I’m on the Buy side as an analyst, and have been doing so for 3+ years. I also have interaction with SS analysts, this is what I see: 1) SS associates work a 7am~7pm schedule, except in 4 out the of 52 weeks during earnings season they work from 7am til 10pm or midnight. 2) Saturday’s are rare, some choose to go in on Sunday to start the week 3) Odds of breaking into the buy side without any sell side experience is slim to none unless your dad knows a PM/analyst of the fund who’s willing to interview you. 4) IB analysts have it really tough. The pay depends on how capable the MD is at closing deals. There are analysts who do pitch books and drive deals just to see it blow up (and see zero bonus), but work the same amount of hours of an analyst who’s on a team that closes deals. 5) Buy side hours are not “lighter,” but more flexible. If your ideas are working out and the firm is making millions from your brilliant mind, go ahead and work 7hr day. If your stocks aren’t going up and you choose to waltz in at 9am and leave at 4:30pm, your comp is probably shitty and might go to zero.
Folks Carson is pretty much correct. I went from the buyside to the sell side and now back to the buyside managing money. After spending time making real money decisions on a portfolio, I can tell you a few differences from my point of view: 1. SS analyst job is to analyze companies, buy side job is to buy good companies, but more importantly pick stocks! There is a difference, and a lot of people don’t get that good companies are not often good stocks. We use them to get market insights, their ratings are not that value added. Actually I want to own a stock before they upgrade it. 2. Buyside is more entrepreneurial, there is no one telling you how to analyze your companies. Models while important, aren’t driving your business. Ten models for a company means jack sh*t if the stock keeps going down. Models don’t factor in the fact that no one is buying your thesis but you! 3. Buyside is one of the few businesses where you are given a scorecard every day. Anyone can look at my portfolio performance on a daily basis and compare it to a relevant benchmark. In this way, it can be very daunting and stressful. Everyone knows when you are sucking! Been there! Sell Side is more nebulous in that respect. 4. The problem I had with the sell side was that your industry is your silo. Your job is to look at 15 companies and know everything you can about the industry. Buyside forces you to understand how the overall market affects your portfolio. Even a buyside industry specialist is more macro than a sell sider. 5. Hours are worse on the sell side, and earnings season is a mess. On the buyside, while hours can be long, you are not constantly churning out written filler, so you can actually sit back and understand how things play out. 6. Pay is more inconsistent on the buyside. There are so many types of shops, so pay is all over the place. …just my two cents
The last two posts have put it best from my experience. 7-7 is a reasonable assumption for hours depending on your shop, your analyst, and the companies you cover.
Kevin I agree with you on all your points except number 3. I guess it depends on the type of shop. Big shops who have analysts for every friggin industry, and who have say a senior analyst covering a sector, SS would be beneficial. A lot of these folks will be career analysts at a fund company (and can make good money) so it fits. The PMs, not necessarily. Most seem to have generalist backgrounds with several years experience. I believe it boils down to the shop. Hedge funds, I would say it doesn’t matter, they just want alpha generators. They look at traders, IB’s, etc. Sounds like you may be affiliated with a mega shop, but I could be wrong…just like I was on this stock I just sold… You sound solid, so best of luck in your studies as well
It does seems like exit opportunities are pretty decent for ER. I’ve seen some go straight into their industry into senior management positions. In fact, one former Senior Analyst / MD is now on the board of directors at my firm. And of course there is the buyside and what not.
Yeah I agree with what boondocksaint said. I think comment 3 is a good point actually. I’ve seen fund managers whose portfolio is really behind the index suffer a lot of stress over it. And I’d have thought 7-7 is a reasonable stab at an average SS research day. 7-6 a lot of the time but maybe 7-10 in earnings season. The impression I get off people I know in ibanking is that the late hours are fairly constant, but I accept their hours overall may not be any worse than those in SS research. I’ve seen guys in my previous company coming in at 11am the morning after very late nights, so I guess it levels out to an extent.
One problem with SS reseach I’ve found is that you’re always technically “on call” and at the mercy of the markets. If a company you cover puts out a press release at 11pm you’re expected to see it and have something out for the morning package. It’s even worse for the analysts when they are on the road marketing.
Thanks all for your input. I hate to hijack the topic of my own forum thread, but let’s switch gears for a second: can any ex-traders or knowledgeable folks out there comment on a day in the life of a trader? What are typical career paths there? How’s pay in comparison to SS/BS ER’s? Hours? Perhaps most relevant to me, how do most traders get their start?
Traders generally have better hours and more pay than ER. However, trading can potentially be very stressful since 1) a higher % of your compensation is comprised of performance-based bonuses, and 2) you can get fired for a single mistake if it is loses a lot of money. There also doesn’t seem to be a fixed entry path for trading, as far as I have observed, anyway. Of the people I know, some are ex-quants, some are ex-sales, some clerked at exchanges, some came out of college/MBA/MFE, and a very small number used to work in middle office or other roles in the company.
Please don’t take any offense to this question. How did you guys manage to get these jobs and most importantly perform on the job without even completing your CFA? I analyze stocks on my own, and personally, the CFA is a joke compared to what actually goes into analyzing and understanding companies. My take is, if you can analyze a company properly which i believe at least those on the buyside are able to do, the CFA is like learning addition after getting A’s in calculus.
Very few people take the CFA for the knowledge. It’s mostly a label that you get to put on your resume.
FrankArabia Wrote: ------------------------------------------------------- > I analyze stocks on my own, and personally, the > CFA is a joke compared to what actually goes into > analyzing and understanding companies. My take is, > if you can analyze a company properly which i > believe at least those on the buyside are able to > do, the CFA is like learning addition after > getting A’s in calculus. Is that you Pixel? J/k. On a serious note, IMO the CFA program sells to many people around the world the hope to become a real analyst at some point, and most people never get into it. The CFAI simply takes advantage of an attractive career scenario and let even my grandma to take the tests if she wants to. Nothing wrong with that, since it’s everyone’s responsibility to assess the invididual benefits of the program.
Sell side Trader here. Came out of a state school with average grades got a back office job and realized that I was smarter than 90% of the people there. At the time back office was a great place to start as the firm took about 80% of their front office people from there. Pay was horrible hours were worse but opportunity was huge. Clerked on the NYSE for 2 yrs, clerked on the desk for 2 yrs, then got my own pad. At a major shop I would say hours are between 6 and 7 am to about 5pm. But you will be expected to entertain clients at least 4-5 times a month. Those dinners run until all hours of the night depending on who you are out with. Still have to be back @ 7am the next morning. Mid tier firms hours are more consistently 7am to 4:30. The comp @ bigger shops are usually base and a discrectionary bonus. I have seen really good guys make only 200k and seen guys make well over 1mm. The smaller shops are more commission based and again comp varies accordingly. The fact that you can be fired over one trade is nothing to sneeze at. I had a situation where I was sure I was getting fired and the bosses never even spoke to me about it. It was a very long week for me bringing a massive loss down to an acceptable one. You also need very thick skin as you are getting shit from Customers, Your salestraders, your analysts, and your bosses. When you dont perform you hear it big time because everybody else gets paid on the amount of money you bring in. The guys that I have seen really do well share some traits – Confident in themselves, thick skinned, fun to hang with, (because entertaining is so much of the job), great @ ad libbing (a customer calls and wants color on XYZ you better have something to say), and finally like everything else knowing your counterparts on the buyside. Incredibly a lot of the best guys I worked with werent very book smart. Probably couldent even read a balance sheet. What you need is to be hyper aware about all news and trends. You usually only care about the next couple of hours. (although some sell side desks encourage holding positions longer, the 4 I have worked at wanted to use capital to get orders in the door not to be a mini PM. Get out quickly if you can) Lastly I have worked @ 2 big shops (sadly both gone now) 1 tier 2 and finally now @ a startup and of all the traders a total of 2 had CFA. Its not widely recognized as helpful on the desk, although I think thats beginning to change as the buyside traders get smarter they are demanding that their counterparts do also.
dmnyc Wrote: ------------------------------------------------------- > Working in SS Equity Research is hands down the > worst job in finance; the hours and work-life > balance are horrific and you are easily > replaceable as most view your skill set as a cost > ctr > > Really think twice before going into SS Equity > Research - i know many ppl that regret making that > move Exaggeration. Work-life balance is okay with work weeks typically being 7 to 7. Earnings, depending on how many companies are reporting on the same day, are 6 to 12. If you’re good at your job, you are definitely not replaceable as it typically takes 6 months minimum to get up to speed on a sector.
NJLVLIII Wrote: ------------------------------------------------------- > Sell side Trader here. Came out of a state school > with average grades got a back office job and > realized that I was smarter than 90% of the people > there. At the time back office was a great place > to start as the firm took about 80% of their front > office people from there. Pay was horrible hours > were worse but opportunity was huge. Clerked on > the NYSE for 2 yrs, clerked on the desk for 2 yrs, > then got my own pad. > > At a major shop I would say hours are between 6 > and 7 am to about 5pm. But you will be expected > to entertain clients at least 4-5 times a month. > Those dinners run until all hours of the night > depending on who you are out with. Still have to > be back @ 7am the next morning. > > Mid tier firms hours are more consistently 7am to > 4:30. The comp @ bigger shops are usually base > and a discrectionary bonus. I have seen really > good guys make only 200k and seen guys make well > over 1mm. > > The smaller shops are more commission based and > again comp varies accordingly. The fact that you > can be fired over one trade is nothing to sneeze > at. I had a situation where I was sure I was > getting fired and the bosses never even spoke to > me about it. It was a very long week for me > bringing a massive loss down to an acceptable one. > > > You also need very thick skin as you are getting > shit from Customers, Your salestraders, your > analysts, and your bosses. When you dont perform > you hear it big time because everybody else gets > paid on the amount of money you bring in. > > The guys that I have seen really do well share > some traits – Confident in themselves, thick > skinned, fun to hang with, (because entertaining > is so much of the job), great @ ad libbing (a > customer calls and wants color on XYZ you better > have something to say), and finally like > everything else knowing your counterparts on the > buyside. > > Incredibly a lot of the best guys I worked with > werent very book smart. Probably couldent even > read a balance sheet. What you need is to be > hyper aware about all news and trends. You > usually only care about the next couple of hours. > (although some sell side desks encourage holding > positions longer, the 4 I have worked at wanted to > use capital to get orders in the door not to be a > mini PM. Get out quickly if you can) Lastly I > have worked @ 2 big shops (sadly both gone now) 1 > tier 2 and finally now @ a startup and of all the > traders a total of 2 had CFA. Its not widely > recognized as helpful on the desk, although I > think thats beginning to change as the buyside > traders get smarter they are demanding that their > counterparts do also. Thanks for this post, very informative
I agree with storko, that was a great post, thank you NJLVLIII for the effort you put into your response.
CFA seems to me to be just a broad stream of generalized knowledge, similar to what a ugrad finance/accounting + grad finance major does. But apparently you specialize in real life…
FrankArabia Wrote: ------------------------------------------------------- > Please don’t take any offense to this question. > > How did you guys manage to get these jobs and most > importantly perform on the job without even > completing your CFA? > I completed mine. The enrollment and the passage of the first 2 levels got me an interview. I got the job cause I interviewed well and accepted a salary that was less than entry level accounts receivables clerk at common companies.
nuppal Wrote: ------------------------------------------------------- > The diary entry below represents a typical day for > an associate biotechnology equity analyst on the > traditional sell-side, whether you are working for > a bulge-bracket investment bank or a mid-tier > boutique. What I hope you gain from reading it is As a biotech analyst do you have any medical or science background or purely finance? Do you utilize market consultants to truly understand the conversations you have w/ the various doctors and scientists you may speak with? You mentioned you had a lunch meeting w/ a hedge fund analyst. was this a client? I always assumed research was non-client facing.
I know pharmaceutical and most likely biotech analysts usually have an MD or Phd in their respective fields. Medical device analysts do not need to.