Should I go ER or IB?
I know this gets talked about a lot, but I’m genuinely torn. I’m confident I can land a solid IB internship, and I’m not obsessed with prestige in my career. I’m passionate about finance, and I understand that IB is probably the best way to learn the ins and outs of the industry, and that leads to the best exit opportunities.
That said, I really enjoy the research and public-facing aspects of ER. I do some finance writing at my school, nothing too in depth, but I love digging into the details of companies and coming up with an investment thesis.
Since both are considered entry-level roles, I’m not too concerned about the minor differences in pay or hours. What I’m more focused on is how equity research is perceived these days, especially after all the regulatory changes. Is it still a legitimate first job, or will I always be looked down on for not starting out in banking?
Ultimately, I want to move to the buy side at a hedge fund of some sort. I saw a post where an MD said something along the lines of, “ER guys would probably be better for us, but we’ll still recruit IB guys anyway.” How true is that?
I’m also thinking about the possibility of staying in either IB or ER long-term. How do they compare in terms of career progression and actual work? From what I’ve seen, the hours seem to level out (IB gets a bit easier, ER gets a bit worse, but both average around 80 hours a week by the time you’re earning serious money). I understand that both pivot to a sales role, but it seems like you can still be a successful and well paid analyst for a while.
My brain says IB, but my heart says ER
You will probably get more HF opps from IBD and probably more flexibility moving sectors too.
ER guys mostly get opps from the pods these days (which isn't necessarily a bad thing, depends what you want). SMs are harder and sometimes prefer bankers.
Yes you get public markets work in ER but to be honest sell side ER is normally a disappointment to people truly interested in investing. It's a role for people who like talking and being intellectual.
I've never got the sense it's genuinely looked down upon, even though people joke about it. Anyone who knows what they're talking about usually understand where its value is and isn't.
For a year, I'd just do IBD.
This is absolutely true. And to really hammer this home, you'd be surprised how much of these processes are (at least partially) run by headhunters who've been in their job 1 year. And all they do is rank you based on what bank you work at. If you work at GS/JP/MS you're considered Tier 1. Regardless of whatever else. Clearly you have to consider that they don't make final decisions but they can be gatekeepers.
Thanks, this was my main concern. Do you think 2 years IB and 2years PE is necessary or is a short stint in IB all I need? Everyone always pushes that 2+2, but honestly PE sounds like hell to me.
I recently talked to a guy who spent 2 decades in ER, his advice was that he wouldn't recommend his kids do ER if they wanted to pursue a career in finance, its not the worst seat, but banks view ER as cost and comp hasnt been the same since regulations kicked in. IB has better exit opps
Thanks, that seems to be the concensus in terms of the recent ER landscape.
WSO mods - I literally linked to just another thread here and my comment was deleted, is it against site rules to post links in threads or something???
Thats against the rules but becoming a heroin addict isn't, obviously. Anyways, what was in the comment if you don't mind me asking.
If you’re that passionate about investing, I believe that Point72 and Citadel have analyst programs. However, consider that these are extremely competitive … as in, “model in your free time” competitive. You need to be a little obsessed. However, they’re also more meritocratic given their rigor, meaning you don’t necessarily need to go to a “target school.”
As between IB and ER … if you can land a role with an II-ranked ER analyst and your skills are top notch, after a couple years, you can likely land at a pod or sector-specific fund of your choosing.
IB would, as others have said, give you a better shot at a single manager HF (though often through the IB-PE- SM HF path).
IB has better internal trajectory, meaning you can “ride it out” indefinitely if you’re good and keep being promoted. In ER, you only become a covering analyst if someone leaves, and that is very time consuming and uncertain. The job doesn’t really change as you get more senior until then; there are two roles - supporting associate and covering analyst. Pay also starts to lag IB severely, and seniors in IB and ER probably work similar hours.
As such, see ER as a means to an end at a pod and an interesting day-to-day as a junior. See IB as a way of keeping optinality open and a “prestigious” path, and also one where you can remain and grow in your seat indefinitely.
Your “training” depends on your seat and on you - if you want to learn to model (if you don’t know already), you can “force” your role to let you in either seat. No excuses there. Both give you the exposures you need on the technical side and marker side, though you’ll have to teach yourself about LBOs and deal processes if you do ER (not hard), and about investor thinking if you do IB (requires talking to people but, again, doable).
Ironically, this is the opposite of how it used to be, where the advice would be to do IB as a two-and-out and ER for the longer haul.
ER faces structural headwinds IB doesn’t, but that won’t matter on a two-year timeframe. Pay for an analyst 1 or analyst 2 isn’t different enough between IB and ER to affect lifestyle … that hits at associate level.
People who say ER doesn’t help with “investor-type thinking” are wrong… you don’t invest, but you’re privy to basically all of the investor chatter and positioning on the street in your names (if your analyst is good). You also learn to model to the KPIs that matter, connect with most of the major pods on the street, and will, even at a junior level, probably meet some investors and write about key catalysts and debates.
All that being said, the hours in ER aren’t as much better than the hours in IB as people think. An intense ER team works more than a chill IB team. An intense ER team in earnings works as much as an IB team during a live deal. All-nighters happen. Even if the hours on average aren’t as bad as in IB, the gap isn’t meaningful enough a reason to pick one over the other.
Generally I’d recommend IB, but that’ because most people don’t know what they want to do. If there is any specific goal more conducive to ER, it’s yours.
Between IB and ER, I’d apply to both IB and ER internships and see where the chips fall. If you get an II-ranked analyst at a top research firm, that would be my choice for you over an “average” IB seat (which is still a prize!). If not, probably take IB, it’s a “safer bet” even if the work won’t be as tailored to your interest.
What about non-pod exits in ER? Any thoughts perhaps on IR? Is it better than corp dev or strategic finance roles or is it better to just stick with investing seats?
You can also exit from ER into long-only funds (Wellington, TRowe, etc…), which pay decently and have good WLB and more of a long-term focus. There are also sector-specific funds (in healthcare, these include funds like RTW or RA) that can take people from ER. And, yes, IR is on the table, as is IB (ER to IB or ECM is very doable).
Corp dev/corp strat is more of an IB exit, as it may look for M&A experience. PE is also more of an IB exit as it also expects deal experience.
can i pm u?
ER is more interesting imo but pays less. Earnings szn can be brutal. Do you like following public markets or working through private deals?
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