I'm probably one of the few people on here that has done both IB and ER. So I thought that I would share a guide on the pros/cons of both. A lot of these items have been covered in other posts so I'm going to focus on the nuisance and specific details which others often leave out. I don't want to make this a book so I'll split it into different parts over a few weeks. I hope you find it useful.
Work Life Balance Basics
As most of you have likely read, you can expect an average of an 80 hour work week in IB compared to about 60 to 70 hours in ER. However, the hours aren't exactly apples to apples. In IB, you're under what I would consider a mid-level of stress at all times. In IR, you're under a low-level of stress most of the time but are occasionally hit with extremely high levels of stress when a press release comes out. In equity research, you are really put on the spot and have to figure out things quickly and write a note right away. In IB, you are rarely put in that sort of situation. Sure, your associate or VP can make you feel like the sky is gonna fall, but usually it's really not.
Another work life balance issue is earnings season. A single week of earnings in ER is worse than anything that I ever experienced in IB. You work about 100 - 110 hours under very high stress levels. In IB, I worked plenty of 100+ weeks which were hell but still not this bad. The stress is much higher when five companies report earnings in a single day and everyone wants an analysis now and those five reports have to be published tomorrow. I find that much more stressful than having a presentation due in three days time but you don't even have a shell ready yet. Both scenarios are not good but the intensity during earnings is way higher.
Schedule
As far as schedules go, also keep in mind that depending on your time zone, you could be waking up every day between 3 am to 6 am in equity research. I've known West Coast analysts who have quit their jobs just for this reason. You start having a really weird schedule. At first, I thought that I would get used to it quickly, but man, there's just something about waking up that early. It probably took me two years until I was really in the groove.
However, speaking of schedules, weekends are much different in equity research. Saturdays are sort of sacred and untouched. More than working 10 or 20 hours less than banking, this is the biggest perk. You can really plan out your life a lot better with a single almost guaranteed day off each weekend. Furthermore, Sundays are usually half days with just some prep for the next week. In IB, I had a few stretches were I worked every single day for five weeks, and I never knew when there would be a day off. So that Saturday is a big deal.
Nature of the Work
Also another great part of equity research is that although the work hours are similar to banking, the work is very different. In equity research, you're always doing meaningful work that has to be done. A press release comes out and you have to update the model and you have to write the report. For industry pieces, you can spend weeks gathering info, but it is all stuff that must be done and adds value to the final product.
In banking, I spent so much time just doing stupid bullshit like staying up until 2 a.m. because the MD wanted to change the presentation's theme from medium blue to light blue or he wanted to add another 10 slides which added absolutely no value to the presentation. In equity research, you're really treated a lot more like a human being and a colleague in the early career rather than an emotionless machine that churns out pitchbooks regardless of the time of night.
Progression of Work Life Balance
With that said, the progression of hours is worse in ER. I started in ER working about 60 hours per week. By my third year, I was probably working 70 hours per week or maybe a little more. As you get better at your job, the analyst typically hands over more of their responsibility. Sure, sounds great at first, but after a while, you are just doing more and more work while the boss is doing less and less.
Furthermore, if the bank starts giving you your own coverage (which is great right?), your work life balance can get really out of whack because you're doing 60 to 70 hours for your analyst and then you're putting in more time for your own coverage. This is one of the reasons that young analysts typically have pretty bad research reports. It's not that they're inexperienced - it's that they're all written off the clock. If you get to this transitional stage between full ER analyst and associate, you can start saying goodbye to some of your free Saturdays and Sundays. So in comparison to banking where life gets easier over time, in equity research, your life starts easier, gets worse ,and then if you become a full analyst starts to improve again.
Do also remember that the work/life balance has a certain floor in ER. Even as a full analyst with 20 years on the Street, you're still going to be working at least 60 hours per week waking up at 3 am to 6 am. So it never gets better than that. I have seen some analysts that start delegating more and more work to very good associates to the point where they work only 50 hours per week, but then the work product begins to suffer.
Overall, ER is definitely a better lifestyle. Like I said earlier, the free Saturdays are huge regardless of the rest of the week and you are also just treated a lot better as a person. I could work ten years as an equity research associate and be OK with it for the most part whereas anyone would lose their mind after ten years as an IB analyst.
Anyways, I hope that this was helpful or instructive. Watch for my post next week on ER vs IB exit ops.
Mod Note (Andy): top 50 posts of 2017, this one ranks #41 (based on # of silver bananas)
I've also previously worked in investment banking (at a middle-market bank) and currently work in equity research (at a bulge bracket), and actually, my hours are fairly better than what you've outline here. And my analyst is II-ranked, so it's a fairly reputable team, etc.
I get into work everyday around 7:30 to 8 AM, and get out of the office around 8-9 PM. This is in a New York office - I imagine that doing research on the West Coast does suck, admittedly. I almost never work weekends (I've had to work on a Sunday maybe twice in the last 6 months). So that's maybe 60-65 hours a week.
On the other hand, earnings week isn't great since most of my companies report after the close, so I have to stay in the office until around 3 AM in some cases - but then I just come into work later the next day (kind of like in banking), so it's never more than maybe 70-75 hours during those 2-3 weeks of earnings.
In fact, my hours are probably worse than the firm average. Most associates at my firm leave an hour or two earlier than I do, and very few stay past midnight even for earnings. So the average hours/week for associates at my firm is probably... 60?
I suppose the takeaway here is that work/life balance varies from firm to firm, even in equity research.
Fantastic
Thanks for the additional color to the post. Another factor that could be at play here is industry as some sectors have more news flow than others. Just looking over the fence, life at REITs or Utilities coverage looks pretty good at least from a work life/balance perspective.
Also, just a question for you, Fantastic. Are you working one analyst to one associate or one analyst to two or three associates? Some BBs still run two or three associates and I could see things being a little more laid back with a bigger team. However, I would note that there has been a long trend toward the one analyst and one associate model and two associates is becoming a luxury, not the norm.
And like you said, agree that work/life balance can be very analyst specific and firm specific. I'd say more than anything its driven by the analyst. You can have a terrible and lazy consumer group in the same firm that's the best on the Street for tech for example. Similarly, you can be taking it easy at GS with a more laid back analyst in comparison to being a complete slave at a small unknown boutique. It depends a lot on the analyst.
I’m on a team of two associates (myself included) + an analyst, so that probably helps. Generally at my firm, an analyst gets two associates if they get II-ranked. That said, I’m at one of the bulge brackets that does fairly well in the II rankings every year, so a good number of the teams have this two-associate setup.
Also, I cover a subsector of tech, so actually our work is relatively fast-paced vs. some of the other teams. But as I said, that’s why my own hours are likely worse than the average at my firm.
Work on an II ranked BB equity research team in NYC as a junior analyst/associate and can confirm my hours/life style are pretty similar.
Usually Mon - Thurs come in 7AM +/- 15 min (possibly earlier if earnings) stay until 8:30 ish unless we have a lot going on (at that point staying until 9:30). Fridays in at 7-7:30 out at 5-6pm if not earlier, Saturdays always off, Sundays 12-5pm. Even at the junior level the work is meaningful and interesting so my day goes by quickly. Still have time to hit the gym 3 times a week and I go out and party Friday/Saturday. Really not so bad compared to the volatile schedule of banking.
I started out in ER and switched to banking and definitely agree with this post. I moved to banking for the exit opps, and admittedly, they are better, but they come at a significant cost. Your "nature of the work" part is especially true. The work is exponentially more intellectually stimulating in ER vs. IB at the junior level. In ER, everything you do revolves around the thesis for your stocks or thematic pieces. You've got to be fully aware of the news and how it will affect your coverage, etc. In banking, optics matter way more than substance in many cases. If you need a macro page for an equity story or whatever, you couldn't care less if you actually believed it if it made the page look good and pitch go well. There is also so much more grunt work in IB, so much. Also, in ER, people actually care to follow the news, care to know what's going on. When I was in ER, we'd have weekly meetings where each analyst would discuss key themes in their coverage to the whole sector. In IBD, I would be literally shocked if I saw any colleague reading the WSJ.
I'm sure it varies by team, but you are treated like much more of a human in ER. I remember my boss used to call on Friday afternoon asking what my weekend plans were because he cared (at least a bit) and wanted me to have a good time. If my IB boss asked that, I know that would only mean that I wouldn't have a weekend, and my boss would probably enjoy the moment.
I could go on. I'm glad I made the switch, but I guess the point is, no matter where we are in finance or in life, be human to each other. And for those in ER maybe debating making the switch to IB, really decide if it is necessary to get where you want to go. If it is, then absolutely go for it, and if not, then enjoy what you have.
I know these are biased opinions and fueled by N.O. Explode at 10pm, but hopefully worth something.
I think the key differences regarding the work-life balance of the ER associate vs. IB analyst come down to predictability and application.
As an associate, you are essentially on-call 24/7. That said, the odds of a coverage company releasing an unexpected press release are very low, outside of the typical 6am-6pm window (depending on your sector). So you have good visibility into your workflow, and it is easy to plan your social life, and make routine commitments, like Wednesday night hockey @ 8:00pm, with the exception of busy season 4x/year. As anyone on this forum can tell you, this is not the case in IB.
On the other side of the coin, when you are in the office for those ~60 hours a week, you are working your ass off the entire time. The majority of your work is extremely time sensitive, with the exception of thematic reports you keep on the backburner for when things slow down. There are no lunches away from your desk, there are no opportunities to go for a 15 minute walk outside, and there are no slow periods when it is acceptable to go to the gym for an hour.
Effectively, a full day of research is on average shorter than a full day of banking, but it can be exhausting, due to the lack of downtime, and the constant application of critical thinking involved in primary analysis. No part of my day would I consider anything short of applied critical thinking. And don't get me wrong, it is a rewarding, intellectually stimulating job.
That said, I am leaving my current ER posting in several weeks for one in IB, because as previously mentioned, to climb the ladder in ER, the commitment to the job only increases, until you've established a successful research franchise, and have one or two associates beneath you. To make matters worse, comp does not increase at the same rate as banking. And ultimately, the research industry is structurally challenged by regulation and technology, as broker dealers bundle ER with S&T when they bill clients, so I don't see career opportunities improving down the road.
great post, like yourself I'm amazed how the analysts/associates on the west coast are up for the morning call with the time difference...definitely not worth it in my mind
one thing I'm curious about is where you get a greater sense of fulfilment...sure in ER when you update a model/write a note, it's something that has to be done in order to get your research out...but at the same time, the odds of anyone actually reading any report from front to back is near 0
on the other hand, in IB a lot of the tasks you have to do are fairly menial (formatting slides again and again), but at least a small fraction of the time you see the fruits of your labour when a deal that you've contributed to actually closes. Plus at the higher level you can directly affect change
But then, I hear from bankers (mostly during my time as a SA) saying how “the bst meetings are ones where the pitchbook isn’t even opened.”
This made me think - why aren’t IB analysts spending more time just informing their MD/VPs Of information, instead of suffering through pitchbooks. To which I countered (and thus realized) that these pitchbooks arent actually for the clients. They’re are for the MD/meeting attendee. So I’m still on the fence about whether IB work is actually “value-additive” in the way that ER work is.
However, you cannot discount two aspects - 1) at the junior level, IB is still a better platform for getting into the HF/AM space and 2) ER really is going through a structural decline with Mifid II, and the proliferation of research out there.
Really think those interested in ER at the junior level would be better suited trying to break into buyside research ASAP.
Even in banking, I’ve seen anecdotally from people here on WSO that they leave for their HF/AM gigs in some cases only MONTHS into their IB Analyst careers.
But I’m really postulating all over the place , and people in IB or ER (and who have worked in both) have more valuable contributions. SBs all around though.
I'll add a datapoint. I'm a senior associate covering tech in NYC. Non-earnings hours are generally 730 - 7 with some later nights when we publish. I'd say these are average hours for my office. During earnings we work until we're finished which can mean anytime from 9pm to 2am. I'm out by 5 most Fridays and I never work Saturday. Sunday I might put in a few hours but it's rarely required.
I would say the hours in ER come at an opportunity cost not only for comp but also job stability / long-term career outlook and the mental strss that brings. Banking is doing well from a revenue standpoint and has been for a while, there hasn't been any good news with regard to ER for about a decade. MiFID, Automation, active to passive, compressing margins, shrinking salesforce, etc.
I am not saying ER is going away any time soon, and this may be for another post, but I would rather work the extra 20 hours a week if it meant better exits, bonuses 2-3x the size, and a job I didn't have to worry about constanly getting worse than the day before due to issues out if my control.
I will cavaet this by saying you have to go with what interests you and if you are young both of these jobs will likely be a relatively short term part if your career. If you really love the public markets and would never consider PE then go ER, if you like deals and the widest possible exit ops then go IB.
With regard to exit ops it seems like ER can go to HF, AM, IB, Corp Dev/IR/FP&A, FoF, Family Office which is every IB exit op besides PE, and you can always try laterling into IB for that. I included VC with PE as most VC funds that take bankers are closer to PE than Seed Stage VC.