Deal-driven work vs. Asset Management management, allocation, currently, Recently, although

JoeyDVivre

I'm fairly new in my finance career and am currently working with non-public fixed income alternative assets in a monitoring role. Recently, I've been able to do some deal work for the front office which needed extra help. I was wondering what people had to say about the pros/cons of working in the deal-driven/front office setting versus in a portfolio management/asset allocation role.

My take is: although I've enjoyed getting into the deeper details of each deal, I can see how after a while it's all the same type of work within your specific sector and may get repetitive after a while. I like the macro thought process of asset management. It seems more academic in my mind, as you'd have to be aware of where global economics are in general. Plus, it doesn't seem quite as harried as deal work (I'm not a fan of the "hurry up and wait" process some deals turn into). Although I would miss the instant gratification of deal work.

I'm thinking I should make this decision fairly soon so that I can better position myself to grow in either direction -> should my next step be towards more front-office work, or should I seek opportunities in asset management?

I'm also an L3 candidate, so my studies will also be shifting to an asset management bias in the next few months.

dandman

deal-driven work requires just that: deals. When things dry up, bankers sit around doing nothing.. then the layoffs start happening.

asset management is generally more stable, can make $$ mkts up or down, and large funds generally won't pull funds quickly.

bleach

I'm biased but I think AM is the best place to be in finance:

- highest potential pay (in fact, it's the highest or second highest paid industry in the world)
- an unlimited number of possible investments to look at, especially if you operate on a global basis
- no laborious negotiations -- if you see something to buy, you buy it
- more autonomy in creating your own schedule than deal type work
- no as relationship-centric (you do real work, not schmoozing)
- no real admin component like pitch books

The level of harriedness depends on the firm. Where I work, we cover A LOT of ground very quickly looking for good buys, and it's extremely fast moving, while remaining labor intensive. The depth vs. time question is always central in making investment decisions for us, and it's one of the principle reasons we hold a widely diversified portfolio, because we might be wrong on any particular name (even if we were to do extensive DD, we still might be wrong).

All that said, BBD is right -- it's very demanding work, that is difficult to get into, and even more difficult to excel at.

mamuka12

BangBusDriver Wrote:
-------------------------------------------------------
> Though you would find many many family trusts sort
> of things, they get some lousy people in their
> network to invest for lousy returns, they usually
> stay dormant and die after some time, they like to
> belive that every one is George Soros among them,
> and they call themselves hedge funds, just because
> they manage money and invest it like monkeys. Lack
> of discipline is not a characteristic of a good AM
> shop or hedge fund. So you need to make a
> distinction between such lousy people opening up
> shops in any corner and calling themselves hedge
> funds and AM shops... and the real Hedge funds and
> AM shops which do operate very systematically and
> with discipline, usually such funds have a big
> portfolio and a long history.

As someone who manages money as a third party for large family trusts, I can tell you that this an incorrect characterization. Most people managing large family offices (circa USD 1B or more) that I have encountered have had successful roles in AM and made a lifestyle choice to manage money for a single wealthy client. In the top echelon, these people are certainly on par or better than most others in the industry. Similarly, these roles are extremely difficult to attain, entail a thorough vetting process and require significant prior experience.

I'm sure the hacks you describe are here and there, but generally speaking billionaires (or half-billionaires) didn't get where they are by making poor decisions. Multi-family office is another thing entirely.


On topic, staying in a deal role becomes more sales and relationship driven the longer you remain in that line of work. While the same is somewhat true of AM, for most PMs or even senior analysts remain more engaged in actually doing/reviewing/analyzing the research going into the portfolio..basically remain more involved in the "process." I'm not sure what I'm trying to say here.



Edited 1 time(s). Last edit at Friday, September 9, 2011 at 02:18PM by brain_wash_your_face.

mamuka12

AM is not "better than anything else" and it's not the "most competitive labor market." IB and PE are deal-driven fields, in general pay higher than AM, and are more competitive to break into.

To the OP, it depends what you want to do. Also you're making a distinction between FO and AM. AM is FO work. If you're in a monitoring role, I'm guessing that's more middle office or back office stuff. It will be difficult to transition to actual investment decision-making roles in the FO but it's possible.

willsucceed

AM

___________________________________________________
ChickenTikka Wrote:
-------------------------------------------------------
> Being Born Wealthy > Being Jewish or WASPY > Born
> Pretty > Top 5 MBA > CFA > Avg MBA > Born middle
> class > Born lower class > Born in crack house >
> Born middleclass in Asia and working in IT but
> looking to switch to buyside

king_kong

theres a stranger in my bed

luda002

AM. Personally, I can't imagine myself doing anything else.

mamuka12

brain_wash_your_face Wrote:
-------------------------------------------------------
> BangBusDriver Wrote:
> --------------------------------------------------
> -----
> As someone who manages money as a third party for
> large family trusts, I can tell you that this an
> incorrect characterization.

Apologies bro, I didn't meant to take a swing at serious and professional people in family trust investment management. I was just highlighting "what-not-to" through some cliches.

AnalystForum

Thanks for the feedback. Yes, my current monitoring position is mid-office, but there may be an opportunity to move as a support analyst for our deal-making team, and I was wondering if I should pursue it.

I work in a niche market/industry in a small firm, so a general "drying up" and mass layoffs don't really apply in my case. My bigger question is how I would make a transition from deal work into asset management someday without starting at the bottom as a portfolio assistant or something. Some have mentioned that you'd need front office type work to break in, but at the same time, what kind of skills would be transferable from this?

My first thought would be that my "in" would be specializing in region/industry-specific portions of a portfolio that I currently work with now.