Bulge bracket or Boutique: which is better?

tgi-finance's picture
Rank: Orangutan | 330

I've picked up an interest in Asset Management and private wealth management recently, and I wanted to know if it would be better to work in BB or boutique. Some people have told me that boutique would be a better experience in terms of work life, but after doing some research, I have come to the conclusion that the hours are the same and the pay is great at BB. I'm a freshman at a target school for business/finance, and it would be "easy" to recruit for IB or AM at top firms. My main concern is not being able to get a job at BB because it is highly competitive. From your experience, is there a significant difference between the two? Which one is a better work environment in the long run?

Comments (66)

Mar 19, 2017

So the bulge bracket vs. boutique distinction is probably more useful for investment banking, than for Asset Management.

In asset management, the distinction is not merely between bulge brackets and boutiques, but rather between bulge brackets, large asset managers, and hedge funds + value funds (you could technically distinguish between the two). Beyond that, you have boutique asset managers and boutique hedge funds, although nobody really applies the term to hedge funds.

So exactly what are the differences between all of these firms in asset management? Well, most bulge bracket firms have their own asset management divisions (e.g. Goldman Sachs, JP Morgan, etc.), but these actually aren't considered the "best" firms within the space. Instead, the best firms would probably be large mutual funds/asset managers, e.g. Wellington, Fidelity, T. Rowe, and BlackRock. Top hedge funds/value funds also come to mind here. Both the large asset managers and the asset management divisions of bulge brackets have rather good work/life balance, usually 55-65 hours a week from what I've heard. As opposed to the exit-ops-crazed mindset of investment banking, many entry-level people will aim to stay at these firms for the long haul. That said, the hours may be longer at some top hedge funds, e.g. Point72.

Private wealth management is structured somewhat differently, as it's a very different job from traditional asset management. In private wealth management, you're mainly managing client relationships, while in asset management, you're usually doing research on stocks and bonds. Keep this in mind when you decide which job path you want to pursue. For PWM, the bulge brackets are probably your best bet.

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Mar 26, 2017
Fantastic:

Private wealth management is structured somewhat differently, as it's a very different job from traditional Asset Management. In private wealth management, you're mainly managing client relationships, while in asset management, you're usually doing research on stocks and bonds. Keep this in mind when you decide which job path you want to pursue. For PWM, the bulge brackets are probably your best bet.

This isn't strictly true. There are several wealth managers/private client investment managers/ RIAs where security research is part of the job. In fact, I would argue that you maybe want to avoid bulge bracket in this area, just so that you can join a shop that allows you to do this (especially as the move towards management fees rather than comissions puts a further emphasis on performance).

Of course, there is a greater emphasis on relationship management than the institutional asset managers (that doesn't mean institutional clients such as DB or charity schemes aren't managed by these guys too), but that arguably adds to the job satisfaction. Admittedly however, unless you are a BSD in this space, the comp is normally lower.

If you find the right company in this field, you'll find that you can have quite a nice balance between Security Analysis and discretionary portfolio management as well as client relationship management and raising additional capital (i.e. new biz!).

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Mar 28, 2017

I'll just like to add, Boutiques are rather broad. You can have a nameless 5-man shop out of someone's bedroom each making a couple thousands to a million a year, managing under 1b. Much better than what some of the branded players pay (think 60-100k for fresh grads and 150-200k for experienced). Of course the majority of boutiques pay below market, have crap/non-existent benefits and poor working hours, but that's a generalization.

And if you seek that training, equipment, structure, and the assurance of a "good wage", you can hardly go wrong joining the big AM brands.

Mar 28, 2017

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Mar 28, 2017

BB AM or Corporate Banking

Mar 28, 2017

If you want IB, then I can say with relatively high certainty you would want the boutique

Mar 28, 2017

I actually asked this, I'm sure everyone was thinking it though...

http://www.wallstreetoasis.com/forums/experience-v...

Mar 28, 2017

yeah I saw your thread and I think this is gonna make things difficult for certain people when it comes to choosing who to work for. It has to be said those boutiques are the top ones and are probably even more competitive to get into. I guess anyone good enough to get offers from all sides of the equation is who we are talking about.

Mar 28, 2017

You can't just broadly say "boutiques" vs. BB. Those uber prestigious boutiques cited in the article (Perella Weinberg, Evercore, Lazard, Moelis, etc.) are a very elite set that many view as at least on par, if not superior to most BBs in terms of experience, prestige, caliber of people etc. This article is referring to this very finite handful of elite boutiques, not xyz regional boutique in east bumblefuck.

Mar 28, 2017

I'm just an undergrad, but I would think that Lazard is slowly moving away from the "boutique" pure advisory status that is more like Greenhill/Evercore. They've definitely added capital raising functions, and seem to be expanding their operations. That said, they are pretty much unaffected by this whole subprime mess, and sure helps their restructuring.

I made the mistake of calling them a "boutique" in my SA interview - something the VP was not too fond of.

Mar 28, 2017

There are arguments for either prediction in this one. When I was deciding what to do in better times, a lot of BB MDs were pretty dismissive of boutiques (even ones they admitted had smart smart senior guys), and especially going to them right out of school, claiming that they were fine in booming markets but in slow times, when there wasn't so much M&A volume to go around, they wouldn't have the dealflow and would end up stagnating or be victims of industry consolidation. People on this board love exclusivity, so they talk up Evercore, Moelis, Greenhill, whatever, but most people I know who went to those kinds of places out of undergrad either were culturally incompatible with their summer BB, were in a weak group at their summer firm, or didn't have great BB options. All this talk of top boutiques picking of guys otherwise headed to top BBs is very inflated in my experience.

That said, I think current markets have shown boutiques also have the tremendous tremendous advantages of being (except for Laz and Greenhill) private and not being engaged in the businesses that are responsible for the ridiculous value destruction we're seeing right now. Huge.

As always, I think it mostly has to do with how much you like the people and environment at the given firm.

Mar 28, 2017

Ruscal makes a decent point. I really have no idea how many great analysts passed up BB opportunities for top boutiques, but a couple kids in my former group (which wasn't a top group at a top bank or anything) passed on the top boutiques. Which doesn't prove a broader point one way or another, just a thought I was reminded of.

Mar 28, 2017

I would hesitate to draw that conclusion. The credit markets have undoubtedly hit the bulge bracket firms much harder than the advisory shops so far, but like they tell you in statistics you can't draw any conclusions from a single observation.

The large banks opened themselves up to boutique competition because the low hanging fruit for the past few years has been private equity business. It let us double dip on advisory and financing fees, and focus on a set of clients that buy and sell companies for a living (unlike GE or Oracle, who do it incidentally). It left the playing field for strategics relatively open for the boutiques.

However, when business dries up the bulge brackets move to chase previously neglected business with a vengeance.

As for junior bankers, my opinion is that the best place to start your career is a bulge bracket M&A group. I have not had my socks knocked off by boutique analysts and associates in general. Some are great, but overall I think the average isn't quite as high.

The way I characterize it is this: the selling point for a firm like Moelis is "hey, I'm Ken Moelis." But if you're a junior banker, you're not Ken Moelis. Same with the Perella team, which looks to bill itself as "Come on, we're all ex-Morgan Stanley guys. You're basically hiring Morgan Stanley M&A, except that we care about you." But if you're a junior hire, and you weren't Morgan Stanley before going there, the thing you have to ask yourself is whether their halo applies to you or not. Because unlike the senior guys, you weren't Morgan Stanley.

Mar 28, 2017

Interesting thoughts Genghis. How do you feel about Lazard? Do they ride on Wasserstein's name these days, or are they respected in their own right (or not?)?

Mar 28, 2017

Ghengis, from an analyst perspective, wouldn't working for one of these M&A advisory shops like Perella or Moelis be similar to working in a BB M&A group (in PW's case, MS M&A)only you're now working under Wall Street legends Joe Perella or Ken Moelis on a given deal, not John Doe generic BB MD?

Mar 28, 2017

Economies of scale surely apply to Research. I'm interested on this too.

Mar 28, 2017

all i know is that:

1/ boutiques are less pay (in Toronto, boutique base is 20-30k lower)

2/ the switch from boutique to BB is tougher in the future

3/ girls are more likely to give you tail if they know you work at a BB

Mar 28, 2017

Since no one else wants to help a brother out.

Pros of a Boutique
-More of a meritocracy (ER is one basically everywhere but its easier to jump the queue at a smaller firm)
-More likely to get good exposure right off the bat
-Better work life balance (in general), usually a smaller coverage universe on a per person basis
-Likelihood that you can live in a place outside of NYC (could be a con for some people)
-Less likely to have to worry about compliance issues and conflicts of interest than a full service IB

Cons of a Boutique
-If it isn't a research focused firm, you might be an unknown
-Lower pay
-Less support services (in terms of outside research services)
-Less support in terms of admin, junior people, and firm infrastructure
-Worse exit opps (harder to switch out of ER to another part of finance), this is mainly due to the likelihood that the firm is less well known than a BB
-Less likely to have a big name analyst that you are working for, and thus worse learning experience for you
-Lack of formal training (not quite sure how much experience you have and how much of an issue this is)

Depending on your level and the exact nature of the boutique there can be a lot of disadvantages to working at a boutique. However, a focused, well known boutique (in ER NOT IB), is as good as a BB for someone with a moderate level of experience and who knows what they are looking for.

Mar 28, 2017

I should point out that if you decide to stick with a boutique for the longer term you will likely make more then BB, since you'll become a partner and share in the firms profit

Mar 28, 2017

Which BB is a research focused firm or a reputable equity house? Does it depends on the region and city?

Mar 28, 2017
user_:

Which BB is a research focused firm or a reputable equity house? Does it depends on the region and city?

It depends more on the team/analyst you would be working under than the firm name, so you need to take it on a case by case basis.

Mar 28, 2017

Life is harder at boutique;
1) relationship with management of covered companies will be a pain in the ass to maintain if you ever plan to downgrade their stock
2) soft dollars are pretty taboo if the boutique doesn't have prime
3) less support meaning you have to work maybe 18 hour days churning out reports during earnings season; the upside is you grow faster
4) less client list meaning less buy-side guys you could meet, thus less exit opportunities

Mar 28, 2017

Initial compensation should be relatively similar for a BB and premier boutiques from what I know.

Mar 28, 2017

For BB's, typical sign-on is ~10k and base ~60k. Not sure about boutiques...

Mar 28, 2017

Most are 60k base and 10k sign on; however, I believe I heard that Morgan Stanley and Goldman raised the base for 1st years to 70k and that Barclays gives a sign-on of 15k.

Mar 28, 2017
Devils Advocate:

Most are 60k base and 10k sign on; however, I believe I heard that Morgan Stanley and Goldman raised the base for 1st years to 70k and that Barclays gives a sign-on of 15k.

Is that for the 09 starting class?

Mar 28, 2017

hlhz is 70k base

Mar 28, 2017

hlhz gave 15k bonuses for 09 full time restructuring also

Mar 28, 2017

How about for boutiques with similar standing as Sandler O'Neill?

Mar 28, 2017

Barcap gave a 15K bonus, and top boutiques pay 70K base (Evercore/Greenhill)

Mar 28, 2017

Across the board, compensation will be approximately 60 + 10, boutique, MM, BB. I can't speak to anything more senior than the analyst level however.

Mar 28, 2017

street standard this year seems to be 70k base, 10k bonus, plus year end...highest i've heard for new FT is 80k base, 12.5k bonus (Bain Cap)

Mar 28, 2017

street standard this year seems to be 70k base, 10k bonus, plus year end...highest i've heard for new FT is 80k base, 12.5k bonus (Bain Cap)

Mar 28, 2017

Bain Cap also is not IBD. Not relevant to the OP's question.

Mar 28, 2017

I can confirm incoming analyst pay for summer 2010 starts at a well regarded middle market bank (non-NYC) is $70k base with $10k sign-on.

Mar 28, 2017

Same at JPM. 70k base plus 10k sign-on

Mar 28, 2017

Moelis didn't do many high-profile M&A deals (like they did in 2008), but about 20 deals in M&A (per mergermarket) and a lot of good restructuring deals (Dubai World was the biggest one). Looks like Movie Gallery and MGM are some recent mandates. BBs have definitely come back. I think people are discussing this because they were high in the league tables for 2008. Having said that, league tables aren't the best way to judge smaller firms.

I think it would be interesting to see how this year shapes up. Greenhill and EVR have done well in boom markets historically as well. Firms like Moelis that are new will take some time to build up industry groups. They are strong in areas like gaming and media, but maybe no so strong in others like consumer. They are young (and have done ok for someone that new). PWP is slowly beginning to see more action as well (as they develop industry expertise in different sectors).

BBs will almost always have very strong dealflow in boom times. The case for a boutique may be the caliber of your peers and the overall experience. I think it's hard to generalize and you should see firms on a case by case basis.

To answer your question, I think they would be doing well a few years down the line. BBs and boutiques both serve important roles and there is a need for both in the M&A market (think financing vs independent advice).

Mar 28, 2017

yeah, 0 deals for moelis is definitely an exaggeration, as they did a bunch of small stuff. i think around $2b total with 20-25 deals in m&a (so under $100mm per deal).

evr & ghl aren't going away anytime soon and pwp has been picking up traction lately. There's always a need for the services they provide, though its never going to be much more than a niche part of the m&a market. I'd bet a lot of the new 2nd tier boutiques that atarted up in the recession are going to be struggling or going under soon though.

Mar 28, 2017

Well a lot of those are undisclosed amounts for the deals, so I wouldn't just divide lol. Also your 2Bn number is inaccurate, I think it was definitely much higher (at least more than triple that) than that when I checked mergermarket.

Also, your last comment seems very naive, as these firms have other revenue streams like restructuring (where Moelis and Lazard had terrific years) and asset management.

Yes their services are niche, yet essential. Almost all major deals have had some boutique advisor involved.

Mar 28, 2017

Moelis has 50+ Managing Directors, yet has absolutely no coverage on key industries such as consumer and healthcare - meaning quantity no quality. They have hired a ton of people over the past year and the culture at the ny office at least has deteriorated. The problem with their hiring is that they didn't raid entire teams. Rather, they hire individuals who come and go as they please (rick landgarten and warren woo). The knock on Moelis isn't much on their lack of deal flow in both m&a (no major m&a deals since ab) and restructuring (missing out on both CIT and GM). It is the way they are building their franchise that is troubling.

Comparably, firms as young as Moelis such as PWP and Centerview have been able to do well despite the economic downturn. I don't know enough about these firms to comment on their strategy, but PWP did both of the airline restructuring deals right after its inception and has built a dominant franchise in Europe, especially France, while Centerview has a strangle hold on the consumer/retail market and have recently hired the Merrill healthcare team, which did pfizer/wyeth and is top 3 on the street. So I'd definitely say Moelis has not only gapped themselves from ghl/evr of the world but have also trailed younger firms such as PWP and Centerview in its development.

To answer the OP's question, I personally think being a generalist at a boutique gives you more optionality down the road if you decide finance is right career for you. The caveat here is that you want to make sure the boutique you join has consistent dealflow and that as an analyst, you are able to receive quality training and make a significant contribution on these deals, not just blindly working hard. At Moelis, you are guaranteed to be worked to the bones because they are so top heavy, but does that hard work turn into a fruitful learning experience? Taking the boutique offer is the riskier route because often times its hit or miss but if you think you have what it takes to be a star it definitely is the way to go.

The list of boutiques I would take ahead of a bulge bracket bank(lazard is not really a boutique, and it is not a generalist program):

Greenhill/Evercore/Blackstone/Perella Weinberg Partners/Centerview Partners

Best of luck.

Mar 28, 2017

"The knock on Moelis isn't much on their lack of deal flow in both m&a (no major m&a deals since ab) and restructuring (missing out on both CIT and GM). It is the way they are building their franchise that is troubling. "

What do you think is the problem in the way they're building, just bad hiring?

Mar 28, 2017

Lack of team culture. Bad hirings in general. Upside down pyramid.

Mar 28, 2017

Also, from an analyst point of view, which firm would you work for? One with ~10-15 partners and an analyst class of 6-8 with dealflow or one with 50 partners all looking to slaughter an analyst class of 15+ with little dealflow. In my opinion, you are able to learn more and forge closer relationships with the higher ups at the firm with less people but more dealflow.

Mar 28, 2017

Clueless, you really are out to get moelis aren't you? No one talks that much shit about a well-respected place unless they are very insecure about themselves or have had a bad personal experience. Obviously you're going to one of the boutiques you listed above, so it sounds like you're worried about the status of you're bank compared to other up-and-coming places. How can you be an expert on a firm's culture if you have never worked there? Moelis is obviously very top-heavy right now, but from what I've heard they are hiring a bunch of analysts this year and probably will continue to do so in the future

Mar 28, 2017
EasyE:

Clueless, you really are out to get moelis aren't you? No one talks that much shit about a well-respected place unless they are very insecure about themselves or have had a bad personal experience.

Actually, Clueless's post was a pretty balanced and unbiased analysis of the firm. He didn't flame or talk shit... he merely pointed out that some of Moelis's hiring practices may lead to problems down the road.

By attacking him personally and starting a flame war, you are the one who actually comes off as "insecure". Even if he is starting at another boutique, I doubt that Clueless feels threatened about moelis's "up-and-coming" potential, but you clearly feel threatened by anyone who tries to tell you that your firm isn't the bees knees.

Mar 28, 2017

I have no affiliation with moelis either but it's true that they have no significant deals going through. I can't speak for culture though.

Mar 28, 2017

I have no affiliation with Moelis, and I'll be the first to tell you that they had a poor 2009, but to preach a "lack of team culture" and "bad hirings in general" seems pretty biased to me. I'm just saying that without ever having worked at that firm, how can he possibly be an expert (and his post makes him sound like he's an expert)? I feel like just about every thread I read on here is hijacked by a kid still in school who pretends like he's been on the Street for years.

Mar 28, 2017

And by the way, I just glanced at the other current thread about Moelis, and I'm obviously not the only one who thinks Clueless has got it out for Moelis...

Mar 28, 2017
jnr:

I was intrigued by a recent thread that noted that Moelis announced 0 M&A deals in 2009.

It made me think - how are the boutiques doing now that the financial crisis is no longer threatening every BB with insolvency?

Curious, what website are you looking at? I see more than 50 total deals for 2009.

Mar 28, 2017

Ha ha they've updated the site.

What a shut-down for those claiming the firm had 0 deal flow!

Mar 28, 2017

will let you know my experience soon! no time now

Mar 28, 2017

It sounds like you work in back office / operations. You're an operations analyst and should not try to position yourself as somebody on the investment side (e.g. a "hedge fund analyst").

"I imagine myself enjoying being an FX trader, but would it be a big downgrade from now?" It would be difficult, but is certainly doable to move to a trading role. If anything, it would be a huge upgrade from where you sit now. I recommend you network extensively with traders at different funds, enroll in the CFA program, and recruit aggressively to move out of operations.

Good luck!

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Mar 28, 2017
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Mar 28, 2017