Hi fellow monkeys!
Been on quite a journey to get there so now is the time to give back and help "old me".
Brief background:
- Bachelor in Finance at no name university in Europe
- Cumulated 1.5y in internships in both sell-side and buy-side
- Passed all CFA exams as a student
- Did sell-side equity research in London for 2.5y
- Made the move to buy-side long-only a little under 4y ago
- Currently working at a global fund with ESG/sustainable angle as a generalist
Will try my best to cover all angles and if you think it might benefit you, hit me up as a mentor :)
What’s your outlook on European LO, are you seeing outflows to passive?
Regarding European LO, I am actually positive. The latest US tariff situation should slow the economy meaningfully and money has already started to shift into other regions like Europe and emerging markets.
Europe has really a chance to break away IF they can lower regulation (big if I reckon).
Yes the outflow from active to passive is a trend and will continue which is putting pressure on asset managers. Either 1) you are hoovering up assets and can compete on costs or 2) you are a boutique with a niche offering strong expertise that is hard to replicate through index/ETF. If you are stuck in the middle this is a tough spot and probably a death by thousand outflows.
Thanks for doing this. FYI, To reply to a specific comment you have to click reply below the comment, not simply "add comment" at the bottom of the thread.
Thanks!
Mind sharing salary progression?
Sell-side equity research: Analyst 1-2 basic £65k bonus 5-15% => Associate 1-2 basic £75-90k bonus 10-25%
Buy side with 5-6y exp: basic £80-120 bonus 25-50%
Thanks for sharing
Can you give a level of insight into hours at that comp?
What was the recruitment process like for your current seat? And what are you longer term plans
Process for my current seat: 30min interview with PM > financial modelling case study debriefed with 2 analysts > 30min interview with other PM > final interview with HR
What type of firm are you at, European, UK, US? How do the cultures differ by firm?
Now at European branch of US asset manager
Cultures can vary a lot: US firms tend to be more aggressive with higher turnover so worse work-life balance and less friendly environment but they pay well
EU firms tend to be more political and sleepy so less turnover, better work-life balance but usually the pay is much lower
Hi, i am really passionate about equities and would like to go ER-> LO, the hard thing about this last few years is the uncertainty, mainly about AI automation. On top of that a recent WSO post scared me away from this role.
What is your view on this and more in general on the future of the industry? As i said i would love to pursue a career in equities
This is the post i am referring to:
https://www.wallstreetoasis.com/forum/asset-management/research-associa…
Look sell-side equity research has been on a downward slope ever since research has been unbundled from trading (mifid2 in Europe) and therefore it is heavily reliant on capital markets activity to generate revenues (M&A, IPOs etc.)
It has found another source of revenue by servicing the pod shops but this is quite volatile as well depending if your sector is hot or not
BUT if you want to break into long-only this is still the most trodden path
Regarding AI automation I would not be too worried, it is useful to cover a lot of basic stuff on a company but will never be a substitute for a thorough analysis/financial modelling/valuation
Equities is still a people business even on the buy-side: you can have the greatest idea, if you pitch poorly your PM will not buy into it. You talk to brokers, management, other investors...
Thanks a lot! I agree that the human part cant be replaced but of course in this period there is so much uncertainty for future jobs (non only in finance).
What about the quant transition instead? Is it affecting traditional AM in the sense that it is becoming more quant/more capital is going from fundamental equity to quant equity (like SAE fund for blackrock) or is it not a problem either?
One last thing, just to be sure, SS ER is still a very viable path to LO right? I am worried about the fact that (as you also pointed out) since like 2015 the SS ER headcount decreased significantly.
Thanks for doing this - did a quick read of the other answers and I want to take this from a different angle.
Can you run me through the end-to-end assignments you've taken on from sell-side equity research analyst, associate and at buy-side.
Specifically, what was your process in gathering research from primary sources of the company (MD&A, annual report, etc.), what was the intent/objective of the third-party calls you took part of, and what was the end-result deliverable in a given assignment? How did the responsibilities differ as you grew in seniority? What was the comparative workflow/deliverable on the buy-side desk?
On the sell-side you start by doing low value-add tasks like gathering industry data, answering client requests, helping your MD managing his admin.
If you are proficient enough, you will get more responsibilities like updating models, writing some parts of the earnings reports, managing the valuation compsheets, keeping an eye on the newsflow of your sector.
The last step is actually covering stocks on your own and talking directly to clients. You are in charge of your own franchise, writing notes, making financial forecasts, managing relationships with companies covered, organizing expert calls and conferences. All of this with the objective to generate client interactions.
On the buy-side you do not have to do any of this. Either you are covering companies which you are invested in, or you are looking to pitch potential investments to add to the portfolio.
The whole process would look like this:
Look the end-result is usually a deep-dive report on the company and a financial model, all of which should be summed into a one-page investment memo for the PM or investment committee.
As you get more senior, you cover more sectors/regions/companies. A good senior analyst can cover 10-20 stocks in details i.e. being on top of the names and not just reading brokers notes.
Thanks for doing this. What is your plan for the future? Are you hoping to become a PM down the line, or do something different? Also why did you choose to go to a LO, instead of a L/S HF where some ER people end up in?
Current plan is to improve as an analyst i.e. cover more companies/sectors/regions, make mistakes and learn from them. Am not too obsessed with becoming a PM, it is a long term goal but also nebulous job in the industry.
Some PMs spend a lot of time marketing the funds so have less time to focus on investing.
Some analysts actually manage a lot more money than some PMs.
Some shops require PMs to do all the financial diligence just like an analyst, and in other shops PMs are just picking the best ideas out of external/internal research departments.
I frankly landed in LO by chance. Worked my butt off to get into buy-side and took the opportunity that presented itself. It turned to be LO vs L/S HF but in hindsight am happy where I am.
do you only cover EU companies? or US/global mandate?
I work at a global fund which means in theory we could invest anywhere in the world, but the vast majority of the portfolio is in developed markets i.e. US+Europe. Thus I cover US, EU and some Latam companies.
How is the market looking for LO analysts at the moment?
I'm from Aus/NZ and an analyst with 6 years experience looking to make the move but I'm from a fund no one has ever heard of. Is there a best time to move? Or is there not really a hiring cycle and more on an ad-hoc basis? Do you have any advice on making the move please?
By design there are always a lot less jobs in LO than L/S. This is because the job in general has better work-life balance, more stability (i.e. less turnover), is actually enjoyable overall. All of this contributes to very low turnover and people staying in their seat as long as they can.
In my opinion the current job market for LO is very tough. A lot of people have been fired and are looking for the same kind of jobs so employers can be very picky.
That being said, there is never a perfect time to get into the industry. I do not think that coming from a no name fund is that detrimental and most shops would consider at least giving you an interview if you have a clean resume with serious experience. Just be prepared and sharp for the stock pitches.
The best time to move (like investing) was yesterday haha. Regarding seasonality, you have more jobs after bonus period (Feb/March in Europe) because that is when people get fired or move if they are disappointed. And the quiet periods are obviously summer (June to August) and Christmas (December).
The move from LO in Australia to LO in London can be tricky so you need to show ability to cover global stocks (US+Europe). You could also check asset managers in your country that have offices in London, or maybe working for a big company that could transfer you internally to London. I know a few people that did buyside Australia > sell-side London > buy-side London. The sell-side stint is a pain in the ass but will definitely help a lot. Also given your level of experience a decent investment bank would still pay you very well.
Hope that helps!
Thanks. That's massively helpful.
I actually cover global equities. Probably 75% US and 25% European. I don't think I've ever touched an Australian equity! Do you think that will be an advantage?
My biggest concern was of layoffs and an over supply of analysts looking for a minimal number of seats.
My I ask how the modelling part of the case study/interview was? After having 6 years on the job I'm starting to have my own processes etc and it may not be the same as other people. Do they go through you're model extensively or are they more concerned with the outcome recommendation?
I was thinking of maybe looking at sellside roles too. It's not something I want to do but if I have to, then so be it.
Thanks for sharing – really insightful!
I'm a finance student at LSE looking to apply for sell-side equity research internships in London this autumn. Any advice on how to stand out or what helped you land your first role? Appreciate any guidance.
If you are dead set on equity research internships I would recommend to start early and polish your interviewing skills as you go. Do not make the mistake of applying only to bulge-brackets. In ER the team and lead analyst matter way more than the name of the bank. So definitely go after the "tier 2/3" firms because at the end of the day it is the same job. You also have brokers like Bernstein, Redburn, other niche boutiques which are highly regarded by the investment community.
Finally you should also go after the IBD internships. The technical skills required are almost the same as ER, you give yourself more chances and it looks great on your resume as well. Even if you have made your mind to do ER, an IBD internship could translate into an ER role if you play your cards right.
Good luck :)
Thanks again. Very helpful perspective.
I didn’t get any spring weeks this year, and I’m wondering how much that might impact my chances when applying (IBD or ER). I’ve been involved in a few extracurriculars at LSE, like the investment club, but that’s about it outside of academics.
Do you think there’s still a shot at breaking in? And aside from the usual interview prep, is there anything else you’d recommend doing over the next few months to strengthen my chances?
Appreciate any thoughts.
For someone trying to crack into the buy side, not from a bank but still in financial services for 2 years, and doing the CFA L2 with aims to complete it - would you recommend going to a big AM and going through the ranks or going to a boutique fund/firm in your experience?
Appreciate you giving up time to answer all these questions!
It is always possible, but how long would depend on which financial services in particular you are working in. CFA exams are a great way to show determination and appetite to learn so do that.
Honestly if you go to a big AM, investment teams are quite siloed and hard to access from other departments. The rags to riches stories from back/middle office to investment roles are very rare so do not count on that.
Given your background, it will be easier in a smaller firm. BUT make sure to do some research on the firms beforehand. Some firms typically promote internally and you will see that by looking at the Linkedin profiles of some guys (middle > front, sales > investment etc.). In other firms it is impossible so do not take any job at AM because you might end up a bit stuck.
Sell-side is also a great way to make your profile more palatable for AM.
Really appreciate the advice, all makes sense. Currently in derivatives risk for a research firm so not too removed but still very different field.
Couple follow-ups if thats okay - on sell-side, what parts of the bank do you recommend in your experience are good for this level?
And on the boutiques, what sort of things do you look out for?
Thanks
Are you worried about AI research tools essentially taking your job?
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