Life after Equity Research

stylemog – I suppose you’re right - getting coverage after four years is quick, but not unrealistically so. Basically, I was just wondering why someone would spend four years as an associate in research without moving on to something else, if they didn’t have realistic prospects of getting promoted within the firm. If you’re an associate for that long, it’s not like your payscale is changing a whole lot, and if you’re not moving in the direction of coverage responsibilities on the sell-side after four years, it might not be that likely that it’ll ever happen. Getting up the learning curve in research is not that challenging - I think you can learn much of what you need to learn within the first two or three years, and after that it’s more about managing relationships with clients and spending more time liaising with the sales desk and traders. That’s why a lot of people will leave for the buy-side, industry, or a smaller sell-side shop where they can take on coverage.
Granted, this is just my opinion about sell-side research in general, but I’ve also seen most turnover at the 2-3 year mark and the people who left at that time would tend to agree with my assessment that being in research for 4+ years in a junior role may not be providing meaningful benefits to your career progression prospects.
Does this help clarify? What are your thoughts?
 
pimp Wrote:
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> I have co-coverage, which means my name appears on
> the front of the report instead of the back, but
> that doesn’t mean the pay gets better. I know
> people here that have been doing the same grind
> for 5 years with no promotion or primary coverage.
> Research has been dying a slow death each year
> from what I have experienced - and because of
> that, senior analysts are reluctant to give up
> their powers in terms of granting primary
> coverage, etc.
Doesn’t your name appear on the cover as long as you have all your licenses (7/63/86/87)? Or is this different?
Anyway, my exact question was, what is keeping those people there for 5 years? Why are they not moving along? Are they holding out hope that they will get promoted? (perhaps unlikely because the firm that I think you work at is on a hiring freeze and has also been cutting…)
Just curious what people’s rationale is for sticking around. I guess the obvious reason is that there aren’t that many other jobs for people to go to right now, and it’s better to be employed than unemployed. This is by no means a criticism of people sticking around in research - obviously there is a ton of stuff you can learn and it really sets an excellent groundwork for future jobs in finance, and I am very grateful for my experiences in equity research. However, simultaneously I do not understand why people stay in a junior role for 5+ years in any division of a bank, unless there was a very clearly defined progression for advancement (as is the case with investment banking, but certainly not so with research because the structure of the business is quite different – people with 0-7 years of experence or something like that can all be called “associates’ by title).
 
Anyone care to give me some insight into total comp numbers . pimp , buddha ??
 
Bonus is about 40% of Base, and Base is about 2.5 times bonus.
 
numi
everything else you said mirrors what i’ve seen at my shop, i just thought the 4 yrs comment was a bit odd.
yes it does seem like people do 1-3 yrs and then it’s off to buy-side nirvana or whatever… and i agree that there isn’t a whole lot of incremental value in staying beyond that if you’re not on sr track; at least to me there isn’t.
to answer your question there are a surprising number of “career associates” around here. usually these associates are attached to top teams with very well established senior analysts that are very well entrenched.
it comes down to a better work-life balance at the expense of earnings upside. as you said, getting up the curve in sell-side research isn’t all that hard; maintenance work ex-earnings season can be a breeze. launching new coverage is much more stressful and fledgling seniors are the first ones to get cut. if you’re the number one associate working under a top senior who’s been at the firm many years you have a lot more job security.
i’m not saying these trade-offs would make sense to you, but i think that’s the thought process.
 
sorry, i didn’t mean to say there was a hard-and-fast 4-year rule. i just used “4 years” because pimp said he had been at his firm for 4 years. maybe i shouldn’t have used that as an example.
i agree with your observation re: “career associates”; there were some at the shops i’ve worked at too. and i guess it’s understandable, because sometimes if you’re a little bit older and have a family to support or are just comfortable doing what you’re doing, being on the sell-side can be ok. the associate role is a relatively low-risk job, and i often feel like the associate gets to share in the glory of the good calls but is also relatively sheltered from the downside and blame associated with the bad calls. earnings, initiations and conferences can be a grind, but overall i think the associate role becomes relatively routine and perfunctory over time, assuming they aren’t evolving into more of an analyst role which tends to be more oriented towards the selling and marketing of ideas. i also agree with you on the point of job security – definitely more of this in sell-side research than on the buy-side.
as for myself, i didn’t see myself being a sell-side senior analyst and was also worried about the future of equity research. i also felt i outgrew the associate role, and wasn’t excited by the new skills i was acquiring. specifically, increased interaction with the salespeople wasn’t all that inspiring or educational to me, and the thought of having to spend time servicing certain idiotic clients in order to grow the firm’s bottom line, which can be rather opaque to a research team, wasn’t very appetizing. so that’s when i prepared myself to move to the buy-side, and in a matter of months, i accomplished that goal. i’m looking forward to learning a lot of new skills, but there are also a lot of good skills that i acquired in research that i’m bringing along with me.
so, “pimp,” where do you fall on the “spectrum” of associates?
 
Numi -
I did close to 3 years of quantitative research, and a year of fundamental research. I’ve spent another 4 years in a business development capacity at the same firm. I’d really like to head over to the buy-side as a generalist research analyst - following one sector is like dating one woman. It gets too boring after a while. I enjoyed my role in quant research as I followed global equities across all GICS sectors, but I also felt that I needed deep understanding of fundamentals. As the learning curve in fundamental research is very steep, I’ve learned all that I needed to but will probably stick around until after completing L3 to improve my marketability.
 
pimp… out of curiosity why did you switch from quant research to fundamental?
was the quant research attached to a strategy team?
 
Quant Research was fun and I got to travel the world meeting clients, but I felt that something was missing. I could explain to clients what countries/sectors/stocks look attractive, but I couldn’t explain the fundamental underpinnings to back up the valuations and rankings. Now that I am in a fundamental research role on the sell-side, I feel that my focus is too narrow by following one sector. It’s been a great learning experience and has given me valuable exposure to company management giving me the confidence I need to ask intelligent questions, etc. But I think my passion lies with more number crunching and I do miss looking at a variety of sectors. Hoping to hop to the buy-side as a generalist and make my way into portfolio management after x number of years.
 
taz722 Wrote:
——————————————————-
> Anyone care to give me some insight into total
> comp numbers . pimp , buddha ??
bonus is around 20% of base for me maybe next year with a promotion to jr. analyst i could be looking at 40-50%.
Yes it is probably easier to make senior analyst/even PM and siginificantly increase bonus than it is to be a lead analyst, but at the moment I make less than SS associates. Which was my original point.
The way i see it the best deal would be to start in SS and jump to the bs somewhere down the road as the salaries go through a inflection point
 
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