Breaking into long only Asset Management

Hey guys, so I was curious at to the various paths to breaking into long only Asset Management (think Wellington, T. Rowe, etc.). So I am thinking about doing investment banking out of college (not necessarily only to break into the buy side, but because I'd really like to try it out), and I know most people use IB experience to get into the buy side for PE/HF.

Can IB experience also be successfully leveraged to get into AM, specifically at great shops like Wellington, T. Rowe, etc.? Or does IB experience count against you since you are so detached from capital markets in a meaningful way by dealing with so much private info and not really working on idea generation?

How does this work also if you are doing this? 2 years in IB, 2 years in PE, 2 MBA and then finally AM? Or 2 years IB and then can directly move into AM?

I know the sell side Equity Research path to AM is also available, but really wondering right now if a lot of people take the IB path to traditional long only AM (not HF). Also, are there are any other traditional paths to getting into AM as well?

Comments (31)

 
Oct 31,2016

If you're really interested in getting into AM in the long run, consider applying straight from undergrad. Almost all of the major asset managers now have junior internship programs, including Fidelity, Wellington, T. Rowe, etc; this is probably your best shot at directly entering the space. You can also enter as a rising senior in some places.

You could theoretically do investment banking first and then enter as an MBA, and the banking experience probably wouldn't hurt you, but it wouldn't necessarily help, either. Before moving to equity research, I interned in banking the prior summer. I interviewed for a few AM firms, and I didn't get a single question asking about my deal experience, or even my banking work in general! Obviously your mileage may vary, but investing is a pretty different game from banking. Also, I doubt there would be an obvious way for you to transition directly from 2-3 years in banking to a big asset manager without business school first. Most of these firms like to grow their talent from within, so that means they mainly recruit straight out of school, rather than making lateral hires.

At the end of the day, it's really about playing the odds, and being realistic. These AM firms don't have a lot of spots-- regarding undergraduates, these big firms now hire most of their full-times from their intern class. This year, I don't think Wellington even took applications from rising seniors, because too many of their interns accepted full-time offers. Fidelity, aka the largest traditional asset manager around, probably hires 10-20 junior interns. I interviewed for T. Rowe's fixed income associate program, and they told me upfront that they were hiring 3 seniors in the country this year (admittedly, T. Rowe's fixed income associate program is a relatively new compared to others - they only hired MBAs previously). Yet despite these relatively crappy odds (compare to the 200+ class sizes of bulge-bracket investment banks), recruiting from undergraduate might still be your best chance. I've heard that the MBA classes at the largest asset managers are around the same size, if not smaller (i.e. 5-10 people).

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Oct 31,2016

Hey, really appreciate it. Yeah so for now I believe most of the resume drops and recruiting is done for juniors (or at least interviews are currently happening), so I'm doing some banking interviews. Definitely thinking about one day doing AM though, so really appreciate your insight

 
Best Response
Oct 31,2016

an IB experience also be successfully leveraged to get into AM, specifically at great shops like Wellington, T. Rowe, etc.? Or does IB experience count against you since you are so detached from capital markets in a meaningful way by dealing with so much private info and not really working on idea generation?

Yes you can move from IB into investment management. I wouldn't say it counts against you as much as somebody who works on sell side ER would have a leg up.

How does this work also if you are doing this? 2 years in IB, 2 years in PE, 2 MBA and then finally AM? Or 2 years IB and then can directly move into AM?

Going IB-->PE-->AM would be very rare, as would IB-->AM-->PE. You need to pick either PE or AM. The two skillsets diverge quite rapidly so you rarely see people switch from PE to AM or vice versa. PE to AM would be more common but still infrequent.

I know the sell side Equity Research path to AM is also available, but really wondering right now if a lot of people take the IB path to traditional long only AM (not HF)

IB is a good path to either a long only fund or hedge fund. Sell side ER is a better path but IB is still a good one.

are there are any other traditional paths to getting into AM as well?

As mentioned above, some of the larger firms hire directly from undergrad. There are very, very few spots though.

 
Oct 31,2016

Hey, thanks for the reply. Yeah right now I want to keep the options open and I'm interested in doing deals (or at least trying it out) but would love to do some form of AM in future. Appreciate the response and advice

 
Oct 31,2016

So quick q just to clarify, if you are moving from IB to PE, is it usually 2 years IB, MBA, then AM or maybe around 4 years IB, MBA, and then AM? (Jw because the path to MBA going the PE route takes 4 years total with regards to 2 years in IB then 2 in PE before going MBA)

 
Oct 31,2016

I've seen both. Usually you spend 1-3 years in banking and then move to AM, or use a MBA program as a route to transition to AM.

 
Oct 31,2016

Really appreciate it; this is extremely helpful in trying to figure out the path going forward. Last q I promise, how much does the relative "prestige" of the IB matter when trying to move directly into AM after 1-3 years in banking, or even in doing so post-MBA? Could I be a kid from RBC or Macquarie doing IB for a year or two post undergrad and still get into a top AM shop? Do they rely more on kids from the top 5 IB shops or idea generation in giving interviews and getting offers?

 
Oct 31,2016

Your interest in and qualifications for the industry are probably more important early in your career. We have interviewed people with a wide variety of backgrounds, i.e. candidates who worked in big 4 accounting, the Fed, local valuation firms, small brokers, etc. Ultimately, the successful candidates had a few distinguishing factors:

1) they could articulate why they wanted to work in AM and what they've done to pursue that goal.
2) they had the accounting and finance background to be at least serviceable as an analyst.
3) they did a lot of their own personal reading and research on investing.

Having a big brand on your resume i.e. Goldman, MS, JPM, Citi, etc. will help distinguish your resume and maybe win an interview spot, but it doesn't help much after that.

Of course, MBA programs will discriminate between top tier investment banks and lower ones, so if you're planning on going IB-->MBA-->AM the quality of firm you work for will definitely matter.

 
Oct 31,2016

@models_and_bottles Curious to hear if you think Buyside ER is better or worse than SS? I had thought buyside since it is much less political but could see the argument that a BB ER giving a better "skill-set" and learning.

 
Oct 31,2016

Curious to hear if you think Buyside ER is better or worse than SS?

I don't think one is necessarily better/worse than the other. This has been discussed a lot previously on here so I encourage you to run a search on the topic.

In general, I think both roles are similar at the entry level. Whether buy or sell side you start by running comps, reading the company's annual reports, transcripts, etc. and generally keeping coverage on a few names. As a candidate, the things to be on the lookout for are:

  • what type of training program do they have
  • what is the typical exit route
  • what is the culture like
  • how much responsibility could you be given

Now after 2-3 years the roles start to diverge significantly. Sell side ER becomes more about having industry contacts, being able to market your ideas, staying on top of your coverage, and responding to important clients effectively. The buy side role becomes more about generating ideas and knowing how to manage your research priorities.

The compensation and lifestyle differences have been discussed many times on here in the past. I think both routes are good careers but be aware that the entire industry is under pressure.

 
Oct 31,2016

Makes enough sense. The firm I'm at is a "no-name" but I do see buyside ER as a little bit better because there is less politics, more relaxed culture, and (from what I've read on here and vault) less hours. Not to mention that buyside ER is generally not as exclusive to NYC as SS. No clue on what pays more but I'm sure it's nothing drastic. I know the industry is getting hit hard and the fact that market isn't going to be bullish forever means there aren't going to be as many spots in the future.

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Oct 31,2016

My experience is that long only takes some sell side guys from time to time but they are always MBA's or PhD's. The best way is to get in as a undergrad, but there are very few opening compared to IB.

The lifestyle can be unbelievable good compared to IB

 
Oct 31,2016

Indeed. Buyside research is probably one of the best on the street in terms of lifestyle on the first few initial years. IMO I think portfolio management at a HF or AM is the best long term job on the street. One thing I will say is that pretty much all PMs are 30-35+ so it isn't particularly easy to do.

 
Oct 31,2016

One thing I'd add is to keep your options open because there are so few spots in ER and AM at the firms mentioned. As competitive as IBD is, most banks have even fewer ER guys. So I recommend trying to apply to IBD/ER/AM because the bull market isn't going to be here forever and the fact is that people in AM don't leave because it's the best job on the street.

 
Oct 31,2016

If you are really interested in AM. I would take a look at the CFA curriculum before entering into a MBA program. You could potentially do both simultaneously.

 
Oct 31,2016

If you really want to be in long only, I'd suggest getting one of those penis stretchers

 
Oct 31,2016

There are 2 normal paths: (1) SS ER out of school, and move after 1-3 years, (2) IB out of school, MBA, then move. So IB experience certainly does not count against you but it is standard to follow it with an MBA beforehand.

As an aside start CFA as soon as possible (can do L1 in at college) - good signal to them you are serious and I would personally say the CFA is pretty much non-optional in AM these days.

 
Oct 31,2016
saracen:

There are 2 normal paths: (1) SS ER out of school, and move after 1-3 years, (2) IB out of school, MBA, then move. So IB experience certainly does not count against you but it is standard to follow it with an MBA beforehand.

As an aside start CFA as soon as possible (can do L1 in at college) - good signal to them you are serious and I would personally say the CFA is pretty much non-optional in AM these days.

Agree with this post. I took route (2) highlighted above which was fairly typical at H/S/W.

 
Oct 31,2016

So quick q, how many years out of undergrad did you do before doing your MBA? 2 years or around 4 years? Also, how much does I suppose the relative prestige of the IB and the MBA program matter when applying to AM roles post-MBA? Or do you just need to network enough to get the interview, and at that point is is more on your abilities in idea generation, defending your pitch, etc. when they decide who to give offers to?

 
Oct 31,2016

I am looking to get into Asset Management as well. Every buyside analyst I talked to has said the CFA holds just as much weight or even more than an MBA. The best scenario is to have both.

I absolutely loved my experience interning at a small buyside shop. The lifestyle was great and the work is exciting. I can't wait for the opportunity to get back on the buy-side.

Another option is to network with boutique asset managers and try to break in that way. It is difficult, but if you can impress someone with a couple actionable ideas it can be done. What people don't realize is these smaller shops don't do regular recruiting, and they typically hire opportunistically when talent comes along.

 
Oct 31,2016

The networking route fully possible. Would actually say it's the main way to move across. You are right - there will rarely be specific posts advertised - it is more likely they will meet you (either as a client or at an event) and it naturally happens. That is what happened with me for example.

 
Oct 31,2016

CFA

Disclosure: I work in AM for one of the largest Asset Managers in the world by AUM, and am a charterholder. 'CFA/MBA preferred' is on nearly every job posting, and everyone I work with has the charter, is trying for the charter, or is a seasoned manager (and hence doesn't need it, but likely still has it). I also can't tell you how much having any sort of technical skill set (data analysis, programming) will help as that is a big need.

 
Oct 31,2016

With that being said, you're an idiot if you think there is just one or two paths into AM. I came from back-office at a commercial bank as my first job. Every shop and team are different...

 
Oct 31,2016

I interned at a 200bn AUM long only in London. Approximately 20% of analysts were hired out of undergrad from Oxford and LSE. Probably 50% of analysts were ex sell side researchers. The rest was a mixture of random stuff like big 4 audit, in house management accounting and google research. There was one ex banker from Lazard. When I told people I was going into IBD, but was interested in moving into AM later everyone thought that was a bad idea. Everyone either had their CFA or were in the process of getting it.

 
Nov 30,2016

My two cents on the topic:

I work at a boutique AM shop and only one of our analysts came from sell side ER (he believes he did so in spite of his background). Most worked at a larger corporation prior to becoming an analyst. One guy was a trader previously. Two of us (myself included) came in straight from undergrad. Mind you, we're a very conservative boutique so we aren't exactly looking for the Ivy League hotshot type. As far as breaking in goes, I really believe it's mostly luck. Turnover is ridiculously low so you just have to be on the lookout and jump at every opportunity. A quick note on lifestyle: from what I have heard and experienced, the people and environment are far more pleasant at a smaller shop compared to the mega funds. Would highly recommend it

 
 
Nov 30,2016

This question does not contain sufficient detail to warrant a reasonable response. Long-only firms generally are more stable and have better work life balance than most other front-office finance jobs, but that's about it. I mean, if you work at a big shop you also get wined and dined a lot more by the sell side than if you're at a smaller one, but that's a given. Beyond that, it's not clear what you're trying to glean from this question.

 
 
Nov 30,2016

what things to watch out for when joining something like this

what can be potential pitfalls of joining something like this?

  • family ownership. If all the senior people are family then keep looking. You will always be viewed as an outsider and are unlikely to get a fair shake.
  • background of the senior people. Do they have stints at well respected firms? Do they have a track record of success elsewhere? Or are they jokers that couldn't hack it elsewhere and decided to start their own firm?
  • quality of non-senior employees. Are the mid level employees of high quality? Has the firm attracted people away from other high quality firms?
  • is the strategy sustainable? How did they grow from 100mn to 1bn in less than a decade? Did they hit it big on a few ideas or was there something more at work?
  • do they have a well defined plan for your role? A lot of small firms struggle when they hire junior employees since they don't have established training programs, or even a clear job description.

I could go on and on. It mostly comes down to the people though at a small firm. I would start there and move your line of questioning outwards from there.

 
Nov 30,2016

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Nov 30,2016

"Sounds to me like you guys a couple of bookies."