Top tier asset manager vs. boutique asset manager

eviloctal's picture
Rank: Baboon | banana points 104

Hi guys,

Having trouble on deciding between sticking with current firm or jumping ship. Interested in hearing feedback from people who have had to make similar choices

2-3 yrs long only Asset Management experience as a equity research associate straight out of university
Ideally would want to become a PM in the medium/longer term however no rush, want to develope very strong security selection skills first before managing money so as to generate maximum alpha

Existing job: Small no name traditional asset manager with very strong track record and sticky retail money. Currently managing low single digit billions in AUM and growing AUM 30%+ p.a organically.~1/10 type fee structure.

Pros of current job:
High autonomy and flexibility, work on my own ideas at my own pace, so long as I can deliver alpha, focus on meritocracy
Good corporate culture, very low employee churns, very high employee satisfaction in surveys, little company politics
Fast tracked career progression, may begin to be managing money soon
Extremely profitable business model (for now atleast), resulting in good historical bonuses

Cons of current job:
Non ideal location, want to be living in a larger city in the medium term
Weak personal development platform/opportunity, difficult to improve my existing skillsets due to low company focus on employee personal development. Feel like my investment skills are plateauing quickly.
Existing coverage sectors are not that interesting, would prefer coverage sector in new opportunity, currently little ability to transition coverage universe in the short to medium term

New job opportunity:
Large well known traditional active global asset manager with couple hundred billion dollars under management, business probably has seen the better days behind it due to global trend of shifting AUM towards passively managed products

Pros of opportunity:
More desirable coverage universe, ability to rotate across different sectors and work in different countries overtime which is something I'm interested in. Want to have the opportunity to work in a different country for a short while
Greater focus on investing in human capital due to large platform, business has reputation of building talent within firm as opposed to hiring externally
More desirable working location, large city that I wouldn't mind settling down in over the longer term
More long term deep value investment philosophy, which marginally better suits my own investment style

Institutionalised company, everything takes a long time to happen, performance possibly not based on meritocracy and more office politics involved (my guess)
Probabily will take twice as long (if not longer) to make PM
Likely longer working hours (70 hrs vs 50 at current firm)

Compensation wise new opportunity is marginally better although gut feeling is existing firm will have better near term compensation growth opportunity as its still in a phase of increasing operating leverage (albeit leverage is a double edged sword) due to AUM growth (assuming markets don't fall off a cliff in the near future). However longer term the new opportunity may be better positioned to allow me to generate stronger alpha when I do end up becoming a portfolio manager due to stronger company focus on employee development

Obviously not an easy decision to make and interested in hearing others opinions on this subject.

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Comments (8)

Jul 21, 2016

Pretty tough decision as it sounds like you're in a good spot already.

Some things I would be looking at:

  • how much do you like your current team?
  • do you like the city you live in? You mentioned that it's a smaller city; could you see living there longer term?
  • how long is the opportunity runway at your firm? Do you think they'll actually let you become a co-PM or similar in the next few years? Or will you be stuck with your current responsibilities for 5+ years?
  • how well do you know the people at the larger firm? Do you know the person you would be working for? Is it a good fit?
  • how stable is your current firm? Is it dependent upon 1-2 people or do they have a deep bench?

One thing to keep in mind is that large firms will give you a brand that will be extremely valuable on your resume. If something happens at your current firm and you need to look for a job your resume won't travel as well. Tough call though.

Jul 21, 2016

I agree with above that the right answer is going to be highly people dependent. If you strictly like the team you'll be working with at one vs. the other then that should guide the decision. I think all else being equal your career will progress faster at the smaller shop. They will be willing to give you a crack at real P&L responsibility from an earlier stage, and there won't be as much office bureaucracy standing in your way. At most of the large long-only's you will have 20+ year veteran analysts and PMs who are going to capture the lions share of the total comp, regardless of performance. You can have a complete blowout year and your comp might move up 20%-50% but you'll still be earning a fraction of what these old school investors are taking. I suspect at some of the more boutiquey shops you get incentive structures that are closer to hedge fund structures (e.g. more formula/quant driven), where they are incentivizing strong performance above everything else. I think that's a positive if you are a good hard-working analyst.

Lastly, I wouldn't immediately discount your current location. It sounds like you're in one of the more regional hubs as opposed to NY/SF. I think there's a lot to be said for cost of living benefits and just overall quality of life in a lot of those cities. There are some great long-only shops (and HFs) in places like Milwaukee, Kansas City, Dallas, San Diego (my personal favorite, does it get any better than that??), Chicago, Seattle, LA where you can live on a fraction of the cost of a standard NY/SF lifestyle. You'll save money faster, you'll buy a much nicer house, and you're likely to find yourself with more overall disposable income. If you're young and single I guess the lure of the big cities might be more attractive, but in general I think these under the radar metros can create some pretty attractive lifestyles.

Either way sounds like you've got two great options. GL!

Jul 22, 2016

To followup, existing shop definitely faces key man risk, bulk of profits is generated by 2 PMs, one of which may be leaving the firm soon for personal reasons. However company view is that FUM flows shouldn't suffer as a result due to majority of funds being sticky retail money and us having direct relationships with the clients (i.e. no consultants involved).

Pretty confident that I could begin managing money in the next 1-2 years if all goes well at existing firm however key risk is because company has less focus on internal development, I could do well for a while and completely screw up once serious money begins coming in (as has happened with others who had been in my shoes) due to lack of experience and limited employee development. I fully appreciate that the skill set required to be a good analyst may be somewhat different to the skill set for a good PM. On the other hand, with the new opportunity it will be 5 years+ before I could even be considered in managing money, however if I do reach such a point, I would have the full support of the new company to ensure I become the best PM I can be.

Jul 22, 2016

Agree with both comments above, current team is good and I get along well with everyone. Met majority of the new team as well and they seem to be nice from initial observations, bunch of extremely talented guys running the show. However having not worked there, difficult to speculate how good I will fit in.

Hard decision is hard....

Jul 21, 2016

How much do you like your current city? Could you see staying there long term?

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Jul 22, 2016

I think it would come down to the career you can get in each firm

Jul 21, 2016
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