Career Stagnation in Public Markets?
For some context, I’m in my 30s, did the typical IB + PE, and have been in a single manager role ever since. I’ve come to generally enjoy the public markets but can’t help but shake the feeling that I’ve stagnated in my career. At this stage, I’m at a bit of a loss on what to do.
I joined a smaller fund to start off my public markets career in the hopes of growing with the firm, but that hasn’t necessarily panned out. While performance has been good, it hasn’t been good enough to warrant much more fundraising/expansion/differentiation when compared to large peer single managers. As a result, we’re trudging along in this weird purgatory state of not being bad enough to shut down but not good enough to make this a success. As years pass, I begin to worry more that lateraling becomes much tougher.
Other factors:
- Industry-wise, single managers and broader asset managers face a structural headwind, so I’m not sure if I should be trying so hard to stay in this industry anyway.
- Culturally, the fund is good and I am thankful compared to some of the horror stories I hear from peers.
- Financially, pay has been below market and stagnant. I often think about the pay some of peers make at much larger, worse-performing funds, but hey, they’ve got the AUM for it.
- Personally, I continue to try to improve, iterate on my own process, and learn as much as I can to stay sharp.
Question I have for the community are:
- Have you been in this situation before and how have you crossed this career stagnation chasm?
- Do you think I need to switch things up and just look for another seat?
- Did anyone here make the move back into PE from public markets? Why?
Thank you all!
why not go to pod
I've considered this path, but am mostly concerned about even less perceived stability/career longevity. I'm not senior enough to get any meaningful guarantee at this stage, so would prefer to wait. However, open to being convinced otherwise.
What is a pod & how does it differ from a non-pod?
Google pod shop
how much do you get paid?
In the mid-/high- 6 figure range.
i would stay where i am if i was you
Entirely depends on fund AUM and your expected pay progression / current pay. Totally fair you don't want to disclose those here but honestly don't think anyone can offer advice without knowing
In the mid-/high- 6 figure range. Pay progression is entirely unclear and a bit dependent on my own/fund performance.
What’s the ultimate goal in terms of pay? If you’re getting paid $500K - $1M consistently with good WLB and culture with potential upside if fund ever scales (even if unlikely) isn’t this a win vs. taking a risk to get a chance at making $1M+ with much higher chance of hating the culture / shitty WLB / chance of getting lower than $500K?
How small is your fund? Like 500-1 or 1-3?
On the smaller end of the range you listed.
tbh you described a problem lots of people in the industry are facing today. 5-10 years ago you could scale a fund of this size with good performance or move up in fund size as an analyst but all the career progression seems to have moved to pods now. so if you have the ambition to move up id go for that, otherwise nothing wrong with clipping what you’re clipping and accepting the career plateau.
Your comp is actually pretty good despite how small your fund is. Id hang around and jump if things start going south. Unless you really wanna make more money.
I'd take the opposite side of most of the posters on here. Comp range of $500k-1mm is decent, but it's not enough that you're set for life if your fund shuts down, which I assume is the calculation you're rightfully making. I'd try to make a change, either to a larger SM or a senior analyst seat at a good pod. Career stability in this industry is mostly a myth anyways, in my opinion I don't think there are any seats that are actually stable enough to be worth tolerating below market comp for long periods of time if you're not learning something useful or have a clear pathway to earn a bigger part of the economics.
Thank you for this advice. Have you seen any cases of analysts moving from smaller startup funds to larger more established funds after having worked a few years in public markets? My sense is many of those are focused on 2+2s.
Second question (realize this has a wider range), but do you have a sense on how much compensation I should be asking for at this stage?
For experienced hires, it’s all about fit. The reason so many ppl leave to pods is cuz the MM model nearly guarantees that there will be a fit for you somewhere on the platform. SM funds in general can be very sensitive about investment philosophy and analyst tendencies, to such a point that some PMs are very open about not hiring anyone too experienced in order to avoid incompatible habits, investing style, etc. this is definitely part of the reason you’re seeing mostly 2+2s getting hired; it’s so that the stubborn PM can “mold” the young guys however he wants (so that he can keep underperforming! lol). Cast a wide net for a search and know that it’ll likely take a long time to find a good place to land. Seats worth their salt are hard to come by
What’s your firm’s AUM
Not in public markets, on private side but I faced a similar situation.
Was at a MF a senior mid-level, making extremely good money. But fund as a whole was just chugging along - and medium / long term career progression was a serious question. More importantly I wasn’t learning anything so it felt like my intrinsic capabilities were deteriorating.
Ended up moving and taking a meaningful pay cut along with it (still high 6 figs). From a career perspective it seemed to have been a good move. From a personal perspective there’s no question it was
Thank you for popping by the hedge fund forum and thank you for the perspectives! I imagine more personal enrichment in the new job led to more career success? How did you diligence the new role to ensure it was worth giving up the old one?
Please DM. I will help if I can
Just sent you a DM. Thank you!
It is all about performance, otherwise you're just fading away. If performance has not been great, that's what you need to focus on.
100%. What’s your take on single managers that largely underperform but are larger vs. chancing it at a pod? The industry largely underperforms, but some people get comped generously despite that.
The question is can you get paid to underperform. These days unless you come from a mega-sized SM or have family/relationships to draw on for fundraising, it is highly highly unlikely.
Without performance you’re at the whims of the politics. If you happen to be good at that game, it can be lucrative.
As someone in their late 20's at a similar style SM, I have gone through and iterated on the exact moves and existential questions you have asked yourself. Been through a number of interviews elsewhere and ended up turning down offers to other pods/SMs. I'm getting to a point where the question becomes when not if I leave but I'll try and contribute thoughts and ask additional questions.
1) Having looked at the chasm of career stagnation at a fund in a similar sort of "purgatory," the main questions you have to ask yourself and especially given your age/level of experience is what you're hoping to gain from either A) staying or B) moving. If the pay seems below what you'd otherwise hope to make elsewhere, is the potential trade-off/risk of a move worth the additional comp? Not sure about any family/kids/wife/lifestyle assumptions but those probably need to be incorporated into your own personal thought process, and imagine they already have been as you dive into these debates. If a priority for you is comp, then I think the decision can be made more simple - you likely can garner better comp at a pod, almost no question. You also can try your hand at a larger single manager, but I would argue the longer one stays in single manager world, the harder it is to 1) grow or 2) move to a pod. The longer you put off a move generally the more difficult it will be to land in that next spot, contrary to popular belief. More experience does not always mean more success and so I've noticed my senior peers from my SM/other SMs struggling to make the next move. Could be anecdotal but just food for thought that the next leap isn't a guarantee.
2) Yes, but do it for the right reasons. Do the cheesy pro's/con's list. Don't settle for a squishy seat you won't enjoy or isn't a noticeable upgrade from your current spot. If you're having this debate in the first place you can likely afford to be more selective.
3) N/A - but tbh PE vs. HF is so different and so if you're asking yourself that you might need to ask deeply what it is you enjoy about investing at all.
Largely speaking I totally empathize with your debate. It's one I go through often, especially w/ rumors of huge guarantees at shops being thrown around. I wouldn't discount your ability to potentially get a guarantee, but also it shouldn't be the deciding factor either. I'd really push you to think about what you envision for your career, what you enjoy doing, why you're there, etc. All the intangibles only you can answer. I think being in a seat you are comfortable with and enjoy is a VERY invaluable piece to the equation, and it's part of why I've always chosen to stay put myself. If you care less about WLB, or care more about comp, then the decision is clearly that you need to look elsewhere. I would just say that no role that is marketed to you on the other side will be as "perfect" as you'd hope it would be, so bear that in mind to discount what those trying to hire you are selling you on. I have plenty of friends at SMs and pods alike that have both incredible, awesome experiences and others that have the horror stories you similarly reference. There's not really a "one size fits all" where someone can give you the magic formula for where the right spot for you might be. There are pod seats that blow out every Tiger seat and there are also pod seats that mimic what it's probably like to be a 1st year banking analyst.
What's the typical range for a pod guarantee at OP's age/experience level?
why do most of responses here assume you'll make more at a pod? you can usually swindle a nice first year guarantee but beyond that's it's all performance based and ppl seem a bit delusional that they can make high low 7 or more consistently at a pod...its more like 5 - 10% chance you make well above low 7 and a good 80 - 90% chance you end up somewhere in 0 to high 6 with way more stress - so you end up net neg vs your "underpaid" single manager job
i guess the above is to say you're probably not underpaid at your subscale SM, if anything you're more likely to be overpaid
but hey this industry is about believing you are the 1% top performer and anything below 10 bucks is underpaid, so go for it and swing if you're truly dissatisfied
It may be a little better than you outlined but i think this is correct - 50-70% chance you would regret moving to a pod. Higher if you join under a new PM or a PM with a spotty track record.
I think the point isn’t about maximising some kind of risk-adjusted outcome but what OP needs to do to advance in their career - I don’t see any way they can do this outside of becoming a PM at a pod given the difficulty of transitioning SMs this late in your career from a small one like theirs. The risk of failure is what it is but no one can say what the best risk-adjusted outcome is without knowing how much OP values that advancement vs safety which is exactly what they’re struggling with here.
Meh it's more law of large numbers
If you are at a pod managing > $1bn in GMV with 3-4 total people incl. PM, and you can eek out 3-5% per yr (which is good/above average, probably top quartile) then the PM makes a mid-7 figure pay-day with a few million to dole out to other 2-3 team members. Not really that unrealistic and if you have any success beyond year 1 they'll give you more capital. I think being in the top 25% to even top 50% of performers at pods can actually be pretty lucrative at any level
The stress side is definitely real and no one is saying the comp is "consistent" but certainly the ceiling is higher at a pod no question
absolutely no one is questioning the higher comp ceiling at a pod. the discussion is what your probability adjusted comp could be over a multi year period. Most pods strike out and its not easy to be top quartile, obviously. Even if you have a >$1M year y1, if you throw up a goose egg year 2 then you are not better off comp-wise than the OP (SM analyst)
You could probably move to another higher paying seat but your boss could be a physcopath and culture toxic so there’s that too
Some good comments already on this thread. I went through a similar fork in the road. My thoughts / rationale below as well as some questions for you to consider.
1) Where’s this firm going to be in 5 years? SM strategies are in secular decline. Unless your PM is exceptional, which he doesn’t sound to be (no offense), have a hard time seeing how you can have confidence in this firm being in a better position 5 years from now vs today. If your firm has been around for a while now, has had mediocre performance, and is low hundred million, that fact pattern sounds bearish to me. I can’t tell you how many SM firms I’ve heard of over my career where a recruiter tells me how they’re 3-500m, small team and good performance, but have been around for 5-10 years and think they can scale. If you haven’t scaled before why are you going to scale now. Why is your performance going to magically get so much better that you get allocators over the hump? Why haven’t you attracted money? Probably because your product is undifferentiated and returns mediocre. Which part of that is changing?
2) Today vs tomorrow. That’s great that you have solid comp but it’s not enough to compensate for the inherent career risk you are taking. It’s almost like a factor bet you’re taking in your career. Are you sure you want to take this? Comp and wlb may be sufficient for now. If you’re 33-35, where will you be at 40? 45? If your fund shuts down, where you going to go? A senior analyst looking for a SM analyst role at that age and experience level, at a good fund, is not easy. Lot of luck/timing/relationships go into it. Do you want to be building models at 45?
3) the gap between a 40 year old senior analyst and a 33 year old one is not that different. Your value gap diminishes as you get older
4) 5-7 years ago, pods were viewed more like back up options. Nowadays it is not. Do not assume you will get some great seat and guarantee as a fall back
5) this career is inherently risky. Your job is taking risk. Don’t be fooled by a low risk seat
6) you have 4 options. Large SM - 3-5bn+ with real staying power. Question is can you get this with your background at this stage of your career. Pods. Discussed a lot already. Large LOs. Start your own fund. Small undifferentiated hfs are a bad risk proposition over the LT IMO and a waste of time. UNLESS you have potential to make millions in your seat.
7) your career is either long or short. If it’s short, and you want to retire in your 40s, then you need to make as much money as possible. If it’s long, and you want to work into your 50s-60s, how do you get there? If you want to be a career analyst, then go to somewhere with durability. If not, then figure out how to be PM asap
Del
Thank you so much for this advice. Incredibly thoughtful and great perspective. What did you end up deciding for yourself at this fork in your career?
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