Importance of Analyst Rankings in II?

How important is it that a junior ER associate works for a top-ranked II sell-side analyst, when considering exit opps. to L/S HFs or the buy-side in general?

Does anyone have insight on if exit opps. are that much different for juniors working for lower ranked analysts or do many other factors matter significantly more (firm brand, industry sector, firm alumni-base, etc.)?

From what I've read, it seems like a mix of other factors is more important, but I wanted to get more recent opinions on this.

 
Best Response

Planning a move from M&A to ER? Well, I'd say working for a strong Analyst, ideally who is ranked highly in II, is quite important as that gives you greater visibility with clients - i.e. you are put in front of more clients and you get the top BS places calling you for your input. You also normally take on more responsibility under a top II-ranked Analyst simply because of the greater request/query flow coming from clients, not to mention the fact that your Analyst will also have to spend a considerable amount of time marketing, which means you will also be integral at those times.

Overall I'd say it's definitely quite important, but other things, needless to say, also play a role - e.g. 'hotness' of your sector, how modeling-intensive the sector is, how much emphasis does the SS shop place on stock picking as some prospective BS employers like to see a nice 'paper' track record of the team, firm brand, firm's reputation in ER etc.

 

from what i've heard its not the "only" thing that matters, but definitely working for a top II ranked analyst would be a real feather in your cap. it sounds like you're considering working for a lower tier firm for a higher ranked analyst? it's a trade off, but certainly working and leanring from the top analyst on the street must have big advantages.

i'm doing everything i can to get placed into a cool group with a top rated II team. my placement wont happen for a few months but i'm doing two crazy huge projects at school that are directly related to the group i'm trying to land in.

 

Having worked at two of the top banks in equity research for 2.5 years before leaving the sell-side altogether, I can tell you for sure that nobody of consequence really cares about Institutional Investor anymore. The only times people mention it is if your bank was ranked #1 or #2 (as one of my firms was), and even then, it's just for marketing purposes - it made absolutely no difference on my experience there.

In general, Institutional Investor rankings have little to no bearing on your day to day lifestyle in equity research - your experience can rock or suck as much as if you were working for a relatively unknown analyst. As far as you, a junior associate, should be concerned, what really matters is the actual responsibilities you hold. If all you do is perfunctory stuff that people don't care about, never have any client exposure, and just work on silly stat books and marketing materials (here's a secret: earning II status is ALL about marketing yourself and your ideas)...then you will have a tough time recruiting for future jobs regardless of whether your senior analyst was II-ranked.

​* http://www.linkedin.com/in/numicareerconsulting
 

It's interesting that I have now heard many conflicting opinions on the importance of II rankings, or any other rankings such as Forbes, WSJ, etc. You said nobody cares, but I have talked to a few alums in research and they say working for a respected, award-winning analyst is definitely something that can differentiate you from other research associates.

Of course responsibilities matter, but assuming you are going for a buy-side position after a few years down the road and are competing against other research associates with comparable experience, it seems like the apparent strength of your team could certainly be a tie-breaker, just like how experience at UBS LA or GS TMT could be a tie-breaker in a PE buy-side job.

 

To be precise, I said practically nobody cares -- or rather, few people care -- and I think I have some authority to say that having worked in equity research at a couple of the top II-rated banks and for an II-rated analyst. Personally, I wish that type of stuff mattered more for my own sake -- and maybe it did on some level, in terms of compensation and visibility with management -- but on the day to day, it really made no difference.

Also, while I can appreciate that you may know other associates on the sell-side who somehow think that working under an II-ranked analyst can somehow differentiate one associate from another, take a step back and think about whether that's really logical -- how does whether a senior analyst have an II ranking serve as a reflection of anything the associate has done, or vice versa? The truth is, it doesn't. Most associates are hired because they are bright, motivated, and able to put up with a lot of grunt work -- and on some level, they do contribute to the franchise of the senior analyst, but chances are, they probably didn't materially impact the position in the II rankings that the senior analyst would have been in anyway. Conversely, the II ranked analyst doesn't exactly make the associate either. II is basically just a beauty contest; there are plenty of great senior analysts out there that aren't ranked in II because they don't want to be. They've found more effective ways to manage their time, and better ways to ensure they get paid.

You also have to consider exactly how knowledgeable your junior sources on the sell-side really are -- perhaps there is a reason why those people are still on the sell-side instead of making the jump to a top hedge fund or private equity firm? Something to think about. No offense to your contacts on the sell-side, but maybe they're still there for a reason (maybe too young to move to the buy-side, maybe just don't want to, maybe not competent enough...who knows? but there is always a reason)

Anyway, if you ultimately if you end up working in equity research yourself, you can eventually find out for yourself whether or not you agree with me. I admire and respect your inquisitive nature, and such qualities will help you do well in equity research if that's the career you end up choosing. My point is, I'm not saying that II doesn't matter at all; it just doesn't matter nearly as much as people think. Most people within the industry would agree with me. This isn't the 20th century anymore, and Sarbanes-Oxley and the Global Settlement are very real things.

​* http://www.linkedin.com/in/numicareerconsulting
 

Most of them have 10+ years of experience, and a few are already on the buy-side.

Of course there are differing opinions on an issue such as this, but you're really the first person I have come across that has vehemently denied that working for an II-ranked analyst is important or even relevant.

It seems like most associates perform the same duties for the most part, so outside of additional client interaction, working for a top-ranked analyst is something that could potentially differentiate you. I'm not trying to imply that Caxton and Bridgewater are going to be knocking down your door because of it, but working for a ranked analyst would seem to help you more than working for a non-ranked analyst.

It'd be nice to get some others to chime in on this, but this sector of the board is fairly inactive.

 

Well, I've already expressed my opinion, and that's the one I stand by. If I understand what you're saying correctly, you were asking whether it was the case that just because a senior analyst has an II ranking, that it should, all else equal, generally positively impact the experience of the associate. While I'm sure this does happen, I think I've been clear stating that this relationship is not as causal as one might think. I think you'll see what I mean if you have the opportunity to just observe the research environment and see things as they are. At that point, maybe you'll still have a different opinion from the one I've expressed, which would be fine too. The experience is what you make of it.

As for your comment about how this board is pretty inactive, it's probably because there really aren't too many other people with blue-chip equity research experience here aside from myself and a few others. Primarily, I see this as an IB/PE forum. That said, there are good resources here, and there are also good resources on another site, namely AnalystForum.com. AnalystForum is where I usually post. Of course, that forum isn't of as much benefit to me now that I'm in private equity, but I like the community there and people still have interesting things to say every so often.

​* http://www.linkedin.com/in/numicareerconsulting
 

It matters to some degree, and I would, all things equal, certainly choose to work for a star analyst compared to a mediocre one. However, you should pick a sector that you'd be interested in because you're more likely to be pigeonholed into that sector as you move on.

Definitely would join a top-ranked team if you have the choice - the comp is lower but your costs should be lower and you'll get a better experience - which will mean a lot more for your comp in the future.

 

Can someone shed a little light on the team ranking system? Also, I know that analysts get ranked within their group, but doesn't this happen after they finish their first year when recruiting for buyside is over?

 

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