Starting off on the sellside research vs buyside (with long run buyside aspirations) - Help Needed

So this summer I'll be applying for full time positions as a London based grad at a top target university. Will be applying primarily for fixed income functions at BBs and top asset managers.

I would like to work buyside eventually but straight out of uni sellside research seems pretty attractive given the better pay, possibly larger classes and similar work at the junior level. I was hoping I could get some info on the ease at which the transition can be made down the line and whether it's worth it at all? How would the hours match up? Would it be better to just start on the buyside given the opportunity?

All advice and info welcome.

 
Best Response

I interned at a buy-side place, but went full-time as an analyst on the sell-side.

Hours: I currently work 75 hours a week on average and more during earnings. This can fluctuate from week-to-week depending on industry activity. At my internship, the most I saw analysts or PMs work was probably 50 hours. Pay: Depends on a firm-by-firm basis. I was interviewing at some buy-side shops (hint: Patriots fans), that paid likely a bit more than I make on the sell-side right now. I get paid a base salary and a bonus worth XX% of my base salary each year, not sure how salary/bonus works on the buy-side. Classes: Larger classes on the sell-side generally. However, if you are an off-cycle hire you may only be coming in with one or two peers. At the big buy-side firms in the NE, it also seemed like they wanted to pump me out into B-school in ~3 years, and I really wasn't into that. Responsibility: Depends on the firms. I took my gig on the sell-side because I would have a lot more responsibility starting off (coverage of companies) and I would learn more. This helped me look past the pay issue.

Overall, whether you start on the buy-side or not is a personal decision that depends on a lot of factors (city, pay, responsibility, title, career path, etc). I will say that it appears to be easier to move over to the buy-side after working 2-3 years on the sell-side than to switch over at a later point, but it's not impossible. I've also seen people move from the buy-side to the sell-side, bringing their industry knowledge and contact book with them.

 

Your 2nd reason, about wanting to get exposure to more industry professionals is actually a true reason for me. So is FamousTrader's reason about gaining exposure to large-cap management teams.

How is being on SS more client-facing than BS? Wouldn't the BS have more interaction with individual clients since it's their money being invested?

Another thing, and this is a serious question....why does everyone start off with the negative assumption that their employees are going to flee the sell-side and run to the buy-side asap? I myself am on the buy-side now and I'm actually looking forward to trying out the sell-side!

______ Corporate financial/business analyst looking for career/MBA/CFA advice.
 
fc200v:

Your 2nd reason, about wanting to get exposure to more industry professionals is actually a true reason for me. So is FamousTrader's reason about gaining exposure to large-cap management teams.

How is being on SS more client-facing than BS? Wouldn't the BS have more interaction with individual clients since it's their money being invested?

Another thing, and this is a serious question....why does everyone start off with the negative assumption that their employees are going to flee the sell-side and run to the buy-side asap? I myself am on the buy-side now and I'm actually looking forward to trying out the sell-side!

The PM of course will have quite a bit of interaction with the fund's investors, but on the SS it is your job to constantly talk with yours - i.e. buy-side clients. So yeah, SS is more client-facing (well, phone-client-facing at least).

 

Also ask yourself, "What do I want to be doing in my first gig?"

Here are some differences I've found in my first few years of experience: -You'll likely be doing much more in-depth and intense modeling on the sell-side. You will be publishing these models and sending them to buy-side clients who generally use them as a solid base to input their own assumptions. And they WILL call you out on modeling errors in front of your boss, so you will learn to model well and clean very quickly. During my brief stint on the buy-side, analysts kept their models strictly for proprietary use and rarely even showed them to other analysts or portfolio managers. They will just update them (generally just do a Bloomberg/Factset pull to full out models) and do some minor tweaking after earnings. Also, most buy-side models are generally created from one template. On the sell-side you have the opportunity to create your own models, especially if you initiate on a company. -On the sell-side, you will be publishing research reports, which you won't be doing on the buy-side, unless you're creating a tear-sheet for your pitch to portfolio managers and other analysts. If you really like writing or want to improve your writing and persuasion skills, sell-side would be the place to be. -Something else on the sell-side that you won't have to bother with on the buy-side is marketing. Your senior will go on marketing trips and try to win business. This means you will have to create marketing decks (which can be cool at times, but can suck) in order to provide clients with unique insight. These often serve as a theme for the meetings and provide your best trade ideas and market themes to expect. -On the sell-side you'll have the opportunity to call up CEOs, CFOs, COOs, etc. of the companies you cover and chat with them. You also get to pick the brain of really smart hedge fund/large AM PMs that call into your shop asking for advice on a few names. This is an often overlooked, but underrated part of the sell-side.

 

For SS: You want to be in a client-facing role You want to be an expert of a specific industry You want to do very detailed financial modeling You want to gain exposure to large-cap (normally) company management teams You want to be part of a publishing team as you like the personal accountability associated with visibility of your ideas

And many more.

 

Does the program rotate you through any different areas or is it just an investment analyst position they place you based on need? And just how bad is the ratio between analysts and pm's.

 
You'll likely be doing much more in-depth and intense modeling on the sell-side.

Disagree with this. The sell-side models I saw were usually very high level and showed little in-depth analysis. Some of the boutique shops actually did outstanding modelling work, but in my experience the BB firms just pumped out generic models.

You will be publishing these models and sending them to buy-side clients who generally use them as a solid base to input their own assumptions. And they WILL call you out on modeling errors in front of your boss, so you will learn to model well and clean very quickly.

Absolutely true. Publishing anything on the sell side is like having hundreds or even thousands of people looking over your shoulder. The pressure must be intense.

Also, most buy-side models are generally created from one template.

Not true at all in my experience. For one subsector I covered we used a "one size fits all" model, but other than that almost every model was custom made. A lot of companies do not lend themselves to a generic model.

On the sell-side you'll have the opportunity to call up CEOs, CFOs, COOs, etc. of the companies you cover and chat with them.

You also have this opportunity on the buy side, assuming you work for a decent-sized shop.

You also get to pick the brain of really smart hedge fund/large AM PMs that call into your shop asking for advice on a few names. This is an often overlooked, but underrated part of the sell-side.

100% agree with this.

 

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