AM associate breaking into Portfolio management?
Hi all- I'm an associate AM at a large institutional REPE firm (both operator & allocator functions) about 3 months into the job. I've only done asset management and value the deal-level experience I'm getting. That said at my firm it's the portfolio managers who run the show and give acq, AM, cap markets teams the directives. They drive the ship, touch all aspects of the real estate (even though it's mile wide, inch deep), and make the final investment decision. They run the valuations, client investment mandates, major capital spend decisions, buy/sell decisions, portfolio monitoring, investor relationships, etc. I think I'd like this role a lot more than the in-the-weeds, operational nature of AM. I also think it would set me up well for a CIO position or even be a better training program for eventually running my own personal portfolio of LP investments.
At this stage in my career, although I could probably use at least 1-2 more years in asset management to really hone my skills, I have good experience here and could quite reasonably asset manage my own deals. I'm in my late 20s/early 30s and next jump from where I'm currently at would be AM VP which I could probably reach in 2-4 years. I'm worried that at that point I'd be pretty much pigeonholed (in the non-freshman sense lol) to AM and couldn't lateral into a VP of portfolio management if I wanted to go that route, and I'd rather not be a mid-30's associate PM. So I was thinking if I wanted to try PM, I should make the jump pretty much ASAP (I was thinking 1 year into my current role, so 9 more months).
My first question is: For those of you with AM or PM experience, or experience at a firm where you interacted with those functions- do you think I'd be making the right move here? My biggest reasons for wanting to make this switch are: 1) move away from operations (I like directly managing GP's and doing leasing, but hate managing roof warranties, administering CAM recs, etc.) and 2) working on higher-level finance/investment decisions like portfolio allocation, formulating/following the investment thesis, performance & valuations tracking, etc. Some reasons for staying in AM, at least for 1-2 more years: 1) refining deal-level operations experience in preparation of potentially GP'ing my own deals, or 2) inertia. Also curious to hear from some of you, what prompted your own switch?
Secondly, for those of you who have made a similar switch, if you were in my shoes, how would you position my AM experience and generally go about landing a PM role (I assume I'd target associate roles but open to other options). I'd like to make the switch internally within my current company but open to roles at similar sized institutional firms.
Thanks in advance!
It is really hard to get a head PM spot without both AM and acquisitions experience in some capacity. It would be difficult to set strategy or make investments without knowing how everything else works. If you looked up the history of the PMs currently in your group, I doubt any of them because PMs as associates and then got top spots directly.
Most people that are associates for those groups never actually make it to VP/Director in PM directly, but use the relationship with the PM team to get their next spot (sort of like taking a chief of staff role, where you do a lot of special projects/weird stuff, but then transition back to somewhere else, usually with an elevated title).
My advice would be to stick it out in AM for another year so you really understand it (and even better if you can work on distressed/problematic deals in the meantime), and then look for either a PM or Acquisitions role when the economy gets better. If you land the PM role first, know that you will probably need to go do acquisitions before you can come back and be head of a fund.
I don't doubt that having both acq and AM experience is the ideal portfolio manager and is the surest path to landing in that department. But how likely is it that someone has both acq and AM experience? Asset managers have a tough time breaking into acquisition roles and acquisition folks usually stay in acquisitions; some have hybrid roles but I think that's pretty uncommon, especially at institutional firms. I took a look at the backgrounds of the current PM's at my firm and a fair amount of them started as PM analysts or associates early on and climbed the ranks (with no previous acq experience); others had varied backgrounds, some of them transactions related, others your typical GS/MS analyst roles. One came in as an asset manager from a previous shop. At least at my current firm, it actually is a pretty straight shot from associate to VP to portfolio management MD (not everyone will make it obviously, put there's a path available). This very well might be different elsewhere and not the norm and I might find the move a challenge if going external.
I'm not shooting for a top spot from where I'm at now. If I can get in at the associate position, climing from there is 90% about competence in the role rather than prior experience. The challenge for me right now would be getting in at that associate position. I'm inclined to say that if you have a firm understanding of real estate valuations and their specific drivers (both technical and subjective), and you can demonstrate that while speaking to your experience, it shouldn't be a big leap to go from an AM who regularly works closely with PM's on valuations, to a PM.
Assuming I'm set on a PM role and my current company doesn't have an opening, I can stay another year or so, but then what do you think the play would be from there? If I'm unlikely to get a PM role that would lead me to be head of fund, what's the surest path for me? I don't think anyone is going to let a former AM run point as an acquisitions associate with no acq analyst experience so not sure how I'd get acq experience...
The ones that don’t have both tend to have acquisitions experience over AM. It is a common misconception that doing acquisitions means you are a good investor, but people routinely give acquisitions people the benefit of the doubt when they want to transition to PM roles.
If you are at a shop where they gave MD level PM spots to analysts and associates that just worked their way up through the ranks, then that is pretty unusual. You might make it there, but for the most part, that isn’t how people get those spots.
When I worked at life cos, not a single PM hadn’t done stints in acquisitions/originations first. The ones that had done at least some AM work were actually the better PMs and tended to last longer.
I’m now in fund world and there isn’t a single PM in any of our lines of business (credit or equity) that didn’t come from acquisitions. All of the PMs have an analyst/associate, but none of them are ever going to get a straight shot into PM from there and will eventually go to acquisitions or AM and go back later in their career if they want.
I’m on the AM side, but I also handle a lot of PM stuff, with our group head. That said, I know I’m abnormal (my whole career has been abnormal), so finding too many examples of hybrid PM/AM is going to be few and far between.
Gracias por compartir esto, se nota que estás reflexionando seriamente sobre tu carrera, y eso ya te pone un paso adelante. Muchos pasan años en roles sin cuestionar si es realmente lo que quieren a largo plazo.
Lo que mencionas sobre la diferencia entre AM y el rol del portfolio manager tiene mucho sentido. En gestión de activos te vuelves experto en el detalle, pero a veces puede sentirse limitado si lo que te interesa es tener una visión estratégica más completa del portafolio y del proceso de inversión.
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