Moving from Front Office to Back Office!!!

I currently have slightly less than 3 years of experience as a desk quant for a fixed income trading desk at a top BB in NY right out of undergrad. Don't particularly like or dislike my job.

Recently a headhunter reached out recruiting for a top tier hedge fund for a risk position. Was skeptical at first but interviewed and liked it.

The firm is a large multi-strategy/asset fund. The job as a risk analyst is to look at individual portfolio positions across strategies and understand the rationale of trades being put on, make sure undesirable risk are adequately and properly hedged, and put on hedges as needed. Position is across strategy and asset class. There is also a performance attribution/explanation aspect to the job. The analyst will sit on the trading floor with the PM/traders and will interact with them daily.

I am offered significant pay raise in a desirable lower cost of living area (without too much specifics, all-in pay is equivalent to the buying power of 300k in NYC according to COL calculator).

I am not really the type who's obsessed with the job and deadset on being a BSD trader/PM one day or whatever. But I do want to get to do interesting work and at some point make mid-to-higher six figure and live comfortably.

A few questions come to mind:
1. How's a career in hedge fund risk, or risk in general?
2. How's this position in particular? Is it a decent position?
3. Are you considered an investment professional in this role?
4. Is this a job where I will learn a lot?
5. How's the pay progression?
6. Would you take it based on information about me I have given?

Comments (56)

 
Feb 25, 2013 - 8:25am

As a trader, whenever i see anyone from risk stepping into my row and possible coming to speak to me, i get a gut-wrenching feeling that he thinks (knows, whatever) i'm over my risk somewhere across the products i trade.
You monitor your firm's book, probably segregated to a few specific products (depends on how your HF splits up the risk tasks - at our firm, we have on-site risk as well as our HQ in London which is the main overseer, split up by trader and by product) you may have some day to day interaction with either the traders or otherwise just people that you report to and they take care of whoever needs to adjust whatever limits are in place.

Can't answer the other questions as i wont talk out of my ass, but a last thing about compensation, it is a VERY competitively-paid position. As a trader, i count for most of my pay from my bonus. Since risk can't trade, they count on bonus partially as well, but more comp in the form of base, hence when base is > bonus.
Good luck with your decision.

 
Feb 25, 2013 - 10:26am

zeropower:
Can't answer the other questions as i wont talk out of my ass, but a last thing about compensation, it is a VERY competitively-paid position.

Just want to make sure, do you mean what I am getting paid for my position is very competitive or hedge fund risk professionals in general are very competitively paid?

Also, while not FO, are people in the groups I am referencing generally competent and bright, and viewed as such, or are they like your typical ops/paper pushers type? Or in other words, do you think highly or lowly of your risk guy relative to say your trade support/compliance/ops guy?

Thanks in advance

 
Mar 1, 2013 - 12:16pm

HedgeRisk:
A few questions come to mind:
1. How's a career in hedge fund risk, or risk in general?
2. How's this position in particular? Is it a decent position?
3. Are you considered an investment professional in this role?
4. Is this a job where I will learn a lot?
5. How's the pay progression?
6. Would you take it based on information about me I have given?

1. Seems boring.
2. Probably good for risk position.
3. Not by FO people, but your mother will think so.
4. No.
5. Not good. You'll never make $500k+ doing risk.
6. Definitely not. As a desk quant, you're not quite FO, but you're close, and you could move up with good performance.

 
Mar 1, 2013 - 11:09pm

I can provide some insight as I made the same move. Was a fixed income quant research analyst working directly with a PM for 4 years, and taking over APM duty when PM is on vacation, on the road. Was asked if I wanted to take a job at a higher level doing equity risk modeling, took the job and have been doing it for a year.
1. Don't know about hedge fund risk in particular, but I would say risk is more quantitative and intellectual than the alpha side (more geeks and mathy types here), but lacks the excitement and upside because there's no risk taking.
2. It is a good position. You want to be evaluate risk to help investment decision making, not be a risk monitor.
3. Yes.
4. Yes.
5. Until PM level your progression should be similar, however, given the lack of risk taking, you will top out earlier. But given the lack of risk taking, justifiably so. Despite justin88's statement, this compensation survey of risk professionals says otherwise. You should look at the "alternative investments" number. My comp is slightly lower (by AM VP/SVP/Director. But remember I just made VP this year.
http://www.risktalent.com/download_files/salary_surveys/2010_assetmngt.pdf
6. Can't tell you what to do.

justin88:
HedgeRisk:
A few questions come to mind:
1. How's a career in hedge fund risk, or risk in general?
2. How's this position in particular? Is it a decent position?
3. Are you considered an investment professional in this role?
4. Is this a job where I will learn a lot?
5. How's the pay progression?
6. Would you take it based on information about me I have given?

1. Seems boring.
2. Probably good for risk position.
3. Not by FO people, but your mother will think so.
4. No.
5. Not good. You'll never make $500k+ doing risk.
6. Definitely not. As a desk quant, you're not quite FO, but you're close, and you could move up with good performance.

 
Mar 1, 2013 - 11:10pm

Front office to back office (Originally Posted: 03/09/2015)

We had a IB analyst with three years experience from a top bank interview today for a operations analyst position. Is this normal or do front office analysts make the switch to back office after a couple years of long hours?

 
Mar 1, 2013 - 11:13pm

That's what I thought. I was suprised when I saw her resume, because she blew mind out of the water. I didn't understand why she wasn't going into risk or something a long those lines if she wanted to get out of IB.

 
Mar 1, 2013 - 11:14pm

It would help to ask. If it's an ops analysis position, they may be interested in that as opposed to the regular ops type positions, given they can leverage that type of work in several directions. There could be any number of reasons why they want to switch out......they may also have accidentally applied to the wrong position at your company. Talk to them more to find out what is going on: this is unusual but not completely out of the question.

If anything, you're going to have a rock star ops analyst who never complains about the hours? :)

Get busy living
  • 1
 
Mar 1, 2013 - 11:15pm

@"UFOinsider"

The position is Operations Analyst.. When she had the interview she said she knew what the middle office does (We are client facing in my role) and she wanted to work in Operations because she was sick of the FO hours.

She's not going to know what to do with all the free time haha. I wouldn't know what to do if I went from 90 hour work weeks to 40-50.

 
Mar 1, 2013 - 11:16pm

Withoutapaddle:

@UFOinsider

The position is Operations Analyst.. When she had the interview she said she knew what the middle office does (We are client facing in my role) and she wanted to work in Operations because she was sick of the FO hours.

She's not going to know what to do with all the free time haha. I wouldn't know what to do if I went from 90 hour work weeks to 40-50.


Analyst is the rank then, yes? There's a difference between working the the operations analysis area and being a BO slave. If this is for a straight ops position, she's making a mistake.

Honestly, if this is just straight BO work, you might tell her that she's really making a mistake and would do well to look at almost any other job. ER has good hours, AM can have great hours, even some of HFs aren't really that bad. Consulting can have decent hours, especially if she doesn't have to travel a lot. MO is good but she might get bored and leave. She will DEFINITELY get bored in BO and leave, so I'm saying this for the good of both of you. Also, BO isn't necessarily the holy grail of work/life balance: I know people in ops who've ended up working long hours and then having their job outsourced.....so there's no guarantee that this is going to be the nice happy thing she's telling herself.

It doesn't sound like she's thinking clearly. Personally, I'd be completely honest about this. Sometimes people act rashly and you'd be doing the right thing to take them aside and lay it out for them.

There is the off chance that she came from an inferior institution (I haven't seen her resume) and thinks your firm's brand name will help her career. But most likely this is bad for everyone involved.

Beyond that, there may be more going on than meets the eye but again, I don't know the full story and I'm just taking a best guess :)

Get busy living
 
Mar 1, 2013 - 11:27pm

Withoutapaddle:

@UFOinsider

The position is Operations Analyst.. When she had the interview she said she knew what the middle office does (We are client facing in my role) and she wanted to work in Operations because she was sick of the FO hours.

She's not going to know what to do with all the free time haha. I wouldn't know what to do if I went from 90 hour work weeks to 40-50.


That's very sad.
heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/
 
Mar 1, 2013 - 11:17pm

OP, I support what some others have said to make it clear to her about the nature of the position. I don't agree that you should turn her down because of her move from "FO" to "BO"...who knows what her situation is...but I do think that you should make it clear.

But above all, this begs the question how did she get a job in IB? You'd think she'd have to buy a booklet to prepare for technicals, show some very specific and obvious passion about business...at least to a point that she should be pretty aware of exactly what she's pursuing.......as far as I know, the ib interview process isn't exactly your typical, run of the mill process

Or are we (am I) who are not in IB, over-thinking it???

 
Mar 1, 2013 - 11:18pm

twinwings:

OP, I support what some others have said to make it clear to her about the nature of the position. I don't agree that you should turn her down because of her move from "FO" to "BO"...who knows what her situation is...but I do think that you should make it clear.

But above all, this begs the question how did she get a job in IB? You'd think she'd have to buy a booklet to prepare for technicals, show some very specific and obvious passion about business...at least to a point that she should be pretty aware of exactly what she's pursuing.......as far as I know, the ib interview process isn't exactly your typical, run of the mill process

Or are we (am I) who are not in IB, over-thinking it???

The is a HUGE difference between day dreaming about working 80-100 hours a week when you're in school, and actually working 80-100. A lot of people don't realize how bad it feels to be constantly tired, stressed, and socially isolated over a long period of time.

I know a TON of people who were at the top of their class at top schools, prepped for IB for years, researched it thoroughly....then quit cold turkey a year or two in because they were ready to kill themselves.

 
Mar 1, 2013 - 11:19pm

@"UFOinsider"

What would you consider operations analysis? What would you consider the role to be?

Unfortunately I did not interview the girl. She currently works at a top 4 bank in their buy side IB. If I had interviewed her, I would have only asked two questions: Why haven't you applied for your MBA, specifically at HSW? Why are you screwing up your life?

She went to Philip Exeter and T-30 undergrad

 
Mar 1, 2013 - 11:24pm

Withoutapaddle:

@UFOinsider

What would you consider operations analysis? What would you consider the role to be?

Unfortunately I did not interview the girl. She currently works at a top 4 bank in their buy side IB. If I had interviewed her, I would have only asked two questions: Why haven't you applied for your MBA, specifically at HSW? Why are you screwing up your life?

She went to Philip Exeter and T-30 undergrad


Analysis of the company's operations: they optimize operations. It's unlikely but they may have applied to the wrong job.

Exeter and buyside ib....yeah something is off. Talk some sense into them lol

Get busy living
 
Mar 1, 2013 - 11:23pm

We actually work directly with the clients, brokers, traders (BlackRock, Facebook, ect.)

There's people in my building that have no client interaction at all.

** Maybe client facing isn't the correct term, but we're working on projects for clients and have direct contact with them everyday so it's not just button smashing

 
Mar 1, 2013 - 11:26pm

It usually goes the other way around.

Opstar lifestyle, might not make it
 
Mar 1, 2013 - 11:30pm

trazer985:

Look on the bright side, this is the 2nd hardest front to back transition you could do. Took me a year of begging for the hardest one....


Now I'm curious, do you feel like going into detail?
Get busy living
 
Mar 1, 2013 - 11:35pm

How hard is it to get from a front office to the back office? (Originally Posted: 08/01/2007)

I really don't like ibanking hours. I want to do Ops. Has anyone does this before? I'd rather have a life than money/prestige.

 
Mar 1, 2013 - 11:36pm

lmao....going from font office to back office is like for Lebron James to say he wants to join the NBDL because the NBA is too much "money/prestige"...

if you are already at a front office...just grind it out....make a good amount of money...take your money and then chill out

 
Mar 1, 2013 - 11:38pm

It isn't too hard. You just need to prove yourself in the back/middle office, know your shit, network HARD. It all depends on how far back you are in the backoffice ;-)

 
Mar 1, 2013 - 11:40pm

How much better? Probably not.

Banking > VC > Tech PE; PM me if you would like any advice I'm happy to help
 
Mar 1, 2013 - 11:41pm

Never pick a job based on a single period's compensation. It's all about that NPV player.

“Millionaires don't use astrology, billionaires do”
 
Mar 1, 2013 - 11:42pm

Nouveau Richie:
Never pick a job based on a single period's compensation. It's all about that NPV player.

Which means the further out we go the less valuable compensation is. The deciding factor might be the return from investing one's income and having the time to do it. Who here has an IRR high enough to make it profitable to work less hours, and spend more time investing?

 
Mar 1, 2013 - 11:46pm

I think about this all the time in my current ops role. Like...I don't do much, work 40 hour weeks , sometimes longer if something goes wrong but that's a rarity..so if somehow BO payed more than FO would ops then be the ideal job? But in the end it comes down to the work I'm doing and respect I have for myself and I just can't bring myself to respect anyone who takes ops seriously.

 
Mar 1, 2013 - 11:48pm

I dunno man, I'm going to get shit for this, but I'd honestly say no. It's not like I'd be poor working in the front office and even though analysts do a lot of bitch work, the potential to do work that's more engaging is worth more to me than extra $$$. I worked in the back office of a financial institution once and the work was so simple and I had so much free time on my hands that I honestly got extremely frustrated with work and the fact that there was no hope to ever do anything more interesting even if I worked harder and more efficiently than my peers (which I did by a long shot). That may have just been a result of the firm I worked for (it wasn't prestigious or large by any metric) but at the very least I learned that I valued interesting work more than money after a certain point, so I'd stay in the front office.

Disclaimer: I haven't made the front office but am really hoping I can some day; that's how much I hated my job there.

 
Mar 1, 2013 - 11:49pm

No, because I'm not doing banking because of what it pays right now. I'm doing it to get hard skills to allow me to make more in the future.

MM IB -> TMT Corporate Development -> New Ventures
 
Mar 1, 2013 - 11:50pm

If that were the case when I joined my bank back in the day, I definitely would've done it. Imagine pulling in $120K or more for 40 hours of relatively stress-free work a week. You can spend your off-hours working on all sorts of shit. A side business, investing your money wisely, learning new skills (i.e. programming.) Not to mention, you'l be pulling in six figures. Banking is not the be-all, end-all.

If you say no to this, then you need to use your imagination a bit more.

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