there've been a lot of changes in sell-side research, specifically in that most firms are moving to different business models in order to generate more revenue. unbundling is one example of that; some firms are moving to independent P&L's for each franchise/research team, others might be focused on building out the relationship between research and retail trading (as opposed to just institutional), etc.
i have worked at one bulge bracket shop and recently accepted a position at another. there's definitely been quite a bit of transformation at both firms as they try to figure out how to make research more profitable, but it's not like all firms are cutting research -- some are actually ramping up because their research IS considered to be value-added. it can be unsettling to some people, but i've been in research long enough to endure the "changes," i suppose. while it might not be the most stable environment, i do feel like i'm part of a firm that's committed to research right now, but more importantly, the skills one learns in research (modeling, writing, client interaction and marketing) are still highly coveted and can be levered in many other fields, including buy-side work. why else do you think so many people want to get into it?
furthermore, the fact remains that while it is uncertain what the future of sell-side research will be, i think the main reason so many people still want to get into it is because the sell-side research skill set will always be of use. people will always need investment advice so even if sell-side research doesn't exist in the same form a few years from now as it does today, the skill set will still be very versatile.
thefork, with your respect to your question about "starting out," once you're a senior analyst, you're not exactly "starting out" per se. in a manner of speaking, if you're at a bulge bracket shop and you're covering stocks, you've paid your dues already and shown that you can handle those responsibilities. in addition, the problem with your line of thinking is that research, like many jobs on wall street, is not tied to their base pay -- it's the bonuses that make all the difference. senior analysts may make $150-175K base, but they can still make several multiples of that in bonuses.
i hope my post provides you with some useful insights regarding this matter. you propose a good question, and the short of it is that i do recognize the volatility in research as a whole, but i think the financial skill set you can acquire at a young age still make it appealing to many.
Edited 1 time(s). Last edit at Thursday, June 15, 2006 at 12:02AM by numi.