The best of the back (or middle) office?
obviously most people here are IBD or bust, but for those of us happy making a decent living and prioritize work and family time, what are some of the better roles in the BO and MO?
the only real BO/MO role i am familiar with is Trade Support so i am interested in knowing what else is out there.
i am prepared for the snarky comments but i do know there are a good handful of people with the back office/operations experience that will chime in.
thanks all!
CCAR is a strong spot for balance between income and hours spent working. Roles spread throughout Risk, Treasury, Finance, and some front-office seats as well. Very transferable as well and in extremely high demand. I know a kid who started in CCAR who after 2 years lateraled from a lower-end BB firm to MS as an AVP (jumped right past associate) and is pulling in a nice 135k base + 25-35% bonus. Hours are rough in Q1, otherwise it rarely passes 55 hours a week.
Risk is general is the best bet, but there are gems to be found across the industry. Credit Risk and Market Risk professionals are in high demand constantly, bring in a strong salary, have far less career risk than any front-office professional, and can move into consulting OR front-office roles in the right situation. I know a handful of credit risk and market risk guys who had no problem going from a USC-level MBA program into an IB Associate seat.
If you want to be come a lawyer or aspire to jump into a restructuring or lev fin team, legal can be the way to go. Also, lobbyists working for the top banks pull in insane money relative to their hours. This is one way to get exposed to that world.
5/10 years ago the front-office was by far the move..... I wouldn't be entirely shocked that if in 15 years the kids starting off in strong compliance, risk, or tech roles are better off than those that are joining weak trading desks or banking groups. The skill-set is simply more necessary for the long-term and offers far more career longevity.
honestly depends what you're interested in.
im in credit trade support at a BB. if you join a BB graduate scheme you will rotate around the different business units. whereas trying to pick and choose what business unit to get in to without any experience will be very difficult. 95% of the time job advertisements require previous experience with a particular product or group before entertaining your application.
don't agree with the post above about satellite offices. a lot of the operations and risk work is a very blurred line these days. the majority of trade support roles are in satellite offices, this is 2018 where communication is instantaneous, you no longer have to be sitting beside someone to partake in the kind of activities mentioned above. everyone uses instant messaging, video conferences and phones. even the biggest BB's are moving the majority of these roles to satellite offices.
and for context I'm interviewing at a fund in the next few weeks with an all in comp comparable to 135k USD in Europe with a few years experience. its more of a project management role, about 45 hrs a week. for me, streamlining the business is one of the sexier roles, but as I say, depends on where your interest lies.
If you dont have what it takes to get front office finance or high consulting gig, yet want to maximize your earning potential, dont do back office / mid office. Go into sales at a large tech company. If ur good, you can clear 300-400k after several yrs and a couple of promotions.
Also mutual fund wholesalers can make a fuck ton of money. These guys are largely sales idiots trying to sell funds to neighborhood mom and pop shop financial advisors. Source: my high school friend is a wholesaler at pimpco / blackrock / allianz type of place and he cleared 600k this year, with 5 years of experience. He tells me that the more successful/ senior sales guys at his fund tend to clear 2-5mm a year, which is basically ibanking MD money
I would love a sales role at PIMPCO
I'm going to get monkey shit for this, but I'd rather be real here and help someone whose shoes I was in a while back. Don't bother with MO or BO dude. Its not a good place to be. Trust me.
It is my hope that this gets stickied and pinned so that everyone making this decision has some insight that, frankly, I wish I had when I was graduating college. I created a burner account specifically for this post, because I want to be as blunt as humanly possible here. I was in the MO and FO at two sell-side banks. I’ve since left, but I still lurk around here.
This is harsh, but please, I’m hoping people will see this for its honesty. People can call me an elitist, but there are several things that are going to be working against you in the near future, that only add to the misery that MO/BO as you get older. I'm in my early 30s now so I'll be real: My guess is you're probably a pretty bright guy, and you think that there's an aspect to finance that's still lucrative and worthwhile from 10 years ago. I would tell my sister, my cousin, or literally anyone younger than me to skip Ops altogether at a sell-side bank. Let's go over some of the issues:
(this is NY-centric but still worth a read):
1) If you live in New York, get ready to be moving, relatively soon, to another city. Salt Lake City, Jacksonville, Raleigh, etc. This isn't stopping and will only accelerate as time goes on as banks continue to cut costs. Hope your girlfriend/boyfriend is supportive of that move.
2) When layoffs occur (and they will), guess who's getting the door first? Yeah, the guy who blows himself up trading will be the one everyone knows who got the door, but your onboarding, KYC, and settlements guys are getting a shove too. If you make money for a bank you are much less likely to get let go than a MO guy. Trump coming to office means a much less strict interpretation of Dodd Frank, and as a result, less of a need to hire good talent for it at banks. I know this because I have several friends in compliance in managerial roles now who bemoan the fact that it’s harder to get good talent in satellite offices because it doesn't make sense to spend up for it now budget-wise at banks.
3) You don’t live in a bubble. You’re not going to notice it yet because you’re 22 and every 22 year old bro or girl is going to spend Saturday nights hitting up Brass Monkey, La Caverna and Hotel Chantelle without a care in the world. And that’s great. Have a blast. It’s all the same salary-wise when you’re 22 unless you play for the Knicks. If you’re moderately driven (and to be on WSO, it seems like you are), you’ll make friends with FO people, and people in other industries whom are driven and making a lot of money in their respective industries as well. You won’t. You’ll make about the same as a firefighter, principal, etc. any number of public servant jobs. Which is fine. But you didn’t kill yourself in school for a specialized field like finance for public servant money. There is no “20 years and out with a pension” like you’d at least get in those fields, so you’re arguably worse off from a monetary standpoint.
Worse, and you won’t realize this until your mid-to-late 20s, people will start doing summer houses out in Montauk or trips to Europe, or things that, while you want to do, it will be much more a struggle for you to afford. You’ll still likely be feeling grateful for your bank throwing you $15k for year-end. Beach house? Rolex? Any of the material trappings, that, while they don’t bring someone happiness in themselves, do serve as a reminder why you work so hard? Nope, and nope. Not happening.
4) You’re still working 55-60 hours a week in an Ops role. There’s another cost component to this that you won’t realize when you’re 22. If you’re in NYC, you can’t afford to live near work and have kids. It’s fine if you don’t raise kids in the city, but you won’t live off the first stop on the Metro North, and you won’t live in North Jersey with anywhere of a reasonable commute. If you want any type of home that’s not a tiny apartment, you’re looking at, at a minimum, a 90 minute commute from like Middlesex, Suffolk, or Rockland county. Yes, 55-60 hours a week sounds great in comparison to the FO. You’re still answering e-mails on your phone and on call if needed. So you’re now up to 70+ hours total a week for $135k-$150k a year.
5) Spouses are important and picking the right one is an unbelievably important choice. But guess what, your spouse is working too! I hope you have grandma and grandpa nearby when you decide to have children, because otherwise, a huge chunk of mommy’s salary is going to daycare. Forget about retiring wealthy, you’re going to retire at 65 like everyone else, on whatever you saved. Which will be one year’s earnings for a managing director on the FO side.
And Last, and most harsh: 6) You’re going into an industry that worships money. Our society as whole worships money and places way too much emphasis on money as a barometer for intelligence, but you’re going right into the belly of it in going into the finance industry. You will bring in zero revenue. Remember that post about “getting friend-zoned” by your job? FO people will look at you as always a “kid brother”. It’s literally the career equivalent of being the “nice guy” in romcoms from a respect by the FO level. You’re the Ops guy that works hard. You won’t get paid out of the FO bonus pool, salespeople and traders won’t pull out an extra $5k in cash as a thank you for the work you did that year. You are the help. You support other people’s efforts whom are valued more highly than you in every way shape or form, with rare, rare, rare exceptions for certain MO types of people whom have very specific skillsets.
I made the jump into FO. It took me years. I made a nice egg and I’ve since left to go work on something else that allows me to work in sweatpants and a t-shirt for comparable money. I had no issues with the industry as whole. I’m not going into too much detail about my background, but I just want you, and any other prospective monkeys to realize what MO/BO actually is.
This is what your life will be if you choose it. There are so, so many options out there that you can go for. If you’re going to settle for the BO/MO salary, for God’s sakes, go do something else.
I don't know what you did when you were in "ops", but my experience in MO was very different from yours.
I started in Risk Management and then jumped to my current role as an associate in IB. It did not take me years to make the change, it took me 7 months of intense networking, and preparation. Personally, I am much happier now in my current role, but that being said, MO is not necessarily a bad place to be.
There seems to be confusion in this site in the sense that people tend to think that all MO roles are the at the same level. The exact same compensation rule of thumb still applies there: the closer you are to the money, the more money you make. So if you do Model Validation or Compliance you are pretty far away from the cash generating activities of your bank, and your compensation will in fact not be enough to even live in Manhattan. But there are other jobs.
I was in risk, so I'll limit myself to talk about that. Risk Management is a very wide field, and within risk I usually like to classify the roles into two categories: before and after the trade. After-the-trade risk management is the analysis and reporting that happens after a security has been bought, or money has been lent to a company. People in these roles generally make less money because they have no say in whether or not the cash generating activity will actually happen.
Before-the-trade risk management teams, actually get to say if the security can be bought or the money can be lent. So they actually have a say in the activity that will eventually generate profit (or loss). I was in Securitization Risk Managment, and my position was actually defined as "front office" risk management. Obviously it is not really FO, but we did get to travel to meet with clients (for due diligence purposes), while the real FO team structured a note. Our compensation was tied to a degree to PnL, so our bonus was pretty decent. Also, I used to get out of the office at ~7pm on the longest of days. That's probably the only thing that I miss.
As someone who started in Ops in a non-metro hub and has since moved to a trade support Ops role in NY, realist243 provided a great perspective from someone now in their early 30s who's been there and done that. I'd like to touch on some of the points he made and expand a bit here and there, offering insight from someone currently in their mid 20s trying to GTFO of their current position. These thoughts are purely based off of my own experiences.
1) Relocation (outside of Manhattan)- very real. Whether it's within your office building making room for another group (that adds more value being closer in proximity to their FO) or to another building in the NY Metro, I could definitely see relocation to a non-metro hub in the coming years happening. One bank in particular already does this for some of their trade support staff.
2) Layoffs- can't really comment on this as I've only seen people who are (apparently) terrible at their jobs get laid off.
3) Your early to mid 20s- yeah you'll make enough to live in the city with roommates and have a good time meeting girls/guys, but depending on how much your career matters to you, you may get bored/start to hate your job. Some of the people I work with are pretty smart, but I do not think staying long-term is the smart move.
4) Hours - I'd put them at the low end of 50 or so, higher end closer to 60 (ex. a teammate is out and you're covering). One major downside to the Ops life is if one of your teammates who carry a lot of weight (like yourself because you've been there for a few months and are competent enough to be able to do the same repetitive tasks that were shown to you a few times) leave for a new job, you're going to be picking up their slack and waiting (months) for your bank to hire someone new. Once that new person is hired, the training process begins and if they're not competent, well, sucks because the job still needs to get done and trading doesn't give a fuck who's doing it.
I won't touch on the commuting/thinking about kids etc. because I'm personally nowhere near that point in my life.
5) Re finding bae- long story short Ops is not going to support a viable lifestyle in NY if your significant other isn't also working. Please save yourself and find something more fulfilling that will pay you appropriately for your time.
6) Being a support function (that generates 0 dollars in pnl)- this one hits home. At the end of the day, you are team bitch. You may be buddy buddy with some of the sales guys or some of the traders, but you busting your ass in your current position is only going to get you more work because people are going to start coming to you instead of someone else to fix their problems. I've seen this firsthand with some very intelligent people who just get smoked with work because no one else has the knowledge... this isn't like banking where you can look up something you don't know in a BIWS modeling guide or find out new tax bill impacts with the right sources... instead you have a handful of gurus between the team you're on and the teams you'll interact with on a daily basis (tech, other support functions, etc.) who know the answers to questions you have and if one of them leave/don't know, you're stuck figuring it out on your own. Dealing with the number of antiquated systems that have been pieced together after years and years and living with issues that have no budget to get fixed can be frustrating to say the least.
If you're in your 20s coming out of college or a few years out and you choose to go into a role like this, please use this as a stepping stone and do not get stuck in a management position (again, my personal opinion) without having one foot out the door looking for your next step. I started in a non-metro area in the definition of a back office function where over half of the people I was working with (~60 person team) were 35+ and had zero motivation to do something more with their careers. I'm not kidding when I'm saying I wanted to shoot myself (not really but you get the point - it was that bad) and even after moving to NY, it's getting to that point again. Ops can offer some great roles, but you really need to seek them out. Think about where you're currently at, what you want out of life, and go from there. I think Ops is a waste of time (more than the CFA exams that I've taken) and I hope that if you're in a position to do something else that will add more value to your long-term career, you choose to work a little harder to get there.
All depends on what you think you'll get out of it. If you're doing equity sales, yes. If you're covering another product, may be worth thinking about. I'd look around your desk/sister desks and see who else is pursuing/has pursued the charter. Ultimately, for someone on the sell side with a solid background (I'm assuming you went to a good school and have a wide network on the street) it really depends on what you (may) want to do from here, whether or not you're thinking about business school, and whether the opportunity cost of those 250-300 hours spent studying for each level may be better spent elsewhere on something that's going to add more value for your end goals. For me, it made sense because I went to a non-target and my network of alumni is slim when it comes to things I'm interested in. Happy to chat offline but my advice is to chat with people in similar roles (within or outside of your firm) who have their charter or are Level 2 or 3 candidates about their thoughts on taking the exams.