Why does research get no respect?

ILOVENYGUY's picture
Rank: Orangutan | 359

Ok, so after reading this site, it seems that research is far from being a preferred vocation for various folks. Why? As a senior analyst you make pretty good bucks - seems like a ranked analyst at a BB you make money comparable to your banking peers. If you don't like it you can always go to a hedge fund + the lifestyle is a lot nicer. Would love to hear other monkeys opinion - what is wrong with research relative to S&T and banking?

Comments (61)

Mar 18, 2011

If research is something you enjoy, shoot for greatness and do it. Just because someone splooges on something they want doesn't mean you should do the same.

Mar 18, 2011

But, seriously, seems like a decent gig, but I certainly don't see kids killing themselves to get into the field

Mar 18, 2011
ILOVENYGUY:

But, seriously, seems like a decent gig, but I certainly don't see kids killing themselves to get into the field

Trust me, I certainly was, when I was on the internship/job hunt. Part of lies in the fact that the process to get into research is just so damn discouraging. Talking with people at both BBs and boutiques you get the impression that full-time hiring only occurs on an as-needs basis, and some people in the industry seem to believe (and, for many reasons, I can understand) that hiring an associate directly out of undergrad doesn't make sense. Internship recruiting is so disorganized for research that no one seems to ever know what the hell is going on. In that sense, it almost makes more sense to just give up and shift one's efforts to S&T, which is what I've seen numerous people do in the past.

Jun 8, 2012
Roger Davis:
ILOVENYGUY:

But, seriously, seems like a decent gig, but I certainly don't see kids killing themselves to get into the field

Trust me, I certainly was, when I was on the internship/job hunt. Part of lies in the fact that the process to get into research is just so damn discouraging. Talking with people at both BBs and boutiques you get the impression that full-time hiring only occurs on an as-needs basis, and some people in the industry seem to believe (and, for many reasons, I can understand) that hiring an associate directly out of undergrad doesn't make sense. Internship recruiting is so disorganized for research that no one seems to ever know what the hell is going on. In that sense, it almost makes more sense to just give up and shift one's efforts to S&T, which is what I've seen numerous people do in the past.

First thread i've actually read from top to bottom

1) Wheres flake at ?

2) I don't understand how people transition into Sales without a research background or a serious book. From what I have learned so far is that some of the best Sales guys come from research - Please someone correct me if I am wrong but this seems to be the general consensus on my street

Mar 18, 2011

Man when i did my first internship at an MM, i vowed never to do research lol. Its fine for people who enjoy it, but that life was just too boring for me, from what I saw.

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

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Mar 18, 2011

What would you say is the difference in personality, daily routine?

Jun 8, 2012
ILOVENYGUY:

What would you say is the difference in personality, daily routine?

this is all coming from ~6mo sell-side ER

Personality - even before starting here, I was told ER was for more introverted folks who enjoy working alone and number crunching/writing versus in team environments being actively involved in transactions... That being said, (and its annoying when people don't understand this), ER is FO. As you move up the ranks, you move away from model tweaking to management interaction, and then to client interaction. That plus talking about what you know and answering questions from your sales folks in morning meetings requires being able to comfortably and confidently talk about what you know.

Daily routine - I can't speak for bankers, but I am in the office 6am-6pm (sometimes 8-9pm, every now and then midnight). I am low level but the higher level guys check the news, write blurbs on noteworthy events, and then go to the morning meeting. That lasts about 30 minutes and then the rest of the day is spent handling either client requests (building out models or just talking to them, as dished out by sales with priority given to higher accounts) or working towards projects. These projects could be model re-vamps/blurbs for company updates, initiations (new models and write-ups), or macro research towards bigger write-ups or reports. Also throw in some conference calls to management from time to time to catch up.

Hours - the most ive worked so far is a 72 hour work week... and ive only worked 2-3 weekends

Exit ops - It seems that HFs make the most sense for ER while PE makes more sense for IB (transaction experience).

dbdbdip:

minimal bonus.. I know this is stupid and mindless, but usually prestige follows compensation

im sure i could find it if i search, but what are bonuses like throughout IB if you stay up to MD?

I think for us its 50-100% at the analyst level.. and i've heard the MDs get 1mm+... i assume thats standard?

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Mar 18, 2011

Again this is based on what I OBSERVED as a freshman intern on the trading floor. Whenever I went down there or walked by it was the quietest floor, guys just reviewing documents and it just seemed like a job in which I would die from boredom. However the the senior research guys were cool, like Paul Miller (named one of the top 5 analysts by bloomberg), he would get on a call and he knew his shxt. But as far as junior research jobs, it seemed too boring for me.

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

Mar 18, 2011

Seems a bit boring to me... like doing homework all day. That said - I've spoken to a lot or really, really smart people in ER that love what they do and all that.... just not my style.

Mar 18, 2011
International Pymp:

Seems a bit boring to me... like doing homework all day. That said - I've spoken to a lot or really, really smart people in ER that love what they do and all that.... just not my style.

Exactly, when they speak I am very much intrigued but not something I want to do.

You give me a gift? BAM Thank you note! You invite me somewhere? POW RSVP! You do me a favor? WHAM Favor returned! Do not test my politeness.

Mar 18, 2011

It's just not prestigious enough for people. You will see this theme in several occasions...it is the same work as a fundamental buyside equity analyst. I sometimes ask bankers I interview - if you want to be a buyside analyst (buyside research effectively) and you now want to recc stocks all day to your pm why didn't you work in sell side research, functionally it's a similar gig. The answers are generally a slew of bs, primarily pointing to the calibre of training for ib and the calibre of deals worked on.

Bragging rights drive a ton of life decisions.

Further as someone else mentioned, as superficial as this will sound, it sounds like doing homework all day, and someone else mentioned in the past you can't get play by mentioning you work in research when you're out. The type of "homework" you are doing is the same as a l/s hf, and whenever I interview guys from the sell side it seems like they can clearly do the job of a buyside analyst.

Mar 19, 2011
DurbanDiMangus:

it is the same work as a fundamental buyside equity analyst..

It is not. Sell side has much less accountability. They don't get a portfolio manager judging you all the time, tracking how right/wrong you are. They research more for the purpose of pushing out volume as opposed to aiming for quality. Buyside analysts also have to take into account the strategy employed, portfolio position, the purpose of the fund etc, something sell-side analysts dont have to worry about.

At my firm, we use sell side reports to get an overview for companies we don't cover. The only value sellside analyst add is in due diligence. There's no value added in investment decision making. Most of the opinions are crap anyway. We just use the reports for numbers/detail. So in a sense, we really consider sell-side analysts glorified fact checkers.

Even within the research industry, buyside analysts dont have much respect for the work churned out from the sell-side, how do you expect people outside the industry to respect sell-side ER?

I am not flaming sell-side ER or anything with this post, this is just the general sentiment within the firm. Sell-side analysts are running jokes around here.

Mar 18, 2011

If you aren't infantry then you're support.

The same thing can be said for any other type of job, whether its banking, consumer packaged goods or technology the same rule apply. You either generate revenue or you don't. Generally speaking research is there to support sell-side producers and doesn't generate revenue. That's not to say that people in research are just putting out reports and recommendations that help the firm sell stuff (though that happens quite a bit) but that's why it is less attractive.

Mar 18, 2011

Don't forget the huge gap between perception and reality on both sides. Most of the kids on this board think banking = being a master of the universe negotiating billion dollar deals all day long. Formatting powerpoint slides and making excel models sure does sound a lot like homework to me, but hey atleast you get to do it for 16 hours a day. Research isnt as prestigious, for whatever reason, but you get to think on your own a bit and talk to a lot of smart people all day instead of the same repetitive bs you do in banking. I'll take actual quality of work/life over perceived prestige any day of the week.

Mar 18, 2011

I certainly respect research, and know people who work in it and enjoy it. Personally, my lack of enthusiasm comes from the fact that that I personally believe a good portion of them are hacks. There are numerous instances where every research analyst on the Street has been clueless about a company and recommended them all the way down (see Enron). In Research many just go with the consensus because it's harder to lose their jobs that way.

Really, I submit to the line of thinking that if they were actually good at there job, they wouldn't be doing it- they'd be making money on their so-called analysis and insight. Of course this theory applies much more to those on the top. I think as a junior associate it could certainly be beneficial as far as analytical skills.

Aug 13, 2012
Tar Heel Blue:

I certainly respect research, and know people who work in it and enjoy it. Personally, my lack of enthusiasm comes from the fact that that I personally believe a good portion of them are hacks. There are numerous instances where every research analyst on the Street has been clueless about a company and recommended them all the way down (see Enron). In Research many just go with the consensus because it's harder to lose their jobs that way.

Really, I submit to the line of thinking that if they were actually good at there job, they wouldn't be doing it- they'd be making money on their so-called analysis and insight. Of course this theory applies much more to those on the top. I think as a junior associate it could certainly be beneficial as far as analytical skills.

There are a lot of shitty analysts/PMs on the buy-side. I think that's an unfair criticism.

Mar 18, 2011

My impression as somebody trying very hard to get into ER is that a lot of bankers don't have too much respect for analysts due to the past rep of the sell-side as basically PR for companies that the bank wants to deal with, herd mentality, and the face that ER analysts generate recommendations that are taken out of context in terms of market timing and overall macroeconomic and market conditions.
With that said, the academic homework aspects really appeal to me since that's my background. I'd also have to second Ilovenyguy's opinion of the hiring process. It's done on an as needed basis and it seems to really be about appealing to an individual analyst that you happen to have connected with through some third party. Hopefully, I'll have more input once I land a position.

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Mar 18, 2011

i respect those guys, but bottom line is:

research guys aren't the ones taking risk, and neither are bankers.

Mar 18, 2011

There are some really weird, nerdy dudes in Research.

Mar 18, 2011

Not enough excitement. Seems to be kinda boring!

Mar 18, 2011

it's funny that people on wso think staring at an excel spreadsheet for 16 hours a day and sleeping 5 hours a night is "exciting"... if you think youre gonna get "prestige" and "respect" from that, go ahead and do that

ER - better lifestyle, work habit, more time to pursue other shit, better exit opps, and better $ for hours worked

obviously sell side ER sucks ass compared to buyside ER but thats just my 2 cents

Mar 18, 2011
lifesgreatmystery:

it's funny that people on wso think staring at an excel spreadsheet for 16 hours a day and sleeping 5 hours a night is "exciting"... if you think youre gonna get "prestige" and "respect" from that, go ahead and do that

ER - better lifestyle, work habit, more time to pursue other shit, better exit opps, and better $ for hours worked

obviously sell side ER sucks ass compared to buyside ER but thats just my 2 cents

Why are the exit opps better in ER?

Mar 18, 2011
Millhouse:
lifesgreatmystery:

it's funny that people on wso think staring at an excel spreadsheet for 16 hours a day and sleeping 5 hours a night is "exciting"... if you think youre gonna get "prestige" and "respect" from that, go ahead and do that

ER - better lifestyle, work habit, more time to pursue other shit, better exit opps, and better $ for hours worked

obviously sell side ER sucks ass compared to buyside ER but thats just my 2 cents

Why are the exit opps better in ER?

they're not. that is a ridiculous assertion. you can find this discussion multiple times on WSO if you search for it. Top PE and HF are hiring former banking analysts way more than former research guys. you're also on a better track to b-school and corporate job ops if you do banking first. a lot of this is due to the fact that banking is perceived to be more prestigious and more competitive to get into.

as far as job responsibilities, a chimp could handle either one at a junior level. like someone mentioned, a lot of research guys are hacks (certainly not all of them). i often find myself in disbelief after reading all the research coverage for a company i know well. these guys are not doing the same work as a good, fundamental hedge fund analyst. research reports are good for getting quick overviews of public companies or getting some good, introductory knowledge about an industry you don't know, but they are not a good source for your stock picks.

Mar 18, 2011

inb4 exit ops argument

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

Mar 18, 2011

Banking analysts out of UG make more than ER associates. That's literally all there is to it.

Mar 19, 2011

Tar Heel,

Wasn't it a sell-side research chick that exposed Enron?

Could be wrong.

Mar 19, 2011

As others have said, there is a ton of hacks in sell-side ER. A lot of them wait for another analyst to publish something first and then tweak their assumptions so that their models spit out similar projections. What then results is a wave of other analysts pumping out the same shit and arriving at "consensus estimates."

For those who want to jump to PE later, sell-side ER is a horrible launchpad. You tweak existing operating models and you never build complex M&A or lbo models. I imagine the only time you'd create an operating model is when your firm initiates coverage on a company.

Theoretically, ER is important. Empirically, it's useful as a primer on a company and an industry, and there's not a lot of quality analysts out there.

Said one banking VP who used to do ER for CSFB, "One of the reasons I wanted to get into transaction-oriented finance was that I realized that most people in research have no clue what they're talking about."

Mar 18, 2011

Yeah, bankers really understand industry fundamentals! This is why M&A has such a poor track record. Asset managers are no better as most underperform indices. Smart people are rare anywhere you go

Mar 19, 2011
ILOVENYGUY:

Yeah, bankers really understand industry fundamentals! This is why M&A has such a poor track record. Asset managers are no better as most underperform indices. Smart people are rare anywhere you go

This is pretty much my view. Smart firms do deals when the economy is lagging, when indices are down, when troubled companies are selling off assets below fair value. I recall being impressed by a couple guys who wrote articles on how they use M&A activity and Goodwill measures to gauge market tops and rotate out of equities.

Seems that sell-side is a like-minded herd. Watching upgrades/downgrades on stocks I own for the past few years has always left me baffled.

I'd like to go in to buy-side ER.

Mar 19, 2011

its just personal preference..

I like what you posted jbert- reminds me of what I read about how Buffett went into Korea when the Asian crisis had kicked off and made an absolute killing.

I wanted to get into research because I am fascinated by the notions of value investing.. consequently the shop I joined up to follow these principles.. in the future I hope to join a value based buyside firm. The problem is, sellside as many have mentioned has such a herd mentality- you're essentially sticking your balls on the block when you call a buy when everyone else is opting a hold/sell. Its an industry which lacks conviction due to business pressures and individual pressures. Anything contrarian or different, you're essentially labelled a vagabond (arguably, thats how you make money though, buying stocks that are out of favour).

Mar 18, 2011

sell side ER is bad. i was mostly referring to buy-side ER in my earlier post.

i don't care about the sell side and don't respect ibankers at all. they're all dumb/bottom of their class and the average ibanker is boring as fuck to talk to

and i love how everyone on WSO gets a boner when someone mentions "PE".... seriously, it's not that cool when you get there.

Mar 18, 2011
lifesgreatmystery:

i don't care about the sell side and don't respect ibankers at all. they're all dumb/bottom of their class and the average ibanker is boring as fuck to talk to

You sir...just made some serious sweeping generalizations...in b4 the shit storm.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

Mar 18, 2011
lifesgreatmystery:

sell side ER is bad. i was mostly referring to buy-side ER in my earlier post.

i don't care about the sell side and don't respect ibankers at all. they're all dumb/bottom of their class and the average ibanker is boring as fuck to talk to

and i love how everyone on WSO gets a boner when someone mentions "PE".... seriously, it's not that cool when you get there.

Newflash dicknose: No jobs in finance are "cool". Everyone is just trying to figure out how to make the most money possible so that can can retire as young as possible and do things that actually are cool. There's nothing inherently "cooler" about PE than IB or Buy side ER than Sell side ER. But they respectively tend to pay more so they deservedly get more love.

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Mar 21, 2011
Dank Nugs:

Newflash dicknose: No jobs in finance are "cool". Everyone is just trying to figure out how to make the most money possible so that can can retire as young as possible and do things that actually are cool.

I don't know about that, DN--my current project is an investment thesis about casino economics in Macao. Triad gangs, high-rollers and imported transvestites = pretty cool. Nominally, I'm my analyst and PMs' bitch, but they usually just give me a project and leave me alone. We shoot the shit, chat about quantifying certain assumptions, and I absolutely never have to work during the weekends unless I feel like it. (I'm ER, buy-side.)

Sure, I make less than I would as an i-banker, but I honest-to-god love my job, have a ridiculous amount of personal freedom, and an actual life outside of work. A huge part of the reason why I do what I do is because I can see myself (eventually) managing my funds until I keel over of old age, probably at my desk.

Chill out, guys. Prestige is the opiate of the elite. It's damn good marketing if you can get it, but don't let it substitute for your own self-worth. Also, take what's said on WSO with a chunk of salt--there's a fairly large masturbatory fantasizing vs. informed opinion ratio.

    • 5
Mar 18, 2011

Actually buy side ER in many cases gets paid less than sell side - in particular, the hedge funds figured out that they can keep people around with the promise of a great payout one day. Long only buy side pays less than sell side in most of the cases.

Mar 20, 2011

^^ Agree. A couple of friends just moved to the buy side (big mutual fund and HF) after c. 3 years at BB research and both are taking a cut. Being able to plan evening activities and having a life during result seasons makes it still worthy for them.

Mar 19, 2011

Seems with the way ER is structured, buy-side should be paid more for accountability. That's alright, I'd still like to do buy-side one day.

And WannabeDude, I have a strong interest in valuation and value investing as well.

Mar 19, 2011

Who wouldn't take the haircut to go over to buyside.. you're actually generating tangible ideas by which you can see the end product (hopefully a profitable trade)..

Mar 20, 2011

Note that the current trend is that bulge brackets are no longer afraid of using their balance sheet to monetize research ideas, so analysts do find themselves making investment calls that impact their compensation. Still nowhere as big as trading commissions, but clearly on the upswing.

Mar 19, 2011

dacasale, very good point. My bank is doing this more and more.

Mar 19, 2011

dacascale, isnt that just proprietary trading? aren't they scaling that back?

If thats the case, the sell side's credibility gets even worse.. assuming the ideas generated by analysts are exploited by the firm before clients which means clients will be making internal profits larger.

Mar 20, 2011

That's a silly assumption, since there is no way you are gonna get away with front-running in the current regulation environment. In fact, one of the main purposes is to get clients jumping in after a track record has been established for the strategies. In this way you could soon be able to invest in a long only, long-short, specials sits, or derivatives fund for each of the BBs research departments. Of course, whether they generate above benchmark returns will be the key.

Mar 21, 2011

minimal bonus.. I know this is stupid and mindless, but usually prestige follows compensation

Mar 18, 2011

^^^ owning a toilet repair company is prestigious if I make $1 Mill/ year? Prestige is totally irrelevant unless you are the type of person that needs to swing their dick at any and all times to feel happy....

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

    • 1
Mar 21, 2011

^ you obviously didn't get my point.

    • 1
Mar 18, 2011

true all finance jobs aren't cool

but as suiter said, the lifestyles/type of work youre doing is much better for certain jobs

Jun 4, 2012

Bump.

Does anyone have insight or experience in terms of getting from sell-side ER to buy-side ER?
Career path? IB analyst -> Sell-side ER -> Buy-Side ER?
Also, what is compensation like in Sell-side ER and Buy-side ER?
Thanks!

"All things are difficult before they are easy"
- Thomas Fuller

Mar 18, 2011

A top analyst these days makes $2.5-3mn, most guys are in $500k-1.5mn range

Jun 8, 2012

there really arent that many ER spots available.. an analyst class for banking at a BB (including DCM/ECM) may be close to 100, an analyst class for research associates is probably a fraction of that

also, banking has all the hoopla RE: PE/HF exits, better modeling skills, more money (initially at least), better rounded skill set (supposedly); research by its very nature doesn't like to toot its own horn; douchebag bankers are so smug and egotistical and make it seem like their shit dont stink (me being one of them)

http://www.youtube.com/watch?v=obks_MnPjts - about 19 to 20 seconds in..

I'm making it up as I go along.

Jun 8, 2012
Cornelius:

there really arent that many ER spots available.. an analyst class for banking at a BB (including DCM/ECM) may be close to 100, an analyst class for research associates is probably a fraction of that.

I'm starting an MBA program this fall and in talking to recruiters now this is painfully true. The number I'm getting is around 3-5 spots approx at each BB, of which I mean specifically MS, CS, UBS, BofAML, and Barclays. From Goldman, Citi, and JP i've gotten a "we don't really recruit MBAs for research, but you can check online" answer. So, FYI, thats what it looks like out there from the MBA recruiting side right now, and again those numbers above are specifically for MBA recruiting.

Jun 8, 2012

i am curious about the volatility in research.. anything like the rolling layoffs in banking?

would appreciate it if someone from ER would comment regarding this

I'm making it up as I go along.

Jun 8, 2012
Cornelius:

i am curious about the volatility in research.. anything like the rolling layoffs in banking?

would appreciate it if someone from ER would comment regarding this

I have spoken with people in research about this exact topic. Going off of what I have heard: If you are a top ranked analyst, you are not getting fired. Just like a BB will hold onto a major rainmaker through the economic apocalypse, no bank wants to see the competition taking their star analyst.

Otherwise, a lot has to do with trading volume and institutional interest. If you are a tech analyst, and nobody is touching tech post-crash, then you aren't really contributing to earnings. You might see headcount reduced.

Generally, it is harder to get fired in research. In banking, performance is clear: are you bringing in deals? In research, it is less so. If you are missing earnings, but clients like you, your job is safe.

Research makes money by attracting business and driving trades. If you can make the case that you are doing either, you are probably ok. Research requires much less support than IB, just by virtue of the flatter structure.

Jun 4, 2012

A lot of great information on this thread. thanks guys!

"All things are difficult before they are easy"
- Thomas Fuller

Jun 13, 2012

Oh, word?

Jun 4, 2012

Flake is here.

"All things are difficult before they are easy"
- Thomas Fuller

Aug 10, 2012

Sell-side ER bias; I think the following quote sums up some of why research gets "no respect" (which is not a completely fair statment at all)

"Business managers for the cash equities business view research as a cost center not a revenue driver"

Aug 15, 2012

As far as sell-side ER goes, do new ER associates (equivalent to an analyst in IB, if I'm not totally mistaken) get involved with initiation reports - starting up models, writing up the reports, etc.?

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is."
- Oscar Wilde
"Seriously, psychology is for those with two x chromosomes."
- RagnarDanneskjold

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