Best Route to Investment Management?

Yes, banking is a direct feeder into IM, but usually for the industry vertical you were working in (industrials, tech etc). Research is as well but to a lesser extent. Depending on where you want to go, switching from research can be more difficult because IM firms dont want you to come in with preconceived investment notions you picked up in research (which are usually wrong). Research is difficult because there really is only downside to your market calls. There's no initiative to go out on a limb and make a unique call because you get no compensation for it, and if youre wrong all your clients get pissed and your boss yells at you. In that sense, a lot of IM firms would rather have someone who spent a few years in banking as they know finance inside and out, and have worked long hours so they know there is some work ethic there.

In terms of specific banking positions, no not really - I would say the more prestigious the firm/group the better, and from there on out it will be up to you to network with recruiters. Good luck.

Ginetta,

Thank you for the response, it's been surprisingly difficult to find good information on this subject!

It sounds like you have some personal experience with this - would you mind elaborating on one or two things? I'm going to apologize in advance if these questions are poorly worded and reflective of my ignorance

*Lets assume I end up in banking. After ~2 years in banking, what would the typical move into IM be? I guess that would depend primarily on the network I develop during my time in banking and prestige of my position, but in general what sort of IM position could I expect as an exit opportunity? Asst. Portfolio Mgr? Analyst? VP of Awesomeness?

*Outside of Research and IB, are there any other potential feeders I'm leaving out?

*Are you a prospective student as well? If not, can you speak to the potential for IB/IM/ER recruiting? I know IB typically comes on campus early, where do IM recruiters typically come into the picture? Is it possible to recruit for both?

Thanks again for your input!

No problem.

After two years in banking you would move over to a senior analyst/associate position on a fund, starting compensation would probably be less than you were making in banking, figure 100-150k in salary with 100% bonus - but the hours much better. I am not sure where comp levels are at currently to be honest. Expect 4-5 years before you are running your own pod of money as a PM, maybe less maybe more depending on how good you are. The move/recruiting would be initiated through head hunters(there are a ton).

I will give a warning, if you are serious about IM, you need to be sure you are passionate. It is an up or out industry, and if you dont live and breathe the markets, you wont make it. The people who end up being successful are those who bought stocks when they were 12 with their milk money. If you arent already running a stock portfolio (even a mock one), I would suggest that you reflect and see if you really are that into it. Although its really cool telling people you are an analyst on a hedge fund (especially the ladies! *wink wink*), in the end its still just a job and like everything else if you arent passionate about it you will get bored and as cut throat as the industry is - its probably not going to work out.

I dont mean to be blunt and dash any dreams, just wanted to give a heads up to truly consider it. As for the recruiting, I am a prospective student going to school this fall, so I dont know much about the recruiting process. What you could do is email someone at www.glocap.com and just say you are interested in breaking into the industry, heading to business school, and looking for information on how the recruiting process works. At worst, they dont write back - no loss.

Hope this helps.

Ginetta, thanks again for the honest advice. I know I have a passion for the markets, but I am concerned that I came into it pretty late in life (definitely wasn't buying stocks at 12, per your example), and fear this might impact my recruiting prospects. I currently work in trading (Fixed Income), run my own small investment portfolio, and study for the CFA level II during downtime. I'm already married so it's definitely not about the ladies , but I'm sure she's excited about the prospect of Ibanking hours.

I'll definitely send an email glocap's way, certainly couldn't hurt. Thanks again for the advice - you've given me plenty to think about.

This is interesting - thought I would chime in here since my goals are similar. Difference is, I am going for research in the short term, partly with one eye on IM down the road but partly because I want to do research for it's own sake.

I'm sure it won't easy getting in, but I'm doing everything I can to make it happen - CFA, MBA and lots of networking. I've also been managing a personal stock portfolio since March last year, which hardly counts as experience when compared to what the pros are doing but it's better than nothing.

Fingers crossed!

It is difficult, but hardly impossible. I got my friend a job at BB bank in ER as an associate as I knew the hiring analyst. My buddy had no industry experience at all, but had level 2 cfa, and was extremely smart with a good UG and made it in. You will just have to network network network. Good luck!

Are you adopting new friends Ginetta? I don't really cook, and I'm not particularly neat, but ...

On a more serious note, it sounds like progress toward a CFA is sufficient for landing interviews, as opposed to having the charter itself.

Aside from planting the seeds of networking, anything else a prospective IM/ER candidate should work on before going back to school (research reports, certain excel/modeling courses, mock portfolio)?

Thanks again for lending your insight

Yeah otherwise we're both screwed - we would need 3 year's work experience to get the charter to get the job we need the experience in. Ummm...

My plan is to nail L1 before school and maybe find time over 2 years to squeeze in L2 at some point. Hopefully there'll be lots of overlap with the MBA! So far at least, I'm enjoying going through the material and the problems are not tough. Just need to stick to my study schedule!

No worries guys. I think you both are on the right track. Having at least L1 under your belt shows you are definitely interested in making it happen. Things you will want to know for your interviews are:

*Being able to fully model financial statements and do earnings projections. Do yourself a favor and learn these https://www.wallstreetprep.com/extrafile ... cuts07.pdf so you dont look like a complete noob. Using a mouse in excel is for the weak! You dont need as much knowledge from a transactional M&A side, but learn about historical valuation multiples, comparable valuations etc. This can all be learned online.

*Have a general idea of what the market has done and feelings for where it is going. You can be completely wrong, but you need to show that you have thought about it at least. This includes having some preferences for industry sectors as being favorable/unfavorable depending on where we are in the economic cycle.

*Some trade ideas that you like that are well thought out and relevant to whatever industry vertical you are interviewing for.

The technical stuff is just jumping through hoops, show your passion for IM by having ideas and being excited about them and you will differentiate yourself from the competition. It doesnt matter if you started later in life, if you love it, they will be able to see that.

Great thanks for the ongoing advice mate. Final question: I have technical experience in a particular industry (oil). Should I focus on a role analyzing energy stocks (less roles available but plays to my strengths) or try to go in as a generalist (thus exposing myself to every available ER role)?

So, I would learn the mechanics behind analyzing companies first, and then try to leverage the skills that you have gained through oil but only if you are interested in it. Your technical skills will give you an edge in that industry, but the basics you will learn will be applicable to all industries. So long story short, I think you can do both - generalist and specialist.

Thanks mate. That sits well with me. I would like to leverage my oil experience (ie cover energy stocks) but it's not a huge priority and I'd be just as happy to focus on a new industry if it means getting the right role. So when I'm meeting recruiters I should present myself as a candidate to cover any industry, so as not to limit my options. If an energy analyst opportunity comes up I can jump on it as and when.

NP, best of luck in the whole process. If I can help in at all please feel free.

thanks, I'll bear that in mind!

What are the options for breaking into a BB banking role outside of the normal pathways; that is, outside of undergraduate or MBA recruiting cycles. I'm 2 years out of undergrad in a corporate finance role in a Fortune 100 finance company doing mostly BO operations for our investments portfolio. I will be sitting for CFA LIII. I really want to get into IM, but as you stated, most of what I've read indicates that banking is the most common course for spring-boarding into the IM game. However, I haven't seen that the options for more non-traditional pathways into banking are very pervasive. What would you suggest?

networking!

i'm doing the cfa to give me the academic knowledge I need for future IM. the MBA is a mechanism for the career change because the CFA isn't enough. that said, my career change is more radical - I'm coming from engineering and I've never been anywhere near a financial statement and I have no contacts in the finance universe.

good luck!

We're in the same boat, mate. !!! I'm from engg too, but have been managing a fund for 6 yrs now.
However, after getting my admission, I've been literally daydreaming and having too much fun, and started my CFA L1 prep only yday, for June.

My aim is to break into research, and then into buy-side. Though ginetta's write-up suggests that would be a tough break-in.
Thanks a lot for the info Ginetta. But I'm gonna ask a dumb question...when you say networking, you meant at B-school? I'm trying to find ppl at Kellogg (where I'm matriculating), in IM, but no luck so far. I'm hearing that recruiting in IM has been very weak so far.

Ginetta, I'd like to know what kind of working experience you've had in IM?

That is still one of the best routes into buy side. Whatever Ginetta has said about ER not the natural route to buy side is the exact opposite in my personal experience.