Is it time for alternative options?
I need to get realistic about next steps and I have a feeling some of you were in my shoes.
I am a few months away from 3 years in SS ER at a MM within a broader TMT coverage and I'm looking to move to the buyside. I've heard that 2-3 years is the sweetspot to make the jump and that it can be more difficult after 3 years (confirm if true).
The issue is that I've had significantly less traction than I would have expected. I've really only had meaningful engagement with one of the big 4 pods. Although it could be the issue, I don't think this is a skillset problem because I have had good reviews and passed multiple stock pitch oriented rounds. Plus, those stocks have tracked as I laid out in my thesis, which seems to be objective feedback.
I believe my issues come down to the following reasons:
- Small, lesser known team: Analyst was fairly new and was promoted internally in the firm. I am the only associate, which doesn't leave time for many client interactions. My analyst handles this because its more important, while I focus on the traditional responsibilities since we don't have other associates to cover that. The limited client exposure probably doesn't help.
- Broader Coverage: We cover names across multiple industries within TMT, so it is more difficult for the buyside to evaluate our coverage and say we are experts/specialize in one vertical. For instance, the interviews with the one pod shop were in a vertical adjacent to mine, so I didn't have the sector expertise. This seems to be a recurring issue. Plus, it's hard to tell if you can truly be specialists or experts in the sector where we allocate more time.
- Lack of Prestigious Background: Semi-target state school, okay GPA, had a somewhat unrelated job before SS ER. I would have figured the experience in SS ER would have offset that but maybe not.
I'm considering switching to a different SS ER team to improve my odds of buyside recruiting and wondering if this is the better option than sticking it out for another year and hope that my luck turns around.
Here are some pros and cons to lateraling to another SS ER team.
Pros:
- More established team, more exposure to buyside. Ideally, an II-ranked team
- More specialized coverage, which would appeal more to the sector specific roles on the buyside
- Better pay
Cons:
- Resets recruiting clock by likely a year, which means I would be recruiting for buyside with around 4 years of SS experience minimum
- Some new coverage, which will require a ramping period again
- May face the same issue in the future, which would make this career move useless
Based on the most helpful WSO content, here are some insights and considerations for your situation:
Key Points to Consider:
Timing for Transition:
Challenges Identified:
Pros and Cons of Switching SS ER Teams:
Pros:
Cons:
Recommendations:
Conclusion:
Switching to a more established SS ER team could improve your odds of transitioning to the buy-side, but it comes with its own set of risks and challenges. Weigh the pros and cons carefully and consider all your options, including further education or alternative career paths.
For more detailed discussions and advice, you might find the following WSO threads helpful: - https://www.wallstreetoasis.com/forum/equity-research/a-warning-to-thos…</a">A warning to those aiming for Sell Side Equity Research - https://www.wallstreetoasis.com/forum/equity-research/feel-trapped-exit…</a">Feel Trapped, Exit Opps From Sell-Side ER?
I'm sorry, but it looks like this may be out of my ability to answer... maybe some of the links above might help?
Kinda just repeated my post lol
Bump
I can't say for sure why nothing is sticking but honestly (and perhaps this is far too old school) but I'd just start pitching teams directly. If you felt you weren't gaining much traction in the normal channels of HH/biz-dev it is likely because the seats or roles they're showing you aren't the right fit anyways, to your point about not being as specialized. In that case and in my opinion I feel like if you wrote up a small 2-3 pager or a few slides on a name you feel comfortable about and found PMs where that sort of pitch could be actionable, it would at least get you on their radar as someone who's smart and hungry and perhaps they'll either 1) entertain a conversation if they're looking for an analyst, 2) know someone who is looking, or 3) ignore you. Tbh #3 seems like fairly limited downside, unless your pitch stinks and that's why they're ignoring you
I have no clue how much II-rankings contribute to someone getting a seat, but I can probably say that typically buy-side folks want to hire research associates from teams they know are good. Idk if II-rankings actually portray anyone's strength though I always felt it was just a chore for buy-side folks to win brownie points w/ the sell-side
I would opt on sticking it out at your current firm and just getting more aggressive on recruiting. There are ways you can start to build specialization in a broader coverage so focus on that - perhaps you get really good at semis or software or internet and you take the bulk of those names off your senior analyst's plate, boom now you're the specialist. Seems like that would work especially if your senior analyst is covering > 30 names all across TMT and you're the only other guy. Also this would probably help in building some credibility and increase your likelihood of talking directly to clients, plenty of times I've asked to chat w/ a senior analyst on a certain name and instead I get their associate who is actually the brains behind that space/coverage
Background - I'm not sure... maybe there's some GPA requirement but honestly you would've been dinged well before getting through a stock pitch part of an interview had anyone cared about your school/GPA
I think the risk on moving is essentially that it's not a guarantee you all of a sudden get scooped up by a pod that only wants to hire from JPM/MS or whomever. I think it certainly has the advantage of gaining more direct exposure to clients, but in reality it'd be different if you were completely excluded from any recruiting whatsoever at your current gig. I think there's a different between biz-dev ignoring you entirely (in which case you would likely have to move SS firms) and them responding but you not moving through a process/getting an offer. Tells me you have to continue to refine your specializations and tailor them for the seats you want, but just remember there are a billion reasons that someone might not hire you so I don't think an abrupt career change laterally to the same job drastically improves your chances if you're already in the door
I appreciate the advice! I like your direct pitch idea and will start implementing that into my recruiting process.
The idea of building out specialization in my current coverage is great in theory. I'm trying not to reveal too much more than I already have, but we don't cover that many names so we have 2-3 names at most in each of the subverticals you mentioned. It's more like 2-3 names each in a bunch of different subverticals with some having more crossover than others. I know there are whole other teams across the street that are dedicated to each of these subverticals because we rarely see the same set of "competing" analysts for our names. However, I guess this advice could still apply by becoming the expert for the 2-3 names in two different subverticals to help provide a little more optionality.
You are mostly correct in your last paragraph. Although, I do want to mention that I have had a fair amount of biz dev completely ignore me, including some of the MM HFs outside of the big 4 pods. If I recall correctly, I think Citadel makes you take some technical/modeling exercise before speaking with biz dev. I've passed the modeling exercise (received an actual email saying I passed) and then get ghosted by the biz dev - this applies to more than just Citadel. For the funds where I actually progress to biz dev and speak with a team, the problem is usually the team/sector fit which I get.
I don't know if this new info changes your advice but maybe you're right in that I will have to just get a little more aggressive with networking and pitching.
Maybe a little bit now that you've elaborated on the coverage. 2-3 names in each specialty is quite difficult and I think broadly speaking the way it works for pod seats is you go from specialized --> less specialized over time within a sector... meaning if you were covering a broad swathe of stocks and became more senior the jump to a more senior buy-side seat actually may make more sense given the coverage-style similarities
I mean in reality the associate seats at MMs want you to cover in excess of 30 names and likely across 1-2 verticals to start with the potential to add more as you see fit. 2-3 names across each sub-vertical is way less than I had thought in my head reading your initial post... I was thinking maybe 5-10 across 3-4 verticals
I think about my experiences in any former processes w/ the MMs, largely the ones that have been successful were ones that there was a clear crossover between my existing coverage and the coverage they wanted me to pick up to a degree, but I probably was close to about 50% of the coverage in the seat I was interviewing for with the remainder being names I'd newly ramp up on. Not sure if that's a useful data point or changes anything but in theory if you're only overlapping with 10% of the coverage they'd want you to be taking on that largely seems like it's a steep ramp from their PoV
I’ve personally never had anyone respond to pitches I send via email. I’ve tried 20 or so times and didn’t get anything. I actually do think they were reasonably good but I assume people just don’t respond to this just generally. Has that actually worked for people? if so how did you get it to work?
imo a lot of your struggle is just job market in general. I think the number of available seats is down 3x but candidates have stayed the same. (This is a totally made up number fwiw but is based me thinking maybe 1/5th of my interviews in my last two recruiting cycles were multis but now the only seats seem to be at multis… I assume some of this is due to the bias of being older now, so I’m illustratively saying 1/3). Also the seats are all from the same places which ends up meaning a smaller quantity of interviews. I just think balance of power has shifted quite a lot in favor of employers because of greater centralization of money.
1) Cold emailing whether or not with a pitch is 9/10 times ignored. Would you respond when your job is to do 100 other more important things?
2) Agreed, the job market is tough. The number of candidates has increased, while the number of seats has decreased. As you can expect, most of the hiring occurs at the big pods and many PMs there have a set "model candidate" of whom they are looking for.
Building off of Herzy's points -- You really need to get more direct client interaction, especially if you've been in the seat for 3 years. I started out in SS ER at a MM and when I was interviewing for hedge fund jobs it was often times clients referring me to open positions or interviewing me themselves. We were a team of 4 with 2 analysts and 2 associates covering close to 40 names so we had a bit more bandwidth, but the senior analyst wanted everyone to be an expert on every name so we were generalists across 5-6 subverticals in TMT.
They were very adamant about throwing us onto client calls from the get go which forced us to get smart on each name and the stock drivers. I think this heavily contributed to my accelerated development. I didn't end up going into HF (went to VC instead) but got to the offer stage at one of the big 4 MMs before I took the VC offer.
I'd stick it out at your current place and be more aggressive with outreach but also push to get more client exposure. At the end of my 3-year stint I was doing 15 client calls a week and taking key accounts out with sales every other week without the analyst involved at all. It was a lot of work and earnings season meant no sleep but if you have the energy to execute this now it'll pay dividends.
Suggestions for getting more client access
As the old adage goes: it's not about what you know, it's about who you know. It sounds like you've got the what pretty locked down, it's the who that needs work.
This is refreshing advice. I’m definitely handicapped in this regard since we just lack the capacity with a team of two but I will make a bigger effort to get more exposure. I imagine this will go a long way in getting more opportunities. Thanks for the reply!
Happy it was helpful!
It's definitely hard when you have such a small team with a rising star analyst. It's a grind to build a franchise from the ground up, but it's on you convince them that speaking with clients not only expands their franchise, but also improves its quality. If your team is a company, he's the account exec (S&M) while you're the product manager (R&D). In order to improve the quality of your product you need to get first hand experience with your customers. That's product management 101.
Best of luck with the search!
I’m curious about the idea of networking with clients and finding opportunities through them. How does this work without your analyst finding out and potentially getting upset? Also, would it need to be done once the clients get to know you better? As a junior associate, client relationships have not been built yet so I’m wondering how to position myself for the future
That's always a risk and you have to be sensitive with how you navigate it. It takes time to build the relationships and once you get to a point where you've got enough trust established you can say, "Hey, I really enjoy our conversations and am trying to set myself up to transition to the buyside in the next year. Can I buy you a drink/coffee sometime and get your thoughts xyz fund/strategy?". It's easier if you're already hanging out with them in person at events regularly and can get their take on teams that are looking for analysts or PMs that suck to work for.
I will say, that usually you'll end up making these types of relationships with specialists in your sector since they'll likely be talking to you over prolong periods of time since they're always trading in and out of their narrower coverage vs. generalists and event driven teams that had one or two names in a vertical for a 2-3 quarter position.
Ultimately, you can't really keep this from your analyst. Word gets out. Depending on your relationship with them the best case scenario is to tell them that your eventual goal is to become one of their clients but you're only looking to make the jump if it's a big step up. Until then you're going to put in a ton of work to be a top performer on the team because that's what it takes to get to the next level. I was explicit with my analyst around the 3 year mark and while he was not happy that I was looking to leave he appreciated that I wasn't going to take just any buyside opportunity that showed up. When I finally got to the reference stage for an opportunity that was too good to turn down he made a glowing recommendation that pushed them to extend an offer.
As I mentioned earlier, it's important to frame conversations in a way that shows how value accretes to their franchise. When associates graduate to top buyside shops it creates 1) the opportunity for more commissions from that shop due to your relationship, and 2) a halo effect on that franchise since they become known for churning out really smart people.
Nice post. Why did you go VC instead of MM? How did that work out / did you enjoy it / are you still doing it?
Fugiat in iusto est nobis voluptatum ut. Eaque in voluptatem praesentium harum et suscipit.
Inventore et assumenda libero exercitationem quo autem sint. Rerum laborum aut explicabo fuga atque doloremque impedit. Expedita aut dolore eligendi in quam. Inventore et autem voluptates veritatis deleniti qui magni. Mollitia ipsam deserunt assumenda in ea non eveniet.
Itaque perspiciatis exercitationem est. Magni sed qui cupiditate expedita a numquam. Officia beatae reprehenderit illum magnam explicabo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...