Private equity - firm types
Can someone break it down for me, the difference between an investment advisory firm, investment manager, and an investment allocator. Is there a difference in job function at the same role (ie. acquisitions or asset management) across these 3 types of firms, or am I overthinking this and that they are all one and the same at the end of the day?
On some companies websites it might indicate that they might be an investment manager, but they also invest their own capital in the deal. Is there any advantages/ disadvantages to working at each one vs. the others?
I'm giving you +SB for not using the phrase "REPE" in this post! Kuddos
Anyway, I'll try and keep this brief as I have written this out in response to other posts (generally those trying to figure out what REPE is lol).
Investment advisory firm/investment manager - I think these are generically interchangeable, a firm that manages money on other's behalf. Can be done through any number of vehicles/structures... closed-end vs open-end, public vs. private, discretionary vs. non-discretionary, comingled vs separate, focused strategy vs. open mandate... all are "choices" made between the advisor/manager and the investor (or what you are calling the "allocator" sometimes, aka the "LPs"). You can have "supermarket" firms like PGIM and Blackrock that literally do just about all those items, or smaller firms that may just do a few (or one) closed-end private comingled discretionary open-strategy fund at a time (this is the classic "PE" strategy).
I think by "allocator" you mean the actual "money" that those firms above go target for their funds/ventures. These are the pension funds (i.e. CalSTERS), SWFs (i.e. GIC), lifecos (i.e. Northwestern Mutual), endowments (i.e. Yale), and even HNW individuals (i.e. rich fucks) who become the "LPs" or just investor/shareholders into the funds/structures of the "investment manager". And YES, an investment manager can be an investment management business, manager of their own funds (sometimes called a house account), and an "allocator" into other funds all at the same time (but def not the same people). The investment manager platforms that were started originally by Lifecos are probably the best example of this (PGIM, Nuveen, USAA, etc.).
I'm not gonna touch the question on advantages and disadvantages of working for each as there is really no way to generalize this. Further, actual seasoned professionals in the industry would never really think along those lines, they would evaluate each firm on its merit (i.e. USAA is awesome if you like San Antonio). If you are a student, young professional, or just on the outside looking in, apply to all of them, don't discriminate. They all get together at the same meetings (like PREA and AFIRE) and act as colleagues. Hope this helps!
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