Equities Research at a BB firm? (1 Viewer)

[Hiyahodestructo]

I met somebody the other day who completed an internship in equities research at a BB bank, and i was wondering if someone (say seremify007 or Newbie...people who seem know the industry i guess) could shed some light on what the job and career is like. How much do they pay as a grad, what is the earning potential after 5,10,20 years? What are the requirements for breaking into that line of work? What does it involve in detail? How do they fit into the bank as a whole? What skills do you need?

I understand that they basically research what stocks are worth investing in, and that they're on the sell-side (and that means that they support the fund managers..or the guys on the buy-side?)..but i'm not sure and i'm quite sleepy (will begin research in the morning). My degree isn't in finance though, it's in engineering/law.

Thanks guys! Would be awesome in seremify007 and esp. Newbie (being an investment banker and all..or really just anyone who actually knows what they're talking about) could shed some light!

 

[seremify007]

Unfortunately I never worked in equities research before so I don't think I can shed much light from personal experience as everything I know is based on what I've seen my friends do (including some ex BoS guys) in this space, and people I've met at recruitment events (although might be worth mentioning I tend to talk to these guys on a more social level rather than as a candidate).

Equities research basically supports the fund managers, traders, salespeople, relationship managers (for HNW clients), etc... depending on the bank they may sit in different places but their role is not to actually do the trade but rather, to provide information to those who will either make the trades or to those who will sell it to customers (note that I use the term 'sell' loosely- i.e. I am referring to relationship managers or portfolio managers etc... who need to convince their customers to do something whether it's to buy or sell, and then the bank earns it's commission or brokerage).

As a graduate analyst, you'd be typically focussed on a very very small segment of the market (e.g. gaming companies - i.e. gambling) and knowing everything there is to know about the companies which make up that segment within a category. Depending on level, you are probably expected to come in quite early since you need to ensure that you are able to provide daily updates to everyone each morning before the markets open- and maybe even put together a report or document of some form which will get mass emailed around for the day. Hours are long but not as long as IBD stereotype- I've heard 7/7:30am starts with circa 12 hour days (i.e. not excessive but still quite long).

Base pay is usually around $100k flat but may have moved since the last I asked around at grad level especially with what's happened in the market in that field.

Most guys seem to get in through the internships rather than fresh applications for grad roles. Commerce is obviously helpful but different places prefer different things- it's not uncommon for a lot to like non-Commerce backgrounds since it means they can mould you and/or you have very specific analytical abilities which can be used. For example, if you have a mining background you'd be a lot better at analysing mining companies than someone with an accounting degree. They also tend to prefer people who can prove they are intellectual/upper end of the spectrum so your law degree can come in handy there even though it isn't that relevant.

As for your comment on sell-side/buy-side... I think it's a bit deeper than that. As far as I'm aware though, equities research is meant to be neutral- it's the traders and IBers who are focussed on buy/sell more and trying to convince people to buy into things.

Earning potential- good question. I only know of people at graduate level, and a couple of people at the very other end of the spectrum. Whilst I don't know how much the guys at the other end of the spectrum earn, I know when someone very close to me takes them out for dinner (just to say 'thanks'), the meals are typically $400+ per person. I figure if that's what they get from their satisfied customers, and they are perfectly used to eating in such venues, they must be earning quite a bit

ps. If you are really trying to find out a salary, the closest thing I can think of to a definitive number would be if you can think of some Aussie companies who have their fund managers as CEOs/CFOs/etc of a subsidiary (i.e. acting as a key management personnel)... then that was previously (i.e. up until 2011) required to be disclosed under the Corps Act in the Remuneration Report. That's all I'll say on this topic.

 

[Newbie]

Grad pay - similar to banking, bonus lower
Hours - crunches during results season, earlier starts when you release a paper to the sales guys
No prerequisite skills, everything can be learnt. most guys get a CFA for street cred but not really sure how it helps.
In fact your engineering degree probably helps. Law not really.


heard its a bit boring from the guy who used to sit next to me, given you focus on one specific sector and 5-7 companies all the time. but you do gain insight and actually "know" an industry which is more than what i can say for bankers. so the upside is that if you are good, plenty of opportunity to move into the buyside at hedge funds.

actually not many people start at research, its always been a less popular option.
Is there a particular reason why you want to apply for that? as opposed to banking or sales and trading?

 

[seremify007]

heard its a bit boring from the guy who used to sit next to me, given you focus on one specific sector and 5-7 companies all the time. but you do gain insight and actually "know" an industry which is more than what i can say for bankers. so the upside is that if you are good, plenty of opportunity to move into the buyside at hedge funds.

actually not many people start at research, its always been a less popular option.
Is there a particular reason why you want to apply for that? as opposed to banking or sales and trading?

I'd presume one of the key benefits is you aren't customer facing. Not everyone likes the interaction or the pressures, and prefer to be left to their own devices and work through stuff.

That being said, as I pointed out to my friend who landed a grad job in this space, you're being paid to predict the future and then see how right/wrong you were.

 

[Newbie]

well at a junior level you are tied to a desk
but senior guys go on investor education trips and marketing trips as well as meet up with the companies etc

 

[Omnidragon]

Certain research is where you want to be. Make big $$$$, types bankers and BBs can only dream of and perhaps a few like Wylie achieve it in Australia.

 

[Omnidragon]

Is there a particular reason why you want to apply for that? as opposed to banking or sales and trading?

It's because at a grad level, people don't know what they should be doing. If I knew what I knew now, I'd have done things a little differently. Probably would've been on to much bigger things now. How's it different to people who get in to say law/medicine/big 4 because they think there are big $$$ before 80 years old?

Either way, too late.

 

[seremify007]

well at a junior level you are tied to a desk
but senior guys go on investor education trips and marketing trips as well as meet up with the companies etc

Roadshows don't typically bring along that many equity analysts as far as I've seen. It's more driven by sales folk who have memorised what the researchers have briefed them.

 

[Newbie]

before an ipo theres 2 weeks of premarketing which is done by the research analyst.
the actual roadshow is done by the company.
the equity sales guys are the ones on the phone trying to get orders


TOO LATE OMNIGDRAGON FML

 

[Omnidragon]

Ah yes too late Newbie.

How's life? What have you been doing with all these $$$ over the years? Flip any of them?

 

[seremify007]

Probably speeding in a Ferrari around the place.

 

[Newbie]

flipped nothing - couple of seeds but nothing awesome
things are sht morale is sht. Pay will be good for the analysts this year, just to boost morale but i expected to get fked hard when my time comes in a years time (like what UBS did)
3 associates just left in the last month. we are quickly running out of people who can actually work and know their sht. as opposed to fluffers (theres a lot of them)

 

[Newbie]

no car - dont have a licence in hk LOL
my house here is the size of my garage in sydney. lol

 

[seremify007]

What's scaring me is that with finance and finance dependent jobs (everything from capital markets lawyers to credit quality reviewers) there are more people than ever leaning on their once upon a time backup major of accounting. I wonder how that'll turn out. Either that or enrolment levels in masters courses skyrockets.


Sent from my iPhone using Tapatalk

 

[Omnidragon]

In my very very personal opinion (in case you think I'm having a stab at you), these people must've been royally f****ed these few years to not have saved up anything/invested that they'd have to go to say a big 4 TSA job or something like that.

HK places are size of garbage cans. Been thinking of picking up a couple of cheap investments like 第一城 and Telford.

Would've loved to buy a bunch of Bel-Air 6-7 years ago. Ahhh different generation. Sigh...

 

[Hiyahodestructo]

Grad pay - similar to banking, bonus lower
Hours - crunches during results season, earlier starts when you release a paper to the sales guys
No prerequisite skills, everything can be learnt. most guys get a CFA for street cred but not really sure how it helps.
In fact your engineering degree probably helps. Law not really.


heard its a bit boring from the guy who used to sit next to me, given you focus on one specific sector and 5-7 companies all the time. but you do gain insight and actually "know" an industry which is more than what i can say for bankers. so the upside is that if you are good, plenty of opportunity to move into the buyside at hedge funds.

actually not many people start at research, its always been a less popular option.
Is there a particular reason why you want to apply for that? as opposed to banking or sales and trading?

It's because, as Omnidragon said, i don't know what i want to do.

I have a lot of opportunities, i guess, and i'm ambitious..this degree opens up almost everything except anything medical and that's kind of the problem. Do i go into engineering and aim for project management and engineering management? Do i become a lawyer working in a top-tier firm? (ugh, but i guess if i can move on to greater things...) Or do i enter finance and the lofty realms of investment banking and MCC like the rest of my desperate cohort?

I guess what's shaping my decision is that i want to enter something 'lucrative' (ie, high salary..i'm ambitious and i've worked hard to get here, sue me), but also something that gives me some sort of tangible skill that allows me to develop, and that shields me from discrimination (i suspect that's going to be a problem in these 'high-powered jobs'). I'm a bit of finance ignoramus (never considered it until like last yr) but churning out powerpoint presentations, excel sheets and pitch-books in my early years, and then convincing clients to accept some sort of merger doesn't seem like something that would provide me with a great level of skill (correct me if i'm wrong). Regardless of money (200k in australia i hear when you begin), and if i'm out...well, i'm out. I don't see what i could otherwise. Where else would i go? What other fields would i break into? What possible skill does an IB have other than churning out powerpoints, convincing clients and being a good monkey for the guys at the top? (if my view is wrong, again, correct me. I'm cynical but i'm also probably most likely very very naive). If it takes 10 years in something else to reach say 150k+ so be it, but i have it in the back of my head that IB is a sucker's game.

Sales and trading is a no-no. As far as i'm concerned, traders creating 'liquidity' by buying and selling shares is just rhetoric. It's just pilfering capital, exploiting prices for gain AFAIC (Again, i'm wrong, correct me). I've researched the role, and the fact that traders say that everyone has 'their own way' of investing rang the alarm bells for me.

So i'm guessing that if i 'know' an industry, that requires some level of skill, it's industry specific, and it could prove useful in the future...maybe? It doesn't pay bad at all (i mean, what could i POSSIBLY do with $2500-3000 to quickly $4000 a week?!)

Is there some catch to these jobs? I've been reading omnidragon's posts, and i can't help but feel as if i'm bit naive....or he's a bit cynical...

It's because at a grad level, people don't know what they should be doing. If I knew what I knew now, I'd have done things a little differently. Probably would've been on to much bigger things now. How's it different to people who get in to say law/medicine/big 4 because they think there are big $$$ before 80 years old?

Either way, too late.

Wait whut? Um, you're 26 according to your profile, and it's over?! ...what field did you break into? Why is it 'over'? What would you have done differently?

P.S Should point out that i would rather be dead than do medicine, for the record...in case anything was thinking that

 

[seremify007]

Hiyahodestructo, based on your last post, I don't think finance is the industry for you. It sounds to me you know you're very intellectually smart but you have no passion or interest for anything in particular. Being smart will only get you so far especially if you don't give a shit about something. Not too sure what you mean by the sales/trading comment but given that you don't place much value on sales/trading and see it as a bit of just a way to rip people off (i.e. you don't value the market) or skim off others, then there are probably other industries where you might feel less conflicted.

Try looking at your interests and passions outside of the obvious. Maybe consider industries where you produce something tangible (i.e. add physical value) rather than any kind of finance/consultancy role. If you are set on a office (i.e. cubicle dwelling) job, maybe consider actuarial or management consulting- but in both these cases, once you climb higher it'll become more focussed on sales and less on technical competence (since that's a given/assumption).

If you're happy with $4k a week then there are plenty of ways to get there- I'm pretty sure even some tradespeople and taxi drivers are in that bracket from those that I've met over the years. $200k a year isn't that hard to achieve (it isn't easy though).

ps. It sounds like you are trying to find a job where you can future proof yourself out of becoming redundant or discriminated against. Finance (and in a wider sense, commerce) is both that and not at the same time. On one hand if you are good at something and can save someone a buck, it by default means you are worth at least that much. But on the other hand, if the world ever got hit by an asteroid and commerce no longer mattered as society started from nothing, then in the quest to rebuild the world, I don't think anyone would be too worried about derivatives or risk management (yet).

pps. I would consider law in your position. Maybe that's an option, and it won't close any doors on you (assuming you're able to get through it with good marks/etc and get involved in other things).

 

[Newbie]

actually actuarial people and management consultants are both just a "fake" as finance. the only real office job that does anything remotely tangible is an auditor/tax guy.

it falls down to whether you want quick money or not, ignore all this other dreamy sht
quick money = finance
my banking skillset? im the best event manager/PA ever. any hotel, any club, any restaurant in the world. I can make it happen.

you say you are ambitious and want a lucrative job, but then you say you are ok to reach 150k in 10 years? thats a contradiction :O

and the perception of money changes as you progress
i would have been over the moon with 4k a week in uni, i make 5-6k a week this year, and i want to be making 50k-60k week in 10 years time.


what do you mean discrimination? you black or asian or what
im asian, thats why im in Hong kong LOLLLLL

 

[Newbie]

sales and trading = massive fraud but whatever it pays up
all the smart money trades on inside info
and when the dust settles, its the retail investors holding the pieces of sht

 

[seremify007]

sales and trading = massive fraud but whatever it pays up
all the smart money trades on inside info
and when the dust settles, its the retail investors holding the pieces of sht

LOL. Are you calling me a

?