Bigger to Smaller = Baller?

I work for a big firm now doing research with some APM responsibilities. I have the opportunity to move to a smaller firm (under $1B AUM, but above $500mm) as a number three person. Here are the pros/cons that I have so far


  1. Bigger responsibilities, broader exposure to various facets of managing the money.

  2. Chance to earn more much more quickly than I would otherwise.

  3. Chance to have greater influence on the investment process and more opportunities to contribute and add value as everybody hasn’t already staked out their fiefdoms.


  1. If we don’t perform we don’t eat. I’m fine with that.

  2. Not sure what type of medical or retirement benefits I can expect at a smaller firm. I may be starting on the baby train soon.

  3. If we are near the top of a cycle, even if we perform I would be less insulated from fee fluctuations due to market movements than at a big firm.

Anybody here moved from a large to a small firm or vice-versa? What was your experience?


How much of a pay bump are we talking?

Sitting down with them next week to work on the comp package. I think it will be about a 20k bump on base, most of the potential is in the bonus and deferred comp. I think all in, I could make $60-100k more the first year, depending how things go. I wouldn’t own a lot of the performance the first year, so it would really depend on markets to a large extent.

It’s not really the ground floor, more like getting in in the teens, but I’d also have the opportunity for equity down the road too.

Almost regardless of the size of the startup they should be able to pay decent healthcare benefits. A family plan is around $1,000-1,200 a month for reasonable insurance. Source: I just priced that out myself. Retirement benefits probably not as much.

Most of these discussions come down to your entrepeneurial nature (or lack) and ability to take risk. I interview people and they want the big fund package in the small fund culture. Nah-uh. There are tradeoffs in any fund. I personally have mainly worked in relatively small funds and have enjoyed it all the way while recoiling in horror whenever I interview with a large firm. But that’s me, you might be different.

I agree with top of the cycle though, we are most likely in for some problems in coming years IMO. I am facing the same issue. I’m going to do it anyway because YOLO and because I have historically made money in any type of market environment because the book is hedged but let’s see how I feel about that in 24-36 months.

I don’t have direct experience with this, because I’ve not worked at a large firm, but I would think some due diligence on the client base of the smaller firm is important. Some clients will stick with you in a downturn, others will run at the first sign of trouble. Often small firms have less bargaining power with their clients so don’t have as much control over who their clients are; others have better relationship managers and are very precise about who they take on. If you are at a smaller firm and at the top of the cycle, how estabilshed and “sticky” the clients are - to the extent you can figure that out - would seem to be an important consideration.

The other thing to think about is that just say you and one of the key parterns are not a good mix, there is no where for you to turn in a small company but to the exit door. In a larger company, you have more options.

Yeah, I got into this a bit with them. They actually added AUM during the downturn (even net of the market decline), so that gave me some comfort that their business specifically could be counter cyclical. They also claim to have no debt, but I’d have to check that out.

I need to meet with more of the people. One of the investment guys is an intense personality, but that has never bothered me before. I work with them all the time. It would definitely be more hours, but I’d save about an hour a day on the commute.

Nice to have options. I haven’t tested the market in a while, and so far I have a 75% hit rate. Maybe I’m setting my sights too low.

Broke the news to my boss today, they countered and asked me to take the weekend to think it over. As bromion says, “YOLO”, so I think I’m going to hit the eject button regardless, doing my best to leave the door open for the future.

I really don’t think accepting a counter ever works out. Thoughts?

How much are you getting at the new role and how much was the counter?

Leave gracefully, I’ve been told not to work for companies where you must threaten to quit to get fair comp.

I think you misunderstand the meaning of YOLO. You only live once so be damn careful and meticulously vet all options.

For serious though, I must have missed this the first time around. I’d be less concerned about the size of the shop than what you’d be managing. That is, are you going from a APM role at a hedge fund or mutual fund company to a “portfolio manager” role at a large RIA? Or are you going from being a senior analyst at PNC helping run their discretionary portfolios (if so, hi, we probably know each other), to a small 40-Act/hedge fund company?

Counter at this point is basically they’ll do anything within reason, including exceeding the base on the other offer and let me broaden responsibilities. Frankly, I don’t really believe them.

Here’s the deal, from where I sit: me quitting makes the boss look bad and decreases team morale, so boss wants to keep me for now and is willing to do a lot to accomplish that. That’s all well and good in the short term. In the long term, he’ll probably not really trust me and keeping me for now allows him to save face while looking for a replacement. That is my cynical view. It’s a knee jerk reaction by him. When he really sits down and thinks about it he’ll realize that we have a lot of junior talent that is getting up to a higher level and at least two of those guys could be used to fill out the analyst ranks.

Also, at a big company like this who do you think is first to get chopped if he needs to reduce headcount? I like my boss and don’t think badly of him, but I need to be realistic here.

Lastly, I’m not leaving solely because of comp. My boss does not have the ability to give me a fund to manage with substantial capital. Ain’t happening, and they’d be a fool to try it.

No, is that something people do?

As much as I’d like to be friends, I do not work for PNC or help run discretionary portfolios. Good gig? I bank with PNC, like them very much.

I’m going from a big fund house to a small one that I think is set up very well to go through a big growth phase. Basically similar work/product, just with more responsibility and more potential upside.

Amazingly, yes. I’ve seen several sr. analysts on funds move to a “portfolio manager” role at big RIAs (over $1B). I wouldn’t say it’s normal, but there are advantages.

Running the discretionary portfolios at PNC or Janney Montgomery is a good gig if you’re the top guy. His research analysts that actually do all the work? Not so much.

In your situation, sounds like you’re definitely making the right call.

What are some of the advantages, in your opinion? Sounds like it could be a pretty cushy job with solid, stable remuneration? Not that I think negatively, but if things don’t work out I always like to know what options are out there.

^In those particular situations, I think most of it had to do with stress. If you’ve been an analyst at a large shop for a while (say 10+ years) you’ve probably built a decent network. Chances are good you’d know the guys that run the largest RIA shops in town (CFA meetings, other industry crap, turnover around town, etc.). If your work/life balance gets out of whack, you can do the RIA thing.

Even working your ass off it’s barely a 50 hour a week gig. Do it right and it’s more like a 35 hour/week job. You get a “Portfolio Manager” title (which they’re not no matter what they say), and you can still make a cushy living. You won’t be rolling in it unless you own the place and keep costs down, but you can easily pull over $200k. Much more depending on myriad factors.

Not all RIA shops are low stress. The ones that are obsessed with gathering assets and winning plans (pensions, endowments, 401ks, etc.), those guys can be slave drivers. But, find yourself a nice RIA in the $500mm to $1B range with a small staff of people you like…that’s a great gig. I’d take that over double the money at a high stress job, but that’s just me.

My take on YOLO is you have to take risks to get ahead. Good luck with the new role brain, keep us posted.