What would you like to know about Equity Sales / Research?

Hi Guys -

I'm working on a blog (or maybe ebook) to give junior staff and interns an idea of what it's REALLY like to work in the equities sell-side business at a BB.

For starters, I'm at a top 3 BB based in Asia contributing in an equity sales front office function. Since I joined in Nov. 2008 during the crisis, I have a unique view what has happened since then and how the industry has transformed. I've done work for virtually every buy-side you can name of, from the top sovereign wealth funds (GIC, Norges, ADIA), to every mutual fund you can name, pension funds, teachers retirement funds, and every hedge fund that has invests in Asia. Internally, I work with our sales/research team across London, New York, Hong Kong, Singapore, Shanghai, and Tokyo on a daily basis. I've interacted with over 20+ Managing Directors (including our global business heads), 30+ Executive Directors, and dozens of junior staff.

Here are some topics that I wanted to cover, but if there's anything you guys would like to know that I missed, please reply here and I'll get it added.

Understanding the Equities Business
- Restaurant or Circus analogy?
- How the sell-side makes money

What is an Equity Salesperson
- Core job functions and their value add to buy-side
- Key qualities of good salespeople
- Relationship with Research

What is an Equity Research Analyst
- It's an information business, really
- Equity Research and what they do (and differences between US vs Asia ER)
- Difference between a star analyst (that moves markets) and an average analyst
- Reading between the lines - beyond Buy/Sell/Hold ratings
- Why Equity Research hates IBD, and why IBD hates research
- Around the world in three weeks, the analyst roadshow

Sales vs. Research
- Why each person wants the other's job
- Who gets the shaft during downsizing?
- Does Sales or Research provide more value-add?
- Which path is more suitable for you?
- Do you enjoy storytelling?
- How is staff performance managed in sales and research?
- Why analysts go on marketing trips

  • Corporates
    • Relationships with corporate investor relations teams
    • Why Investment Banks do roadshows for corporates
    • Stories from cool companies to cover (Playboy mansion, living on an aircraft carrier)
    • Shared relationships with IBD/Research/Sales and corporates

Union of sell-side and buy-side
- What is the real value-add of the sell-side?
- How the Buy-side fits in and importance of client mindshare
- How the Buy-side pays sell-side for services and research
- Importance of external surveys that outsiders don't realize (ex: Institutional Investor)

Long-Term Success in Equities
- Modeling skills and financial analysis will only get you so far and why
- People Skills and the 3C Theory (Clients, Competitors, Colleagues)
- Intangible qualities that make you stand out
- Importance of differentiation, responsiveness, flexibility, idea generation, and creativity
- How your reputation supercedes you constantly
- Types of people you will encounter in this business and how to deal with them

For Junior Staff, Interns, and Aspiring Candidates
- Top 4 misconceptions outsiders have of the equities business
- 7 common mistakes junior staff and interns make
- Types of mindless tasks you will be assigned to do because nobody else wants to do it
- 5 things senior staff appreciate when it comes to junior staff and interns
- Case study of an intern that got a full-time offer and what she did right on the job
- Case study of an intern that failed to even be considered for a full-time interview and what he did wrong
- Networking Hacks - quarterly corporate results, industry trade shows, and corporate websites

Let me know if there's anything else I should add. I purposely avoided pay/bonus since it varies so much between different firms that nobody really has a "right" answer. Tks!

  • T
Best Response

Will try to be brief here but in a nutshell:

Equity Sales - Essentially a stockbroker and account manager for a buy-side fund/client. For example, if I was assigned to cover SAC Capital, I would need to make sure their PMs and Analysts are getting the right resources in making investment decisions/actions from my firm (mapping). This could range from research analyst 1:1 access, broking research ideas (or their own views), corporate access, offering a unique market view, making sure there are no trading issues, good rates for stock lending, bookbuilding process, and a bunch of other stuff. The end goal is to capture more client mindshare so eventually SAC (or XYZ firm assigned to each salesperson) does more trading through us (or ranks us higher in broker reviews) so my firm gets paid more, and thus everyone is happy.

Equity Research - In a nutshell sell-side research analysts are a walking wikipedia of their company and sector, offering investment advice or market insight for buy-side analysts/portfolio managers. These are the guys that give buy/sell/neutral ratings you hear about. Economists/Strategists are also grouped into research but it's not really focused in the spotlight compared to analysts. For an Apple analyst (as an example) - besides having a model and forecast, they will need to know their phones and industry inside out, from component makers like the camera, keypad, processor, casing, and touch panel. Gathering all this information from either industry contacts, companies within the supply chain, or various sources they piece it together to get a fundamental view of how the company should look in the next twelve months (or a shorter time window) and take an investment view from there. The end goal is to become the "go-to" person regarding a company (or sector) to buy-side PM/analysts. Occasionally they help IBD with their IPO deals, but how often usually depends on how good your bankers are at getting that business.

There are also salestraders on the sell-side that cover buy-side traders, but it's not my field of expertise. I'm probably missing some other info if anyone else wants to chime in.

Sales vs Research In a way, you can think of it as a shotgun (sales) vs sniper (research) approach to stockbroking. Research is a laser focus understanding on a company/sector, and sales is a generalist focus within a geographical market. A salesperson can broke healthcare, tech, autos, or any ideas they like to portfolio managers/analysts, while research can only focus on their coverage universe or sector. There is no way to say which job is better, as it really depends on your personality and what interests you.

Generally speaking, a sales can enjoy the flexibility of having multiple topics to broke about, but they will never understand a company as well as the analyst or have the industry contacts to provide differentiated insights. But for an analyst, a salesperson is helpful in getting your research "broadcasted" out to the investment community (only so many phone calls an analyst can make within a 24-hr day) and help raise your profile/franchise to get more trading commissions/higher broker reviews for the firm.

Management often says that a good analyst is a good salesperson, and a good salesperson is a good analyst. Research needs to have the qualities of a salesperson to get their ideas out there and capture the client mindshare, and a salesperson needs to understand fundamental research so they can broke stock ideas more effectively (instead of being just a copy/paster).

Equities in Asia: There are a ton of countries within the Asia market, but the business units are generally divided geographically across firms as follows:

Japan - It's in it's own world since it was the first to take off in this region decades ago ASEAN - Southeast Asia (Thailand, Malaysia, Indonesia, Philippines, Singapore, +/- 1 or 2 others) Greater China - Hong Kong / China (H-Share) / Macau, Taiwan China - A-Share market Korea - Self-explanatory India - Also in its own world Frontier Markets - Cambodia, Vietnam, etc (nobody really covers them yet)

Asia is quite exciting as there are so many stories happening at the same time, and as a regional salesperson its just a buffet of ideas for you to broke. If you want to talk about Apple/tech, you can focus your day's work on Korea/Taiwan (panels, camera modules, and chips are made here), and if you want to talk about casinos or Chinese tourism, focus on Macau and Singapore. China consumer of course is a big story that I don't need to go into.

As an analyst in Asia, you will most likely be based in a country covering a specific sector. There is usually a sector team head that coordinates the sector view/strategy. For example, a regional banking head will take input from the Korea, China, Taiwan, Singapore, ASEAN, and HK banks analysts to come up with a strategy piece and sector view. Junior analysts tend to rise the ranks faster in Asia since the business model is slightly different from the US and there is more growth/opportunity/turnover in the region.

As a salesperson, you will either be a country or regional sales. Country sales focus broking ideas from one country, ie: Korea Tech, Korea Banks, Korea Consumer, and regional sales can pick anything they want in the region cross-country or cross-sector. There are benefits/drawbacks of being both, but that is for another post or my blog/ebook haha...


I've been co-oping at a boutique shop for the past year and may end up taking a role in equity sales. My thoughts are purely as an observer and my experiences working with our sales guys.

1.If I want to help his candidacy at particular firms, would it be worthwhile for me to reach out to the analysts? Guessing they would have a decent amount of pull.

My suggestion would be your sales rep as well as the analyst- my particular experience is that the sales guys will do more for you in terms of getting your buddy a job than a sell-side analyst.

2.I get the sense that equities desks have done well this year and are looking into expanding headcount - would you agree that this is the case? We have been expanding but mainly hiring individuals that already have well established relationships- if your targeting smaller boutique shops its tougher getting started due to lack of coverage (or quality) so you really have to be motivated to make it work. That being said "doing well" is relative, our guys have done well this past year and I would feel good about what they're taking home.

3.Anything in particular that would be good for him to read? What is the main criteria that you look for (I'm guessing personality fit)? How much market knowledge would he be expected to have?

It benefits him to learn as much about the financial markets as humanly possible. There are plenty of brokers that do quite well for themselves being chaperones. I find that it is much easier to establish relationships or even a conversation by having something intelligent to say. Personality is huge and having the ability to start a conversation with a person that has no interest in talking to you is paramount. As the above poster stated, the buy-side gets bombarded with research notes every morning by random brokers so understanding the value in the information and how or even if it should be disseminated is huge.

For your friend I would start with getting the coverage universe for whatever institutions/sales group he's targeting and learning a little bit about each company. Thinking about- Who would find this information useful- Who are the major holders-How do I find this information-How should I reach out to them.

If your actively trying to get him a job in equity sales, call up some of the guys that cover you and have them take you out for beers and bring your friend along.

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