Hi. I stumbled into this forum from one of ratul's posts about bonuses and ended up reading the_inscrutable_chicken's thread about ER. I'm trying to decide which will fit me best - IBD, S&T or ER. Hope some of you ER veterans can help with these questions.
Learning potential: It seems like junior ER people can really take a lot from their experience by doing actual analysis, instead of formatting powerpoint slides in IBD or checking trades in S&T. Is ER really as intellectually stimulating as it sounds? Or do writing the same types of reports all the time get boring?
Prestige: ER seems to get the short end of the stick here. I found a couple of "equities in dallas" cracks just by skimming the forum. Is ER looked down on as back-office or less prestigious because they don't directly generate profit/loss? I read some comments about showing you are connected to profits, but others talked about how ER is a cost center, not a revenue generator. What's the real deal on this?
Exit opps: Posts here indicate that hedge funds are one of the main exit opps available to ER, but I thought one needed an advanced quant degree for HFs. Yet, most of the people on the Morgan Stanley site (under North America - Research) have BA Economics degrees. Are these people still in ER because they lack those quant degrees? Or is there another explanation?
Thanks, and feel free to include other info that might be helpful.
Learning Potential: Don't
Learning Potential: Don't kid yourself, you do not get to do THAT much actual analysis as you might think. As a junior person, you spend a lot of time doing "analysis", i.e. reading reports, crunching numbers, building models, etc, but you don't often get the final say as to what that analysis means. Since your senior analyst already usually has a set of opinions and views on the particular industry or companies, your analysis usually works to back that up.
The work is sometimes stimulating, alot of times it's not. A good deal of time is taken up by earnings reports, which happens 4 times a year, pretty much the same routine each reporting period. That gets really boring.
The only stimulating aspects are the "special" reports written once in a while. This is either an initiation report, quarterly industry report, or a special report on a company in coverage. These projects require more work, more thought, and usually are a bit more interesting.
The rest of your time is spent satisfying client requests (so yes, you do have to keep checking ppts and worrying about formatting), talking to sales and trading about your industry and companies. Reports also take time to format and etc.
Still, ER is a nice balance between IBD and S&T in terms of hours and type of work done.
Prestige: Depends on bank, some banks really push research function, others don't. In any case, you won't be respected as much as S&T and IB regardless, since you don't generate revenues. Any revenues generated are under the S&T P&L, since trades are placed through S&T.
Exit Ops: Not all hedge funds are quant-based funds, there are value funds and fundamental funds. Portfolio management is another common place people go to, some have done a 3rd year in IB or S&T.
To be honest, I have a quite
To be honest, I have a quite a different experience with my time in ER.
I think this might have a lot to do with what team you're on.
In terms of work stimulation, it can be pretty interesting b/c you're constantly reacting to news flow and you are always rewarded for your creativity.
Furthermore, where I work, research is an incredibly important function and salesman and traders depend on us quite a bit. Ultimately, ER is the backbone of most banks, despite going through a tough phase post spitzer which really hurt the respect of ER in the industry. But, to be honest, the rule changes have been quite useful and we're much better at what we do. Frankly, the number of hedge funds that are depending on quality research is increasing by the day
I also don't agree with the revenue generation. It is our ideas that generate revenue and our work that is just copied and pasted by salesman to make trades. I have definitely generated revenue b/c I am very much able to convince someone on the buy side to invest or divest in stock a. To suggest ER isn't revenue generating is like saying the manufacturers of GAP clothing aren't the revenue generators but rather the saleswoman who helps you try on your shit.
For me, I already have my name on all the reports already which is rare and my opinion is being sought after by a lot of senior salesman and traders.
My exit opps so far have been prop trading, working at a hedge fund and moving up to hedge fund manager and porfolio management. My buddy just move to do high yield bonds and many senior ERs sometimes move to corporate finance.
Anyway, I have a very different experience. But I'm on a top team where ER is an incredibly important function and where I have a lot of say - so your experience will definitely depend on what bank you go to.
Wow, that's some perspective
Wow, that's some perspective ratul. I wonder whether your great experience is a result of which bank you're at, or just because you're a standout analyst.
I understand what you mean by ER being an important part of profits, but in a way the people who actually close the deals get more credit. There seems to be a connection with bonuses here, but if you're a star, I guess you can strike gold whatever you do.
But looking at freeloader's post, I wonder how representative ratul's experience has been of ER in general. How does the average guy do? (Keep in mind that I have no idea how good I'd be at any of this stuff, so I'll assume I'm average for now.)
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