Q&A: ex-McKinsey EM and current L/S hedge fund analyst

Subscribe

I worked for 4 years in McKinsey across 3 continents after getting my advanced degree (think MD, PhD, JD) and about 1.5 years go I moved to a long short global hedge fund based in US with $15b+ assets under management as a buy-side analyst. Ask me anything! McKinsey career, transition out, international transfers in McKinsey, MBB to hedge fund move, life in L/S HF, anything else you can think of. I will try my best to answer. I might be slow but I will get back to you

Comments (67)

 
May 11, 2020 - 12:56pm

Hello, thank you for sharing your experience.

Can you recommend a strategy book to prepare for the cases interview? I am finishing this year my Master (EU) in finance but my interest switched to management consulting (more particularly strategy). I have given myself one year to prepare/ learn consulting and I am looking for resources to do this. I got a lot of cases but I don't have yet the technical knowedge.

Best,
K

 
May 13, 2020 - 2:20pm

The transition was relatively smooth and this was in huge part thanks to the folks I work with in the HF. The fund that I work in is not a MM pod where the primary focus is QoQ EPS and 100% market neutral structure. This leads to heavy performance pressure on a daily basis and teams have huge turnover rate.

I work with a fund where the folks are super supportive, we have a committed LP base, a strong HF brand recognition, and it is a single manager HC fund within a larger HF. All this makes life good and culture strongly different to other HFs that I have seen.

Cmpared to consulting firms, HFs are vastly different on culture. Consulting firms it is all about giving recommendations and not owning the outcomes, till you become partner (maybe). Here, you live and die by your words and there is an extreme sense of ownership.

 
May 11, 2020 - 1:38pm

Would love to learn more what’s the transition from consulting to PE like (how to prepare for technicals, interviews, networking, etc.)

 

 
May 12, 2020 - 5:37pm

I moved from consulting to buyside HF and not PE. I did interview with a few PE firms while I was thinking of this transition but ended up giving up on that option as most PE firms considered my skillset great for their operational team but not for their investing team. I did not want to do "consulting" at a PE firm, which is pretty much what operational teams in PE do

 
May 11, 2020 - 1:53pm

I keep hearing about how consultants are routinely bashed as being "less quantitative," "softer," etc. than iBankers and other finance-heavy career folks.

What was your way of refuting those preconceptions, or demonstrating your technical chops? What sort of prep did you do before deciding to transition?

Do you think any of that would that change for me (an Associate at a T2 firm)?

Array
 
May 13, 2020 - 2:24pm

Consultants are used to 30k foot thinking and are recommended not to boil the ocean. In HFs, the devil is in the details and you need to think of every single aspect of a problem to ensure you are not fooling yourself. It is generally true that consultants don't necessarily make great investors, as the skill sets are different. But, a few things translate:

  1. Your ability to read management teams and understand how they think and speak is really healpful in HFs, as you do dilligence
  2. Your creative problem solving approach helps - basically your ability to collect all sorts of information and drive towards a data-backed conclusion is key
  3. adaptability - you are really good to modifying your approach to solve problems based on your situation in consulting. think of each investment as a new case

What doesnt help much is - lack of detail orientation, team focus (HF is all about you and your performance in the long run), and lack of need for lipstick on a pig (no need to dress up anything in HF - it is all about the truth)

In terms of prep, I did a lot of strategy and corporate finance in McKinsey, which helped a lot naturally. I did not preparestock pitches or ideas. That is more relevant for MBA to HF transition, not MBB to HF transition. I am generally very sharp with numbers and came with a lot of detailed technical background - PhD and postdoc in Biology

 
May 11, 2020 - 5:43pm

I'm interested in having a career where I do a wide variety of stuff yet have the flexibility to jump back into a previous role.

Wondering how did you shift across industries and what advice do you have for someone to experience a lot of stuff

Array
 
Most Helpful
May 17, 2020 - 12:13pm

One thing I was particular about throughout my career was not to restrict myself to a particular industry or career path because I had initially committed to it by choosing a particular education or initial job.

I completed my undergrad in engineering but go excited by basic biomedicine mid-way through my undergrad, so systematically started shifting my education career towards it. To that end, I completed 2 internships, in 2 name brand universities so that people take me seriously when I applied to biomedicine programs for my grad studies vs engineering. This helped land a grad biology program in one of the best universities in the world. The first internship was extremely hard to get, since no one took me seriously. I reached out to 100s of labs and 10 responded, and 1 offered a position for an internship. Second internship, I applied only to 2 and got my top choice since I had a recommendation from 1st internship.

While finishing my grad studies, I was clear that I did not want to get into academia. So I started looking into every single non-academic position I could get into. I literally googled academia to non-academia and came up with every single option possible. I landed with MBB because I realized it is a career accelerant and would open all sorts of doors post a few years there. I have to admit here that my brand name grad school ensured that people in MBB recruiting took me seriously and at least gave me an interview. The success here was driven by sheer hard work to crack consulting interviews and also importantly, having a clear idea of what consulting folks wanted. So prep here was long, since I did not do my MBA but clearly found a path to get to join MBB at the same level as MBA folks. By doing so, I got offers from M and B, and I decided to join McKinsey.

At mcKinsey, it was clear I didnt want to be a partner at the firm and after a few years in the firm started looking a all sorts of opportunities. The HF opportunity was luck driven to know about the role but then sheer hardwork to convert the opportunity to a true offer

So, overall, if you ask the keys to success:
1. Work extremely hard and constantly keep your antenna up and look for opportunities
2. Seek brand name institutions on your CV. I know it might be considered a shitty advice but I have found again and again people use these brand names as flters, even though they do not admit to doing so
3. Read, read, read and become as world wise as possible - you knowledge of the world is going to help you know of the opportunity set out in the world for you
4. Never believe you cannot do anything - dont let people tell you that you cant get something - look at folks around you, I am sure you will find 10 examples at least of folks having done things that are deemed imporssible. Work hard and anything is possible

 
May 11, 2020 - 5:46pm

Thanks for doing this. How did you move to your current firm?
Could you add a little bit of color on the interview process?

Array
 
May 19, 2020 - 11:13pm

I explained the process of how I moved in an answer below or above please check.

Interview - the only thing to highlight is that I did no stock pitches as part of the interview. The fund focused on an investment naive analyst for the role, which worked in my favor. They of course looked for 100 other things in the analyst they wanted to hire, which I satisfied.

 
May 11, 2020 - 8:51pm

Hi, thanks for doing this. I was wondering how often do McKinsey offices from a certain country, say Italy, hire people from abroad (I'm European, but not Italian and currently doing my Master's at a target in Mexico). Do they stick to people who already live in the city where the office is located or doesn't really matter?

 
May 17, 2020 - 12:18pm

MBB is very international in recruiting people but a few things are important:

  1. Local language: dont expect to get into Italy office without knowing Italian or Germany offices without knowing German. In EU, Brussels, Amsterdam are exceptions, where you can be considered with just English

  2. Local schools are feeders: expect to put up a heavy fight to get into an Italian office from a Belgian school. It is not going to be easy but definitely not impossible, if you are Italian for e.g. You can always join a Belgian office and 1 year later move to Italy by requesting a transfer within McK

 
  • Prospect in 
May 11, 2020 - 11:33pm

Thanks for doing this, it's super helpful. I have a couple questions:
1: Why HF over PE?
2: How do you think your recruiting was affected by doing consulting over banking? Would you do consulting over banking given the chance to do it all again?
3: Where do you want to go from your current position?
4: What are common exit opps from HF besides more HFs/AM?

 
May 17, 2020 - 12:28pm

HF vs PE
I understood quite early in the process that if I wanted to get into PE, then I should be ok to settle with an operational role vs buy side. Further, a PE role involved all the same issues that consulting had for me - travel, fixing companies, crazy time deadlines without 2 critical difference - financial upside and owning your recommendations. Further, I didn't see myself 10 years later starting my own PE firm, so I decided not to pursue this route.

HF on the other hand was very attractive. The market is the market is the market - it is very objective and winners and losers are decided based on the exact same metric. The market doesn't favor the powerful, it doesn't favor the rich, it doesn't favor track record, it doesn't favor brands - it treats people equally, which was very attractive. In the future, I can leave the HF and create a phenomenal family office without 0 infrastructure consideration, which I love. I could be location independent and stand up my own firm or office when I wanted to do it. Thirdly, network has limited effect on overall success. You don't need a brand name like a16z or djf to succesd in HF like VCs or TPG or Blackrock in PE. In fact, the most successful HFs fly under the radar, which suits my personality and character a lot. I am not flashy, I dont care about press coverage or fame.

 
May 17, 2020 - 12:32pm

I would not trade my consulting experience for banking but be informed that I did not do banking and all my knowledge is hear-say. I loved my consulting work - team building, client relationship, international travel and experience, and the overall impact I could create while working in consulting. All of this is extremely helpful in my current HF role. Granted, I am not an excel guru and don't build the most sophisticated models but I find that is the easiest of the skills to learn and become an expert in.

For my future, I want to get my own book, which I am already starting to do. I want to stop working in the HF in the next 6-8 years to start my family office.

I can always get back into academia or consulting! Those doors are always open but I am not sure if I will get back into either.

 
May 13, 2020 - 3:06am

Thanks for posting ! I have a few questions :

1) Does the transition in hierarchy from EM (manager level) to Analyst not feel strange ?

2) Are your colleagues much younger than you ?

3) In terms of salary, was it a pay bump or pay down grade from your previous job at McKinsey ?

 
May 16, 2020 - 11:48pm

I decided when I moved to the fund that I would lose my managing and mentoring role. I was ok with it but it was a hard loss. The one true thing I enjoyed at McKinsey was the mentoring ability. I enjoyed nurturing BAs and Asc. However, I did not enjoy the client serving aspect one bit. I never was able to put client first, above everything. So I was ok to give up the managing role for my overall happiness.

 
May 16, 2020 - 11:50pm

My colleagues in the fund are younger but it is clear that I have a more well rounded path to the fund and have clear advantages in terms of career maturity and skill set. I am not ashamed or I do not hesitate to ask them for advice and help. I learn from them every day and I am happy about it.

 
May 16, 2020 - 11:54pm

The biggest reason I was ok with the move was the financial upside. The factor played out clearly in year 1. I made 2.5x a senior EM or 1.5x 1st year AP year 1 as an analyst in the fund. Pay me the money, call me any title and let me enjoy the work - that is what I love about the role

 
May 19, 2020 - 10:51pm

L/S fund wins hands down

Let me give you an idea here:

McKinsey:
Analyst: 100k all in (0-2 years on the job)
Associate: 200-250k all in (2-4 years)
EM: 350-400k all in (4-6 years)
AP: 650-800k all in (6-8/9 years)
Partner: 1-2m all in (8/9 - 12/13 years)
Senior partner: 3-5M all in (13 years+)

Fund - please keep in mind a successful on:
Analyst: 500k-1m (0-5 years)
Junior PM: 1-5m (5-7 years)
PM: sky is the limit

Layer on top crazy travel, being the client’s bitch, unhealthy life style, and constant people pleasing - it is quite clear to me which profession is financially attractive while providing a manageable life style.

 
  • Prospect in IB-M&A
Aug 18, 2020 - 5:37pm

for funds it depends on AUM and profit cuts.
unless you're at a >$10bn with <15 IPs, I doubt you'll find first year analysts making >600 all-in

Array
 
May 13, 2020 - 2:15pm

Managers/Finance Industry .vs. Professors/Academia -- which group of people are you more impressed with? [both of those worlds should have outstanding supervisory people, but is one world clearly more impressive in your mind? ]

Aside: I'm from Silicon Valley and doing a startup that might target consultants -- can I do a quick 15 minute Zoom call with you to show you my prototype product and get your feedback from your McKinsey experience? I can answer any question about Silicon Valley that you might have also.

 
May 19, 2020 - 10:47pm

It is really difficult to compare and contrast finance vs academia in terms of people capabilities. The talent required to thrive and the end goal in these sectors are really different. Also, it really depends on how you define success/talent.

If the goal is to contribute to changing the world for the better, one brick at a time, I believe academic pursuit and characters there are very well suited to change the world.

If the metric to define success is wealth creation, then of course the financial world and folks there are any day better in finding avenues and opportunities to succeed.

I feel like I am not adding anything new here, so I will stop but this is not a clean answer at all

 
May 20, 2020 - 10:27am

hedge-mofty:

If the metric to define success is wealth creation, then of course the financial world and folks there are any day better in finding avenues and opportunities to succeed.

Yeah, this observation makes a lot of sense. The academic world is very diverse in its goals and caliber of people -- and usually it's pretty difficult to measure. In the finance world, there is a more uniform metric for measuring and assessing.

 
May 17, 2020 - 12:04am

I wanted to focus on life science and I scouted for life science opportunities. Even though we sit in a L/S HF, we do all sorts of investments within the life science world. So we do late stage private investing or so called cross-over investing, credit including convertible bonds, options, and of course pure equities. I get exposure to everything and get to learn investing across the spectrum. LS investing, here I mean life science, requires specialized knowledge and the fund is broadly ok with us investing across the LS universe across all types of investing vehicles. It is a complex ecosystem and we are lucky we can play across the investing vehicles universe. Honestly, I did not know this would be the case when I joined but I am glad we are doing what we are doing as opposed to just equities.

 
May 16, 2020 - 12:27am

There was a huge luck component in landing the initial Head Hunter conversation. It was a random LinkedIn outreach. The harder you work the luckier you get, I guess.

However, after the initial conversation, the interview process was more than 6 months in total without a single pitch interview - it is all about character, culture, ethics, personality, references, and temperament.

In such HFs, seats don't open up often, so the harder you network and connect with people, the more likely you are to land an opportunity.

 
May 13, 2020 - 3:29pm

Could you comment on moving offices within Mckinsey? What benefits did you see working in a foreign office and how easy is it to move back to the US after starting in a foreign office?

Array
 
May 16, 2020 - 12:20am

Moving offices helps get a variety of cultural and client experiences. Also, moving to international offices is critical for upward mobility within McKinsey, especially beyond AP.

It is much easier to move within US offices locally vs international offices. Also, it is much easier moving from high demand offices, such as London, New York, San Francisco to other offices vs the other way around

 
May 13, 2020 - 3:58pm

Does you HF or others you interviewed at recruit from other consulting firms other than MBB?

I'm currently at a strategy arm in big4 (S&, EYP, Deloitte S&O) and want to make a jump to HF/PE investment. Should I just try to jump to MBB first or do I still stand a chance.

Thank you!

 
May 16, 2020 - 12:17am

Brand names help recruiters, head hunters, and hedge funds cut through the noise. They are hoping that the brands did their diligence to recruit or admit the folks they bring on board. So this elevated platform provides them easier recruiting grounds.

This does not mean you can't move from a non brand name consulting shop to a hedge fund. However, the direct transition might be extremely difficult, almost impossible. Make a few baby transitions and then aim for the big leagues.

 
May 13, 2020 - 9:24pm

Thanks for doing this-I am at a T20 US MBA and interning in Corp Finance this summer. Here are my questions.

1) Is a Consulting internship necessary for McK?
2) I am an international student. Given the current employment market in the US, would it be easier for me to recruit for McK in my home country?
3) How difficult is it to crack McK during FT recruiting?

 
May 14, 2020 - 9:25am

Hey, unsolicited advice: Covid, international, top 20 MBA, not a fancy internship (not MBB, GS/MS/JPM, or FAANG), you have very little to no chances for MBB full time in the US. You should play the long game: get an MBB offer for your country, and then do an internal transfer in 2 years

 
May 15, 2020 - 12:19am

The biggest challenge for you to get into McKinsey is going to be the challenge of landing an interview. The minute you land an interview, your entire past is forgotten and the only thing the firms focus on is your performance during the interviews I.e case and personal experience interviews.

So, focus on landing the interview. To make this happen, network like crazy with MBB, go to every single into session, find out if your school alum are in MBB and how they got there, craft and re-craft every aspect of your resume, and I think top 20 B-school can crack MBB. You need a clear strategy and plan.

Did you get interview call from MBB for your internship?

 
May 15, 2020 - 1:46pm

Unfortunately,I did not get an interview call from McKinsey. Interestingly, the recruiter(HR) who was managing campus recruiting for my school setup a calendar invite out of the blue during the process, told me that I have a strong profile and encouraged me to apply. Not sure that is very common though. Thank you for all the advice-any inputs on the timelines for FT recruiting and what I should be doing from now until then? Also, to just give you some background, I was not targeting Consulting for internship recruiting and had more of a Finance resume-so that may have come across to the recruiters.

 
  • Prospect in IB-M&A
May 17, 2020 - 1:25pm

This is great thank you.

Could you mention some resources/suggested readings/publications for learning more about the HC/LS sector?

Also how beneficial is your science background on a day to day basis? Im sure it helped you tell your story and get the job - but I am more wondering do you have any knowledge advantage over a econ major ex-M&A banker/consultant turned HF analyst?

Array
 
May 19, 2020 - 10:44pm

I believe that a life science or medical academic background is critical to succeed in healthcare investing. This is especially true if your work is to focus on biotech and pharma investment opportunities. One way to overcome this experience is by spending 4-5 years in sell-side ER to get this education/knowledge base. I can safely say it is a pre-requisite to succeed. Although, you can craft your investment strategy in non-biotech/pharma names, like devices, diagnostics, tools, etc in healthcare and do fine. It really depends what part of healthcare you want to play in.

 
  • Intern in HF - Other
May 18, 2020 - 1:58am

If you had to do it over, would you still go into consulting after graduation before HF, go into banking, straight into a HF, or something else? I know you touched on consulting vs banking earlier, but any other thoughts on starting your career with the goal of becoming an active investor would be great.

Second question, any particular reason why you chose L/S over other strategies like credit/ss or FI? Thank you.

 
May 19, 2020 - 10:40pm

I don’t know about something that I havn’t experienced. So it is hard to compare and contrast the consulting route vs banking route to investing. However, I am very confident of the route I took works really well for me, and by extrapolation, other folks like me trying to make the switch. But, one thing to keep in mind about my transition is that I spent a lot of my education in scientific and quantitative fields (e.g., I was an engineer before I moved into biology) and I believe those experiences also helped massively in making this transition possible, since I believe that a quantitative analytical bent of mind is critical to succeed in investing. It is possible that for someone with non-scientific educational training, banking might be better vs consulting as it provides a platform to build quantitative skills needed to succeed in investing.

 
May 19, 2020 - 10:41pm

On L/S vs other strategies, I mentioned this above for one of the answers. I spend most of my time on equities but our group is involved in all investing instruments, including convertible bonds, options, private equity/late stage growth equity, etc. So, I have the latitude to grow in any and all of these directions, which I enjoy tremendously

Start Discussion

Total Avg Compensation

September 2020 Hedge Fund

  • Vice President (18) $520
  • Director/MD (10) $359
  • Portfolio Manager (7) $297
  • 3rd+ Year Associate (18) $269
  • 2nd Year Associate (25) $242
  • Engineer/Quant (47) $236
  • 1st Year Associate (58) $189
  • Analysts (175) $167
  • Intern/Summer Associate (13) $133
  • Junior Trader (5) $102
  • Intern/Summer Analyst (186) $80

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.3
2
Jamoldo's picture
Jamoldo
98.3
3
Secyh62's picture
Secyh62
98.2
4
CompBanker's picture
CompBanker
97.8
5
redever's picture
redever
97.7
6
Addinator's picture
Addinator
97.6
7
Edifice's picture
Edifice
97.6
8
frgna's picture
frgna
97.5
9
NuckFuts's picture
NuckFuts
97.5
10
bolo up's picture
bolo up
97.4