Joining a well ranked ER department still a sensible move these days?

Hey monkeys!

I had a ER summer internship at a BB in '12 and was offered a FT position recently (based in London).

I enjoyed the time there and could absolutely see myself doing the job for some years. Good people, good infrastructure. Also, I like the exit opps. However, reading recent stories about the 'future of ER' (Bloomberg, FT, WSJ, ...) makes my guts rebel quite a bit.

I don't expect to be paid like it's `05. Just want a stable environment in the mid-term (say 5 years) where people focus on their jobs rather than on rumors about lay offs, an on-average-60h-week, and reasonable pay bumps from time to time. During my internship things looked pretty much like this.

Do you think this will change for the worse (across banks)? Will an oversupply of laid off ER guys force the remaining analysts to pull longer hours (and generally worsen their bargaining position)? Iterating forward, will exit opps be worse/fewer in 5-10 years time?

Putting it another way: Do you think joining a well ranked ER department is still a sensible move these days (seeing that I could as well do a Masters or take up a very decent offer in consulting, though that would clearly be my 2nd preference)? Am I too apprehensive?

I'd greatly appreciate your take on this!

 

So the topic of looking out 5-10 years is extremely difficult. Also in terms of what "businesses will struggle" is also another tough one to call. Bankers are also getting laid off and HF's are shutting down as we speak as well. This happens in up and down markets across the board.

Right now comp of course is not at 05' and before levels when you saw crazy numbers. To be honest those numbers are likely dead forever, both in banking and research (if it comes back great).

Now on the Research specific side, overall there is no "Stable" job in wall street anyway. So i'd cross that off the list of needs. But its more tied to your bank. Does your bank do a lot of IPOs and are they healthy? Then you've really got minimal issues. Here's how you evaluate your job security.

  1. Top Analyst
  2. Healthy Bank
  3. Sector is trading or banking heavy

Notice the top analyst part still comes first because even if your group gets booted, but your analyst was ranked highly he will get picked up quickly and if he likes you, you're joining up as well. Picked up quickly as in will be hired within a month time frame. Quite fast.

Your last question compares it to management consulting... That part is a bit startling to me. The question you should ask is if you want to work in Wall Street or not. There are always other finance avenues even if all of ER gets shut down, Investor Relations, Corp finance, Mutual Funds, hedge funds... Banking... There are other slots in finance

 
  1. ER is not going anywhere anytime soon. Especially for some of the boutique players where research is a big driver of S&T and banking

  2. Analyst, Analyst, Analyst. Hitch your trailer to the best god damn analyst you can find, not the firm. Its rare for a top ranked analyst to get canned, and even if they do, they'll get snapped up instantly. As their associate, you're going with them.

 

Thanks guys, great advice! ER is my fav, no doubt. Just added the comment about the consulting offer to provide a better picture of my situation. If I had a single offer only it would of course be a no brainer ;)

ad analyst: don't know yet which team I'm going to join eventually. Hoping that one of the II ranked analysts calls for an associate by the time I join, but there is def. a random component to it. Would love to have full access to the II ranking (incl. 2/3/RU), are you aware of a copy circulating somewhere?

ad trading/banking heavy: any idea how I could figure out which sector has a good trading flow at my bank?Markit or Greenwich equity/ETF trading reports show broker shares by geography but unfortunately no split by sector.

Cheers!

 

Generally, trading flow is going to depend on (1) what sector is "hot" (as indicated by volume), and (2) your bank's strength in that sector.

This of course depends the strength of the analyst. As the above posters said, ranking is most important. The #1 tobacco analyst is probably better than the 10th best tech analyst.

So, to figure out which analysts to target, google their names. Any awards will likely be mentioned in the results. Go for ranked analysts first. In the event of a tie, look at the average volume of the stocks they cover. Yahoo will list each analyst's coverage in their Starmine section. Note: do not use Starmine to pick analysts. Those results are pretty much meaningless.

 
West Coast rainmaker:
Generally, trading flow is going to depend on (1) what sector is "hot" (as indicated by volume), and (2) your bank's strength in that sector.

This of course depends the strength of the analyst. As the above posters said, ranking is most important. The #1 tobacco analyst is probably better than the 10th best tech analyst.

So, to figure out which analysts to target, google their names. Any awards will likely be mentioned in the results. Go for ranked analysts first. In the event of a tie, look at the average volume of the stocks they cover. Yahoo will list each analyst's coverage in their Starmine section. Note: do not use Starmine to pick analysts. Those results are pretty much meaningless.

Thanks a lot!

Do you have links/sources on data that could yield insights into volume traded by sector (did not come across anything like that)? Also, is there something like "common knowlegde" regarding the strenghts and weaknesses of the BB banks in Europe? Just know the teams ranked 1st in II, but 2nd/3rd placed analysts might be just as good, given the imperfect nature of such surveys?

Had a look at YahooFin, but seems to be kinda incomplete, at least for my bank (analysts and many covered stocks missing).

 

just realized: searching "All ranked analysts" AND "your bank of interest" AND rank* AND "institutional investor" via google leads to articles for second and third ranked teams, even though these are supposed to be hidden behind the II paywall.

 

1) ER to fixed income / trading is tough. ER to Sales is doable, but you would likely be covering the same product you did in ER (equities). You aren't stuck: HFs, asset managers, F500s all like ER guys.

2) Bonuses are low for junior guys right now (though this is somewhat true across all of finance. There are definitely fewer openings. That said, there are relatively fewer layoffs in ER than IB & S&T because ER is very lean to begin with. I actually can't think of a sector in finance that is really "sunny" right now. The industry is contracting.

 

I broadly agree with the rainmaker.

  1. At junior levels you can move to a lot of different positions. Banking (in your coverage sector), sales, AM, corp fin, anything in the sector you cover is really fair game. Also, if you start at a high quality firm, lateraling to other parts is far easier than moving outside of the firm.

  2. Finance is shrinking and it can be hard to get exactly what you want. That being said, get a job that you like and gets you excited. All of the worries about which sector is next or safe is a craps shoot. Go for a strong firm (this doesn't necessarily mean a big or BB firm), a role that you like, in a location you want to be in.

--There are stupid questions, so think first.
 
wallstreetballa:
Funny thing is i'm serious lol

Other than the kids that get into S&T right out of school, your only real chance is transitioning from ER

I don't understand why ER's such a bad place to you guys?

Still needs batteries.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 

I think he's implying that everybody else was being sarcastic...

"and so many banks are hiring right now, that you'd be stupid to settle"

If your dreams don't scare you, then they are not big enough. "There are two types of people in this world: People who say they pee in the shower, and dirty fucking liars."-Louis C.K.
 

ER and Quant Analytics are going to be the only FO divisons that survive the coming bankruptcies. And it makes for a great upper-middle-class career that's relatively stable and allows for a little family time when you get older.

More important than which bank you'll be working at is WHO you'll be working for. Google the senior analyst and figure out as much as you can about how good he is at making calls in his sector.

Yes, it's worth it. Especially if you want to have a job in 5 years.

 

Despite the apparent sarcasm, it can be a shit career. It can also be a great career if you play your cards right. At any of the BBs that you named, you will be able to transition quite easily into an S&T role (focus on sales, don't know why anyone would go into trading right now). You could also possibly switch to IBD in the sector/industry that you cover or to the buyside (mutual fund or L/S hedge fund). With that said, analysts put in a lot of time training their associates and I wouldn't expect any analyst to help you get a new job. But it's very important to find an analyst in a sector that interests you, who is well respected, and who "gets it." By gets it, I don't mean II ranked. There are some analysts who work 100 hour weeks who are less effective than others who work 60. Make sure you don't work for one of them as your life will be miserable.

As for why it could be a shit career...there are several reasons. Obviously ER is a cost center and bonuses are unpredictable. This used to be more true at boutiques/MMs but it looks like all of the BB's will F their employees this year. Also, you get sort of pigeonholed to your sector/industry. This is great when its a hot sector but could be terrible if the sector loses interest or many companies are taken out or become irrelevant. You also don't develop as wide a finance skill set as an IBD analyst and this could narrow your options. If you look at bios of analysts, especially non-NYC analysts, you'll often see guys who have worked for 3+ firms and seem to be at a new place every other year. It's a really sad existence but the truth is that these guys typically aren't very good at what they do and simply have no other options. They're afraid to get out of "the game" because they don't know anything else and convince some shit boutique to take them on with the hopes of getting banking mandates. Like I said, pathetic and a sad part of the ER industry.

 

Damn, you people have some strong words for an undergrad taking an ER gig at a BB.

ER has great exit ops. The longer you stay in it your exit ops decrease very very quickly. There are very few firms who are going to turn you down if you have worked in it for a couple years and picked up solid writing, modeling, research, and financial analysis skills.

You are right about the respect thing. I think it is because ER is most def not an unlimited compensation career and in fact has an image of low comp. You will max out at $800k (there are some exceptions supposedly though i have never met them). At the senior associate level (5+ years experience) you'll max at $200k in a good year and group like energy. This is contrary to the image of bankers making millions and PE/HF guys making 100s of millions. Again ,the image.

I am however very confused at how they even get comp this high. I don't want to be the person who says that wont last long though cause if you dig around on WSO you'll find threads from '07 claiming the end was near for ER.

You do get pigeonholed in your sector but so does everyone at some point. Again, back to carefully managing the time you spend in the career if you do not want to make it a LT thing.

I actually think it is a great LT career. $500K plus for avg work weeks ~60 hours, even at the junior level? Pretty damn nice.

 
JJP1234:
. I think it is because ER is most def not an unlimited compensation career and in fact has an image of low comp. You will max out at $800k

hahahaha only on Wall Street

If your dreams don't scare you, then they are not big enough. "There are two types of people in this world: People who say they pee in the shower, and dirty fucking liars."-Louis C.K.
 

ER is a good place to start. I don't know of another job where straight out of college, you get to sit down with CEOs and CFOs of major public companies, while at the same time pitching investment ideas to PMs managing hundreds of millions (or even billions). You develop modeling, research, and communication skills, and build nearly unparalleled expertise in your chosen sector. Round that out with reasonable hours and good pay, and this is a no brainer.

 
vfrex:
ER is a good place to start. I don't know of another job where straight out of college, you get to sit down with CEOs and CFOs of major public companies, while at the same time pitching investment ideas to PMs managing hundreds of millions (or even billions). You develop modeling, research, and communication skills, and build nearly unparalleled expertise in your chosen sector. Round that out with reasonable hours and good pay, and this is a no brainer.

Well done, neighbor.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 

Sell side ER may get leaner although it's already pretty lean. But I don't see it going away anytime soon, not at BBs at least. I talked about some interesting greenwhich survey results from 2011/12 in one of my older q&a posts, which showed the benefits of having a strong ER division in terms of both primary and secondary markets.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
Flake:

Sell side ER may get leaner although it's already pretty lean. But I don't see it going away anytime soon, not at BBs at least. I talked about some interesting greenwhich survey results from 2011/12 in one of my older q&a posts, which showed the benefits of having a strong ER division in terms of both primary and secondary markets.

great, can you post the link of the Q&A thread u mentioned? thanks a lot!

 

Flake is correct, while the world could change here is why ER is likely going to be around

  1. Companies need coverage, a company will almst never go public with a bank on the cover and get zero coverage
  2. Volume can also be a sales trader issue, again, research is the liaison between Ceo's and Cfo's and the investment community. Without research analysts how will an investor know which management team is credible, understand the story etc. Yes the buyside will keep quiet and do their own work, however research is needed to help explain the themes surrounding stocks. (See a few threads we have started on 1. Learning companies. And 2. Overall how research works.
  3. Access to management, people will debate this however, a meeting with a C level executive at a major firm is not possible for most shops to obtain, yes Cohen can get a CEO on the phone immediately but your average shop will have a hard time getting beyond an investor relations member.

How research will change: 1. Likely gets consolidated, as banks get more efficient, you can outsource modeling and basic tasks freeing you up to cover more companies 2. Small shops getting squeezed out, again a big pull is being able to take a company public + cover the company, so a strong IB team and ER team will still be around. 3. Move to the top. More and more, every year, pay is becoming more performance oriented so working for a top analyst is significantly more important than working for an average analyst. The top analyst will also be able to choose better companies to cover.

(Drill point 3 into your mind, go work for the best analyst possible, that is where you will see the most gains)

These are all opinions, the world could end but that's unlikely the case, adapt or die. If you want to do ER find a top analyst at a top firm, work hard and do your best. If it blows up you still have marketable skills for other finance jobs.

 
WallStreetPlayboys:

Flake is correct, while the world could change here is why ER is likely going to be around

1. Companies need coverage, a company will almst never go public with a bank on the cover and get zero coverage
2. Volume can also be a sales trader issue, again, research is the liaison between Ceo's and Cfo's and the investment community. Without research analysts how will an investor know which management team is credible, understand the story etc. Yes the buyside will keep quiet and do their own work, however research is needed to help explain the themes surrounding stocks. (See a few threads we have started on 1. Learning companies. And 2. Overall how research works.
3. Access to management, people will debate this however, a meeting with a C level executive at a major firm is not possible for most shops to obtain, yes Cohen can get a CEO on the phone immediately but your average shop will have a hard time getting beyond an investor relations member.

How research will change:
1. Likely gets consolidated, as banks get more efficient, you can outsource modeling and basic tasks freeing you up to cover more companies
2. Small shops getting squeezed out, again a big pull is being able to take a company public + cover the company, so a strong IB team and ER team will still be around.
3. Move to the top. More and more, every year, pay is becoming more performance oriented so working for a top analyst is significantly more important than working for an average analyst. The top analyst will also be able to choose better companies to cover.

(Drill point 3 into your mind, go work for the best analyst possible, that is where you will see the most gains)

These are all opinions, the world could end but that's unlikely the case, adapt or die. If you want to do ER find a top analyst at a top firm, work hard and do your best. If it blows up you still have marketable skills for other finance jobs.

thanks a lot. and I really hope work is becoming more performance related.

 

Many people start out at a sell side research shop annd stay there for at least 2-3 years or so. From there, associates can exit into a number of roles (buyside at long/short HFs, investor relations at F500, corporate development at F500, etc.). Some associates stay on and work to gain their own coverage, which is not a very defined process and varies greatly from shop to shop.

Base salary usually matches the base in IBD at thr junior level, but bonus will be lower. Can't speak towards more senior compensation. In general work/life balance is better than IBD (except around earnings season), but you're almost always thinking about the stocks you cover because news can come up at the least expected times.

Hope this helped!

 

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