Rethinking Progression: The Case for Lateral Moves in a Dynamic Investment Market

A successful investment career was once about getting your feet under the desk at a prestigious fund and then rising through its ranks. Today, your route to reward and fulfilment could also be through a series of strategic sideways moves. With new funds, new strategies and new cultures springing up in new locations all the time, ambition comes in many guises. Here, we share our advice on using the buoyant lateral hiring market to forge your unique path to success.

Would you walk away from millions of pounds of carry to join another investment fund at the same seniority level?

We recently advised a Partner on an important lateral career move that posed this dilemma precisely. Over several months, we coached him to uncover his motivations for pursuing a new direction. Through frequent walking meetings and detailed phone discussions, we helped him define his vision for success – what it looked like, the impact he wanted and how it connected with his personal values.

It’s the kind of move that might seem reckless or counter-productive to some. The fact that the candidate seized the opportunity shows the importance of knowing what you truly want from your career so that you can move forwards with courage and conviction.

There are more lateral opportunities in the market

Almost one in four buy-side roles we have secured for candidates over the last three years have been lateral moves.

Though US investment professionals have long embraced the sideways step as a strategy for going up in the world on their own terms, the European sector has traditionally favoured the internal hierarchical approach. However, this began to change during the pandemic after lockdowns disrupted in-person training and mentorship for junior bankers, impacting their proficiency and forcing funds to look outward to fill skill gaps. In the pandemic boom, funds hired massive associate classes to meet surging deal activity, creating a large cohort that is now competing for promotion opportunities. With their proven track records, these experienced associates make attractive lateral hires, however, and their mobility has created a dynamic marketplace across the globe. We’re now seeing a strong uptick in demand from our clients for skilled professionals with at least two years of buy-side experience.

In tandem, European firms are increasingly adopting the career development model favoured in the US that promotes only the very highest performers, forcing even strong players to look outward. A top private equity firm might now hire four associates in their class but earmark only two seats for long-term promotion, for example.

While this creates less certainty for professionals, it also creates vast opportunities to grow skills, gain autonomy, improve deal exposure and access better compensation by stepping sideways. The lateral hiring market is gaining momentum, and a smart move could be your chance to align with a fund that offers a stronger cultural and strategic fit.

Don’t just wait for opportunities – create them

When was the last time you thought deeply about what drives you? How happy are you in your current seat, and what’s in the marketplace that would be worth leaving for should the chance arise?

Few investors tell us they do this kind of soul-searching proactively. When we check in with candidates sometime after helping them secure their first investment role, most assume we’re reaching out with specific opportunities. But we’re more interested in hearing how their investment thesis and motivations are developing so that they can spot – and even create – great opportunities when the time is right.

An optimal lateral move should feel less like jumping ship and more like commissioning your own vessel. A proactive attitude will impress funds. They may be more wary if they sense you’re leaving before you’re pushed.

Now that you have some buy-side experience, no doubt you have more nuanced motivations than you did at entry level. Would you like more deal exposure? Greater autonomy? The chance to specialise? What do you think of your fund’s investment thesis and cultural environment? Is your compensation structure working for you or locking you into a career with too many compromises? Which geography makes the most sense for you and your family?

A senior search partner can help you flesh out these push-pull factors. By surfacing them in good time, you’re more likely to find yourself in conversation with your dream team, either by reacting fast to emerging opportunities or making them happen. You’re also more likely to speak with an infectious enthusiasm and conviction at those meetings.

Prepare for an unpredictable hiring experience

When you made the leap from banking or consulting to your first buy-side role, you probably followed a well-trodden process of application, shortlist, interviews and selection within pre-agreed timelines.

At a senior level, recruitment unfolds more organically and unpredictably.

A fund may want to snap you up within weeks to meet its urgent needs. Alternatively, hiring managers might meet you for informal chats over coffee for six months before inviting you for a formal interview.

Opportunities are just as likely to come via word of mouth and networks, but that doesn’t mean they will tick your boxes or win you a way in. Your friend who works for a desirable fund may have skewed insider knowledge due to their limited interactions. That head-hunter pushing you towards a perfect fit might not know what that means to you.

This is where it helps to have a powerful ally and advisor who can see the bigger picture. A specialist senior search partner will have a balanced view that spans the entire market. They can provide crucial intelligence, from salary benchmarks to team cultures, so that you don’t have awkward conversations with firms that are the wrong fit.

Suppose you’re a top-tier banker regretting a move to a fund that has damaged rather than enhanced your career credibility. A recruitment partner who understands your professional history and has backed you since your entry-level days can be a formidable advocate on your behalf, explaining to hiring managers why your CV should still be in the pile. They can also alleviate the legwork of searching for senior roles independently by leveraging their extensive knowledge and connections to help you target the best options.