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Equity Research vs. Investment Banking (both done at BB)

Hi guys,

After having a couple of classmates who have gone into investment banking and equity research, I have heard a few anecdotal tales of what the work-life balance is like for both.

But since we’re all still in college, we don’t really have an idea of what to expect in terms of the long-term career.

I want to maximize my earnings, but obviously still have a life outside of work.

The idea of “making deals” in M&A seems pretty cool to me, but I am sure that even if I do make it into a good IBD offer, I will be over a decade away from actually having any tangible impact on company growth.

Equity Research also seems intriguing to me. I like the idea of concentrating on a sector, perusing through a selection of companies, and trying to select which one will have a positive future. 

The truth is, all of my worrying for the future is useless because I myself have yet to score an internship. However, I’ve noticed among my class that the idea of maximizing earnings is a point of comparison and honor for many of my friends. I obviously want to be able to compete with them, even though both careers offer a very good compensation (the best in the world, probably for any job).

So, I was wondering if you could help me:

1. How much more of a work-life balance do ER analysts have over the course of a career compared to their IBD counters?

2. Is the better work-life balance in ER worth taking, considering the lower compensation compared to IBD?

3. How much can I make in either careers as an “average analyst” or a “average” banker at an elite BB in my: 20’s, 30’s, 40’s, and 50’s?

4. Life time earnings?

5. For PE and HF’s, which career has the best track record for exit opportunities and getting selected for an MBA?

More importantly, what are you interested in? If it is following public equities and working in a traditional AM role, then ER. If it is working in private companies, working on deals, or working in alternative AM like hedge funds, IB is better.

IB will lead to more money and better exit opps. ER will give you a better work life balance. Computing lifetime earnings is not relevant for you at this point in time. Either choice is better than nothing.

That’s the thing. I’m a pretty sociable guy and I enjoy the idea of “making deals”–as vague as that sounds. But ER also interests me. 

In terms of work-life balance: I’m more than willing to bust my hump in my 20’s and early 30;s (22-33/34) if it will one day lead to an easier gig with better hours and more money, and potentially a 7 figure annual paycheck. I guess that route would lead me to go IBD–> PE. But that’s easier said than done. Also, I’ve heard that the PE lifestyle is a little bit easier, but not by much, compared to investment banking and that it’s very difficult to maintain a high 7 figure or 8 figure compensation. Looking through some other websites, supposed veterans have also said that the hours don’t really change by much in IB and most MDs work just as hard s their analysts some times.

I’m going to go out on a limb here and say that ER is probably also not a 45 hour gig ever in a whole career. 

What I would be comfortable with in terms of work-life: Working very hard from age 22-34 (doing 60-100 hrs/wk), easing up a bit as I hit 34-45 (30-50 hrs/wk), and then retiring by 50 with a large retirement fund and enough to pass on to any children and wife that I may have.

What I would be comfortable with in terms of actual work: Working on deals between up and rising companies and brushing shoulders with tech executives by the time I’m in my 30’s, or doing technical analysis and allocating funds based on my acumen and foresight that I gained through years of practice in seeing which companies are poised to succeed. If I take the latter route, I’d ideally want to start my own fund by the time I’m in my mid 40’s and keep it going for 20 years while working at a very relaxed pace (30-40 hrs/wk).

Again, I know I’m getting ahead of myself. But this is what I want.

Is it possible to break 7 figures in either career at a BB by age 35?

Also, I’ve heard that many people in the industry–even at the top groups, hit a ceiling eventually. 

For MM: IB and ER will usually stay anywhere from 300-1mil.

For BB: IB and ER will usually hit 3-7 mil (IB) and 1-3 mil (ER buyside + sellside). But many are stuck at lower comp levels and routinely make 500-1000k. 

Is this true?

/

OP, I am sure the local Subway will have exciting career opportunities for you. Exit opps include Hardee’s, Burger King, and maaaaybe if you’re top 3 - Chipotle.

Lol man. wth. I tried my best not to come off as overly conceited. I studied hard and made it into a top 20 school. Everyone around me is talking about money and careers and I just wanted some advice before I get into something. 

The figures I were quoting were what I heard from classmates. I was hoping someone here could give me some insight. 

Can I just ask one question though:

I get what you’re saying, but I can’t stop running the numbers through my head. 

The competition at my school is incredibly fierce for these positions. These kids are going in with the mentality that they will be on top. With the way that Wall Street compensation has been focused on by the media in recent years, I honestly don’t know what to expect, other than that I will be working very hard and being compensated well. 

But I’m going to assume that the competitiveness among these people never really goes away. It persists into their careers and that’s why everyone fights for their fair share in the bonus pool. 

Does every person that receives a FO offer from an elite bank make it into the 7-figure ranks by middle-age? 

Stop trolling with stupid questions.

I don’t think that’s a stupid question.

Ask the same questions on wallstoasis - greater probability that someone will will answer.

A while ago I wrote a comment (normal, non-offensive one) in NBA thread and one guy literally went berserk.

I guess it’s that time of the year.

Thanks Roger. I don’t think it’s a stupid or arrogant question either. I mean these careers are open to anyone who has the work ethic and drive to go get them. I just wanted to know what I was getting myself into.

I’ll take your advice.

helpmefortheloveofgod wrote:

Does every person that receives a FO offer from an elite bank make it into the 7-figure ranks by middle-age? 

No. A few months back some kid posted here with these rigid salary expectations. Take whatever those are, and reduce them drastically. There are no guarantees, especially once you are at higher levels the majority of your pay would be performance based

'A flute with no holes, is not a flute. And a donut with no hole, is a danish'

Yayyywork wrote:

helpmefortheloveofgod wrote:

Does every person that receives a FO offer from an elite bank make it into the 7-figure ranks by middle-age? 

No. A few months back some kid posted here with these rigid salary expectations. Take whatever those are, and reduce them drastically. There are no guarantees, especially once you are at higher levels the majority of your pay would be performance based


You mean that immature troll with a pharmacist license that thought he was going to make 500k in like 3 years from his first day in ER?

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

itera wrote:
 You mean that immature troll with a pharmacist license that thought he was going to make 500k in like 3 years from his first day in ER?

Thats the one. I recall him being positive that he would be making 5-10mm after 10 years in ER. That guy was a hoot

'A flute with no holes, is not a flute. And a donut with no hole, is a danish'

Wow. I just saw that thread. He sure got annoying towards the end… I guess an advanced degree really got to his head?

That being said, I do notice that in the biotech sector especially there are a lot of phd and pharm-d hires. Just curious, is the ER structure completely fluid from associate–> analyst? I’m assuming since it’s not like investment banking, associates basically just reach a level of experience where they are ready to be respected by their peers and given more responsiblity, right?

Do these advanced degree hires get hired in at the analyst level usually? Because I noticed on linkedin that there are a few that are hired after graduation at the “associate analyst” level. But one guy has his description as an analyst in the info bar near his name. Does that mean that it’s possible to get hired at a more advanced level if you start after finishing some graduate degree?

helpmefortheloveofgod wrote:

Also, I’ve heard that many people in the industry–even at the top groups, hit a ceiling eventually. 

For MM: IB and ER will usually stay anywhere from 300-1mil.

For BB: IB and ER will usually hit 3-7 mil (IB) and 1-3 mil (ER buyside + sellside). But many are stuck at lower comp levels and routinely make 500-1000k. 

Is this true?

yes very true.

"You want a quote? Haven’t I written enough already???"

RIP

Ok..I’m not THAT crazy. But I won’t lie…I would really like a 7 figure paycheck at some point in my career. I mean, who wouldn’t?

An acquaintance of mine who works at Jefferies said that his boss cleared just north of 3 mil, but I think he was in his mid-late 40s. I don’t want to say that I’m all in it for the money, but with all the industry shrinking and changing and news of a recession, I feel like those numbers are a thing of the past for most. 

Still, most FO roles will still be well compensated–just not as highly as before. 

3 mill in research?? The days of multi million dollar analysts are very few now. Top top top research guys can make maybe a few million a year,but that’s super rare.

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

Is that for buyside also? And is that for BB in NYC? 

I mean 3 million is a ton of cash. Are “hotter” sectors (pharma/lifesiences) a better sector to cover in that case?

I mean BB analysts have to be getting good amounts. Maybe not the 5mil+ that idiot in the other thread wanted, but still.

OP, do you have a PharmD?

helpmefortheloveofgod wrote:

Ok..I’m not THAT crazy. But I won’t lie…I would really like a 7 figure paycheck at some point in my career. I mean, who wouldn’t?

An acquaintance of mine who works at Jefferies said that his boss cleared just north of 3 mil, but I think he was in his mid-late 40s. I don’t want to say that I’m all in it for the money, but with all the industry shrinking and changing and news of a recession, I feel like those numbers are a thing of the past for most. 

Still, most FO roles will still be well compensated–just not as highly as before. 

3 mil thats like below avg at that level. your buddy and his boss both hacksaw.

you should prob stop associating with him at this point as he will only bring your future earning potential down.

you dont get rich in this business being friends with losers.

honestly if you are a real bsd, you will pick up the phone and call your buddies boss and tell him to fire that mediocre zip.

follow up with an email to the boss with a copy of your resume, give him your start date and your ideal salary.

then text your ex-friend and tell him “youre welcome, you will  thank me one day”

at this point his gf is fair game so let her know the shmuck just got fired and you are coming over in a few hours with some mad dog and m@gnums

"You want a quote? Haven’t I written enough already???"

RIP

No, I’m doubling in Bio and Econ and have been guaranteed admission by a professor into a 1 year M.S. for Biomedical Engineering. 

LOL igor. I wish I could..I wish I could. That man is currently slaying left and right. I WISH I was him (my friend I mean).

No, but seriously. I’ve looked on wso and they say that the current packages for associates ranges in the 140-160 level all-in at BB (NYC). That’s why I was wondering earlier if packages are really that sweet. I’m not making it up. I could post the link for you if you want.

Just a disclaimer: All jokes aside, I know I’ll be well compensated if I ever make it to a BB. I just wanted to know if I’ll ever have the honor of saying that I got to “that level”. 

^ Serious note: My experience with WSO is that they are mainly banker wannabe types. I know a few people at my school who are still students but pose as experts or people with industry experience. Don’t listen to the bull they say. Some people like Palantir, Ohai and few others actually know what they are talking about. I am confident you cannot make the same argument for WSO people. I myself don’t want to have a career in ER/banking and prefer to follow the quant route but I still benefit from the hindsight of a few people here. Avoid WSO , if you haven’t already check out mergersandinquisitions.com . 

I’ve looked through mergersandinquisitions, but I think their website is a bit outdated. 

As far as wso is concerned, I see your point. I got that vibe as well. But their is a consistency to some of the answers that makes it hard to assume they are just making it up.

Quants: Are those involved in risk and strategy for allocating funds? Are you talking about algo trading?

In terms of work life balance, an ER analyst definitely wins from what I’ve seen. Besides the travel, successful analysts spend a lot of time socializing and some having their associates do the modeling, etc. As long as you have those buyside relationships, you don’t have to work long hours. Market hours arent that bad and don’t have the stress of actual stock performance

But I thought once you transition to the buy-side: the hours go down, but the stress goes up because your stock picks actually start to matter. 

By “win”–what do you mean? ~50-60 hours/wk at the senior level? Or more like 40?

helpmefortheloveofgod wrote:

That’s the thing. I’m a pretty sociable guy and I enjoy the idea of “making deals”–as vague as that sounds. But ER also interests me. 

In terms of work-life balance: I’m more than willing to bust my hump in my 20’s and early 30;s (22-33/34) if it will one day lead to an easier gig with better hours and more money, and potentially a 7 figure annual paycheck. I guess that route would lead me to go IBD–> PE. But that’s easier said than done. Also, I’ve heard that the PE lifestyle is a little bit easier, but not by much, compared to investment banking and that it’s very difficult to maintain a high 7 figure or 8 figure compensation. Looking through some other websites, supposed veterans have also said that the hours don’t really change by much in IB and most MDs work just as hard s their analysts some times.

I’m going to go out on a limb here and say that ER is probably also not a 45 hour gig ever in a whole career. 

What I would be comfortable with in terms of work-life: Working very hard from age 22-34 (doing 60-100 hrs/wk), easing up a bit as I hit 34-45 (30-50 hrs/wk), and then retiring by 50 with a large retirement fund and enough to pass on to any children and wife that I may have.

What I would be comfortable with in terms of actual work: Working on deals between up and rising companies and brushing shoulders with tech executives by the time I’m in my 30’s, or doing technical analysis and allocating funds based on my acumen and foresight that I gained through years of practice in seeing which companies are poised to succeed. If I take the latter route, I’d ideally want to start my own fund by the time I’m in my mid 40’s and keep it going for 20 years while working at a very relaxed pace (30-40 hrs/wk).

Again, I know I’m getting ahead of myself. But this is what I want.

Ah man, this is classic.  These “map out my entire future” topics just kill me.  At 34 you want to be working 30 hours a week and clearing 8 figures?

Great.  Love this place.

Hahahahahaha.

30 hrs a week at a bank? If you look good in high heels, maybe you can score a gig at the front desk.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

ok ok hotshot. A lot of young guys want to have their entire lives mapped out in front of them. I’d love to be working 30 hrs/wk for a 7 figure comp. But I know it’s not likely. I was just wondering how things will be if I get a BB FO offer as a sell-side ER associate. 

To be completely honest with you, the guys as WSO are laying down data points for IB and ER bonuses this year and what I’ve said regarding pay is not falsehood. It looks like mid-level associates in ER can make upwards of 200-300k/yr and that’s in your mid-late 20’s. So I was just wondering what happens as you keep climbing up.