Entry buy-side or sell-side position....thoughts?

mshefford's picture
Rank: Chimp | banana points 4

I got two different offers for post-MBA entry positions. One is sell-side ER associate and the other is a buy-side junior analyst (IM). The SS firm isn't a BB but it's a recognizeable MM firm while the BS firm is a relatively small investment management company that runs only two or three funds and employs about 30-35 staff (including 15 analysts and 3 PMs) but still manages over $12 billion in assets.

Both have roughly the same starting comp level (~80 + bonus) but the SS job involves longer hours (60-65 hours per week versus 50-55 for the BS). The SS job can lead to promotion to senior analyst in 2-4 years afterwards the total comp can multiply to 300k and up. The BS job doesn't seem to have as much LT upside potential in terms of base comp but its bonuses can match base in the future in good times.

Questions:

Is there a big difference in job security for a SS ER associate and a junior buyside analyst? I heard that the associates are much less scrutniized than their senior analyst, but of course they're paid only a fraction of the senior's comp.

Which job (BS or SS) would give you better exit opp's? If you'd like to go into IB/corpfinance/M&A or even enter a company management role, is it better to go with the SS role?

If you had to choose between an junior buyside and a SS ER associate position, which would you choose and why?

My impression is that the BS job is more competitive, in terms of receiving an offer, than the SS job since a lot of MBA's seems very keen on getting into IM these days (better work/life balance).

TIA.

Comments (6)

Mar 21, 2007

I am curious about this as well.

Mar 30, 2007

I've seen people start out in buyside and move into sellside later on and vice versa. Some friends of mine said they didn't like sellside because the research doesn't provide value add to the small investors, others moved into sellside for the pay. I guess if you want to help the little guys you'll pick BS otherwise SS. I was told that SS Associates were in demand. I personally don't think that either will limit your exit opps. Pick the one you think will be the best fit for your interest.
Let us know what you decide...Congrats and all the best.

Mar 30, 2007

SS is more interesting, but it's rubbish at the bulge bracket. Guys there aren't really doing much research and just holding the hands of the dirty cats running the hedge funds. Better lifestyle on the buy-side, but ultimately, I personally love the sell-side. If you're good, you can have a lot of fun and really make a name for yourself.

Apr 1, 2007

Thanks for the responses, guys. I decided to take the SS job for a number of reasons:

1) Greater exposure to the capital markets as you have higher exposure to S&T/IB and corporate management, and higher dynanism (responding to day-to-day new market events). SS guys get quoted in the press and not buyside guys.

2) SS positions require a more broad skillset (verbal & written communication capabilitiers as well as stock analysis); I think I'd enjoy publishing reports and presentations/client calls/marketing trips, rather than punching numbers in Excel all day.

3) In SS you become more of an "expert" in the companies you cover since your focus is more concentrated; I'd rather know 10-15 names really well than to have a more superfluous understanding of 30-50 firms.

4) There's higher "pressure" to perform on the buyside. On the BS they expect you to make good calls (since you'll be judged on nothing other than P&L) whereas such emphasis is not quite as prominent on the SS (according to a few analysts I've spoken to over the past few weeks).

Furthermore, if a BS analyst researches a company for days (weeks?) while thinking it'll be a great pick but afterwards, near the end of the process, learns of some flaws that prevents him from recommending the stock to the PM, it'll appear (to the PM or other supervisors) that he did not add any value or accomplish anything for the period while researching the stock. A SS guy's research will always add value, regardless of how he rates the stock.

5) There's a sentiment that you're more likely to be pigeonholed into AM if you're on buyside (from what I heard) while moving from SS ER to IB or corpfin roles is a more natural or common exit path.

6) It's harder to get a job on the sellside as you get older if you don't already have SS experience. Buyside firms generally value experience more than SS firms, so it's probably easier to move to BS anyway once you have experience (be it on BS or on SS).

Now if someone really likes the idea of running a portfolio or hedge fund as the ultimate goal, buyside may still be the preferred place to be. But my finance interests are more varied so for me, it looks like sell side offers greater flexibility, variety, and a more compelling perspective.

Apr 1, 2007

They sound like great reasons, well done and good luck.

Apr 1, 2007
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