Pros & cons of jumping to PM from senior analyst / sector head role?

Hey all - how do you guys view the pros & cons of making the jump to a PM role from a senior analyst role? I'm more referring to being at a MM with P&L allocation (call it $200-$300mm in your names) as a senior analyst / sector head (with an agreement with the PM on payment terms) and making the move to a becoming a first time PM at another MM firm (either at a PM development program like Anthem (Balyasny) or Launchpoint (P72) or a smaller shop like Verition/Walleye/Exodus). A few years ago, I would've figured it to be a no brainer move, but I'm seeing a lot of "cons," and was curious on what I was overlooking or too/not enough focused on: 

Cons of making the move:

  • Likely lose at least a year of income as you build up all your models and process / platform again e.g. getting your data feeds, etc.
  • Higher risk of blowing up, especially after spending a year building up your models. What do you even do after this? Go back and find another senior analyst role probably, but not sure if you'll get another shot at PM
  • Building a team / training juniors
  • Likely have to move city (which I see as a con as I like my current location)
  • Probably running the same amount of capital ($200-$300mm) vs staying as as senior analyst
  • Can likely stick around and continue to get get more capital / better economics with current PM if doing well 

Pros of making the move:

  • More control over process / being the guy who pulls the trigger
  • Better economics, even if running the same amount of capital. Call it making 20% as a PM vs getting 10% as a senior analyst
  • Potential to running more capital if you do well and make more money

Anything I'm missing? Almost feels like would rather be a better risk/reward of staying as a senior analyst until I'm really itching to leave. Opportunity cost seems high. 

I am at a LO not a MM so someone can correct me if i'm wrong... but I'm pretty sure it is still industry standard for new MM PMs that make a switch like this get locked into a healthy 1-2 year guarantee which positively negates your 1st "con" bullet point. As for the rest, there is certainly much higher risk (and reward). The average MM PM tends to have a short career. Hard to make that decision for you without knowing your risk tolerance, nest egg, alternative options, and ability to execute. Biggest Q is do you feel ready? My general advice would be to not make a move like this unless you view yourself as a killer and are highly confident you'll do well. 

I'm someone who's trying lateraling for a while and I can tell you it's been tough as hell to get a new seat as senior analyst in this market. I wouldn't assume you would manage to go back to another shop as an analyst again so easily. 

Great list of pro/con. As mentioned the MM will typically take care of any “immediate downside risk”. Truly most people mainly debate the different nature of the job and what they would like to do next. Say even if economics are the same, the stress/day-to-day is a lot different. Would focus more on if you enjoy what you do and if understand as a PM will probably have to stop doing some of the work you like.

The biggest con (or pro?) is you’re not really a stock picker doing research anymore. If you enjoy the creative process of generating ideas, a true PM job is not about that at all. It’s about building a brand, hiring people, coaching them, and making decisions based on other people’s research.

If you’re going to a smaller shop like Verition or Walleye that enable one-man or a two-man teams (likely a junior doing grunt work), then it’s just a senior analyst job with better pay (higher take rate) but less stability or partnership (emotional support or having someone to bounce ideas off of). Which could be a good career path for someone who likes to work alone and confident in generating P&L with zero help. But remember that books at Big4 could be multiple times larger (so the better take rate gets diluted, sometimes fully), and you lose the optionality of becoming a PM at the big 4 one day.

I think one issue is by actively avoiding the PM advancement you may have a more existential crisis. There is only so long you can hide as a analyst under another PM and therefore you come up with the same shortened timeline on your HF career. 
 

At a certain point (5-10 years) more experience as an analyst flips to a negative in this industry. Most analyst positions are for junior to mid level analysts and being very senior but not having a PM track record can be a difficult spot to be in. 
 

I think in general you are underestimating how much risk you are already taking. If your running a 200-300M carve successfully then your taking the majority of the risk of a PM with much less payout, thats not a situation I would want to be in for long.

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