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Why I left McKinsey & Co. for buy-side giant T. Rowe Price

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T. Rowe Price is headquartered in Baltimore

Stefan Hubrich is the co-portfolio manager of T. Rowe Price’s new Multi-Strategy Total Return Fund (TMSRX) – its first foray into liquid alternatives. How did he get promoted from an equities quant analyst to the director of research in the multi-asset division and co-PM at the fund giant? Rather than go directly into asset management, he got his start in management consulting.

While getting his PhD in economics at the University of Maryland, he decided that a career in academia wasn’t for him. Upon graduation, he managed to get his foot in the door at McKinsey, where he worked for four years, earning a promotion from analyst to engagement manager.

As an analyst at McKinsey, you will be staffed to a project, and you may travel to work with that client on-site three or four days a week, essentially solving various business problems. “My work as a management consultant really does tie back to my quant investment team today, because when a client tries to figure out how they’re going to get to the next level of growth, you have to be very analytical,” Hubrich says. “Consultants are not quants, but some come from STEM backgrounds such as math and engineering in addition to an MBA.

“Management consultants have to be ruthlessly analytical and a people-person, because you’re interacting with a mid-level manager at the client company, and you have to work with that person to solve the problem,” he says. “You can’t be successful if they’re not successful, so there’s a collaborative aspect [to management consulting] that connects to our team [at T. Rowe Price].”

Hubrich says he learned a lot at McKinsey about taking a hypothesis-based approach and having the courage to speak up and share his real opinions, which he instills in his current team. However, the grueling travel schedule eventually wore on him, convincing him to shift his career aspirations from management consulting to asset management. “There were lots of meetings, gathering information, meeting people, then you’ll go back to the office to synthesize all of that, putting it on paper and updating your PowerPoint deck to be ready for the next day,” Hubrich says. “After a while, I got restless and realized that I didn’t want to do this for life – for a blend of reasons.

“The tactical personal reason that I made a change is, we had our first child, and I wanted to have a role where I didn’t have to travel as much,” he says. “I’m an in-between person as a quant and an analyst, and I was eager to build things that have a more lasting real-world impact than the world of day-to-day projects at McKinsey, where there was too much turbulence in the rush to get there. T. Rowe has deep rigorous analytical work that really matters, an investor-focused mission and a clear definition of success that’s often missing in academia or management consulting.”

From management consulting to asset management

T. Rowe Price created a unique dual-structure for the investment team of the new liquid alternatives fund, with Hubrich leading a quant team and the other co-PM – former Soros Fund Management equity analyst Richard “Rick” de los Reyes – leading a fundamental team, part of the hybrid “quantamental” trend on the buy side.

“It’s an absolute-return strategy that blends fundamental and quantitative elements – I’m a quant, my colleague Rick is a fundamental investor, so he and I complement each other,” Hubrich says. “However, I don’t actually like the juxtaposition of fundamental versus quant, because what we do is also fundamental, just in a different way.

“The key distinction is discretionary versus systematic – our team mechanizes some processes and uses a lot of data, but ultimately we buy the same stuff, we just buy it for different reasons,” he says. “The quants I need for my team are mainly STEM majors, but they need to have a decent minor in fundamental investing – I don’t hire quants that are pure stat-arb traders and wouldn’t understand what they’re actually buying, they need to be investors.”


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