Joining LO to Collect Paycheck
Approaching 3 year mark of SS ER and looking to move to buyside. Most of the opportunities seem to be pods for obvious reasons but the idea of grinding through earnings seasons and working 60+ hours a week for the rest of my life sounds awful. The comp upside is nice but don’t think it’s worth the trade off.
A nice LO job sounds like a dream, working 40 hours or less collecting a $250K paycheck. I wouldn’t have to deal with earnings season 4x a year. Maybe this is just the burnout talking but is there anything wrong with just coasting for the next 10+ years and living my life?
The hardest to get most coveted job in finance “is this coasting”
I completely agree with you regarding the top LOs or even tier 2/3 names because you have so many people gunning for a spot that’s rarely open. I was more so referencing small boutiques that have lower AUM but still good AUM/IP economics so you can still get paid decently, maybe a slight discount but trade off is that it is easier to find a seat and usually even more cushiony.
Tier 3 funds probably won’t pay you $250k in your first 10 years.
You should easily get a spot in T2 shop from SS ER and will be able to clip coupons on a closet benchmark tracking strategy.
I’m a shill for the investment department of insurance companies so I’ll plug them again. Phenomenal WLB, with great cultures, down to earth people, and it’s still on the buyside. The assistant PM at my old shop was making around 250k and most PMs around 400-500k range. We dealt exclusively in credit and that seems to be case for most shops although we were definitely smaller compared to your Allstates or PGIMs. Again not a lot of seats similar to traditional LO but should be easier to get a foot in the door.
Lmao this is wrong on so many levels. LO does not work less than 40hrs a week (unless you're talking about LO in 1980s) -- expect to put in ~50hr weeks
Second of all, landing a decent LO seat is one of the hardest things to do within finance....you don't just decide you want to one day and deign to accept one of these seats saying 'I guess I'll settle'
This is the correct take. While 50-60 hour weeks are significantly less than banking/PE and most HF hours, they are not chill. Any well paid LO seat is going to require you to be mentally active for a large share of the hours worked. I imagine the same thing is true for HF. Also, who are we kidding, these seats are still in public markets which means any day can be blown up pretty easily depending on news flow. There is nothing chill about a competitive investment seat in public markets. If it was easy, they wouldn't pay so well.
Also, before I get lit up, I'm not saying that these seats are more stressful or objectively "harder" jobs compared to banking, PE or HF. I'm just saying they are not objectively easy.
Fair enough. I’m not going to pretend that the hours would not be mentally draining, but the total number of hours would go down. Plus, I don’t really mind index hugging since that’s the broader reputation of the industry anyways, so wouldn’t feel pressure to go the extra mile every time anyways.
Also, my original post is more focused on boutique LOs with good economics (<10B AUM with single digit IPs). I am not gunning for the highly competitive scaled platforms that everyone knows and pursues. These are insanely competitive seats. However, there are plenty of smaller, boutique firms that nobody knows that aren’t crazy competitive because they aren’t getting thousands of applications.
It seems like people seem to think that a highly competitive seat is what causes the higher pay. While it is definitely correlated, it comes down to the economics at the end of the day. Smaller funds with decent AUM per IP economics will still pay market with 1/2 the competition. Before you say I’m wrong and that they don’t exist, I have been/am in processes with several of them and we have already discussed the compensation.
The mentally active comment is both interesting and spot on. There's time spent at work and there's actual work. Know several on the buyside. They definitely don't do the long hours (maybe 50-55hrs, some less) but they would tell you it's really active and some times intense. Personally I would like that. Fast pace, day goes by quickly, interesting and impactful work, etc. They describe it as "being dialed in" the whole time.
I mean I work for a long only pension as a PM and make 400k/year working remote and probably work 25 hours/week.
This is sick - do you have to stay in the country though?
Yes
Confused by why you think that long only analysts don't have to worry about earnings season lmao.
Sure “worry”, let’s not kid ourselves and pretend that they are doing the same level of work/time spend during earnings than MM HFs or SS ER. Absolutely, it’s gets busier and you work longer than you normally would but it’s just not the same.
We all know LOs folks clock out at 5pm, let's not pretend this is a serious line of work... I work at a T2 and after 10 years of analyst/pm work still don't understand the point of this industry.
No offense but you are deluded. I work at one of these T1 LO boutiques (or T2 if you want to call it that -- think firms like Polen / Harris, idc what tier you want to put it as). Most analysts are putting in ~55hr weeks here (fair number with more intense coverage though are ~60hrs) with this ramping to 60-65hrs during earnings
I mentioned ~50hrs above because this was a blended avg of T1/T2/T3 type seats -- you don't want to go lower than T3 as that type of seat will usually have bad performance and could blow up far easier and your comp will likely be poor
Yes, LO earnings season will be less intense than MMHF earnings season no doubt -- but it's not like SS where you are chronically wrong and no one cares. You are paid to be right a majority of the time, it is still a risk-taking seat. Trust me, I would LOVE it if it was that type of job where you just coast as it would make my life far easier.
Likewise, good LO's do not like SS candidates. In the entire time I've been at this firm (I'll just say 5-8yrs) we have only ever hired 2 SS associates -- both were not a good fit given SS training / process and were let go. In the entire history of my firm (40+yrs) we have never hired a SS analyst. SS lends itself well to HF, not so much LO. Not saying you can't make the leap, but I wouldn't sit there on a pedestal thinking some 'sleepy LO where I work 30hrs a week and collect $300k checks' is going to be begging to have you. This far and away is one of the most competitive seats in finance. We likewise almost never take former HF folks either, WAY more folks looking to move from HF to LO than other way around which should tell you something
Now if you don't believe me, there's a simple way to test -- recruit for T1/2/3 LO and tell us how it's going in 6mo. It will be a very humbling experience
How are Invesco and Voya Investment Management viewed?
Also most buyside are not working straight 40 hours per week. I'm in by 7am and out at 5 most days outside of earnings season which is 50 hours and during earnings season closer to 55-60 hours.
Also it's not really coasting. Your picks matter, performance is on your mind all the time. I think about work a decent amount outside of work hours. I also worked on the sell-side and while the busy work isn't as intense, you have a different type of stress all the time being tied to your performance and eating what you kill.
FWIW, I've interviewed for a senior IG credit research role which paid $250k all-in, with an insurance company in the mid-west. This was certainly a "coasting" role, albeit with limited upside beyond $250k. I was concerned that the lack of intellectual challenge or ability to influence outcomes, which could make this a rather depressing career choice. I've heard of people in the East Coast getting more than $400k as junior PMs for IG credit, and I doubt these people are ever pulling 60+ hour weeks.
I would appreciate to hear other perspectives, but if you are looking for a chill environment, IG credit is going to be much less demanding versus equity or HY LO roles. I doubt that anyone in IG is up late at night working on quarterly earnings models, more likely they are just updating an XLS file to check on high level metrics for 100 - 200 different credits. I do wonder IG seats even need to exist, or could these jobs be replaced with AI. That said, it seems like insurance companies and asset managers ultimately have a fiduciary obligation to conduct some level of real analysis even with IG credit.
To beat benchmark and earn my bonus I just take the credit sights best ideas and buy those. Let them do the research. That’s why we pay 75k/year for their service.
Are you working in IG credit? Curious if you could share some perspective on LT career progression. This area just seems suspiciously easy, to such an extent that the job could be depressing. Do senior IG analysts ever move to HY nowadays (eg. seems possible if you have an IBD and PE background)? Any perspective on what PMs get paid for IG credit?
Redacted
If its okay, I'd like to DM you, have a few questions.
Chiming in as someone who has 10-15 yrs of xp and works at a LO. Seeing a number of comments from op and others that are v off vs what I’ve experienced at my shop and at peers. Hopefully can offer a more realistic portrayal on a few topics
In no particular order:
1. Serious misconception about work hours at a LO. regardless if the product can seem like a super sleepy bench hugging index your PMs can demand a lot of work from you. They’ll want new names, constant updates on positions and can/will debate every nuance with you EVEN if in the end no change is made to the position. Working 50+hrs (can be much higher on earnings, conf season) is pretty standard from what I’ve seen but will come down to the PM and culture they set. I’m sure there are sleepier t3 places in the Midwest that I’m less familiar with that are more lax but would be a big mistake to generalize an entire industry. On a relative basis are the hours and work, in aggregate, MORE than the pod average? NO, but don’t assume it’s just some cake walk
2. Although LO get paid on asset fees, and it is true that raising assets will be the primary driver of returns for GP equity, does NOT mean that the investment team is not hustling to beat the index. OP comment about not having to do earnings is obviously completely ridiculous. IP get paid to generate returns in excess of the benchmark. If you aren’t generating excess returns you have ZERO leverage at year end review when it comes to bonus discussion. If your performance comes short of your sector index are you going to mention to the mgmt committee that Mary in client services landed a new client and you should get paid? Think about how ridiculous that sounds
3. There was a comment made about someone’s firm not hiring SS into LO. The issue with that comment is that many professionals in the space did in fact start on the sell side whether in ER or banking. You could do a few LI checks to confirm. For a firm to not hire anyone with SS xp would imply they’ve only hired people that have been career LO pros since college and that has been become less common for a number of reasons. Would sum by saying yes it is very competitive to make it but no it is not atypical to hire talent from SS. The younger you make the shift the better and the easier it is
4. With all that said, Would be remiss if I didn’t remind everyone here that equity LO, esp boutique LO, Is a dying industry which you should consider in your LT career analysis. Pay is still good for now but LO has the highest beta exposure to the headwind from dollars shifting to passive vehicles or alternative assets. Nothing sexy about working at a boutique where you are facing AUM headwinds which crushes firm margins against a somewhat inflexible cost base. Fee take rates deteriorate every year on top of that. The guys that are “cruising” are v senior partners who have been with the company (or industry) for 20-30-40 years and don’t really care if the company goes to 0 they are just milking the remaining cash flow then retiring. That won’t be you. This forum loves to do $/IP math but tbh it’s meaningless because the pie is obviously not being split in anything resembling an even way esp at a boutique. Even SS is more insulated to passive in many ways than LO given rev linkage to pods (growing fast and gathering alot of AUM- fantastic product for LPs atleast for now) and capital markets revs. If you still want to do LO I would argue the largest LO with brand value are in a best position given the ongoing consolidation in the industry
I’ll stop there for now but happy to expand
Great response. Especially agree on your last point. I’m at a boutique that people talk about on here, top quintile track record, and we are still feeling the pain. At best feels like our AUM increases slightly with the market growth but fees continue to be pressured. This industry is not what it used to be. I enjoy the job and am glad to be here but I don’t expect to be getting more than high six figure comp over the long run. Hard to complain given I enjoy the work and high six figures still great but it is rough.
If the LO job offers stability and less stress, it could be a smart move for quality of life. Burnout is real, so taking care of yourself matters too.
Yea agree with your underlying premise, but in practice I don’t think LO is more stable nor is it less stress than sell side
The issue is I think some of the perceived stability in LO is an illusion if there’s persistent asset and fee compression, and stress lvl being lower is debatable
I have been working at a top LO for a short while now as a quant, coming from market making.
The pace of the day to day work product is a smidge slower. What I mean is my deadlines are extended a couple days or maybe an extra week from what I’m used to. It’s nice change of pace allowing me to dive deeper into analysis — I believe the nature for this being LO holds positions 5-10 years, trades the same names daily roughly, while MMs like to go home flat, manage risk across various different asset classes to hedge, etc.
However I would argue my hours have been the same, if not a little more. I work roughly 50-60 hrs a week. This is similar to what I was working at the MM. I am on the trading desk and our team gets in around 7/7:30am and leaves between 4:30/5:30pm.
Our international PMs work seemingly all hours of the day, putting on orders for Europe in the early AM, then orders for APAC in the late PM. Domestic PMs work usually US market hours.
Analysts and Associates generally work 8am-6pm at my firm, with some more intensive days coming around c-suite meetings for prospective companies, earnings, and year / quarter end.
Any advice for someone currently in a seat like you're describing? I am considering staying for as long as I can, keeping my head down, and clipping a coupon that is low relative to the street but reasonable for the amount of work and stress involved. How do people strike a balance between ambition and desire for good work life balance? If I stay, am I capitulating and accepting that I was good enough to get a job in the industry but never excellent?
I currently work at a long only in fixed income. Doing IG/HY/Loans. It's a pretty chill gig outside of credits blowing up, earnings/conference season. Outside of that, my hours are in that 45 hour range. Maybe peaks at 50-55 during those busy times. Comp is quite decent given those hours, call it $350k range all in with 4 years experience. I have enough time to not stress too much about work and can generally not think about work outside of my work hours. Maybe equities are a bit more intense but if you're in fixed income, it's a solid place to be.
Damn, I wish I had an interest or skill in fixed income investing. That sounds amazing
Can attest to this. I’m at a T1 LO as a Senior RA in equities. Comp is really good considering the WLB. Most RAs work 40 hours on avg, but I work more in the 45-50 range as I’m trying to learn my sector through and through. All in comp is $300-325k with 5yoe (SS/BS).
40hour week is not even market hours. How is it possible? Don't they need to be on the desk during market?
Well…. The market is open from 9:30am to 4pm each weekday. That’s 6.5 hours per day. 6.5x5=32.5.
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