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.
Agree with your analysis here. Would add for your consideration: when you are itching to leave, that usually coincides with some degradation in your current setup. Which may have implications for whether the exit move is still available to you. There are moving parts and contingent elements to consider.
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.
thanks guys - great advice
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.
I've been running a sleeve for 2 years and plan on moving to PM basically because of 3 main motivators:
1. Higher payout (obviously).
2. No netting risk against other Sr Analysts.. full control of my destiny. Nothing sucks more than being up $20mm when the other two sleeves are down $10mm each and getting bageled.
3. Additional leverage of having an analyst and (maybe) a broader team.
If you have been performing well, the Sr Analyst to PM move is easily derisked by a move to another shop with a multi-year guarantee. I am considering that, but am weighing those guarantees against really liking my current seat and not wanting the disruption of moving shops. That multi-strat bid is still going to be there in a year or two and if anything it will get stronger over time, so I'm not in a big rush to hit the bid.
With respect to losing out on the analyst work - I think that's a genuine concern. I have already cut down significantly on the amount of "analyst" work I've been doing when I went from a SM to a MM sr analyst seat. I still cover my names in moderate depth, but I cover an industry where that can be done without dramatic time investment. The vast majority of my time is spent on PM type work (managing the book, sizing, exposures, trading) and random idea generation rather than in depth modeling.
What kinds of guarantees are people getting these days making the switch from SM to MM? Say for example going from a senior analyst/sector head seat at a SM to either an analyst/APM seat with a carve at a big 4 or a PM seat at a smaller multi strat?
Will likely get a guarantee to cover your deferred comp and also a one year guaranteed bonus similar to your recent comp to cover sit out period/ramp up period. The big guarantees come after you have an established P&L track record, if its your first risk-taking role I wouldnt expect anything crazy.
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