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Is there one area of PB you're more interested in than others? You have sales, sec lending, risk, pricing, credit risk, cap intro, etc
I don't know much if anything about the different groups. Could you shed light on the differences between them all?
Sales - As the name implies, these guys are trying to bring in the business. Whether its a start up or they're trying to win over Gekko's business, they'll do what it takes to bring 'em over.
HF Consulting/Cap Intro - Team size depends, but usually a smaller group that essentially helps newer funds get all the crap they need to start running. Helps them find qualified analysts, investors, physical space, etc.
Sec Lending - These guys help provide HF's the shares needed for shorting. They try to make a spread from borrowing at one rate and lending to the customer at a higher rate. As such, they have their eyes on what the inventory is actually like.
Risk - These guys analyze existing and new portfolios for old or oncoming clients. They'll provide margin rates, figure out what the book does to our overall exposure, and give general advice on what we should do with them. Keep tabs on existing books and the amount of margin being utilized, as well as who's making money.
Pricing - They essentially price the client out based on the book (how long/short biased they are, what markets they're trading, how often they trade, how big the book is, etc.) They'll shoot for a predetermined ROA.
Credit Risk - They do a lot more of the background work when bringing on a new fund (how long they've been around, who the managers are, what kind of track record do they have, what are they trading, do they have the necessary BO/MO setup, etc.). They provide critical data for the margin and pricing teams.
Happy to answer any other specific questions.
This is an excellent overview of PB. I would personally split up consulting (deals with the infrastructure of the hedge fund and getting it running) and capital introductions (introducing hedge fund managers to investors).
Personally, I only see Cap Into, Sales and Sec Lending as the FO functions.
Yep, good point. The shop I worked at had smaller groups, so they just kind of blended together.
And I think it just kind of matters on what your definition of FO is. Is it speaking with the traders of a HF on a daily basis? Is it speaking with the treasury group every other day? Is it casually meeting with the COO to try and show them indicative rates for their book(s)? It just depends in my mind.
Fair enough. I define FO as units that directly generate revenue for the firm, which applies to Sales and Sec Lending. I also consider Cap Intro as a FO role but I guess they don't follow my definition.
Out of curiosity, did the place you work at not have a Client Service team (they deal with day-to-day operational queries from hedge funds)?
I can speak a little about the career mobility in PB based on my internship experience. I know people can move from PB to a hedge fund but I've not seen people move into an investing role.
I have personally observed: - Client Service > HF COO/Ops role - Risk > HF Risk - Sales/Capital Introductions > Marketing roles
In terms of internal mobility, there seems to be a lot of flexibility within PB itself. I've seen: - Client service > Business Consulting - Client Service > Risk - Client Service > FX Sales - Client Service > Securities Lending - Client Service > Equity Swaps Trading - Capital Introductions > PB Sales - PB Sales > Other Sales
I don't think that there's anything about the Client Service role that lends itself particularly well to the other areas but they do interact a lot with the other functions and also, there's quite a lot of client service reps at the place I worked. Just as a note, the transition doesn't happen very quickly - I've seen people who have been there for 4/5/6 years before they move - it depends on business needs and the relationship you have with the team you want to move to.
Totally forgot about the CSR guys, probably because they weren't the brightest of our PB platform. In many cases, they were just the middle bitch who would whine and complain to the rest of PB why something wasn't fixed in 2minutes. I found myself explaining the intricacies of PB to people who had been there for 3+ years but still didn't understand how things worked. And I don't know how many times CSR's would simply forward emails and questions to me simply because they were lazy or didn't know how to answer.
Like you said, though, they have a lot of interaction with the rest of the groups. Like any role, you'd really need to spend time with each and actively show your interests if you wanted to move around.
Thanks a lot HFer. I could probably figure it out a little on my own, but what is the most "FO" of the above roles and their order from BO to FO? I'm guessing Sec Lending and Risk are most FO...
How does the compensation track look? Does it differ between the different groups? What types of people succeed in each?
Is PB an overall good place to start a career? I will be in an investor services role at a BB for a summer internship, potentially in prime brokerage but potentially not. If not, I could probably get there full-time. Should I use the opportunity to learn and make a committed effort to move somewhere else for full-time or can staying on and building a career in prime brokerage be a smart decision?
Do any of these groups provide skills that are transferable to other careers (consulting, IB, investing, corporate finance, etc.)? To a hedge fund?
Do B-schools have any conception of what prime brokerage is? How would it look on an MBA app?
Is there ever a movement to the investing side? (whether thats at a HF or S&T or IM, etc.)
Sorry for the flurry of questions and thank you!
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