Private market roles at endowments, insurance, pension, etc
I am constantly worried about pay and job security at my firm. I am an associate at a secondaries firm in the US, with 2 years of BB experience. I have heard both good and bad things about private equity teams at private and public pension funds. I believe there is some variance among pensions and endowments, especially among elite pension funds (e.g., CPPIB, OTPP, GIC), insurance, and public pension funds (e.g., CalPERS, TRS).
- What is the job security like? Do you see VPs who are 50 years old? Do you generally not see people getting laid off unless they mess things up or simply don’t care?
- What is the salary/career progression like from associate to CIO?
- What is your day-to-day work like? Do you normally work on fund investments, or do you actively work on secondaries, co-investments, direct investments, etc.?
- There seems to be a preference for the CFA. How important is it for recruiting?
- Can you switch to the endowments/pension world from a direct or secondaries firm, or do people generally move to endowments/pension funds at a junior level and work their way up?
Based on the most helpful WSO content, here are detailed insights into your questions about private market roles at endowments, insurance, and pension funds:
Job Security
Salary/Career Progression
Day-to-Day Work
Importance of CFA
Transitioning to Endowments/Pension Funds
For more detailed discussions and personal experiences, you might find it helpful to explore specific threads on Wall Street Oasis related to these topics.
Sources: Q&A: BlueWing Part 2: Endowments, Foundations, & Asset Allocators, Direct PE to Pension/Endowment, Q&A: Endowments, Foundations, & Asset Allocators, Q&A: Endowments, Foundations, & Asset Allocators, Endowments & Foundations Part 1: A Basic Overview
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Have close friends at a top E&F. These types of asset allocators vary DRASTICALLY so hard to make blanket statements about what they do or don’t do.
Comp at this E&F was very very good. Comp as you progressed got more and more tied to bonus / how well the fund did versus base. For actual numbers I’d look at tax forms of endowments and foundations - they’re great.
In terms of work, it also depends on the allocator. Some are super sleepy and it’s a boring job. There are also ones that are doing very interesting co-investing / direct-investing .
CFA depends on the fund as well. Think it’s more like “you will learn lots of great stuff” rather than being a prerequisite from my understanding
Do you have an idea of which institutions are more sleepier than others?
Unfortunately don’t have a super good idea - the largest ones are not necessarily the most sophisticated.
Would look at public reports of these funds and see what they’re investing in / if they’re talking about it on podcasts or whatever
Could also try to find charts on which funds are growing the fastest / outperforming, can be an indicator that they’re doing something more than just the Swenson Model.
following
Spent some time working at one of the largest public pensions in the US. My .02 on some of your Q's below:
What are some convincing reasons for people articulating why they want to move from direct to LP other than WLB?
A few that come to mind:
Thanks. What’s your view on Canadian or other foreign pension funds (e.g., GIC)? If I work at a secondaries shop and would like to transition to an endowment or pension fund at some point, what would be the optimal level (Associate, VP, Principal, etc.) to make the move without having to take a big pay cut?
Generally higher comp but worse WLB at the Canadian funds is my understanding (don't have too much experience with them though). I think they have a lot more autonomy than a PE team at a public pension may have.
The delta in comp will just increase as you get more senior, especially as you start getting carry / other deferred comp.
I have spent ~10 years in E/F and family office roles. E/F and pensions are structurally fairly similar as mentioned above and in general pay is E >= F > pension (specifically for US public pensions - my understanding is that Canadian pension comp is more competitive).
Overall job security is very good and it is very uncommon for a senior person (director or above) to be pushed out of a role. From personal experience there might be instances where juniors (analyst level) and gently pushed out.
As others have mentioned, compensation for many roles is either public or pseudo public since many jobs are affiliated with public entities or file tax returns. Public colleges have to do some form of salary reporting and foundations file 990s on which they need to disclose the pay of officers (the CIO) and the 5 highest paid non-officers (which are invariably senior investment people). I think a good baseline for comp in MCOL areas is:
Bigger funds and HCOL areas is higher. Generally very good benefits and good WLB for the industry ( 40-50 hrs/week).
I think most E/F/pension roles will be pretty heavily oriented towards fund investing unless the job description pretty explicitly mentions direct deals. Exactly what the day-to-day looks like depends on the exact role (which asset class(es) you cover, for example) and will probably involves calls with managers, reading reporting materials, analyzing existing the portfolio, etc.
I think the CFA requirement is honestly just a weeder requirement for some junior roles - the content is either too basic or not that relevant for most jobs at allocators.
A secondaries role is likely the best possible role to lateral from, particularly at the junior level. More senior roles are generally filled by people working their way up.
Thank you very much for the write-up. I wanted to see if there was any particular area I should focus in if I'm interested in the macroeconomic research side of the business, particularly with relation to public markets? Curious because some previous threads mentioned an emphasis on macro in these roles but didn't see you had explicitly mention that.
In terms of more macro-oriented roles, larger organizations often have a few employees dedicated to overall portfolio allocation and risk management. Depending on the organization, people in these seats might be involved in developing portfolio overlay / portable alpha strategies (using synthetic exposures), understanding factor risks, portfolio-level hedging activities, scenario modeling, real-time asset allocation, and cash flow modeling (for private assets). These roles likely have more of a macro-economic/market orientation than the majority of front office investors at allocators, who are generally dedicated to manager sourcing, research, diligence, and monitoring.
These roles are definitely a small minority of the overall investment seats at allocators, most of which are taken by the aforementioned external manager-focused roles. Larger pensions with pre-dominantly internally managed portfolios (particularly in public equities) might be the exception to this, although I'm not familiar enough with the industry landscape to say that definitively.
Thank you for your answer.
In your opinion, how would you rank different types of endowments and pensions in terms of stability, pay, and career progression among private university endowments, public university endowments, corporate pensions, foreign pensions (e.g., CPPIB), and domestic pensions? Where would you recommend?
It seems like private university endowments are extremely selective. They generally prefer their own alumni and grow their talent internally. Any advice on how to best position myself?
Would you say the PE team at corporate pension funds pays better or worse than those at other endowments or foundations?
Would you say that most people at these organizations end up retiring at the director level? How difficult does it seem to move up?
The questions are getting more granular so unfortunately I don't have great answers for them.
I'm not exactly sure the 'rank' of pay between all of the different cohorts below, but endowments (both public and private) both pay far better than public pensions (US), which are certainly the worst in terms of headline comp. Honestly not too sure on corporate pensions, but they are a dying breed as few very are still open to new enrollees. Furthermore, the recent upswing in rates has left many corporates fully funded or even overfunded, which has and will continue to lower the risk-taking in those roles. Not only do (public) pensions typically have lower comp than endowments/foundations, but the decision making authority can be much messier and more annoying for an investor.
While it's likely true that many schools like to hire their own alumni, there are plenty high level people at what are considered top tier endowments that aren't alums (and likewise plenty of people from universities with well-known endowments that work elsewhere). Being willing to move to cities that are a bit off the beaten path might immediately give you a leg up on landing certain roles (although I think COVID has accelerated a trend of schools located in an area where it is difficult to recruit talent deciding to just move their investment offices to a better location instead). I would also caution that size and prestige isn't everything - scale can preclude you from pursuing interesting/attractive opportunities.
The industry isn't that large, but I think most people will eventually end up in a director role, if not higher (MD, head of a specific asset class, CIO) if they are willing to move around a bit. Perhaps this is very anti-WSO mentality, but topping out at director making 300k+ a year working 40-45 hours, great benefits (i.e. lots of vacation), and getting to travel the world for your job can still be a pretty nice life, particularly in L/MCOL areas.
Thanks for the write up. I have a few specific follow-ups about your experience in family offices.
1) How did comp compare at the family office roles vs. the endowment / foundations?
2) What kind of investing did you focus on in the family office space (e.g., FoF, Co-invest, majority buyout, etc.)
3) Was is fairly easy to move around between family offices and endowment / pensions?
Thank you for the detailed response. Do you have any insight on transitioning from buyout PE to an endowment or family office allocator role? Curious whether you've seen this done before and what level I could expect to come in at - I'm currently a third year PE associate / incoming VP.
What types of modeling/analytical work is done in these types of roles? Is manager selection mostly qualitative?
I have spent some time around the Canadian pension landscape and can provide some perspectives there. It is very difficult to generalize across the Canadian pensions, but a few things are relatively consistent:
There's a lot of generalizations above, but hopefully that gives you a good sense of the market!
Thank you for your help. If you don’t mind, I would like to ask you a few more questions:
Thank you again for your help.
As some have mentioned, comp and actual responsibilities can vary widely at these types of roles. I would encourage you to look at publicly available comp information as a screening tool. Also, I’ve noticed David Barrett Partners seems fill a lot of the better roles, so reach out to them. Hope this helps.
Thank you. Just one more question. if you had a choice, would you recommend moving from GP to allocator space at the junior level (associate, senior associate) early on or at the senior level (VP-principal)?
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