Corporate pension path
Hello. Out of undergrad last year and I am currently working for a large company’s corporate pension as an investment analyst- on the equities side. Ik this is a buyside seat and all with a good WLB, but I am trying to pivot into a bigger LO or hedge fund , I am wondering if it would be possible to make this career switch- I actually have no idea what the career trajectory for this type of role; so any advice would be appreciated. Thanks
You'll be working in the Endowment and Pension (E&P) field, aka being an 'Allocator'. While you can say you're working on the "buy-side", would you consider a janitor who cleans the floors of an operating room a surgeon just because they work in the same area? No. (To avoid the awkward conversation of having to explain yourself, best to drop saying you work on the buyside, sense you're not buying stocks/securities, unless you are working as an equity research analyst for a pension actively buying stock, which is A) a very very small field and B) one of the most coveted seats in all of finance). It would be best if you explained what you would be doing. Is it A) Giving money to hedge funds/PE/VC and maintaining the relationship? Or is it B) buying stock working as an equity analyst at a pension?
To your question on how can you pivot to a LO or LS, your best case is getting an MBA or getting out of the E&P as fast as possible.
Option 1 -> MBA: Working as an allocator is very relaxed. Your WLB is superior to most jobs in finance, you'll know your schedule 1-year out and can plan your life accordingly, and you'll get to talk to a plethora of managers who will be begging for money, because that's how they raise capital. You'll most likely leave the office at 5 or 5:30pm on the dot and not have to work afterwards unless you want to or it's time to prep for your IC meeting. As you can see the pros are heavily skewed towards the "L" in the WLB. Downsides are that the job is 99% relationship building / maintaining. Your technical skills will probably be one of your greatest areas of weakness because there is no technical need for the job, you'll just have to know HF performance, your cash reserves, and your redemption (take money out of hedge funds) and subscriptions (give money to hedge funds) schedule (which are all planned out months, if not quarters, in advance). You'll need to know market news and different market make ups (i.e. is tech something you want to be exposed to, what about healthcare, perhaps industrials...). I can go on but you should understand what I'm talking about if you already got the offer. Comp progression is probably one of the slowest I would say, but with the slowness comes stability (hopefully). I've spoken to a handful of allocators and literally all have praised the WLB but have damned the pay. If you stay long enough, you'll get a good chance at being a CIO which is a great $500k a year for ~50-60 hours a week. If you still want to go to the actual buyside, getting an MBA would be your best bet as this would give you a fresh start. But again, this depends on the world not blowing up, plus a lot of other things.
Option 2 -> Get out ASAP: Getting out ASAP was what I did to get into the SS ER and I don't regret it one bit. Sure my WLB isn't as great as it was, but my exit opps have opened up to areas that would be almost impossible to break into without having the experience (both technical and soft), and if I really wanted to, I could go back to to the E&P field being a consultant. You'll basically have to self teach yourself how to model and write notes, try to land a spot in equity research (as going to a LO or LS from being an allocator is almost impossible). From SS ER you can then try and land a LO offer (good luck) or a LS offer (less luck needed but you need to love stocks to survive that environment).
Hope this helps shed more light.
Thank you for the response . It was actually quite helpful tbf. I actually am an equity research analyst on the internal equities portfolio covering individual stocks and helping my pms with investment recommendations. I should have been more clear in my initial discussion point.
No worries, I wouldn't ever tell people what to do with their career but I would highly suggest you first network with the LS side to see if the work flow and overall life they live is something you would even want. LS aren't really stock pickers, but more so finding pricing discrepancies amongst stocks they think they can make money off of (i.e. not looking at a company for it's underlying value). In my mind you're already in a LO seat, but instead of it being for a mutual fund to sell to a pension, you're already doing that and cutting out the cost to pay a fund to ultimately underperform their benchmark. I would suggest staying for 2 years, you'll learn valuation, the 'behind-the-scenes' discussions when it comes to adding / removing a stock from the portfolio. During those 2 years I would just network and gauge the more institution side.
Why is working for a pension as an equity analyst a coveted seat? If you had the chance to work for a $100bn pension fund (say a teacher's pension fund for one state), what would the career track there look like?
My sense was comp would just level off at say $500k max and thats it, and thats sort of the upside case no?
It's coveted because it's essentially the same thing as a LO job. Comp at HF's are unlimited but so is the stress. Comp at LO's are slightly higher but barrier to entry is also high due to lack of seat. The best analogy I can offer is like racing a Ferrari and a nice BMW with the same engine as a Ferrari. Performance wise they are essentially the same thing, except one is flashy red, while the other one looks like a normal BMW. Same objective, same engine, same goal. I'm sure the PM at the pension isn't cracking $700K (the LO PM probs isn't either), but the pension PM doesn't have to worry about clients, because he is the client. Only has to deliver on mediocre performance (my personal joke about the LO industry). I hope that makes sense.
I think I will edit the Post - to avoid further misunderstandings abt my role
You’re in a decent seat for WLB. The tradeoff is career growth and lower comp compared to HF. It comes down to what you want long term. If you care more about money and progression, you’ll need to move. If you want stability and lifestyle, you should stay. It’s better to figure that out now rather than in a few years and realize you’re stuck.
If you want to pivot, start networking immediately. Make sure you’re working on the right skills too (modeling, research, understanding how to pitch names). You could consider getting an MBA but honestly if you have the skills and network then you should be fine.
Thank you for the response. I know it’s good for WLB but there’s no way it’s just networking right? I doubt people are directly recruiting from pensions etc for HF seats and even LO seats- even though my position is a LO ER analyst. That’s why I’m asking, I have no idea what the trajectory looks like.
If you think about it, you're literally doing what LO's do, but without paying mgmt fees. So the skills are almost identical, therefore networking could possibly be the only thing you need to do.
FWIW, from talking to friends working in pensions space there are some pensions that run more sophisticated in house investment teams whereas others outsource to external managers. I think state of Wisconsin is one of the more highly regarded ones?
Also the Canadian pensions such as CPP seem to do more interesting work…
Congrats on Wisconsin
Yeah pensions are cool but idk what the career trajectory looks like. I am getting direct equity investing experience and shit
MBA-to-LO is going to be your best and safest bet.
Thank you. Thoughts on CFA?
Dolore iste deleniti ut animi. A asperiores sapiente non sit voluptatem inventore labore. Et nihil excepturi cupiditate maiores. Consequatur temporibus quia illum nesciunt.
Itaque tempora deserunt consectetur enim similique et. Ea atque tenetur qui distinctio quod aliquam. Ea mollitia deleniti velit sint quis rerum voluptatum et.
Animi natus commodi deserunt. Velit sapiente fugit est. Dolorem rerum id quia iste mollitia quis cupiditate.
Architecto esse perspiciatis dolor voluptatem aut. Repudiandae error culpa ex et delectus. Debitis sed ea qui laborum ipsa est est. Asperiores beatae atque voluptatibus quia vel.
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...