Are jobs really so sweet at boutiques?
Are you brave enough to leave your current role at a big funds manager and move to a boutique? Or perhaps you're even considering establishing your own firm? Here are some pros and cons.
Most boutiques are set up by two or three principals - invariably experienced professionals who have already had successful careers in large institutions and are looking to grow their own business from the ground up, says Jarrod Brown, CEO, Bennelong Funds Management.
"At this stage of their lives, and given their professional experience, they feel they have the best shot of setting something up. You don't have to be best mates with the other principals, but you do have to have a high level of trust," he adds.
Principals are also entrepreneurial and competitive by nature. "They have a desire to control their own destiny. It's not just about the potential financial upside for them, it's about creating a new culture from scratch."
Similar qualities apply to those they employ in their teams. "Some asset teams enjoy the focus and support of an institution, while others have fire in their belly and want to take control of their own careers, driving their success in a boutique environment," says Brown.
Fiona Weeks, a partner at search firm Platinum Pacific Partners, agrees: "It's risk - purely and simply. Some people are incredibly conservative and prefer to have a larger base salary and know their bonus is capped in the larger institutions. There is a feeling of safety in the big houses - sticky money, established brand name, bigger teams."
Others are more than happy to take a minimal base in exchange for a piece of the business, whether it be equity ownership or profit share. "They know it could be disastrous and they might struggle to pay their mortgages in a GFC-type of environment, but they also see the upside and the potential to make a lot of money," adds Weeks.
The past two years have produced winners and losers. As their FUM dries up, some analysts and relationship managers have regretted their decision to leave the cosier institutional world.
"However, if it is a boutique that has performed well and indeed benefited from other funds performing badly, with FUM increasing, the employees of those funds are very happy. They were perhaps not paid well in 2008, but 2009 was a good year," comments Weeks.
Another advantage of working for a boutique is that it involves less number crunching compared with a big firm, according to Brown. "You don't focus on the figures all the time. You have to roll up your sleeves and get involved in many different roles and work closely with everyone in the company, so you need to be very people-driven," he adds.
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