PWM PM vs. Institutional PM

Quick question for you guys. I am interviewing for two kinds of junior / associate PM roles – one is at an investment advisor that caters to high net worth clients (>1B AUM), and the other is at an institutional asset management firm (lots of billions, not sure exactly about AUM). To me, the work looks pretty similar – both roles are highly analytical but do require some client interaction (maybe 80/90% to 20/10% split of analytical to client service). These are definitely NOT operations or client service type roles – I would describe both as investment decision making roles. My question is this: I recently spoke to a recruiter about these opportunities and how they might lead to career development down the road, and she told me to be careful in selecting which role I want to go into in the sense that people who into the advisory side cannot easily change to the institutional side later, in her experience. Is this similar to the experience that people here have had? The work looks almost identical to me, so I don’t see why changing later would be a problem. I am looking for a ~2 year role prior to b-school and do not want to pin myself down to any particular career just yet. In the long-run, I am heavily leaning toward becoming a PM at a hedge fund. Will I hose that opportunity by working at an advisory shop? This is all theorhetical since I don’t have either offer yet, but I would appreciate perspective about how to think about each role given my goals. I don’t want to take just any job that comes along, but on the other hand, it’s hard to be especially choosey right now given the brutal job market. Thanks for your advice.

From my understanding (and I think I understand this) the recruiter is absolutely right. The nature of your investment decisions in PWM could be very, very different. The most important decisions a PM will make on the PWM side are asset allocation decisions. In contrast, in an institutional context, you are likely to be 100% a stock-picker.

Not necessarily. Plenty of high net worth advisors don’t invest in commingled vehicles (or just small %). They do the asset allocation AND the stock picking.

Ok… but since most value will be created / destroyed at the asset allocation level, you are less important in this frame.

Thanks for the replies. I should have been more specific. The posting for the PWM job is for an investment analyst / associate PM. It specifically says that I would be analyzing individual equities and bonds, in addition to helping select alt asset investments (HF / commodities and PE(?)) in addition to mutual funds and ETFs. It’s a broad based analytical role but not one of those “model monkey” type PM jobs where you plug pre-approved assets into allocation models. The senior PMs were previously equity and credit analysts before joining this firm and working their ways up. I will know more about the role after the interview tonight, but I was hoping you folks could give me something to think about so that I ask the right questions at the end of the interview.

I suspect the institutional side has more prestige and (potentially) substantially higher compensation possibilities, whereas the PWM has more interesting and varied interactions with clients, understanding specific needs (as opposed to the institutional directive: beat benchmark X with no more than Y tracking error). I have heard that PWM tends to have better work-life balance too.

^^ I was basing my answer on this sort of thing. Better to look at individual securities all the time if you want to be a PM at a HF!

I have heard similar things about PWM switching over to Institutional, although have never heard of a particular instance and believe it probably depends greatly on where you were and what you did(case by case). I do similar PWM work and spend a lot of my time going over individual investments(stocks, bonds, etf, hfs, etc) and some time with AA and sector weightings. I am sure this is a bit different from Institutional as they focus on an asset class and security type(my view). I dig it cuz I feel like I am getting exposure to many areas as well as the daily management that needs to occur(trades, raise cash, taxes, etc). I also know a lot of the PWM shops could be salesy or prop models and whatever else, this is something I would watch for and avoid like the plague. I think Institutional is probably pretty dang sweet, however, and hope that my work in PWM doesnt completely limit my ability to switch someday if I choose…I guess time will tell but am happy to hear opinions on that too.

agree with Etienne on point of going institutiional if you wanna play in HFs. I look at positions running endowments and the like as attractive jobs and they spend time not solely looking at indiv securities but the portfolio as a whole(not that institutions neglect it, just different focus or breadth I guess).

This is basically confirming what the recruiter said and what I thought prior to applying to these jobs. I’m in kind of an awkward spot then – possibly finished the CFA (can we get the freaking results already?!), pre-MBA, some decent front office experience… okay, what’s next? The sell side bores me out of my mind, but it’s hard to get a great buyside job pre-MBA… and I don’t have enough experience to get into the MBA program of my choice (waitlisted this year – feedback = need more experience). And the market blows chunks right now, so it’s hard to get anything going on the job front. It seems like the PWM job might be workable from a career perspective if it is truly as analytical as they say – that experience would probably be transferable to a HF coming out of an MBA program. Also, I’d love to hear people’s feedback on beta-oriented (indexing or index + slight tilt) instutional PM jobs. I am interviewing with yet another firm (3rd firm referenced in this thread) for an associate PM job on a team that manages assets by more or less matching a benchmark while minimizing cost and risk. This doesn’t sound super exciting to me, but I bet it would be pretty good experience for a PM job down the line since my feeling is that a lot of stock pickers may know how to produce alpha from time to time, but fall short on risk and cost control, which are crucial to being an effective PM. Again, this is fairly theorhetical at this point, but the advice of people on this board is helpful in determining what to aim at. All of these jobs seem fairly similar to me, but I am finding out that hiring managers may not exactly share my view about that.

I have seen a tax-efficient index type setup where they basically track the index but do loss-harvesting to provide a better AT-return, which I guess is something but man that sounds boring to me. I know that might not be exactly what you are referring to, but its out there and some people must dig it. I think you are right about the PWM position IF it is as analytical and not sales cultured…that is the biggest differentiator I see, so you have an actual process and experience and strategies you have learned and used coming out of it that is transferable to other areas (Institutional, HF, whatever). Good luck with all 3 of them, keep us posted.

tvPM - it’s interesting to hear that you do work at the individual security level. i had been under the impression that a lot of PWM shops were more involved in manager selection and asset allocation than individual securities. would you say that your shop is unusual in that respect, or is that a more common setup than i was aware of? i’m evaluating exit strategies many years down the line…just curious.

I never understood the concept of “junior” PMs with entry-level experience. In hedge funds (and fund of funds) a junior portfolio manager, if that title exists, usually has years of experience analyzing securities and at least a few years managing portfolios, and is usually making north of $1 million/year if he is successful and/or works for a large fund.

farley013 Wrote: ------------------------------------------------------- > I never understood the concept of “junior” PMs > with entry-level experience. In hedge funds (and > fund of funds) a junior portfolio manager, if that > title exists, usually has years of experience > analyzing securities and at least a few years > managing portfolios, and is usually making north > of $1 million/year if he is successful and/or > works for a large fund. So how do people get to that level? I agree though that PM is one of the most misunderstood / misapplied titles in the industry. I’ve seen “portfolio manager” jobs that are basically back office jobs, and the retail brokers I work with like to call themselves PMs.

Generally toil away as an analyst for years. I know people well into their 30s and 40s in this industry who still have the title of analyst but are making insane amounts of money. I just hooked up an analyst in his early 40s with a start-up hedge fund that was offering a low 7-figure total comp package.

What do you consider insane amounts of money? Just curious. I never know exactly what is possible in this industry. People say, “The sky’s the limit!” But really, unless you are one of the $50MM+ a year ballers (the approximate threshold to be in trader monthly’s annual top 100), where is the limit?

pox-I dont really know what else is out there, I would imagine there are lots of both managing managers as well as other things. I do manager selection as well(for HFs for instance, some SMAs, etc), so I do not spend all my time picking stocks or whatever. But we do run an active core as an example, which is obviously a component(if not the main item) of the portfolio. Therefore I get to work on core holdings as well as external manager selection(intl FI for example)… I know some other shops that have in-house core models that your client gets plopped into, and others with restrictive approved lists, etc. Thats why I say make sure it is what you want, otherwise you are going to get bored and not get the knowledge and experience, my 2-cents. farley seems to have the good life…it would be a shame to find out he is really a 55yr old housewife who just makes believe on this forum…j/k

>What do you consider insane amounts of money? Me personally? Anything over a $1 million a year is a lot of money (unless you live in Europe). On the other hand I know some people who would slit their wrists if they only made a million a year.

Do you know a lot of people in the 10MM+ range?

tvpm - thanks for the info.