Why does everyone want buy-side?
So many people hear praise the buyside like it’s the second coming of Jesus Christ. I don’t get it. The pressure of dealing with huge money from rich, annoying clients that don’t care about anything but performance, dealing with markets that you have no control over. It sounds like the hours improve a bit but the pressure grows tremendously. The churn of analysts, it would just give me so much anxiety.
Maybe it is the pay… but is the pay really that much different versus higher levels on sell-side, or even moving elsewhere with the great experience you have..? I get that sell-side can grind people to the bone, suck out their soul. But the pressure that comes with the buyside…
For people here, in whichever field, that have this high aim for the buyside at any cost… why?
Personally I always wanted to invest money whether it is my own or a clients. I get excited by the work and the actual investment process is fun, especially if it pays off. The sell-side is a means to an end for myself and many other people (although people do stay on the sell-side specifically for the reasons you mentioned). I would not be able to do research for forever for a variety of reasons but two of the main ones are that I don't like doing all of the research and then not being able to trade on it but also the fact that you're always going to have to cater to the buy-side no matter how good you are. If you run a hedge fund you still have to keep clients happy but there's likely far less of them and it's not comparable, besides that's not something I believe anyone but the PM or above would really have to deal with. The money is great but I wouldn't be doing it solely for that.
I’ve yet to see a coffee station get taken away on the buy side.
1) It's an outcomes business rather than an input business. Have also heard this described as "ideas business rather than sales business". Success on the sell side is heavily influenced by the sheer amount of hours you are willing to put into writing / publishing / cold calling. Success on the buy side is far more influenced by how good your process is for picking stocks / bonds / insert asset class here. Yes there is stress - especially when things move against you - but for most people I know who have made the move (and can get the hang of 'thinking like an investor') quality of life is vastly better than on the sell side.
2) Depending on where you end up you may end up with zero client marketing required. E.g. if you end up at a large pension fund / sovereign wealth fund / multi-strat HF you can (mainly) just get on with the job of investing. On the sell-side there's an enormous amount of 'sales' required - cold calling / organising corporate access / marketing trips. Some places on the buy side you will have to do some client marketing but probably not much as an analyst - more when you are a PM trying to raise new funds - but there are a lot of places where there's close to zero required. Buy side can be a much better place to work for introverted types (the trade off here is buy side can sometimes be a lonely place).
3) Linked to both of the above: picking stocks / researching companies / investing is fun. I get to spend 100% of my time doing this. On the sell side it was <50%.
4) Pay is similar / worse at the junior level and a lot better at the senior level. Also typically a lot more transparent / performance linked.
Why is pay similar or worse at junior level?
The fact you used "hear" and not "here" in the first sentence shows why you are not buyside material
ouch
Because all they think there is to it is stonks
ER is even more of a cost center given recent changes and the rise of data shops like Yipit and Mscience. I think this argument makes sense for ibanking vs. PE but sellside ER is a horrible place to stay if you want to make money above the average consultant or lawyer.
Not entirely accurate. I know a fair amount of MDs who consistently earn high 6/low 7 figs on an annual basis and enjoy a very nice balance and work flow. Not to mention in sectors that are not in the “sexy en vogue” tech/healthcare spaces. I wouldn’t mind getting paid like that and not enduring the stresses associated with risk taking seats. If money is your end goal then I think staying sell-side could be just fine
You have no idea what you're talking about…a junior lead analyst (VP, Director) with his/her own 1-2 associates make high six figures to just above a million a year in good sectors at many places (ironically one would make more/higher range of this at a smaller platform). A junior MD can get close to $2 million and a reputable/ranked senior lead analyst can make $3-6million a year.
Can confirm the compensation levels at the senior level for ER. However, personally seeing how the sausage is made, it is by no means a free lunch at the top.
Top-ranked ER MDs arguably work the same (if not more) than banking MDs. Most of senior ER comp is tied to broker votes and II-rankings (client service) — your job quite literally is to be a consultant for investors (mainly hedge funds).
If you go on the hedge fund forum, you’ll quickly learn that most PMs/analysts are religiously working 60+ hour weeks. This is because news flow (anything that influences prices) is incessant. There’s always something else to “read up on” or “dive into”. Therefore, even if you’re “at work” from 8-6, you’ll likely still be online well before or after this time “catching up on things”.
Now imagine serving as their consultant. As a senior in ER, not only do you need to be “in the know” of everything in your constantly live-updating universe, you also need to write and publish reports on each material event AND have the time to actually meet with your clients (usually on their schedule btw). Oh, and this doesn’t even include building/maintaining relationships with management in your coverage, attending industry events, or earnings season.
When it’s all said and done, as an ER MD you can generally expect to travel ~30% - 70% of the time, with a non-earnings work week generally being 70 hours (time spent logging on to logging off irrespective of location).
Oh and when you decide to go on vacation, be sure to expect client calls and one of your coverage firms to announce something big, requiring you to log on at the airport.
Ironically, what I’ve found in ER is that the more senior you get, the more you work (and more stress). Most juniors see how their MD works and conclude they would never be willing to make the sacrifices required to keep that seat regardless of pay (sound similar to IB?).
All across the Street (IB/S&T/ER), the top dawgs get taken care of but it likely may cost almost all of their personal free time outside of work. Sounds like a hard sell when you’re 43 years old with a family.
Buy side is the holy grail because money is power
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