Careers Post-HF?

Hi All,

 

A little background on myself - I started in consulting, then worked sell-side research, got my CFA, and moved to a multi-manager, and am now at a smaller fund. My question is - if this doesn't work out (I could always go back to a multi-manager but not sure I want to do that), what are typical career paths for someone post-HF life? Strategy? IR? Business Development at a fund? Obviously the earnings potential is much lower, but MUCH more stable I would imagine. I'm curious what type of earnings potential these paths have and what people's experience with stress levels are - the constant gyrations of this crazy market have got me thinking longer-term.

 

Thanks everyone for your input.

Comments (27)

 
Sep 16, 2020 - 12:23pm

Truthfully, what I've seen, heard of and be told about is that people who were PM's would hop from MM to other MM's til they couldn't anymore. This is also been true for analyst's if nothing else they could go back to banks and trade. People who've done IB have been able to make the switch though. I've also seen heads of big groups make the jump to corp. side and find roles for themselves.  I know it can be done, but I don't have experience with how it gets done though. I'm not on the street but I've spoken to people and googled what happened to other names that I've seen along the way. Something that is constant though is being able to network, so if you have buddies at a bank or people you went to school with lean on them, that's not a bad way to start at least.  

 
Sep 16, 2020 - 11:55am

Corporate development, strategy, internal finance, investor relations are usually the places I see people. I've seen a few become CFOs at smaller companies they covered and knew well.  I've also seen a lot just leave and trade their own books  - If you've managed to put away $1-2m you can probably trade your way to a solid $100k/yr

 
Sep 16, 2020 - 7:47pm

I am close to a handful of former IBD analysts of mine who are now in corp dev in tech, specifically in the Bay Area. For post-mba manager level, total comp comes out to be around $250k depending on the company ($150k base + 20% bonus + RSUs that vest over 4 years). Another former analyst of mine is a senior manager in corp dev at a tech unicorn. He said his offer came out to be around $325k, including stock (obviously, less, if there is never a liquidity event). 

At more senior levels, I have bschool friends who are in various business roles (i.e., non-engieering) at FAANG making $500k+ with stock appreciation. 

Then you factor in lifestyle, company perks, and job stability.....it's a pretty damn attractive path, IMO.

 
Sep 16, 2020 - 11:12pm

OP - without knowing much more (and others have outlined the corp dev etc route). It depends. You could go long only if you still really like investing. Or a family office which might (emphasis on might) be much more chill. Otherwise you can do a bunch of stuff in finance. IR (which can pay extremely well) is a path if you are more social and can build relationships. As someone who used to "be in the biz" there is credibility in front of investors that many don't have that you will, since well, you know the pressures, the challenges, the BS etc. That said this can also be a high pressure seat since you may be leaned on to actually raise capital and product/firm selection and working relationship with others is key. Seriously though. The number of good IR people in this business is small. Very small. Especially when it comes to actually knowing what they talk about... You could do another LP role, like FoF, endowment etc. Some of these are fantastic high sharpe ratio roles (less hours and pressure but really solid pay - with the understanding you won't make millions and stable) and you'll have an edge in doing diligence, reading between the lines etc, because, well, you've done it before. Product specialist (kind of like IR), consultant (Cambridge, Albourne etc)... As someone who has sat in a number of seats (including managing a book at a HF), happy to chat more if you want to PM me.

Also people here seem to seriously overestimate how long many people last at MMs. Sure the payouts are great as is the independence, but you are kept on a very tight leash...

 

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Sep 19, 2020 - 7:25pm

 

By tight leash do you mean very little room for error before getting fired? How poorly does one realistically have to do to get axed?

Yes this. If you look at other threads with some posters who are at MMs they sort of sketch it out. Loss limits depend on the individual/team and strategy.

Essentially when you interview and get hired you will have negotiated a stop loss regarding your performance. So let's say you can lose 5% before you are shown the door. What happens is that around 2.5% down your capital is cut in half, in other words you need to sell/cover a bunch of stuff. This is a risk mitigation tool for the firm. Then when you are down 5% you are literally shown the door. Because places like MLP pitch to their clients that they will make low vol returns and you losing a lot of money (and being levered) isn't low volatility...

 

This means that you are probably adjusting your book a lot if you are down 1% - 1.5% so you don't get your capital cut in half. Because once that happens, it is very tough to come back because you have to make up your losses ...but only using half the capital

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Sep 19, 2020 - 7:32pm

Rocksteady

What is your advice for someone looking to transition to an LP, FoF, endowment role?  Are those mostly sourced via networking or are there headhunters that work specifically in those seats?

LP life is very clubby and a lot of people know each other. It is, I would argue, much easier to jump between LP seats when you are already one or are a consultant or something. At least in the E&F or Pension or Family Office space. That said many of these places do employ headhunters and the positions can be quite competitive. FoF is a good place to start because many of them like people with transaction skills/experience or direct investing/trading experience. They also pay the best but have the worst work/life balance because they are commercial and have LPs. They are also increasingly not popular since it's fees on fees.

One day I will write a long AMA including this, but allocation/fund DD is in my (not popular) opinion, at a high level, many ways similar to research DD on companies (how do these people make money, is it sustainable, whats the competitive landscape, referencing supply checks (ie companies) or clients (other LPs), do I have other options that would make me more money with less risk etc)... but also very different and often higher level thinking (that's not a good thing or bad thing, it just is). But there is a huge human element to it as well which often there is much less of in direct investing.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Sep 19, 2020 - 7:25pm

consultingtoAM

Ha yeah clearly people here have never worked at a MM...the daily stress of when things aren't going your way and having daily meetings defending your positions. Everyone is just like yeah i'd make a couple million then peace. Ok...good luck.

this (+SB)

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
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