What would you do... interesting dilemma

I’m graduating from a top tier MBA program this May (and working on Level II) and have received two offers to commence when I graduate. I am looking for advice from intelligent individuals like those on this board, many of whom are either in similar situations or will be in the near future (hopefully). The first offer is an equity research associate position at a large buy-side firm. The role is exactly what you’d expect. I’d be working with two senior analysts covering specific stocks in a specific sector. I’d be performing financial modeling, preparing research notes, etc. Career track trends towards becomming a senior research analyst or possibly a PM several years down the road. The second offer is at a very small Investment Management firm (and by very small I mean 3 employees and $100M in AUM). The firm manages money for a number of institutional clients (pensions, endowments). They currently manage three funds (large, mid, & small cap) and have a solid track record. My role would be helping the owner roll out and manage a new long/short ETF fund. I guess I should explain. Basically we will analyze sectors of the market we believe will outperform (tech, defense, etc.) and go long corresponding ETF sector funds. Additionally, we will analyze sectors we expect to underperform and short those sector-specific ETF’s . I would be completely involved at the onset assisting the owner in every facet of the development and management process. The company expects to grow considerably over the next couple years and it could (and I stress COULD) be a great opportunity to get in at a growing firm and make a name for myself at a young age… or it could go bust, who knows. As you can tell these are different roles that would lead down different paths. The question is: Which would you take and why? Any thoughts are greatly appreciated.

Honestly, I think it depends on several factors which I didn’t see described in your message: 1. What sort of obligations do you have? Do you have a family to support? If you are married, are you the sole breadwinner? 2. What kind of debt did you accumulate, if any, while earning your MBA? 3. How comfortable are you working at a company that might not be around in six months? I know this isn’t what you are looking for, but it really depends upon your answers to the above questions. I can tell you, personally, I would jump on the first opportunity. But, you and I are two completely different people. With that said, congratulations are definitely in order. It seems you’ve done a nice job setting yourself up to land some great positions.

MeddlingKids, thanks for the response. Your thoughts are much appreciated. To answer your questions. 1.) No wife, no kids, no family to support. 2.) Lots of debt due to MBA. But, to be completely honest I’m not concerned with debt at all. It will be paid off eventually. Besides the pay is similar. In fact pay would most likely be higher at the IM firm if the fund did well. 3.) The company has a strong track record and long-term clients. Its safe to assume the firm will be around for a while.

I would jump on the second opportunity. But, you and I are two completely different people. It’s a broader perspective. It’s also what I know best (comparatively). I would expect to get a better grasp of how things interact, quicker, and I would find that more exciting. I’d have more opportunities to travel and meet with specialists outside of the firm, more opportunities to grow a professional network. I’d also have to be prepared to share in on making coffee, clearing out the dishwasher, go out and buy my own stationery and share in on fixing the photo copier when it invariably breaks down the same day the board meeting minutes are just about to be copied. These things never happen at larger firms, they’ve got staff employed to prevent & deal with all of these little things behind the scenes.

My advice is to take the research analyst position. It is more guaranteed so you don’t have to worry so much about whether your company could go out of the business etc. However, I am highly averse to risk. Of course, you can accept the 2nd offer, work several months and see the firm’s potential. Just have your doors open in case that you want to leave.

Go with the small shop, especially if you have no spouse, kids, etc. The sell side will always be there. If you truly want to go down the PM career path, I think it is much easier to move around once you break into the buyside. And if you want to go back to the sell side, it will be easy to sell that story. Take the risk now while you can. For what it is worth, I just moved to a small manager after several years on the sell side. It has been signficantly more rewarding, both intellectually and financially.

I completely disagree with those advising you to take the small shop job. Getting security-level analysis experience now (while you’re young) is a great way to go. Assuming the buy-side firm has a well-known reputation, you can always jump ship later for a small firm, once you’ve gotten focused experience and a bit of a pedigree. You might be promoted faster at the small firm, and find that you get to be involved in all aspects of the fund (obviously attractive), but I have a feeling that you’ll top out earlier. Big firms don’t usually hire small firm guys. It’s easy to go from big to small and find an awesome opportunity down the road. I think it’s good to get disciplined analytical experience first and work up to more broad-based stuff like sector ETFs, etc.

And 50-50, the OP’s associate opportunity is on the buy-side, not the sell-side. I think that makes a big difference in weighing the options. Seems all the sell-side people want to jump over to the buy-side.

Oops. I read it too fast during my lunch. Forget what I said earlier.

If you don’t mind me asking… what school are you graduating from and how did you land these opportuntiies (on-campus recruiting or personal job search)? And did you have investment management exp before b school? I’m also heading towards B school this fall… not top top school, but still a great school (carnegie Mellon - Tepper) and I want to head towards IM. First congrats on 2 great opps. I would take the first offer. 100M is really small. Even for a single fund, 100M would be small. I think this kind of opp is for someone that doesn’t have a top MBA to gamble on. If you take the research role at the first job, you will have access to top board members of the companies that the IM company holds. If it is one of the top 10 holders of huge companies, then you will learn a lot just interacting with these c-level executives.