One of my friends got an offer from a boutique (~10 Billion) fee based Investment Consulting/Advisers as a research analyst leading to portfolio construction. If she joins, she is planning to stick with them for a few years and switch over to buy side. She has a MBA from top 10 and CFA L3 candidate. No prior finance experience. Is it doable? And if so, is it a smooth transition or do the buy sides value sell side more? Thanks.
What are her alternatives? If she has nothing to compare this offer to, then isn’t it a moot point?
Dude, you posted the same question a week ago. Go bump your old thread. Bottom line, SS to BS is going to be much easier than IC to BS. IC doesn’t provide a very transferable skill set to BS.
Agreed with Chuck. Investment Consulting is pretty much a 3rd tier job imo and on par with accounting (and pays less at a firm that small). 10bil AUM is a pretty small consulting firm and if your friend was really interested she should go to one of the bigger firms (Mercer, Hewitt, Cambridge, etc).
Ah consultants. They are similar to the asset mgmt fund-of-funds model. More portfolio mgmt based, you won’t go into actual stock picking or valuation. Agree with above. Consulting to buyside is much harder than SS to BS I wouldn’t call it as bad as a glorified accountant… but I’d rather go for a fund-of-funds instead.
Institutional investment consulting often opens doors to buy side firms in client facing roles, e.g. institutional sales, consultant relations, portfolio specialist/product manager. Buy side firms tend to value the client-facing exposure and understanding of how different investment strategies fit together at the portfolio level that comes with spending time at an investment consulting firm. If your friend is looking to transition into an equity research role down the road it might be a difficult mountain to climb.
i dont get it. whats the difference between investment consulting and buy side? Isnt BS just doing rather than advising as an IC does, on the same things?
^ no. usually consultants don’t do specific securities selection (think fund-of-funds model). They come up with the allocations of what you should invest in. So, consultants get some port mgmt skill, but nothing deep in terms of valuation and really understanding individual sectors or asset classes.
I work for an IC shop. When we’re first hired by the client we run through their current allocation with a fine tooth comb, rewrite their ips (if they even have one), develop corporate governance policies, establish fiduciary guidelines, look at their funding obligations, etc… I’m responsible for the manager research, portfolio allocation, and monitoring of the selected investments going forward. In a nutshell we manage the managers as iteracom said above. It’s not rocket science, but you would be surprised at the ineptitude of many F500 executives when it comes to making investment decisions surrounding their pension plans. Rarely in IC will you ever dive deep into a manager’s portfolio to look at each of their holdings. Occasionally you’ll look at all of the sector/industry weightings to determine where the alpha attribution is coming from or why a specific manager has bombed so badly. We’re not in a position to even look at individual positions for our clients. I will say this, IC has allowed me to make some good BS connections. Have I learned anything about equity valuation during my stint in IC, no. I do want to get on the BS eventually but I’ll be leaning on those contacts much more so than my skill set. Some guys love IC, but I find it a little boring. I have probably over 500 tickers memorized in my head of the different funds I see on a weekly basis. You can only see so many share classes in a given year before your head explodes. BS = individual security selection, actively managing the portoflio. IC = managing the managers. monitoring the allocation. fiduciary governance, etc… I do get to play a lot of free golf and eat a lot of free steak dinners at the fund companies’ expense though.
I’m also interested in knowing. I got offers in 2 IC firms. One in Manager Research and the other in Investment Strategy Research. I like both teams overall and package is pretty much identical. I’m having a hard time picking which offer to choose I don’t want to become a career IC, but as a first job I definitely look forward to everything I can learn here. Also ICs tend to value CFA, so at least I can get a few pay increases from this alone. As for Manager Research, I feel the network of fund managers and ability to identify fund manager talent is a great skill. Eventually a transition to BS Inst Sales or FoF is also possible as I’ve heard from my ex-IC contacts. But for Investment Strategy Research, I’m still quite clueless what I can do afterwards. More specifically are the topics related to asset allocation/risk tolerance/etc? Will I be able to move to, say, sell side in Research or a strategist role? I’m currently leaning towards the Investment Strategy Research role because it sounds like I can build more technical skills and be closer to the market. Is this true? OP, could you keep us posted what your friend chose to do? -poornewgrad
Just to add, I don’t think it has been mentioned: I have seen former investment consultants move to managing a foundation, endowment and family office. Whether you get into that or working on the client side at a fund company probably depends largely on whether you are better on the sales side or on the investments side.
iteracom Wrote: ------------------------------------------------------- > So, consultants get some port mgmt skill, but > nothing deep in terms of valuation and really > understanding individual sectors or asset classes. Agree on valuation…it’s not a necessary skill for them. To a degree individual sectors. Completely disagree on asset classes. Top IC’s know much more about asset classes than BS analysts. If they don’t, they are pretty sh!tty IC’s…