Working in fund management: the secret to longevity in financial services?
Investment banking isn’t renowned for recognising the value of a few grey hairs. Traders regularly burnout after 30, the hours expected of investment bankers make it difficult for all but the most hardy to survive and even in areas like equity research – where experience of a few market cycles should surely add to insight – firms are often keen to promote thrusting young talent over industry veterans.
Asset management, meanwhile, is all about the value of experience and long-term relationships. At least that’s the theory of ‘star’ fund manager Richard Buxton, who departed Schroders for Old Mutual last year. “My job ihe antithesis of the trading game at a bank, which is a young mas tn’s game and why they burn out,” he told the FT. “I believe experience counts for a lot in fund management. Some of the best fund managers tend to be older and more mature like me or Neil Woodford [aged 53].”
This attitude appears to permeate the junior ranks; as analysts work closely with senior fund managers in the first few years, they learn to respect their judgement and value their experience. Kathy Collins, analyst at Aberdeen Asset Management, told us previously: “One of the more frustrating elements of the job is that you only become a good investor over time. You come out of university believing that you know a lot, but you need to have the experience of investing through market cycles to become a good portfolio manager.”
However, to suggest that fund management is the direct opposite to investment banking, where experienced portfolio managers can happily see out their career to retirement as a revered talent may be overstating it.
Track-record is integral to success, and indeed employment prospects, in the sector, but not everyone can make it to the hallowed ‘star’ fund manager status, and reaching the senior ranks without a solid, high-profile reputation can often be a dangerous place.
“Some of the larger fund managers tend to let go of swathes of their managing directors each year, with the idea of promoting younger talent within the organisation,” says Chris Sevenoaks, asset management consultant at recruiters Baker Noble. “In some of the more conservative fund managers, who still value the old boy’s network, it’s easy to see your career through to retirement. In larger institutional fund managers, where they’re constantly regenerating staff, it’s difficult to last beyond your 40s.”
In 2002, Schroders was taken to court by 56-year-old Sharon Haugh, chairman of its North American business, when she claimed it had encouraged her to focus on the salaries of employees in their 30s because "older employees, in their 40s and 50s, were not as marketable" and that she should “consider retirement” herself.
Nonetheless, cases of age discrimination within the fund management industry remain rare. Senior fund managers are valued, but if they’re looking for a new position, it normally takes “six to 12 months” before they’re successful, claims Sevenoaks.
“Where most senior fund managers tend to find success is within asset managers creating new offices in the City, who want a steady hand and someone with a very solid history to lead the office,” he says. “Vangaurd and LGIM are good examples of this; they want senior individuals who are respectful of their reputation. However, in areas like liability driven investment (LDI) or ETFs, fund managers are more likely to look towards bright young things, and burnout can be just as common as in banking.”