Q&A: From Big4 Audit -> Big4 Advisory -> MBA -> AM Portfolio Manager

SReaper's picture
Rank: King Kong | 1,170

Hi all,

I've been a long time reader of WSO, but rarely posted anything in the last couple of years. Thought I'd change that and give back to the community helped me out in the past.

So here's my story (I'll keep it short):
From Eastern Europe, raised and studied there. After uni, joined Big4 audit team in London, did CFA, then moved to advisory (TAS/Valuations/CF), also did a few years in a developing country with the big4 setting up a new advisory team. Then went to a top European MBA and after joined a large pension fund in Europe as an equity portfolio manager. It is a direct investment role in global equity markets.

Feel free to ask me anything about my path, the work I did in each place, or anything really. If I can't answer (such as what are my portfolio positions), I'll let you know.

Comments (31)

Jan 22, 2019

How did you get a PM role without any previous investment experience? What is the AUM of your fund/ the total AUM at your firm? Total comp? How has ETFs/Quants affected your fund's performance as well as inflows/outflows? Same question regarding your firm.

Jan 22, 2019

It's a fundamental equity portfolio, fairly concentrated. They were looking for someone from a principal investing or transaction background, who can analyze industries/companies and see patterns well. The CFA helped slightly. We don't have a lot of investment analysts in house, so even as a PM I also do some of the investment cases (for reference mostly). So I learned most of the portfolio and risk management/position sizing/rebalancing etc. on the job.

My fund's AUM is 1-2bn, entire AUM is over 30bn. Total comp not amazing (it's a pension fund in Europe after all) - about $120k + 30%-40%, with extra perks.

Inflows and outflows not really an issue, as it's a pension fund, so only thing that worries me, apart from performance of course, is reallocation to other asset class, which means I would need to sell large chunks. Of course it could work the other way, but I'm more than happy to get a few more mm to manage.

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Dec 28, 2019

It's a fundamental equity portfolio, fairly concentrated. They were looking for someone from a principal investing or transaction background, who can analyze industries/companies and see patterns well. The CFA helped slightly. We don't have a lot of investment analysts in house, so even as a PM I also do some of the investment cases (for reference mostly). So I learned most of the portfolio and risk management/position sizing/rebalancing etc. on the job.

My fund's AUM is 1-2bn, entire AUM is over 30bn. Total comp not amazing (it's a pension fund in Europe after all) - about $120k + 30%-40%, with extra perks.

Inflows and outflows not really an issue, as it's a pension fund, so only thing that worries me, apart from performance of course, is reallocation to other asset class, which means I would need to sell large chunks. Of course it could work the other way, but I'm more than happy to get a few more mm to manage.

How can a pension fund in Europe get away with paying a PM like you so little. Revenue at an external manager that size would likely be over $10 million and after administrative costs should leave at least a couple million for you and the other pm to split. How are they able to attract talent with that type of compensation?


Jan 22, 2019

What's your relation with quants on the team, if any? How does the investment process look like? Do quants sometimes become pm?

Jan 22, 2019

We have quant PM/quant analysts and quants in risk. The quant PMs came from analysts/risk or external.

I work with quant PM/analysts every now and then. Both fundamentals and quants sit together, and quants are more focused on the core portfolios, smart betas, min vol strategies. But they also look across the entire equity platform, so I talk to them on certain factors risks, performance attribution, or even algo's to screen stocks etc. We also have some quants in the risk team, and we talk on exposures, concentration, tracking errors etc.

The investment process is more bottom up. I would generally get an idea from a conference, analyst meeting, company roadshow, or even a conversation. Then I dig deeper into the idea with research analysts or internal analysts. We have a research company that can do deep dives into ideas, make financial models etc. If I think the idea has potential, I then pick which companies I believe will do well (probably do an investment case on the ones I feel I should add to the portfolio, unless an analyst does the case). Seems a bit simplistic, but there can be a few months of work between idea and some names to invest in.

Before adding new investments, the other PM and I discuss each others ideas and we make a decision based on potential upside vs risk. I then size the positions and send the buy orders to the traders. We monitor positions daily, but try no to trade to often (generally between once a week and once a month - but on multiple names at once).

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Jan 23, 2019

Thanks for the AMA!

Did it matter (if at all) which sub-division within Advisory you worked in at the Big4 with respect to gaining a place at your MBA and/or Current Role (i.e. would it have mattered whether you gained experience in TAS vs Lead Advisory)?

Did you have other offers following B-School such as IB/Alternative Investments, if so, could you highlight what areas of finance they were in? Really interested in understanding the career options post Big4 Advisory + MBA.

Jan 23, 2019
  1. For the MBA applications, it matters very little which advisory team you're in. It's the job progression, getting more selective roles (eg. moving from audit to advisory, back office to front office etc.), and showing leadership that matters most. That being said, top US schools are a bit biased against Big4 experience in general, especially if you are based in the US. As I was in based in Europe, I did manage to get interviews/accepted by US top 10 schools as well.

For my current role, the experience that was helpful was working on transactions (understanding capital structures, financing), being able to do valuation models and financial models in general, and being able to understand a company well just by reading some financial statements. A lot of the interviews was similar to consulting, but the cases were more comprehensive, and there was a focus on independent thinking. I think if you only had financial DD experience, some of the things above would be hard to demonstrate.

  1. The good thing about an MBA is it can help you reinvent yourself. My goal was technology (strategy/corp dev) or investments, but I also did some consulting interviews (followed the herd a bit on that one). So at the end, I chose between 4 roles: strategy consulting (not MBB, but better pay), associate/VP at a LMM PE (almost a start-up PE, but with some decent partners), internal strategy at a tech firm (based in continental Europe) and this PM role. The PM role was the more interesting job, even though not the highest paid.
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Jan 23, 2019

Thanks for the great response.
I've heard that in the US there is a fair amount of bias against candidates coming fresh out of Big4, not just regarding B-School but also career moves such as IB/MBB. Coming from London, I've seen numerous ex-colleagues successfully apply to top European B-Schools, Corporate Finance/Consulting roles and even the odd Asset Manager.

  1. Agreed regarding FDD. A lot of people (at my office anyway) are fixated on Audit>TAS>Exit as the client size in TAS is greater than Lead Advisory, however, my thought process is that gaining exposure only to FDD may be limiting.
  2. Congrats on the great offers! Did you have an attempt at recruiting for roles pre-MBA, if so, were the roles similar/different (if similar, I assume lower comp)?
Jan 23, 2019

I tried recruiting after my first year in big4, and a bit again a few years after that, but it didn't help that I came from a no name university (good in my country, but not known in London). I also graduated during the financial crisis, so banks weren't really hiring much at the time.

I had mixed experience with recruiters as well, as most of the roles they were pitching to me were more middle office, albeit higher salary. Still, not somewhere I wanted to go to. Then decided an MBA would be the best route.

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Jan 23, 2019

hey mate

did you do the cfa instead of aca at the big 4 shop you were at? or did you do both?

how easy was the transition audit >> advisory?


Jan 23, 2019

I was in a small specialist team in audit, where I had a choice to do CFA or ACA. I was more interested in a career in AM/banking, so I chose CFA.

I would say the transfer was not too difficult, it's a common move. However, a lot of people try to make the move, so you do have an imbalance of supply and demand. But I did two key things:
1. I networked heavily, meeting people in advisory for coffees, learning about what they do and soft signaling my interest. People can be quite open for chat, especially at Senior Associate/Manager level. The team I eventually moved into was aware of my audit team, as some people had transferred there in the past and were well regarded.
2. I managed to get very good performance reviews. Although I am not sure if there was a clear cutoff, being ranked in the top quartile was definitely helpful in interviews.

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Jan 24, 2019

fair enough - mind detailing the types of audit teams where cfa is offered?

yh that was my main concern - audit >> advisory >> MM M&A etc obvs there are more people gunning for that than there are positions available.

guess meeting and pleasing (eg being the right fit, moving from the right group etc etc) the right people is as important as the other stuff as well i guess.

cheers again mate

Jan 23, 2019

He, thanks for doing the AMA!!

I am currently enrolled in a target school in Europe (3rd Semester out of 6) and have an internship in big 4 audit and small cap M&A.
My Problem: My GPA is less than impressive (~2.8-3.0 depending on how you convert it, I am maybe to up that to 3.5 before graduating)

Do you think a CFA Lvl 1 would help me to land a Analyst gig after school? Would it be worth the time and cost?

Again thanks for the AMA and looking forward to receiving your answer !

Jan 23, 2019

CFA Lvl 1 gives you a marginal benefit, as it shows interest in finance and you get some useful knowledge for interviews. But more so if your degree is not finance/economics related. If you are studying a relevant subject, it is less of a benefit to your profile.

Also, analyst is quite a general description. Are you looking at M&A, asset management, research analyst? For IBD, you don't really need CFA. Internships/school/grades matter more. Plus some networking. For asset management or research, it is more relevant.

So, for you, I would say your focus areas are increasing your grades and getting a top internship (not sure if banks/AM firms are still recruiting for the summer). Then you either convert the internship or recruit from a stronger footing in your final year.

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Jan 24, 2019

Thank you for your reply!

I am mainly interested in M&A, so I guess I will just try to somehow up my grades since SA recruiting is pretty much done. Thanks again for helping out!

Jan 24, 2019

To be honest, I am rather surprised that you are running a portfolio of individual equities at a $30B pension, even as a $1-2B sleeve. In the US even the largest (~10X your size) pensions outsource a large portion of their equity investment. We regularly get RFP requests from them for both our quant and fundamental equity strategies.

Jan 25, 2019

Not sure really what you're implying here... that I must be managing less or that my job is selecting managers and not direct investments?

Firstly, the fund is bigger than $30bn, but I don't want to say how much because there are not many pension funds our size in Europe. Overall, we have more than $10bn in direct equity portfolios, so I'm managing just part of that.

Secondly, we outsource about 15%-25% of our equity allocation to external active managers and have a 5%-10% allocation to hedge funds. They serve as a good diversification tool and somewhat a benchmark for our internal performance (if investing in similar strategies).

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Jan 25, 2019

No, I was comparing and contrasting how different pensions can be in Europe from the US. In the US it is rare for even large pensions to manage any equity strategy in-house, and FI is trending the same way. They may ask for an AM firm to build a custom strategy for them, however.
To give you an example, a few years back, CalPERS (A ~$300B pension) wanted to tilt money towards companies that had women in management. They went to State Street (SSGA), and the end result was that SSGA launched an ETF, SHE that did that, and CalPERS seeded it with $250M. There are rumors that SSGA is kicking most, or even all of the management fee back to CalPERS, and that makes sense, as getting an ETF on people's radar and approved at the wirehouses is a huge deal, and at that AUM you basically get a free-pass everywhere.

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Jan 26, 2019

Thanks for the AMA:

1) What are your exit opps?

2) Does your pension have a funds investment team too?

3) Do people move over from funds investing to your equity PM kind of role?

Jan 27, 2019

1) I haven't done too much to explore exit opportunities, but typical places some of my colleagues have gone to are other pension funds, asset management firms (PM or analyst roles), some PEs (more portfolio management roles).

2) We have quite a sizeable team that does fund manager selection, hedge funds, private equity funds (LP investments) and real estate. Basically the front office is split in three roughly equal investment teams (equity, fixed income and external) and traders.

3) I haven't seen anyone move from fund of funds to equities. The skillset is quite different. A few people have moved the other way, either for good or for a secondment.

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Dec 17, 2019

First of all extremely well done!

Im planning on following a similar route via MBA however in an acct mgmt / investment advisory role. More recently, I reconnected with someone (MD at a PB) from a previous role whose willing to help me get back in the industry and would appreciate your help in how i should tailor my CV to get into investment advisory, research. My experience includes the following:

Past 4.5 years in consulting including deal strategy, bid advisory and operations consulting
7 months at a single family office prior to that where I had a solid track record managing USD400m (I dont need to justify why I left)
2 years in project finance (hated it)

Definitely not interested in or cut out for PB sales (relationship management). Any help would be appreciated.

Dec 27, 2019

Are you trying to tailor your CV for an MBA or investment advisory? There's different advice for each. And when you say investment advisory, are you thinking of companies such as Mercer/Towers Watson? I don't think anybody from my MBA class went to any of these companies. You can check profiles for people there on linkedin, but I assume a typical path is moving there either from an investment role, investment strategy or financial advisory.

In tailoring your CV, I can't say I have the expertise to judge well what they are looking for in an investment advisory role, since I never worked in that role, so apart from what skills they look for in a job posting or doing an online search for investment advisory CV, I can't do much more than you can.

One thing I can add, I would focus your CV on the relevant skills gained during your current position, and not around the investment position 5 years ago(apart from mentioning it of course). I have been co-manager of a global portfolio for 2 years now, and beat the benchmark in both years, but still can't say I have a "solid track record". 7 months is a very, very short time to manage a portfolio.

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Feb 9, 2020

Hi, thanks your reply.

As mentioned above, I was referring to PB. Anyways, that process is dead - need to fix up CV for MBA now.

Any advice on how I can position myself for Investment Advisory / Account Management roles at AM shops such as PIMCO, Fidelty, GS, JPM post top 2 European MBA programs? Thanks for your support and let me know if we can connect over PM.

Jan 9, 2020

I'm looking into TAS at a Big 4 myself - was in a small MM IB shop, deal flow very light, too much filler work (valuations). Definitely up for more challenge and career progression. Seems like a good next step without jumping off the cliff to front office IB with killer hours. I'm Associate level.
Can you give me an idea of hours/workload, intensity, and if you feel it's comparable to straight IB? Interesting / high quality work? Good clients? Does it feel like a "front office" role where you're interacting with clients?
Any skills that were particularly critical for TAS, or same typical modeling/pitch/presentation/research & writing/deal management skills?

Do you feel like it is a potential step to an IB? Is Big 4 TAS a second-class citizen to a true IB?

Thanks in advance!

Most Helpful
Jan 10, 2020

By TAS do you mean FDD (Financial Due Diligence)? Different Big4s structure things differently, but the main way to interpret Advisory teams are:

TAS - FDD : Work on big deals, brought in to look at financials, quality of earnings, net debt items etc. Generally more accounting needed than other Advisory teams.
Corporate Finance - CF/M&A : Essentially MM IB (at least in Europe), generally do deals below BB, so lower value, but higher volume. I think in the US Big4 CF is not as strong as Europe. Not sure about Asia.
Valuations - advise on valuations, financial models, expert for audits etc. More product focused team (ie. work on valuations), but broader in types of clients and reason for valuation (so can help audit with fair value, or work on a PE deal, or do purchase price allocation, or value brands)
Financial Modelling - can be a separate team, effectively do financial modelling for various reasons and clients, mandate can be quite broad.
Other teams that sometimes would fit in Advisory are Transactions Operational Advisory, Transactions Strategy, Restructuring, Forensics etc., but I guess not the focus of your question.

Overall, to answer your questions: for all teams fewer hours, less pay compared to IB. The more deal focused a role is, generally the more hours you work. FDD and CF can be particularly bad at times, similar to IB. Work in CF is probably no different to MM IB. FDD gets the best exposure to top clients (particularly MF PE), but they're seen as the accountants on the deal. All of them are front office roles, so after a certain level client interactions and selling skills become essential.

In terms of skills, for TAS/FDD, you generally need some accounting qualification. For CF, similar to IB in terms of skills, but big4s will likely make you do ACA/CA (in the UK at least). Valuations stronger on modelling skills, and may do CFA or ACA/CA.

From most teams in Big4 Advisory, you can get a job in IB (in London). FDD/CF can also get roles directly in PE. Sometimes valuations and modelling can go straight to PE as well.

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Jan 11, 2020

Thank you, that is very helpful - great explanation. I need to do some networking to find out details for specific firms. I worked for 2 Big 4 firms years ago, in taxation, with a CPA, but now have an MBA and many years of transaction experience. But left on good terms, so I think I can reconnect with former colleagues to do my own due diligence.
Definitely want to avoid valuations/"accounting" role. Great work, no doubt, but not my goal.
Again, greatly appreciated!

Jan 13, 2020