Holla Back, Office: 7 Reasons You Shouldn’t Work In The Back Office
“Andy used to want to be in the heat of things, sealing deals and wooing clients, but now he’s destined to be support staff.
Holla back, office?”
-BigLaw, BigSchmaw, The Leveraged Sellout
Ah, the back office. Should you go there? Is it worthwhile? Are there any exit opportunities?
I try to give detailed tips on everything from private equity interviews to investment banking resumes, but my advice on this one is simple:
No.
Front Office vs. Back Office
There seems to be some confusion over what constitutes “Front Office” vs. “Back Office” (and then there’s that netherworld of “Middle Office” in between the two), so let’s be clear on terminology.
“Front Office” refers to any group that generates revenue for the firm – investment banking, wealth management, private equity, and sales & trading are all examples.
One exception: equity research is still “front office” even though it doesn’t directly bring in revenue.
“Back Office” is anything that does not generate revenue – IT, accounting, HR, risk management and compliance are examples.
You might consider some of these “back office” roles – such as risk management and compliance – to be “middle office.” But let’s make things simple and just go with “back office” for now.
As you might surmise, groups that don’t bring in revenue are not viewed favorably in a culture where greed is good.
But why specifically should you not work in the back office?
1) The Front Office Doesn’t Care
This might be the biggest misconception that prospective financiers have: that it’s “easy” to transition from back office to front office.
In practice, it’s very difficult and I’ve rarely, if ever, seen it done. In cases where it does happen, usually it’s moving from “middle office” areas such as risk management rather than jumping from IT to M&A.
Often, engineers who want to move into finance are “sold the dream” on joining IT at a large bank, thinking that they’ll be able to break in at some point in the future.
But you know what? Out of every single engineer friend who graduated with me several years ago and went to work in IT at a bank, not a single one has successfully transitioned over – even though they all want to.
2) Top Business Schools Don’t Care
Business schools classify candidates into 3 categories – the “prestigious job” (finance / consulting) crowd, the “average job” (IT consulting / accounting / product management) crowd and the “did something completely different” (became a monk in Tibet / started a company / became a wandering bard) crowd.
Or as Alex Chu over at MBA Apply so eloquently puts it, the “Blue Chips,” “Average Joes” and “Vagabonds.”
Banks and other financial services firms recruit primarily at the top 10 business schools; these schools have very few students who took the “average job” path, and by doing back office work, you put yourself in this category and therefore reduce your chances of getting into one of these top schools.
Don’t believe me? Take a look at what Alex has to say on the topic:
“The difference with HBS, Stanford and Wharton is that you’ll see far more Blue Chips and Vagabonds (and by extension, less Average Joes) than you’ll see at other schools, and particularly at HBS and Stanford.”
Needless to say, HBS, Stanford and Wharton are some of the top business schools for finance recruiting.
3) The Buy-Side Doesn’t Care Either
This one mostly applies to hedge funds, but doing back office work at a large bank is not a good way to break into the buy-side.
Some people get the idea that working in trade execution support might be a good way to network with hedge funds and eventually break in.
While this logic almost makes sense on paper, in practice it’s much better to get actual experience doing trading or investing if you want to work at a hedge fund – even a small “prop shop” or smaller hedge fund would be a much better strategy for getting into SAC or Citadel one day.
And Steve Schwarzman really doesn’t care that you did IT work at a bank – so don’t expect a great reception in private equity, either.
4) Goodbye, Models And Bottles, We Hardly Knew Ye
Don’t expect too much pay in back office jobs, let alone the models and bottles you lust after (if you’re female just think of male models here).
You’ll likely be earning slightly less than what investment banking analysts make as base salary ($60K), so probably $40-50K in your first year with a very small bonus (5-15% of base salary).
It’s hard enough living in New York or London on this kind of base salary, but to barely get a bonus either… that’s like pouring salt in the wound.
5) Respect, I Never Get Any Respect Around Here
There are myths about how bankers don’t respect lawyers when working on deals, but in my experience this is rarely true; no matter what you say behind their backs, no one directly insults or disrespects lawyers.
But back office folks are directly insulted. I’ve seen MDs yell at risk management and compliance staff because of draconian restrictions, and I’ve seen even lowly Analysts get into arguments with IT staff who are told “FIX IT NOW!!!” repeatedly.
Once again, those who don’t generate money in a culture of money are not very well off.
6) It’s A 9 To 5 Job
Yes, this is a bad thing. The problem with standard (or almost standard) hours is that learning and advancement opportunities are also very limited. If you value peace of mind and a stress-free environment more than the potential to advance, then back office work might be for you.
But I’m guessing most of you don’t fall into that category.
This type of work is more appropriate if you want to have a secure, stable job with little in the way of either downside or upside.
7) The Work Itself
Finally, the work you do in the back office is almost uniformly boring and even more repetitive than spreading comps, creating pitch books and pulling all-nighters to fix broken printers.
While you could argue that investment bankers are overpaid paper pushers as well, they actually bring in revenue via deals. And at the senior levels they focus on relationship-building, which is far more interesting than monitoring employee trades.
Ok, But Is It Really That Bad?
There are a few exceptions. As mentioned above, if you are simply seeking a low-stress environment while still being able to claim that you “work in finance,” then the back office might be for you.
Another exception: internships. It’s not necessarily the end of the world if you end up in a back or middle-office role in a summer internship, but you should try to transition out as soon as possible – it’s much easier to move over as an intern than as a full-timer.
The Solution
“Ok,” you might say, “But if I can only get back or middle office roles at bulge bracket banks what should I do?”
Simple: Go smaller. It’s far superior to do banking or trading at a boutique than to do back office work at a large company.
Sure, you might not have the same exit opportunities as your friends at Morgan Stanley IBD, but you’ll still be much better off than your friends at Morgan Stanley IT.
Boutiques are still hiring, even in this market, and are often the best strategy for those who are transitioning into finance from other careers.
Holla Back…
…if you can find me a single example of someone who successfully moved from back office to front office.
In the meantime, focus on doing client-facing work anywhere you can – that’s always better than being the IT guy (or girl).
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I have an internship in Trade Clearing and Execution for a large custody bank in NYC (i.e. BNY MELLON or State Street) as rising junior (sophomore summer). I’m looking to break into IB and wonder how to best sell my experience this summer and how it will be received by interviewers.
Any advice you can give is appreciated.
Talk about how you helped them generate revenue, save money/time, or something to that effect, and how your skills might apply to real trading at a bank or even to deals (think leadership, teamwork, solving problems, etc.).
Thank you very much. Do you think this experience will be viewed favorably in the IB recruiting process considering it was my sophomore summer?
Yes it will still help somewhat
This summer (junior summer) I worked in a middle office group within the Finance division at a BB. Really want to break into IBD for full-time, but unsure as to how I should sell my summer experience since the closest thing to client interaction I had was approving trades for Sec Div, and the rest of the work was either report-based or dealing with how to better understand the collateral flows from the transactions. Was wondering if I will even get interviews given the economic environment & the fact that banks already have summers to pick from – for full disclosure, I’m from a target where banks heavily recruit and am in the 3.5-3.6 GPA range with decent ECs.
Any advice would be greatly appreciated. Thanks in advance.
Though banks do pick from their summer class for full time positions, there are slots available for peeps who didn’t intern in the summer. Yes you can get interviews. Your creds seem ok to me. I’d:
A. Focus on the bank you interned w, network, and try to land a front office role there
B. And…network w other banks. Your first task is to make it the “resume screening” cut (http://www.mergersandinquisitions.com/investment-banking-resume-university-student/) so you land an interview w the banks. Then its up to you to pitch to the interviewers. In your interview, focus on the quantitative and qualitative skills you gained in your previous experience, and WHY you want the front office role.
http://www.mergersandinquisitions.com/investment-banking-superday-interview-guide/
Thanks! This was really helpful.
I know someone who transitioned from the back office to IBD at a bulge bracket. I don’t work in the back office but I did ask him for advice on how to break into IB. He was very nice and very helpful but when I asked him exactly how he did it he played coy and said that he got ‘a lot of help’. After probing further, it turns out that his father is well connected and helped him get an interview with the CEO of the bank that he currently works for.
I just started on a collateral management team at one of the major I-banks. My internship was in equity research at a boutique, and I mainly took this job because a. it was better than unemployment b. it had a prestigious name c.I felt I could quickly leverage this experience into a front office role.
I now realize that work here is equivalent to working in a morgue, and my dreams of being in the front office may be harmed by this decision.
What is your advice? Is it better to quit ASAP or work for 6 months and network. What is the soonest possible period for me to quit without looking like an idiot for taking the job.
I’d quit if (a) I really don’t like this job (b) I really feel that this job is affecting my ability and “mood” to find another job (c) I just want to travel and focus my energies on other things
If its neither, I’d suggest you to give it some thought before quitting. You can always network internally and externally while working and find a front office job. You can also try to develop skills/knowledge that are relevant to your “dream” job while you’re employed too (unless your team requires insane hours).
Follow your gut.
I’m currently working in a middle office role at a third party administrator for hedge funds. The position is client facing, which is nice, but not very interesting. The pay is also lower end of the scale. I’m really looking to get into a career at a boutique firm’s front office. I realize that it probably isn’t too realistic at this point to have one of the large banks take interest in me as an IB candidate since I’ve been out of school for a little over a year now. Do you have any good suggestions? I really want to be in a position that matters and feels rewarding and isn’t just the daily grind of administrative work.
See everything under networking on this page – lots of case studies and stories on how to move from middle / back office to the front office: http://mergersandinquisitions.com/recruiting
Hi Brian,
I am currently working in the IT department in a BB. I have no problems with the reasons listed here except 2 and 3.
2. Business Schools – so does it mean it will be difficult to crack into top MBA programs even if you work in say front-office IT support or you are involved in algorithmic trading and such advanced IT functions (as opposed to printer troubleshooting)
3. Exit Opportunities – are they really that grim as you portray them to be? coz i have heard that many IT alumni transfer to top positions and managerial roles in tech firms such as Google, sungard, adobe etc. so wouldn`t IT roles in hedge funds also be within reach?
thanks in advance!
patrick
1. no, depends on your credentials, GMAT scores, essays etc
2. IT roles in some HFs may be within reach – again it depends on what the firms are looking for, your chemistry w the team, etc. I can’t say because I don’t know you in person but I do suggest you to network a lot
Hi M&I,
After reading this article, I can’t help but feel a certain sense of doom. I am trying to break out of course, which is why I’m in this website anyways.
I’ll keep in mind the Never say Never even if everyone is saying Never.
I majored in Chemical Engineering. GPA is considered “Second Lower Class Honors”. Worked as a production engineer for 3 months, got tired of the low pay. Left for a night-shift Call-center job (back office) in Barcap that paid twice the amount. Worked long hours 12-14 hour days. Got offered to be ‘groomed’ as a manager, saw that the “manager” role worked 15 hour days. Got married, couldn’t take the night-shift. Afer 2.5 years at Barcap, I left for Risk Management (again, back office) in a consumer bank, taking a pay cut. My responsibility includes FX trading and Equity Leverage risk management for individual investors. It’s close to 2 years now, and I have been doing some serious thinking of my career. (I REALLY REALLY hate being stuck in a cost-center.)
As opposed to a front line job at the consumer bank – sales/relationship management, I have been thinking about Advisory/Consulting, in the lines of Oil/Energy/Commodities, and in the long term, Investment Banking/Private Equity to rake in the big money.
So,
1. Should I even consider Advisory/Valuation jobs at the big 4 as a stepping stone?
2. Should I consider studying, at least take the (i know you hate it) CFA level 1 to get an idea of finance. (or would CPA be more relevant for point 1?)
An MBA is out of the question. I live in Singapore. A good MBA costs something like SGD100,000. Financially also, I can’t take a break from work. House, loans, etc etc. I’m 29 now and I really want to make the next switch a value-added jump.
Really would appreciate your advice..
1) Yes, potentially a good idea but still not the easiest thing in the world to transfer. Probably easier to move into a smaller bank or a boutique trading firm and move into a front office role there first.
2) You could do it but it’s really not relevant to trading and/or advisory/valuation. So don’t spend much time on it.
Hey Brian,
Thanks much for the insight. I will explore my options, but if you don’t mind further questions,
1. what are the roles could I explore in the boutique firms?
2. How about CPA? is it more relevant in valuation?
I agree on the CFA. Spending another $3000++ and 1.5 more years to get the full charter (and is more for personal wealth management) is really out of point. I think a few firms in Singapore are already realizing that.
From a HR perspective though – Looking for candidates with a CFA was probably the most efficient way to decide who to hire. It’s not a matter of whether the fella has good EQ or not, but rather HR covering their own asses by stating that “Hey, we interviewed the guy with the most paper, the most ‘smarts’”. But that just means that the firm has very weak HR policies.
1. analyst roles there – basically similar to analyst roles at IBD in BB just that you’ll probably exposed to different sides of the business cause boutiques are way smaller so you have more responsibilities
2. No. CFA is more relevant than CPA. You want the person w the hiring power to want you, not HR. HR just facilitates and screens people. If the person w the hiring power wants you, HR won’t have much say
Thanks very much again Brian, Nicole.
Hi Brian,
I recently completed graduation and got recruited for an ops role at a BB. Its been about 5 months here and i’m already planning to get out.
I applied elsewhere and got a chance to start trading at a prop trading firm.
Is this switch safe? Is joining a prop firm so early in your career considered risky? Or should i just take the plunge and join it and hope for the best?
Not necessarily but it depends on how good at trading you are. If you want it, why not take a risk?
Starting in January I will be working Regulatory Reporting for Merrill Lynch. This is an internship and I will be there for 6 months. Although I will only be 20 years old, I am nervous that it will not open doors into front-office roles. How should I go about leveraging this great experience?
Network like crazy and congrats on your internship!
Hi there. First of all, thanks for the site. I’m a third year law student with no previous finance experience who has (semi) broken into investment banking, in large part due to this site!
I’ve landed a middle office internship at JPMorgan this summer. It’s in their “Operations” division; my understanding is I will be providing support for the institutional asset managers.
I want to get to front office, and I have a question about one of your “exceptions” about taking middle office jobs, which was if it was an internship. I was wondering if you could elaborate on why it is easier to switch out of middle office from an internship, and provide some strategies on how to to do so. Also FYI, since I’ll be graduating this May, my employment (apparently they hired 80% of interns last year) would start in January.
Also, please let me know if you want to write anything more specific on law students breaking into finance, as I have (I think) a pretty good finance resume coming from law school with no previous experience, and an interesting cover letter. I’d be happy to share my experiences to help others in my situation.
Thanks and have a great day!
It’s easier because internships are for testing out what you like at a bank rather than committing to something for years. So you see people move around a lot. There are some good tips on how to move from middle office to front office here: http://www.mergersandinquisitions.com/middle-office-to-sales-trading/
And sure, we could definitely use more material on law – feel free to contact us here: http://www.mergersandinquisitions.com/interview-contact/
Thanks!
Hi Brian,
I’m glad to see your Resume editing service back.
1 question for you… Would you edit a back-office folk’s resume so that it’d be polished enough for the applicant to get front-office interviews?
I’m speaking from my own experience… yes I made a mistake working BO (even I had an excuse, it’s still a mistake).
Finance background. No FO experience. Been in the job for almost 2 years. Want to get out of BO asap!
Thanks
Hi Phoebe, thanks for your question. We can edit your resume, but our edits will not guarantee you a role in the front office. We can, however, spin your resume to fit what interviewers in FO are looking for. Please email us at coaching@mergersandinquisitions.com if you have other questions.
Hey (want to do IM) wondering if Portfolio Analytics Group at BlackRock (determining risk and exposure of portfolios for both PM and external clients) is a front or middle office role? The group’s based in the same office in London and has IT but also client interaction. Historically a lot of people have moved into the Portfolio Management Group(was the only route for grad hiring a few years ago). Do you think BlackRock name for IM is better or would you target a smaller AM firm for direct FO roles. Want to work in BlackRock finally. Am in my final year of undergrad with no IM interns but want to do IM in future.
I’d say more middle office
It depends on your team and circumstances. If you haven’t received any offer yet, I’d apply to both
Hey (want to do IM) wondering if Portfolio Analytics Group at BlackRock (determining risk and exposure of portfolios for both PM and external clients) is a front or middle office role? The group’s based in the same office in London and has IT but also client interaction. Historically a lot of people have moved into the Portfolio Management Group(was the only route for grad hiring a few years ago). Do you think BlackRock name for IM is better or would you target a smaller AM firm for direct FO roles. Want to work in BlackRock finally. Am in my final year of undergrad with no IM interns but want to do IM in future.
I’ve answered your question already. Please don’t post the same question more than once on the website.
Hi there,
If given the choice between a corporate actions role or a desk assistant for an investment advisor, which do you think would position me better to be a trader or investment banker? I am currently at a brokerage house in australia
Much appreciated
I don’t think it makes a big difference w the two roles if you want to be a trader/banker
Dear M&I,
Is the CFO group within BoFA considered MO or BO, providing business proformance analysis for GWIM Business.
Middle office
Hi All,
After graduating with BSc honors from a US target business school, I had to move back to Europe before I could apply for bulge bracket analyst positions.
Upon moving back to EU, I took a panic analyst job at my old employer – a premium automotive manufacturer, at their headquarters, within Group Treasury..BO. Now, my only objective is to get back on the bulge bracket track. However, I feel that I am in between a rock and a hard place with an automotive company on my resume for the past year.
Moving into FO within the autocompany might be easier than finding FO analyst entry jobs at any bank with my background. However, via connections I might pull off an MO analyst position with a bulge bracket (Credit Risk)..would this be a good move? It would be in East EU (yes, I’ve read the article about East EU!) and I would drop 50% in salary…but I would do it if I could switch to a FO position at a London based bank after.. (long shot though, I know), any thoughts?
All feedback would be appreciated!
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Hi All,
After graduating with BSc honors from a US target business school, I had to move back to Europe before I could apply for bulge bracket analyst positions.
Upon moving back to EU, I took a panic analyst job at my old employer – a premium automotive manufacturer, at their headquarters, within Group Treasury..BO. Now, my only objective is to get back on the bulge bracket track. However, I feel that I am in between a rock and a hard place with an automotive company on my resume for the past year.
Moving into FO within the autocompany might be easier than finding FO analyst entry jobs at any bank with my background. However, via connections I might pull off an MO analyst position with a bulge bracket (Credit Risk)..would this be a good move? It would be in East EU (yes, I’ve read the article about East EU!) and I would drop 50% in salary…but I would do it if I could switch to a FO position at a London based bank after.. (long shot though, I know), any thoughts?
All feedback would be appreciated!
I’d choose the job I enjoy the most. Not sure if it is that easy to move from MO to FO. Your call if you should sacrifice pay for the role.
“If the front office is the guy who’s the center of attention at a party, the back office is like your nerdy friend who organizes the parties and sets up logistics, but never gets any girls.”
Funny but its too sad to hear this cuz I work in an accounting team.T..T
Hi
I recently got a year long internship in Fixed Income Research in London, would this be considered front or back office?
Thank you
Front not exactly back
Hi
Is mortgage credit banking/underwriting for a major investment bank considered front or back office?
Thank you
I’d say front but I’m actually not quite sure
Is Public Finance Capital Markets Underwriting (IBD)considered front office?
Also do you have any advice for a student trying to transition from a bloomberg internship to an investment banking internship?
Yes
Have basics of valuation/financial modelling before working in an IB
Hi,
I have received an offer for a intern position in back office in one of the world’s biggest pension funds.
I have never had an experience in finance and I would like to eventually do Equity.
As far as I have read, back office is not the way in but with limited finance experience and lack of “ivy league” names, I felt it was somewhat a good way to approach the environment (=to get started basically).
Yes back office roles can help you get your foot in the door if you have no front office jobs on the table.
Right, that is exactly ii. I mean, I have spent the past 2-3years applying for front office roles.
I am european undergrad from a top uni in my country that is yet not a major one in Europe. I shot some attempts at bb banks in London etc, but some with the current job market and economy, some with the fact that I had never stepped into banking/financial firms before their replies were standard: “we liked your profile….bla bla….but due to high calibre standard of applicants….bla bla….we are sorry”.
My reasoning was: better start somewhere than not starting at all.
My plan is to complete this year-long commitment at that fund and then go on for a master of science, which is quite common in Europe.
in the meantime, I thought that working within the field may be good to build a network, which might prove useful later on.
Any suggestion or piece of advice?
Know how to be a master net-worker. Follow up. Build trust and genuine relationships. Build your credibility within the field. Figure out what your strengths and weaknesses are and which areas of finance you are interested in and why.