I'm a Senior Sell-Side Research Associate, AMA

Quick Bio:
I'm in sell-side research and have been for 4+ years now covering the same sector. Prior to research I did a few years in a finance-related role that was moderately applicable to my current role. For the people who care, I went to what would be labeled a "non-target" university and obtained a wildly mediocre GPA. I'm a CFA charterholder, went for the designation to bolster my non-stellar academic profile to whatever extent it was possible. Given my tenure as a "junior sell-sider", I'm obviously looking to change it up and make the move to a new opportunity.

Happy to discuss anything. Some of my answers may be a bit on the generic side, some may be in greater detail, heck some may just be soap box responses depending on the day I've had but the end goal is to provide value-add content to anyone curious about sell-side research without giving away my identity. I would say I've experienced more than a normal junior person in my stint through multiple employers/market cycles/swings in investor sentiment (all pertaining to my specific sector) and hope it serves this community well.

Will do my best to answer your questions as quickly as possible and individually but depending on time and question backlog, I might just fire off multiple bullets in a single response.

So with that said, fire away.

Comments (55)

Apr 22, 2019

How do you gather info about competing bank analyst views?

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Apr 22, 2019

Partly from previous experience given my work history, but would say the best way I've been able to comp myself against other banks is through my client relationships or from colleagues who have left to try their hand at investing (HF and LO). I've found reading competitor notes can only get you so far, much more helpful to hear the nuanced details expressed in conversation that can't be discerned through text, though it is difficult to get these tidbits often.

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Apr 22, 2019

Comp progression over your 4 years?

Apr 22, 2019

Started strong and after some changes have seen it be more average to below average. Rough progression has been as follows (in total comp): ~$120-125k, ~$110-115k, ~$125-130k, then flat and now on track for ~$140-145k if the variable portion is roughly the same as the past couple payouts.

The overwhelming majority of the "increases" have been driven by base bumps/promotes, so low-calorie at best. When it comes down to brass tax, the way you get paid in research is to help drive banking revs up for your respective group on the other side of the wall. If you want to get paid decently well at the "junior" ranks i.e. not a senior analyst, go work at a BB.

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Apr 25, 2019

I think you mean "brass tacks", just fyi

Apr 22, 2019

Thanks for the AMA. Couple questions here.

1.) what are your hours like? Are you happy with where you are in terms of comp/life balance?

2.) in banking the higher up you go the better the hours. From what I've read here it seems that it's not as clear in ER. Is this true?

3.) Do you think there's a conflict of interest for sell side researchers if they cover a company that's also a client? Is that allowed? To what extent are you a "cheerleader" for the firms that you cover?

4.) How does your role compare to buy side equity research (think Wellington, fidelity, etc.) in terms of what you do?

5.) Everyone says they have "differentiated research" in marketing, but what makes a firm good at ER in general? In today's Information Age how do you get around the fact that everyone is a able to access information quickly?

Thanks again, if you need to condense answers into one no worries.

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Apr 23, 2019

Great questions. Commenting to see an answer as well

Most Helpful
Apr 23, 2019

Solid questions here. I'll do my best to interject as little bias as possible and give enough detail without writing a novel.

1) Hours are highly variable and heavily dependent on a wide variety of things however I would say the largest drivers of your overall experience will be your direct boss (Sr. Analyst), sector being covered, and whether or not it's earnings season (or any other fire drill mode). That being said from talking to my friends at other shops i think the average is fairly close to 50-60 mark in a week. For me personally I have seen a material deterioration in control of my schedule relative to what it has been in the past so my top-end can swing violently and without warning to +10-20. So in that light, I'm not very pleased with my current comp to work/life ratio which is a contributing factor to seeking a new gig.

2) Generally true I would say. Things in ER are less cut and dry as compared to banking generally because there aren't multiple levels of seniority that allow for delegating: it's just me then my boss then the head of research for the bank. That being said, once you hit the Sr. Analyst level you have substantially more control over your schedule however, the less you do the less you'll earn since you aren't helping the bank's bottom line. Also, it can be a much shorter time span from junior to senior in ER as compared to analyst to VP/Director in banking.

3) I'll take this one out of order, think it will make more sense that way. Yes, we cover companies that are banking clients as does everyone in the industry. Research is legally not allowed to drive banking decisions and vice versa and FINRA has been cracking down pretty hard when they find something like this happening. The main conflict of interest on the ER side stems from people refusing to write anything remotely negative about a company because they are afraid of losing corporate access. In my experience companies are generally aware of when they do something that upsets investors and can understand you having a negative bend in your note. The most difficult situations are when a company feels investors are too worried about "the near term" as the stock gets punished because management feels they are right and the Street feels very differently. However, I've always been a "call a spade a spade" guy, if a company screws up then say it like it is...in a very politically correct and gentle manner ha

4) Well, in my role I spout about a bunch of nonsense that adds little value and/or report the news...in all seriousness, buy-side guys don't have to focus on things such as writing, updating marketing decks or other various forms of administrative minutiae that adds little to no value and prohibits you from doing real analysis and drawing conclusions. I have heard some of the bigger LOs like you mentioned do write a decent amount but that it's less formalized and you don't have stroke egos of companies because it's all for internal use only.

5) Just because you have access to information and data does not mean you are equipped to leverage and interpret it and subsequently draw the proper conclusions. Also, I'm generally privy to certain information that Joe Blow would never have access to given my relationships and direct access to management and IR. Differentiated research is more deep-dive/thought pieces that explore certain attributes of your universe that others haven't thought to explore or write about in detail. This takes various forms and is unique to each sector and Sr. Analyst. There are some guys though who are flat out dumb and it baffles me they are still employed. Maybe Mifid II will fix that.

Hopefully this response wasn't too long.

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Apr 22, 2019

Thanks for doing the AMA -

Can you describe your day-to-day responsibilities? Or a typical non earnings day? Especially the first year or two (junior).

Apr 23, 2019

Day to day isn't too standardized. Show up around 7:30/6:30/5:30/4:30 am depending on your time zone (I'm not 4:30, that would suck). We have a few morning calls/meetings with the entire research department and then with our respective groups. These are sales calls, just giving your thoughts on anything that has happened in your arena. Generally move through my to-do list after that which can be anything from models, company calls/meetings, client projects, industry events really no set task list that appears every day. You have to be reactionary in ER, mostly before or after the bell, but during the day you can get random calls from clients or clients asking you for things. Usually punch out 11-12 hours after I started.

In your first year or two you will not do most of what I described. You will be doing a lot of grunt work as well as studying for your licensing exams. It will likely take you 8-12 months to have a handle on basic responsibilities and to develop a baseline knowledge of your particular group of companies. Year two is a little better since you should be more efficient with the mundane at this point and you will start to be included more in the things I mentioned above.

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Apr 22, 2019
  1. Thoughts on using a DCF vs. a simple multiple?
  2. Most important skills to be a good associate?
Apr 23, 2019

This is very sector dependent: DCF is a highly academic exercise but that does not mean it's useless and it certainly has its place in particular industries in various forms. Multiples are all relative and, in my opinion, are a trap for lazy thinking sometimes (again, depending on your sector - sometimes these are the only things that work). In my particular sector, people are attempting to use multiples based on historical averages even though one could argue there has been a shift and history is no longer a viable sense check. I always think using multiple valuation techniques is a best practice, that way you have a sense check. One of your valuation methodologies should not be Sum of the Parts. Just don't.

I think an appetite for learning and a natural curiosity are natural traits of good associates. Ask questions, don't worry about asking a dumb one. I would rather you ask me a basic question with honest intent behind it rather than keep quiet and mess something up. Also, and this sounds cliche, but a good attitude goes a long way. Yeah, you're not going to do a lot of the fun or interesting stuff right away, but doing your best work on the menial tasks and doing so with a great attitude will make me want to give you more to do and include you more in other aspects of the role.

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Apr 23, 2019
Street Smart:

One of your valuation methodologies should not be Sum of the Parts. Just don't.

how come?

Apr 23, 2019

Thanks for the AMA. Just as an introduction, I am an equity research analyst too covering EMEA TMT space. I just wanted to hear your thoughts on the following

  1. Slightly focused on Europe, but how do you think the industry has evolved post MIFID II? Has it become harder to sell research given the unbundling from S&T?
  2. How do you think roboadvisory services is going to impact the industry going forward? Do you think there is scope for significant value addition by humans vs standardized robotic recommendations (especially during times of irrational exuberance often seen in markets)

Thanks in advance!

    • 1
Apr 23, 2019

Happy to answer the questions. Will assume you are based elsewhere outside the US given your coverage so just bear in mind my responses are from the US perspective.

1) I think MIFID II is an interesting thing: on one hand you have increased clarity for investors which should help them better allocate dollars however on the flip side that has meant a pretty sharp decline in the size of the global wallet used to pay sell-side (not to mention what I hear has been an incredible bureaucratic headache). I'm not sure buy-side ever really paid specifically for research but rather other touch points within the realm of sell-side research such as corporate access, they just have to be open about how much they spend now. Net-net I think the regulation squeezes some firms out of existence and those who are able to meet client needs will survive. Too many sell-side people, many of whom get paid very well while providing little value.

2) Don't think this will impact the space in a significant manner, mostly because there are multiple qualitative touch points that seem like difficult hurdles for robo's - relationships with companies, being in the room with them and investors to see body language, to infer tone when discussing certain topics among other things. It feels like, once you boil it down, the robo thing is just a glorified factor model. And I believe there is always an element of human intuition: how many robo-advisors would punch out of a position in reaction to factor limits being tested instead of understanding what is driving the spike in factors in the first place? Maybe I'm just old-school but I think the human element will always be around. That being said, I'm all for technology that makes my day to day easier so bring on the bots that can write my earnings notes once I load a model!

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Apr 27, 2019

Brilliant answers. Appreciate the inputs and glad to see myself on same page here.

Apr 23, 2019

What size bank/group are you with? Don't think I saw it anywhere above.

Apr 23, 2019

Yeah I forgot to put that up there. Will point out though that in ER bank size/group size matters little from a reputation-oriented perspective. Not to say BBs can't put out solid research, JPM is tops for a reason but it's not necessarily because they are a BB. Your Sr. Analyst and Industry matter more. With that said, I've been at both boutique and MM.

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Apr 24, 2019

Thanks. Has the level of work changed greatly between your time at a boutique and MM? Do you prefer one over the other?

Apr 23, 2019

What drove you to change banks/analysts? What does that process look like?

How do you handle buyside meetings where the other guy clearly has a different opinion than you? Do you guys ever change your thesis/calls based on client pushback?

Apr 23, 2019

1) Mostly an upgrade in reputation but also a chance to try my hand at a new sub-sector. Process is fairly straightforward, you know someone has a need so you find a way to get your resume in front of them. From there it was a basic series of interviews that you would expect for sell-side research. Offer in hand 6-7 weeks later.

2) Those are interesting meetings. If it's someone I have a good relationship with and hold in high regard, I'm willing to take another look. Sometimes we miss stuff on the sell-side, shocker I know. But if it's another meeting with another generalist type guy (or even certain sector focused guys) who's pounding the table on something that doesn't warrant that level of enthusiasm, I become very skeptical very quickly. Do a little channel checking and find this guy has said the same thing to a few other firms and you know he's pushing his book. I'm not a fan of that stuff. I feel you can generally tell if client is sincere because the line of questioning is well thought out and doesn't focus on nuanced details that don't drive the actual conclusion. However, a previous boss of mine was fond of "sourcing" ideas from client meetings. Drove me nuts.

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Apr 24, 2019

I am currently working as an ER associate at a top 10 II ranked firm but have been considering a transition into banking. Any tips on how to effectively market my skills/experience, or just advice in general?

Apr 24, 2019

Honestly not much advice I can give on that front. I would say to make it clear that you have the technical capacity to do the work. Lean on your industry/sector knowledge as well, in my experience junior research people develop better industry knowledge than banking juniors. At the end of the day, you can be taught to think transactionally so don't let your background give you any doubts. Just make the connections and go for it.

Apr 24, 2019

What are your hours like? What about during earnings?

Apr 24, 2019

Used to be pretty insane however have recently smoothed out to a normal base outside of earnings. Roughly 50-60 in a normal week, +10-15 on the top end during earnings. Nothing too unbearable.

Apr 24, 2019

I have a very similar background. What are you looking at for your next opportunity?

We've had a handful of exits to corp finance/strategy from my research dept over last few months (mostly out of coverage to FANG), and a couple to bschool last summer. I haven't seen anyone go to the buyside in over a year.

Apr 25, 2019

Would prefer buy-side but it doesn't have to be public markets. The ultimate goal is to be an investor, I just find it very interesting and challenging. Have also been looking into Corp./Biz. Dev or whatever people call it at their respective firms. It could be interesting to be involved with investing via the company balance sheet and being involved in strategy decisions to whatever extent you can be in that role. I'm fairly open, just don't think my future lies in sell-side research.

Apr 25, 2019

Thanks for your kind help in advance.

I am currently a strategy consultant in biotech/pharma industry. I feel tired of my work and wanted to try something new. I have worked briefly in a fund before my consulting career so I know a bit what equity research is like, although not too much. I have always liked playing with numbers and building models rather than pulling "business strategy" out of thin air and offering that to the clients who might never execute my strategy. Also I have a phd in life sciences and I like doing research.

Long story short, recently I am offered a ER associate position under a relatively famous analyst in the pharma/biotech sector. But I am still debating whether I should take it. A few of my concerns are:

1) career progression. I am in my mid-30's. So I am not young anymore so I would prefer a career route that won't take me another 5 years to get promoted to a more senior role;

2) comp. I am making ~150K all in now as a consultant. But will likely to be promoted in half a year and make ~180K. It seems that if I take this job, most likely I have to take a substantial pay cut and stay that way for at least 2-3 years. (the new offer is verbal and no comp info is discussed yet)

3) exit options - I understand the ER has a natural exit option to HF or Asset Management, but would I be too old when I make the transition?

So I would love to hear your thought on this. How would you choose if you were me? Thanks!

Apr 25, 2019

There is a fair amount of very specific detail here and I'm hesitant to offer any advice simply because I'm not you and I don't know your entire situation. I'm also not going to tell you "do what you find interesting" or "just go for it" or anything generic like that because that could be terrible advice based on a multitude of factors. You've reached a point in life where you likely have more substantial financial and life obligations/responsibilities than a kid coming out of undergrad so there is more to consider outside of job satisfaction.

Here are some pieces of information I can give based on what I know of the industry:

1) If you're looking for career progression, this might not be for you. I'm not really sure what you mean by "famous" but bottom line is that your potential boss is highly unlikely to leave any time soon if he has relatively solid clout. Sr. Analyst seats are pretty cush if you are highly ranked. Also, as I stated above somewhere, there isn't any predetermined path to seniority in ER. You could be promoted in 2 years or 10 years or never.

2) Depending on bank size, you will almost certainly make more in ER than you currently do. At the very least, you will likely get paid in your first year or two what you would've been making with your promotion in consulting. PhD generally lends itself to better pay especially for the industry coverage group you've picked.

3) No idea. It will likely be a very steep uphill battle if that's your end goal. The higher likelihood is you being a career sell-side person who, if you're good, can pull decent money even as a Sr. Associate depending on your bank.

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Apr 25, 2019

Thanks very much for your thoughtful answer. It's very helpful. I thought ER associate is getting paid for only a bit over 100K all in nowadays, especially in early years of the job. I am surprised to hear that it can be 150K+ or even 180K+. That's a bit of relief. Yes, you're right. At mid 30's with two mortgages (luckily I don't have a family yet), your life goal and expectation for a lot things have dramatically changed compared to fresh out of college. Compensation is definitely one critical factor to consider given the financial responsibilities I have. I guess I will just have to gamble on the future if I take the offer, from the perspective of career progression. Well, life is pretty much a gamble already.

Anyway, thanks again for the help.

Apr 25, 2019

Can you expand on how you were able to break in from a non target, with mediocre GPA, and relatively no experience?

Apr 25, 2019

It basically boils down to networking. I cold emailed like crazy after deciding this particular sector interests me most. I practiced building models (which were terrible) and even sent one with a few resumes trying to find a way to stand out from the crowd. Once I landed an informational interview type call, I would ask thoughtful questions and attempt to demonstrate my passion for the subject matter at hand. My first boss told me he was giving me a shot over others because he felt I wanted it more. I think one of the more important aspects though is maintaining the connections you make and developing them into relationships. Don't be the guy who emails me once with a blatantly obvious motive and moves on to the next.

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Apr 25, 2019

Thanks for answering. Hoping you'll answer my follow up question.

I created two models (one that I am proud of, but probably still terrible) so far and am building a contact list to shoot emails out to once earning season dies down a bit.

If say I am interested in the retail footwear/ activewear space like Nike, Lululemon. Wouldn't the focus on 1 specific sector limit me to the amount of people I can reach out to. Shouldn't I try to broaden my approach and email every analyst

Apr 25, 2019

Hope I'm not too late for this AMA.

How do you demonstrate that you "want it more"? More specifically, do you write your own reports and how do you show enthusiasm in the interview?

I'm trying to write my own reports but I'm having trouble with the valuation (this is a reply to another post of yours about not using sum-of-parts). I figured I'll do reports with 2-3 pages. 1st page highlights key points. 2nd page summarizes company and maybe talk about a major project/catalyst of the company. 3rd page is the model. How do you recommend I structure the report? Obviously, I don't know as much detail to fill a 7-10 report.

On a side note, I got lucky and had an interview last December through an online submission but f*cked up royally. One of the question was "which skill is stronger: Excel or communication". For some reason, I blurted out Excel. I tried to take it back and said communication is great too but I could tell from the analyst's reaction that he wasn't too keen on that. I'm still kicking myself for it.

Apr 26, 2019

As someone just starting out on the sell-side at an MM bank, I really appreciate this AMA. I've only been at it for a few months but a lot of what you're saying makes sense.

Apr 27, 2019

Hey, hope I'm not too late. Starting at a mid-tier MM straight out of undergrad soon. Any tips that you think should be known before I start/as I ramp up?

As an aside, if I'm not happy with my analyst/industry, do you think it would be better to shop around for a BB (Read: thoughts on how the process would be) around the one year mark or just tough it out for 2-3yrs before my reviewing my options?

Apr 28, 2019

I know this is a fairly typical question for guys/girls coming out of undergrad as you want to do anything you can to make a solid impression which is a good thing. That being said, I personally feel this question is much better poised to your soon-to-be boss/team. Everything I would suggest is laced with personal bias and also might not be applicable to your coverage universe. However I would imagine your boss/team would have suggestions and it's an opportunity for you to re-enforce your excitement for the role.

I would say you won't really have a full view after a year, especially when coming straight out of undergrad. Best served to give it a couple years. Obviously if you've unknowingly walked into a toxic environment then what I suggested isn't as applicable anymore. Good luck.

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Apr 27, 2019

Do you have your CFA? Does your current position require it? If you have it, has it helped you in your career? Do recommend someone in the buyside (long only, small cap equity value) to get it even if your job doesn't require it ?

Apr 28, 2019

Yes I have it, no it wasn't required, I did find value unit but it's not for everyone. Probably better uses of your time unless you really want the letters assuming you've been in your role for a few years.

Apr 27, 2019

Thanks for doing this.

1) How does a typical earnings day look like?
2) Is there pressure to update your views quicker than the next house?
3) How long does it typically take to update your view for an after-hours, pre-open, and mid-day earnings release?
4) Do you anchor your view and use the consensus as a benchmark? Or is it completely independent and based off first principles?

Apr 28, 2019

1) insanely busy

2) the faster you are, the higher likelihood your note is actually read. However, my stance has always been that it's better to be fully accurate with some decent commentary than be first by regurgitating the release. Now if it takes you more than 2-2.5 hours to put out your initial take, just don't bother. Nobody reads it at that point.

3) no real answer to this question. Too dependent on multiple factors. Also, not sure if you mean "view" as in opinion/thesis or "view" just updating my numbers and putting out a conclusion. If the former, I don't let an earnings release change my opinion/thesis especially without listening to the call and following up with the company. That's how you get egg on your face. If you mean the latter, I think I gave enough in the previous answer.

4) again depending on your definition of "view" but no I don't anchor myself. I do the analysis and let the chips fall where they may. I use consensus as a sense check but sometimes there is only a one maybe two people with fresh numbers so it's not too helpful. If I'm very different than consensus I'll talk to the company again to see if I'm missing something, which isn't always helpful.

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May 8, 2019

Hey man thanks for doing this. Few quick questions:

1) For entry level, how much lower are my chances if I didn't have a SA position in either IB/ER? Also will a CFA lvl2 play a role or it won't matter as much without experience?
2) When should I be applying for FT roles if I am graduating from my MS program in December? I know that ER is need based, but I want to time it the right way.
3) I am interested in life science/biotech/tech industries, but when I research them I realize that they need a lot more sophisticated knowledge. What industries can I target to slowly build up to them?
4) How are the exit opps to VC's? Obviously IB is the better choice, but have you seen anyone make the transition?

Thank you.

May 8, 2019

Sorry in advance that these responses will be on the short side, just not enough time in the day sometimes.

1) No idea since my move into sell-side research was a little more a-typical. Some people like seeing progress towards CFA, some don't care. It might get you through initial HR screens but the potential Sr. Analyst might not care.

2) Applying through company sites is futile. You need to be reaching out to Sr. Analysts now and networking because there is no structured hiring process (some banks have post-MBA ER recruiting though).

3) I have seen people cover those industries without a phd or industry experience. All they had was a science-based undergrad degree. Targeting other industries won't help you land where you want, if anything it could be to your detriment. Talk to Sr. Analysts covering the space you want to cover.

4) I've never seen anyone go VC from ER. I've seen some PE, but most go public markets or corporate. Not to say it can't be done but after 3 years in sell-side ER at a decent bank you're likely hitting $150k+ all-in and since you don't have a banking or transactional background you will likely have to target smaller or newer VC shops which likely leads to a pay cut for you. Maybe not, but that is my assumption.

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May 8, 2019

very helpful, thank you.

Oct 9, 2019

My circumstances are very similar. I'm wondering:

(1) what you are seeing in terms of new and innovative ways to enhance the value of sell-side research in a post-mifid world (i.e., prop. surveys, sentiment data/analytics, etc.); and

(2) what are the most effective ways, in your experience, to stave off the feeling of being burnt out?

Thanks!

  • $billy
Oct 9, 2019

Honestly the niche value-add stuff is highly sector-dependent. I would say most if not all teams already use data analytics if you cover a space that has large sets. But it's really about doing two things: 1) Figuring out what clients want be it corporate access, industry data points, whatever and 2) Leveraging that to make money for the bank which will in turn make you money. This could be through events, attending conferences or industry stuff, you pick.

As far as feeling burnt out, i notice this creeps up most for me when I feel my work load is heavy on the low value stuff (updating background files, publishing recurring notes that report news, etc.) because I feel there is little purpose in the job at that point. But when I'm out meeting companies or clients, attending conferences, doing some heavy modeling, then I feel I've accomplished something that is somewhat meaningful. Even if I bang out 14 hours that day I can still feel good.

So I guess find ways to keep yourself busy with what you find most enjoyable. If you don't like any aspect of the job then you're probably in the wrong job altogether.

    • 3
Oct 9, 2019
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  • $billy
Oct 20, 2019