Should I take the back office role at the large, well-known firm or the front office role at the small, lesser-known firm?
It’s a very common question. Fortunately, the answer is easy:
Front office. Always.
Front Office / Back Office – Defined
Front office is limited to the investment professionals – the analysts and PMs that make the investment decisions.
Back office consists of all the support staff – compliance, accounting, trade reconciliation, IT, etc.
So, What’s the Problem with Back Office?
There’s nothing wrong with back office support staff. They are hard-working, under-appreciated people who keep the business running smoothly.
Unfortunately for you, though, back office people are not part of the investment process. If you want to make it to the front office, you need to prove that you can do the job. How do you expect to do that working in the back office?
“You really reconciled those trades with great efficiency, how would you like to start picking stocks?”
Don’t expect to hear that. If your goal is to become a financial analyst, keep it simple and just choose the front office.
What about Middle Office?
“But, what I aspire to become is middle/middle.”
First of all. there is no clear definition of middle office other than it is the catchall for gray area jobs. Risk management is often considered middle office. It’s a gray area job.
To find out if a specific middle office job is acceptable, ask yourself this question: Will I be part of the investment process?
OK – Working with a PM to determine optimal risk exposures in the portfolio.
Not OK – Working with client reporting to generate risk reports.
See the difference? If you are working with a PM, you can demonstrate your work ethic and skills to make the jump to front office. In the second situation, you are just in operations and you will likely get stuck in that role.
There are many more potential gray area situations, but always remember to just choose front office when given the choice.
