Q&A: Equity Research Associate Laid Off
Hey guys, I got laid off from a MM bank. I've got 1+ year of equity research experience and 2.5 years of investment research experience. Ask away... /insert shameless looking for a new job solicitation/
Hey guys, I got laid off from a MM bank. I've got 1+ year of equity research experience and 2.5 years of investment research experience. Ask away... /insert shameless looking for a new job solicitation/
+22 | What’s my next move? | 5 | 5d | |
+20 | Vanderbilt vs. Notre Dame M.S. in Finance Equity Research placement | 10 | 5d | |
+18 | Biotech ER vs IB | 16 | 1m | |
+18 | CS Major looking to switch and break into high finance - is it over for me? | 6 | 6d | |
+15 | Wolfe Research best coverage verticals 2024? | 13 | 6d | |
+15 | Final Round Never Heard Back? | 4 | 1w | |
+12 | Why is MM ER comp so bad? | 6 | 2d | |
+12 | The Ultimate Non-ER SS Research Guide | 1 | 2w | |
+12 | Manager fired, debating to exit | 5 | 2w | |
+10 | Is this pivot attainable? | 3 | 3w |
Career Resources
1.) What are you looking to do next? 2.) Why were you laid off?
1) Hopefully ER, but also looking at other tangential things like FOF, IB, etc. 2) Cost + Team performance
Were you able to network with other ER firms? What was your coverage?
1) I've been networking w/ other ER firms 2) Can't go into specifics, but broad category would be TMT
I understand, what were expectations for you starting out from management? How has MiFID ii been talked about affecting your overall business by the senior guys? Do you think MiFID ii has affected the quality of research either you or your firm put out?
Hey sorry to hear about the lay off and thanks for the AMA.
Have you found that industry consolidation has made it more friendly to get into the BB firms rather than the boutiques who may not be able to support the weight of the research groups cost structure? My gut is telling me everywhere is going to be shrinking accordingly, but wondering if you've noticed any talent flow to or from larger shops.
Thanks!
From what I've seen, pretty much everyone is hurting, but people working at BB's are probably faring better because they've got a larger revenue pool, provide quality research, and have good corporate access. Also, when it's easier to cut pay when you're making 500k - 1 mil. Whereas it's much harder when you're making 200k - 400k. And the reason why you're making 200k - 500k is because the money your bank makes for the work you do isn't much. When the bank starts running at a loss, people will get cut much faster than when the margins are just slightly contracting. Put simply, I think that BB's have more operating leverage - decremental margins are much lower at BBs vs lower on the totem pole. I'd imagine that my shop will begin to see more talent outflow as people realize that this could happen to them. If you're gonna get axed without a warning, you might as well make big bucks at a BB right? If BB's are truly feeling pain, my guess is that they will shift coverage to focus almost solely on the names they bank, but the pay will still be good. Lower MM and boutiques don't have that luxury because the names they bank are probably private, ergo, ER gets no slice of the pie.
TLDR: Lower MM and boutiques will struggle because fee compression hits those at the bottom much harder than those at the top (talking to all the left co-bookrunners on the side that's on the occasional lower MM deal every once in a while because they've got a buy rating on the stock, report the news, and are pretty much outsourced IR)
so what do you think is the future of ER overall? will you still have a few rockstar researchers, or is it all going down, game over man?
Future of ER needs to be put into multiple buckets: BB's/strong banks that get deal flow: Good to go - maybe some slight fee compression, but if your seat is paid for by the companies that you bank, you're fine. Top MM's/banks that good decent deal flow: Probably face some pressure and will likely reallocate resources to companies they bank or just take a pay cut. Low MM's and boutiques/banks with poor deal flow: "Full service" will begin to look deceiving. These banks are probably good in a few areas and will stick to those few areas that they are good in. Other areas w/out banking support will get cut. Other/Boutique Research Firms w/ strong research product: Interesting dynamic. Hard to say. You have to wonder why an analyst chose to go independent. I'm fairly certain the money is less than a BB/strong MM, but I could be wrong.
I wonder if ER turns into a massive conflict of interest. I've noticed that a lot banks skew ratings towards "buy", whereas BB research that I've read sort of do as they please. I.E. Goldman's Industrials whip they're ratings around multiple times a year based on fundamental data/valuation. Whereas a lot of other banks will cheerlead a stock up, and each research report is either "buy on weakness - lowering price target by 30% and maintain buy rating", "flywheel keeps on turning - increasing price target by 30% and maintain buy rating", "Disappointing quarter but valuation looks attractive - lowering price target by 30% and maintain buy rating"
Can you rank the banks, as best you can, in terms of research product and quality over all.
Research that I haven't read - Bernstein, Evercore, Needham, Oppenheimer, UBS, Credit Suisse, Piper, Raymond James, Baird, rest of small boutiques Top 3 based on what I've read would probably be.. William Blair Goldman (more so for models - some of these models get insane; i.e. modeling media companies by movie...) RBC/Wells
RBC put out some good industry things Wells put out a good morning news update for important industry/company events
Something that people might not understand is that a lot of research that's put out is garbage/reporting the news/outsourced IR. Sometimes they will put out good stuff, thought pieces, in depth looks at companies, etc. and that's what I'm rating them on. Note: this ranking is based on what they write, and not what value add they may only give over the phone.
Interesting take. What makes William Blair among the top three? RBC and Goldman are expected, of course.
Just adding my $0.02. I put in a year and change in ER and was laid off recently. Was told that buy-side allocation towards smaller ER shops was contracting drastically, hence me being let go. In terms of independent shops, those with select talent and niche industry focus (Wolfe/Sandler/Zelman) will be able to hold their ground for some time IMO.
Can you speak on how you got to ER in the first place? (school, internships, landing the job). And any advice for someone who really wants to break into the industry (graduating senior) but just got shafted by a fucking global pandemic?
Where you working now?
I though those niche ER shop want people with real industry experience rather than just vanilla finance skills? What's your take?
Sorry to hear that dude...when u say being laid off, than fired, you still got paid for several months’ salaries? or not thanks!
Have you considered buyside research? How's competition looking to break in there?
If you had your time again would you have done IB instead?
Good questions, would be interested in hearing a response too!
Sorry to hear that man...I'm also in the job search process (recent grad FT offer got rescinded due to covid)
Can you share any views on networking in ER, like how important is that and how should recent grads approach this? (no direct ER experience, only did private credit internship)
Also, do you see any hiring freeze in BB/boutique ER recently?
Thanks!
Look at Gutenberg Research for some (virtual) internship experience every quarter. You could also consider taking the CFA Investment Foundations course, which is entirely free.
Test
Hows the job search been?
Minima sed et est odit aut voluptate praesentium. Praesentium aspernatur porro ullam fugiat ea et sint. Excepturi consectetur dolorum nihil aperiam nobis. Omnis nesciunt facere quod ad sit. Aut et veritatis aut pariatur et consequuntur. Ipsum et voluptatem illum quia ex.
Aut nesciunt asperiores veritatis molestiae. Assumenda incidunt est praesentium earum rerum alias. Eveniet quia tempora eum inventore placeat consequuntur. Eaque tempora atque voluptatem quia. Nisi et et eos earum eos consequatur.
Deleniti doloremque commodi aut ut. Sit laudantium officia et quo repellat dolore. Culpa voluptatem illo corporis laborum reiciendis eum odio.
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...
Qui ea omnis aliquid eius qui nemo quia incidunt. Eaque rerum perferendis incidunt vel. Molestias laudantium corrupti sunt totam.
Corrupti nostrum est laboriosam sed in corporis illo. Consequatur harum ab illo et perferendis iure. Nihil ipsam numquam labore. Veritatis quia eos earum ipsam non. Voluptatem sed id veniam et dicta.
Ipsam quos modi est est enim tempore alias doloremque. Occaecati saepe nihil id est quisquam. Aliquam asperiores molestiae qui minus quas perferendis sunt minus. Voluptatem ab iusto excepturi assumenda.
Dicta quia minus non officia aspernatur laboriosam corporis quas. Amet aut sequi sed reprehenderit qui. Quos eveniet nobis quidem at velit quasi.