Just curious, where do those of you in buy or sell side research think the industry will end up in two, three, five, ten years from now? Ya’ll gonna stick around?
I can’t decide if the “its going to be fine” impulse is naive or if I should heed the notion that it would be best to make some sacrifices and flee research for the greener pastures of some other industry / other part of finance before the winds of passive management, declining trading volume and regulation torch what’s left of my profession. In some ways I’m lucky - I’ve been working as an associate for a very good analyst in a mid-to-large bank that’s actually taking market share so we haven’t seen mass firings like (rumor has it) some bulge brackets and many second tier houses have (damn, how many brokerages are there nowadays anyway?). I was paid 150k last year at the age of 27 (great). But friends in other industries pull down 200+, and I suspect they work fewer than my 70 weekly hours and probably get a salary increase year to year (at my bank, 90% of associates were given flat base for 2017). They probably are gaining transferable skills beyond knowing everything about X industry or how to manage a likely-index-underperforming equity book, and the partnerships / promotions they might one day obtain could be better than the declining position of senior xxx sector analyst at xxx huge bank. I realize I could probably get a hedge fund to hire me, but ive seen so many clients blown out (and how much were they really getting paid anyway, for all the stress and lack of security) that it doesn’t have the sheen it did when I was starry eyed and ignorant. I’m tempted to talk with my boss about this, but his perspective is biased (he makes a zillion dollars and it all worked out for him, surely will for me too, etc etc etc) and I don’t want him to think more than he probably already does about the possibility of losing his young soldier.
Buy side I think will stay, sell side I would flee. The sooner the better, start working in advance because it’s a hard transition to make for a lot of people.
Hey man, you’re definitely not alone here. I left over a year ago due to the same negative outlook on the space as you highlighted. In addition to that, I also felt that the quality of our work has collectively gone down over the years with a lot of it comprising simple maintenance (i.e. earnings notes that very few people actually care about; client “clicks/reads” were lowest in this area). I got the chance to work for a buyside shop on the side while helping my family office last year and (in my experience) the way things are viewed is quite different.
That all said, $150k is quite good for ER at 27. Heck I would say most of the people I knew were barely hitting $200k in their early 30’s (drastic change from just 5-10 years ago). I would consider a few options: 1) stay on the sell-side and build corporate relationships to see if you can work at one of your covered companies; 2) move to the buyside (still has a mixed outlook, but better than SS); or 3) do an MBA to switch into something else (though this is probably not necessary IMO).
Per discussing this with your senior, only you know the quality of the relationship. Once you do say this to him though, he will be default think about contingency plans. Most seniors run through many associates so he should be used to it, but I’ve found their responses can be mixed.
If you’re only getting paid $150k, I doubt it’s worth sticking around given the outlook, and depending on your qualifications. This range is what a good MBA graduate will get paid in most industries, so unless there is imminent upside in your job, it doesn’t seem like it’s worth the stress and seemingly limited growth prospects. It depends on your credentials of course, and what other opportunities are open to you.
The main reason that there hasn’t been more of a mass exodus in finance is that people are for the most part, still paid a lot - much more than they would earn in another industry. So if you’re not on the “schedule” and you have other choices, I don’t know if it is worth hanging around.
This is something I’ve been pondering about. It seems like both sell side and buy side are under extreme pressure. It’s tough seeing funds fold each year and Vanguard start to lower the bar for fees.
It seems that if you get lucky and pick the secular growth career, that is the home run. I just have trouble thinking what that could possibly be, except for coding and other things related to the future arrival of our new robot overlords. So many good jobs today seem at real risk over a 10 year time frame given the growth of computing.
I definitely wouldn’t do an MBA; if I were to go back to school it’d be for law where at least personally I think my returns would be higher.
I think being Mr huge large cap stock fund manager would be a wonderful job but I’m not sure how many years and how many needle-eyes I’d have to cross through to make it at a long only (and have no idea what the recruitment, career track and comp landscape looks like there)
I wasn’t saying you should get an MBA. I’m saying that $150k is a relatively normal wage for a lot of positions. In general, people sacrifice a lot in lifestyle or sense of accomplishment to work in finance, due to the high compensation. So, if the pay is no longer outsized, there is less reason to continue on your current career trajectory.
However, I don’t know what your alternatives are, when you will be up for promotion, or other details, so it’s hard to say if this is good or bad given your position.
Ah, that makes sense. Apologies for misinterpreting.
My options are to continue in research and hope that I can make a good go of it (possible - and at least near term I have leverage (they need me) as my teammate is leaving and my boss has spent months mowing through dozens of innocent applicants whose small incompetencies have soured things for him), try to move to the buyside, try for P/E (I don’t think I have the salesy drive for that), or do what my twin did and go to law school.
Re - what is a “zillion” - somewhere between $1 and $2 million, I would guess. I don’t know anything other than that it is seven digits. We are ranked near the top of the firm by the sales staff.
Depends on the firm I guess, some of them are expanding actually with lots of initiation work, but I generally agree many positions nowadays consist of maintaining existing models, morning calls, etc. which can get boring very quickly.
To earn those kind of bucks, especially non-BB, is really good. That said, I suspect a good chunk of that is equity with significant claw-back provisions should he leave (this is how it was setup at the shops I worked at). If you have a decent shot a taking his role in say 5-10 years, then you might want to stick around.
Classic that he’s mowed through dozens of applicants. I’ve seen this happen all too often in which the senior spends little time actually nurturing talent. Why management allows this to continue given the costs of hiring someone is beyond me.
Lastly, it can be done, but breaking into PE for ER analysts is quite hard because you have no transactional experience. At least that’s how it is viewed, which I think is somewhat short sighted on HR/hiring manager’s part. It’s like those who say CFA has no value in PE/IB; it actually should IMO, but it doesn’t because, well that’s just the way it is.
I have a few friends in corporate law and even that field is under significant pressure. with that small sample size (NYC) it seems you could make 50k more than your current pay assuming you’re top tier material after a few years, but that’s after 4 years of school (+150k in debt? not sure what Law costs in USA). You’ll graduate at age 32 and have to grind for three years at starting pay and hope you get large raises by that time. Seems a bit inefficient unless you love the law.