Considerations in Family Office
Hey guys,
I've only worked at institutional buyside HF/AM and don't have much insight into the Fam Office world, particularly ones that invest direct and focused on public markets.
I'm not talking about full-fledged institutional ones like MSD or Sam Zell, but fairly under the radar $500M-2B size FOs with a very lean team. I'm a bit tired of worrying about redemptions and fundraising being a constant threat to the business model and viewing the world in terms of calendar year performance. I am also mostly focused on credit now but would like to cross over into equity, privates, and other stuff from time to time (without losing the credit side as I think market environment is good today).
- What can I expect for comp as a 5-10 YOE analyst? Can you still get paid for performance without carry element? How does LT trajectory work? I'm expecting 500-700k this year from my HF in a down but OK year. Also, is the expectation at FO basically to just get cash comp? Is there any path to owning some equity value or profit share in the returns you generate?
- What kind of time horizon do you invest in at a FO? Theoretically it's forever but I suspect that still doesn't fly in a public-market focused platform. But can you truly invest on a 3-5 yr horizon without trying to time all the zigs and zags in vol?
- What do I need to be aware of about the asset owner? Is it typically a good/bad thing if the family is very hands-on and involved in the investing? Or is it better setup where a professional CIO runs the show? If the family wealth originates from investing/finance, do they typically lend their credibility/network/resources to help find good investments? Is this a good thing for the non-family professional staff?
Thanks guys!
anyone? bump
Bump
500-700 is pretty low for 5-10 YOE in credit HF unless you work for a small shop (less than 1b AUM). But that's probably the ballpark of what a family office would offer you and keep you stable-y there without the massive upswings (or downswings either)
OK thanks, I'm on the lower end of that YOE range, but I hear you. Less concerned about how to improve my comp than the FO question here though.
Idk 500-700k seems pretty good for a shop in a down year with no performance fees to go around? Especially since the upside is only like 1.5-2mm for a senior analyst in credit anyways.
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Pretty sure he's speaking on average. 4-5mm for a 30 year old senior analyst is like top 5% of earners/funds and maybe like less than 25 ppl in the industry earning that level and that age
What are IP/aum ratios at said funds? Hard to imagine such dramatic pay unless we are talking Appaloosa, Silver Point or Diameter caliber funds
Well Jesus. You and I operate in different credit hedge fund circles. Not even the same world. So you have less than 5 years of total experience out of college, and i guess in 2021 or 2020 bonus when you had 1.5/2.5yrs of buyside experience after RX IB, and you got paid $2mm...you may have been the highest paid 26 year old in credit. And probably in equities too alongside a few select 1st years at Viking. Anyways back to reality, these are nowhere near numbers anyone should ever expect even at the bluest of blue chip hedge funds as a junior. Maybe Diameter decides to be super generous in a standout year, maybe. Maybe Elliott, but they're not much for taking kids out of banking. Sculptor I've heard of a senior analyst getting 5 bucks. I'm happy for you and happy that sort of trajectory is ostensibly possible in credit, but even the top 5% of analysts in credit HF land - the King Street, Goldentree, Redwood, Silver Point guys, aren't seeing anywhere near that comp 1 - 2 years into the job. Normal upside year for a top 5% credit HF non-partner analyst is gonna be what you made as a 26 year old lol. At some AUM/IP level, it doesn't matter and comp would be so far off market that the excess would just accrue to the PMs/Partners/Founder. I am curious though in your rarified air of credit hedge funds, what's the most you've ever heard an analyst get paid, regardless of years of experience? What is your actual upside target. Maybe not including analysts who are also true Partners like at GT or Redwood.
Very hard to get back to a HF role once you leave. I left an event driven HF (doing credit) back in 2016 and I've just managed to get a desk analyst role at a BB, hoping to use that to springboard back to a HF seat in the future. I fully understand the drag of investing in an institutional setting but just make sure you are 100% sure you're not just chasing greener grass. Comp will be lower (argument is better job security....in theory) and you may find the nature of the work less interested/sophisticated.
Thanks for the advice, this is helpful. Do you mind sharing why you think that is? Do typical HFs look at FO experience and think it's not as rigorous or something? Or did you switch asset class / go into more external manager selecting type of thing? On the equity side, it seems that people fluidly move back and forth between real HFs and FOs.
It comes down to the old "you never got fired for buying IBM" mindset. If I have to hire a guy and I have a candidate from some no name FO and another candidate from King Street/Warwick/Anchorage, why would I take a chance on the FO guy? A lot of FO's are quite secretive (which makes sense as UHNW families tend to want to be discrete) which can make it hard to assess how good you actually are. I'm not sure how things work on the equity side, maybe there is more fluidity in that asset class. I will say, from my time in Switzerland where there are a lot of FO's, you can very easily get into a situation where the founder (say a Russian family) gets placed on a sanction list overnight and the entire team gets let go. Of course, an institutional fund can also lose its AUM, but I feel there is a bit of value in working for a more transparent vehicle.
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