there are already so few seats! Now put in a less traditional background / uphill climb... and even then will it get you to a good career?
Thanks for the reply -- this all makes sense. Very insightful discussions below as well
There’s no path from RIA to HF Analyst because there’s an intermediate step which is sector or style coverage.
The best way to get that skillset is by (1) asking your team for a carve out to focus on certain sectors/verticals where you cover the stocks like an equity research analyst, (2) apply to sell side programs, (3) apply to experienced buy side programs at P72 and others, (4) self study.
Options 1&4 are hard because there’s little to no feedback or mentorship. Option 2 is the best to get you on the path, and Option 3 works if you think you are already quite skillful.
There are various smaller single managers that will hire w/o more direct experience, but they tend to hire from within their network. It’s possible to cold email/pitch them on stocks— wouldn’t discount that.
Why direct experience matters is because the seat expense can run easily over $100k for an analyst ex- your comp. So the firm is already “down” ~200-250k/yr depending on your comp. Because the role is so intense, I do not recommend trying to go this route unless the manager is putting you on some 5 year plan or something.
I like the use the cooking analogy. You can cook at home for yourself & friends, be a line cook at a restaurant, or work in a Michelin starred restaurant. It’s extremely hard to go from “good home cook” to working at Saison, Per Se, or Arpege. Even a decent line cook would struggle with the intensity and might not like it.
If this is what you want to do, then I’d highly recommend going through the sell side route (& maybe take a break for a masters/mba as an excuse to rebrand).
Just my thoughts.
OP here - HAH we were DM'ing recently... and YES you are correct here. My feedback from final round interviews where I did well (I think) was typically "we really like you, think you're smart, blah blah, but we need someone with more sector experience right now"
To be at most legit funds, they want someone who is already in the day to day fairly tied to the process, or close enough via sell side.
EX: if I am an RIA LO generalist and know xyz name fairly well, I am an inferior candidate to someone on sell side or elsewhere who is covering a tight process on that specific subsector, especially for pod world where its a lot more relative value / pairs focused. The workflow and feedback cycle of being much more connected to every incremental data point + commentary and how that shapes things in real time, its just too far from the generalist RIA LO role. Also depends on how much true primary research you do in that seat vs. generic LO approach. Then throw on the intensity of how detailed are models, how do you triage key questions, decision making at margins - they are just different questions and debates sometimes because its a different mandate... even when on the surface we are asking the same questions at conferences.
I messed up my path many times - waited too long, should've done sell side, or should've done MBA. I made my peace with it.
Takeaway from above shouldn't be that "hey RIA is a good stepping stone if you work hard - take this job as a pathway," more so, "if you are stuck in RIA world already, all is not lost, but it takes a lot of effort to get out, and odds are mostly stacked against you."
Can you work at a $400mn fund from a PM who wants to take a shot on you- maybe!
I'm at an existential career point trying to figure out what gives me the best track to controlling my financial destiny. Research in RIA world is mostly a cost center. What is lacking is advisors who actually know how markets work and can do true primary research. Most clients don't care tbh, and the value most advisors give is not from investing. Regardless, I still think there is a lot value for an advisor who can make decisions across a range of issues using foundational principles and fundamentals of investing / markets / etc. Who knows...
Advisory path still has some nice outcomes though. You can have a book of $300mn, 500, 700, etc. - that can be MSD millions every year fairly consistently. Still get to be tied to markets, less stress... building that size book is the same as building any type of business though and is equally extremely hard. Gotta be a chad about networking and good with people. If you want double digit millions, you need to monetize your book via a transaction of sorts. Its less exciting than having a shot at one huge payday in a killer year, but its still an interesting potential career.
I have heard of smart people at advisory firms (RIAs) becoming portfolio managers and, in some cases, running sleeves. Is that something that's an option for you?
Joining a hedge fund is the opposite of job security. It is boarding on a creaky ship to cross the ocean in hopes of some gold (but you might die en route). If you want to bet on yourself, then it's a good option.
Sunt aut quia aliquam incidunt. Facilis voluptas eos voluptas minus et provident.
Sed nihil sit eius fuga in laboriosam doloribus. Earum et dicta voluptas aperiam totam. Ullam quo ullam vel harum necessitatibus sed consequatur. Labore sed delectus eius tempora sapiente.
Incidunt dolor consequuntur sint numquam quam accusantium rerum. Quo in tenetur molestias numquam. Quas qui voluptates distinctio cupiditate enim eum. Eum et est dolores est aut pariatur.
Omnis doloremque ratione velit sequi suscipit fugit omnis accusamus. Saepe hic magni culpa ipsum. Et aut illum fuga. Voluptas voluptas quasi repellendus dolorem impedit.
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...
Fugiat ducimus sunt quas neque natus vero cum. Ut quisquam consequatur quos voluptas. Esse soluta aperiam nostrum. Nihil enim temporibus dolores quisquam incidunt illum.
Voluptate labore ipsa autem qui perferendis explicabo. Dignissimos dolorum accusantium qui incidunt est porro doloribus vel.
Ut laudantium fugit quo possimus rem totam illo. Est accusantium voluptas quas quia. Hic enim expedita minus sit est. Libero omnis quo non officiis possimus ullam aut. At repellat aut veritatis numquam explicabo voluptates minus. Commodi recusandae enim labore porro velit sed. Aliquid numquam a consequatur veritatis.
Sint debitis non nulla veritatis iste. Quo velit non nemo nam et odit. Similique impedit nemo reiciendis alias vel delectus molestiae. Ratione tempora omnis asperiores temporibus quos illo officiis harum. Molestias consequatur et deleniti quia. Et dolor perferendis reiciendis explicabo quod tenetur.