Ask someone who has been around for a while...
So some community manager asked me to do this. Intro: 20+ years in banking and research at banks small, medium, and large. What do you want to know?

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^write up some unique investment ideas, network, run them by ER guys and let them know your interest. You should have an industry in mind and target people in those groups (have a particular focus i.e. don’t just say you want to cover “Consumer”, be specific and go for apparel or outdoor products)

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Really appreciate it OP. You're doing an amazing service telling people how it is/will be without all the management fluff.

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Well when I moved from banking to research (pre-Spitzer) bankers were the bag carriers of research analysts. Analysts would literally give the pitches at bake offs. Things however have changed. Research has gotten more true to what it *should* be but has also gotten farther away from revenue. Unfortunately this second part has made it harder to get paid in research and even the very best analysts in the hottest sectors peak out now around $2mn, well below top bankers. Banking as gotten a lot more interesting too, mostly because they have had to become smarter on their sectors because they can’t just rely on analysts to do their positioning.

Longer term, banking is much better positioned than research. The rise of passive (40%+ of the market now and growing) combined with regulation (MFID) seriously undermines the value of long term careers in research.

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Fortitude, luck, and obstinance

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I would say it is much harder to switch from research to banking at the associate level than the other way around. Interestingly it gets easier to make that move at the MD level (I’ve gotten tons of calls to move into banking but I travel enough already - no interest in giving up more of my life even for a 50% comp increase). One of the challenges going from ER to banking at the associate level is that hiring and training is done as a class. Your best bet would be to try to get in when they are doing their MBA recruiting for incoming associates even if that is slight downhill move (not sure how long you have been an ER associate) and go through the standard training in that class of new associates. You should openly look to contact your sector’s banker - you have industry knowledge that most associates candidates don’t

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Frankly? Look for an exit. Here’s why: I don’t see many senior MDs in research leaving except to retire because there just isn’t a bid for the vast majority in the industry. So what does that mean? Few empty seats and thus it is unlikely you will get promoted to that senior research spot soon. In the mean time, research management is going to look to lower costs as MIFID sucks out revenue (don’t believe the management hype - it won’t “get better”) that teams will get leaner and the seniors that do leave will be replaced with much lower paid people (not likely going to be many more joining that $2mn/yr club). Get to the buy side (though they are screwed long term) or get an IR gig and the way to a CFO job (seen a few ER VPs take that route)

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I knew someone who used this approach to go from back office to ER with level 1 completed

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Someone on my team came from private banking so it is certainly possible. Research is different from banking - classes aren’t all that important so you can just keep looking and pushing for an opportunity at any time (juniors leave all the time and not on predictable schedules like bankers). Also - make sure you target analysts and teams. Make an argument why you’d be good on a particular sector. Advice above to put together some detailed stock calls/mini reports is also good

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Nothing more stressful than having your own P&L - no argument from me. A little better in research but still hard to control. In banking it is rarely a true P&L though, particularly at the bulge brackets. It is usually a share of fees that are paid in the sector. If your sector sucks that year it is not your fault (though your comp will undoubtedly suffer but only somewhat). Your job as a senior banker is to ensure that you are in the mix for everything and that you get an “appropriate” share of the sector’s banking fees. You can have more control of this - not total control mind you - but more. All you have to do is beat out a douchebag who is basically exactly like you at some other firm who is likely offering pretty much exactly the same service at the same price. Sounds fun, right? Challenge I have seen a lot: the best associates do not necessarily make good MDs, and in fact they often make terrible ones. That said, no bank is going to throw you to the P&L wolves right away. It is a gradual process through VP, director, and even young MDs.

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Equity sales is the walking dead and they know it. They are all just sitting around for Rick Grimes to shoot them in the head. They have all the issues research has long term (passive, low vol, falling commissions, MFID, etc) with the added bonus that their job was fundamentally disintermediated by email about 20 years ago. You can’t amplify the analyst’s voice any more than the blast email or voicemail already does. They then get relegated to schedulers more than anything. The number of MDs in sales is going to go down not up (though I doubt it ever goes up again in research either...)

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GS1 - I prefer at least a modicum of anonymity. If I told you my sector, everyone on here would know who I am

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Well, for one, it hasn’t. Passives are more than 40% of the market now and alpha has only gotten harder. Any system for increased market efficiency will have edge case arbitrages, allowing alpha, but these will be eliminated vanishingly fast by AI. The “active” players won’t be people, thy will just be other machines with different algorithms

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How should I feel about the stress of constantly needing to generate new business as a senior banker? Being a junior sucks but at least i can take obvious steps to become better.

getting tossed into the world with a blank p&l every year sounds 10x worse. You could be a genius, have the best ideas and still not be a great senior banker if you can’t generate fees. I’d be way happier if my fate had more to do with stuff in my control. Does this make sense? Am I missing something here? I’m a 3rd year associate thinking super hard about whether this is really how I want to spend the rest of my career. Thanks

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Would you recommend an associate from IBD moved to ER if I don't see myself becoming a fee-generating senior banker? ER sounds very interesting but I worry if I'd be entering the industry at a time when it doesn't really need more analysts. If you recommend making the move, how should I go about it?

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OP if you were an ER associate now what you advise on doing (with Mifid etc)? Try to stick it out to become a senior analyst or go elsewhere in a different/growth capacity?

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Biotech is a lone bright spot

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Thanks for this. What’s your take on credit research vs equity research - in skills, marketability, pay , career outlook?

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How do I survive and thrive

How does an analyst and CFA LII candidate in the private bank move to research successfully? Have always been interested in sell side equity research, but the opportunities have never been there.

Thoughts on banking vs. research? What made you move from one to the other

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