Sell side status update - few years post Mifid, one year post Covid, etc

I w ould love to get an overall discussion on how people in the business (and outside of the business) view ER a few years after the adoption of Mifid, after last year's Covid boom in equity trading, the current issuance boom, etc. My gut is that the outlook for equity research as an industry/job opportunity has improved compared to say three years ago. Bonus pools seemed to increase this year, there is a lot of deal flow and the need for analysts.

I can also answer questions for anyone. I am a sector analyst with a team now (think Executive Director / Director level, so between VP and MD). 

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Comments (25)

  • Associate 1 in ER
Feb 21, 2021 - 10:10am

Has the pool of associates to recruit decreased due to the perception of ER's future? Was wondering if that has made it harder for analysts to staff their teams. Might be sector specific.

Feb 21, 2021 - 12:11pm

I don't have all of the levels, I am not as close to comp for those the first few years in the industry. Bonus pools seemed to be up in the mid to high single digits this year, with a firm or two increasing pools in the low teens. New analysts with sector coverage responsibility seem to start at ~350K to over 500K depending on the sector; hotter sectors (internet, biotech, etc) seem to start higher. As you know, which coverage analysts, pay can vary widely. Top analysts in important sectors can get into the high six figures, with a few superstars here or there getting into 7 figures (though less than were used to be several years ago, or so I'm told). Associates with a few years experience and an associate corporate title seem to get base in the mid 100s with bonuses that can range from 50K or more (total comp in the 2s). VPs slightly higher. 

Firms that are known to pay aggressively for senior analysts include Wolfe. 

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  • Associate 2 in ER
Feb 21, 2021 - 12:22pm

Would you say hotter sectors (biotech) with higher degree requirements (PhD, MD) have seen better prospects in terms of pay and bonus for associates. Been getting more recruiting outreach but not sure if that is just because it's the season or because there is a real dearth of potential associates to recruit from.

  • Summer Associate in IB - Ind
Feb 21, 2021 - 5:55pm

What would pay be like for someone with an MBA and 1-2 years of experience as an IB associate? Also, what other shops are known to pay above market?

Feb 22, 2021 - 10:29am

I interned in ER a few years ago and my 2 cents are: 

- there was an initial nervousness around MIFID II impact to ER careers

- majority of individuals I worked with during my brief stint moved to adjacent industries (buyside, IB, consulting). A senior member of my current team joined from ER at at a senior level for IB due to uncertainty re long-term impact to the industry

- our ER subscriptions, in terms of # of providers, has decreased but we place more reliance and speak more frequently to our highest quality providers who we continue to subscribe to. My inference would be (as an outsider) overall fee pool has decreased but still a significant opportunity for the highest quality shops

- a number of firms which ceased coverage of various sectors / verticals are resuming / initiating coverage as the market never completely dried up as some previously predicted

Feb 22, 2021 - 7:05pm

What's true:

-leaner teams + less resources + WFH = more hours and the perceived better work/life balance is not as true anymore

-there is some consolidation...Wells Fargo had a significant layoff last year (including some very talented people) and most firms are on a flat/down trajectory on headcount rather than hiring.

-data-driven work  is a bigger slice of product than fundamental research (though few traditional SS shops do data consistently well)

What's false:

-AI/automated programs are replacing research analysts..absolutely not the case and will not be for some time. 

-Buy-side firms are broadly insourcing more research functions (this is partially true at some leading shops, but not overall)

-compensation is down in recent years 

Feb 23, 2021 - 12:00pm

1) Agree on leaner teams

2) There has been consolidation, but I feel that has slowed down a bit. Not sure if we will see Nomura situations this year

3) Data driven work is a bigger slice - thought your comment that few traditional SS firms do it well suggests that there is a glut of data driven work coming out of firms that clients don't value

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Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (202) $234
  • 2nd Year Analyst (115) $151
  • Intern/Summer Associate (97) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (420) $131
  • Intern/Summer Analyst (338) $82