12/24/17

I'm probably one of the few people on here that has done both IB and ER. So I thought that I would share a guide on the pros/cons of both. A lot of these items have been covered in other posts so I'm going to focus on the nuisance and specific details which others often leave out. I don't want to make this a book so I'll split it into different parts over a few weeks. I hope you find it useful.

Work Life Balance Basics

As most of you have likely read, you can expect an average of an 80 hour work week in IB compared to about 60 to 70 hours in ER. However, the hours aren't exactly apples to apples. In IB, you're under what I would consider a mid-level of stress at all times. In IR, you're under a low-level of stress most of the time but are occasionally hit with extremely high levels of stress when a press release comes out. In equity research, you are really put on the spot and have to figure out things quickly and write a note right away. In IB, you are rarely put in that sort of situation. Sure, your associate or VP can make you feel like the sky is gonna fall, but usually it's really not.

Another work life balance issue is earnings season. A single week of earnings in ER is worse than anything that I ever experienced in IB. You work about 100 - 110 hours under very high stress levels. In IB, I worked plenty of 100+ weeks which were hell but still not this bad. The stress is much higher when five companies report earnings in a single day and everyone wants an analysis now and those five reports have to be published tomorrow. I find that much more stressful than having a presentation due in three days time but you don't even have a shell ready yet. Both scenarios are not good but the intensity during earnings is way higher.

Schedule

As far as schedules go, also keep in mind that depending on your time zone, you could be waking up every day between 3 am to 6 am in equity research. I've known West Coast analysts who have quit their jobs just for this reason. You start having a really weird schedule. At first, I thought that I would get used to it quickly, but man, there's just something about waking up that early. It probably took me two years until I was really in the groove.

However, speaking of schedules, weekends are much different in equity research. Saturdays are sort of sacred and untouched. More than working 10 or 20 hours less than banking, this is the biggest perk. You can really plan out your life a lot better with a single almost guaranteed day off each weekend. Furthermore, Sundays are usually half days with just some prep for the next week. In IB, I had a few stretches were I worked every single day for five weeks, and I never knew when there would be a day off. So that Saturday is a big deal.

Nature of the Work

Also another great part of equity research is that although the work hours are similar to banking, the work is very different. In equity research, you're always doing meaningful work that has to be done. A press release comes out and you have to update the model and you have to write the report. For industry pieces, you can spend weeks gathering info, but it is all stuff that must be done and adds value to the final product.

In banking, I spent so much time just doing stupid bullshit like staying up until 2 a.m. because the MD wanted to change the presentation's theme from medium blue to light blue or he wanted to add another 10 slides which added absolutely no value to the presentation. In equity research, you're really treated a lot more like a human being and a colleague in the early career rather than an emotionless machine that churns out pitchbooks regardless of the time of night.

Progression of Work Life Balance

With that said, the progression of hours is worse in ER. I started in ER working about 60 hours per week. By my third year, I was probably working 70 hours per week or maybe a little more. As you get better at your job, the analyst typically hands over more of their responsibility. Sure, sounds great at first, but after a while, you are just doing more and more work while the boss is doing less and less.

Furthermore, if the bank starts giving you your own coverage (which is great right?), your work life balance can get really out of whack because you're doing 60 to 70 hours for your analyst and then you're putting in more time for your own coverage. This is one of the reasons that young analysts typically have pretty bad research reports. It's not that they're inexperienced - it's that they're all written off the clock. If you get to this transitional stage between full ER analyst and associate, you can start saying goodbye to some of your free Saturdays and Sundays. So in comparison to banking where life gets easier over time, in equity research, your life starts easier, gets worse, and then if you become a full analyst starts to improve again.

Do also remember that the work/life balance has a certain floor in ER. Even as a full analyst with 20 years on the Street, you're still going to be working at least 60 hours per week waking up at 3 am to 6 am. So it never gets better than that. I have seen some analysts that start delegating more and more work to very good associates to the point where they work only 50 hours per week, but then the work product begins to suffer.

Overall, ER is definitely a better lifestyle. Like I said earlier, the free Saturdays are huge regardless of the rest of the week and you are also just treated a lot better as a person. I could work ten years as an equity research associate and be OK with it for the most part whereas anyone would lose their mind after ten years as an IB analyst.

Anyways, I hope that this was helpful or instructive. Watch for my post next week on ER vs IB exit ops.

Mod Note (Andy): top 50 posts of 2017, this one ranks #41 (based on # of silver bananas)

Comments (29)

Best Response
11/19/17

I've also previously worked in investment banking (at a middle-market bank) and currently work in equity research (at a bulge bracket), and actually, my hours are fairly better than what you've outline here. And my analyst is II-ranked, so it's a fairly reputable team, etc.

I get into work everyday around 7:30 to 8 AM, and get out of the office around 8-9 PM. This is in a New York office - I imagine that doing research on the West Coast does suck, admittedly. I almost never work weekends (I've had to work on a Sunday maybe twice in the last 6 months). So that's maybe 60-65 hours a week.

On the other hand, earnings week isn't great since most of my companies report after the close, so I have to stay in the office until around 3 AM in some cases - but then I just come into work later the next day (kind of like in banking), so it's never more than maybe 70-75 hours during those 2-3 weeks of earnings.

In fact, my hours are probably worse than the firm average. Most associates at my firm leave an hour or two earlier than I do, and very few stay past midnight even for earnings. So the average hours/week for associates at my firm is probably... 60?

I suppose the takeaway here is that work/life balance varies from firm to firm, even in equity research.

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11/19/17

@Fantastic

Thanks for the additional color to the post. Another factor that could be at play here is industry as some sectors have more news flow than others. Just looking over the fence, life at REITs or Utilities coverage looks pretty good at least from a work life/balance perspective.

Also, just a question for you, Fantastic. Are you working one analyst to one associate or one analyst to two or three associates? Some BBs still run two or three associates and I could see things being a little more laid back with a bigger team. However, I would note that there has been a long trend toward the one analyst and one associate model and two associates is becoming a luxury, not the norm.

And like you said, agree that work/life balance can be very analyst specific and firm specific. I'd say more than anything its driven by the analyst. You can have a terrible and lazy consumer group in the same firm that's the best on the Street for tech for example. Similarly, you can be taking it easy at GS with a more laid back analyst in comparison to being a complete slave at a small unknown boutique. It depends a lot on the analyst.

11/19/17

I'm on a team of two associates (myself included) + an analyst, so that probably helps. Generally at my firm, an analyst gets two associates if they get II-ranked. That said, I'm at one of the bulge brackets that does fairly well in the II rankings every year, so a good number of the teams have this two-associate setup.

Also, I cover a subsector of tech, so actually our work is relatively fast-paced vs. some of the other teams. But as I said, that's why my own hours are likely worse than the average at my firm.

11/19/17

Great insight from both of you.

11/20/17

Been working with a lot of ER guys recently and this really shed some light on the difference in their lifestyle.. thanks to you both!

11/20/17

Work on an II ranked BB equity research team in NYC as a junior analyst/associate and can confirm my hours/life style are pretty similar.

Usually Mon - Thurs come in 7AM +/- 15 min (possibly earlier if earnings) stay until 8:30 ish unless we have a lot going on (at that point staying until 9:30). Fridays in at 7-7:30 out at 5-6pm if not earlier, Saturdays always off, Sundays 12-5pm. Even at the junior level the work is meaningful and interesting so my day goes by quickly. Still have time to hit the gym 3 times a week and I go out and party Friday/Saturday. Really not so bad compared to the volatile schedule of banking.

11/21/17

Great post, especially on the progression of work-life balance.

I'm a new ER associate and just finished my first cycle of earnings. During earnings, my senior analyst was up late with me, and during non-earnings, in addition to the routine work, he spends time marketing himself and our coverage companies.

@NoEquityResearch, I wanted to see if you could give any advice for writing notes/reports. Most of my time so far has been spent in Excel. Thanks!

11/21/17

I started out in ER and switched to banking and definitely agree with this post. I moved to banking for the exit opps, and admittedly, they are better, but they come at a significant cost. Your "nature of the work" part is especially true. The work is exponentially more intellectually stimulating in ER vs. IB at the junior level. In ER, everything you do revolves around the thesis for your stocks or thematic pieces. You've got to be fully aware of the news and how it will affect your coverage, etc. In banking, optics matter way more than substance in many cases. If you need a macro page for an equity story or whatever, you couldn't care less if you actually believed it if it made the page look good and pitch go well. There is also so much more grunt work in IB, so much. Also, in ER, people actually care to follow the news, care to know what's going on. When I was in ER, we'd have weekly meetings where each analyst would discuss key themes in their coverage to the whole sector. In IBD, I would be literally shocked if I saw any colleague reading the WSJ.

I'm sure it varies by team, but you are treated like much more of a human in ER. I remember my boss used to call on Friday afternoon asking what my weekend plans were because he cared (at least a bit) and wanted me to have a good time. If my IB boss asked that, I know that would only mean that I wouldn't have a weekend, and my boss would probably enjoy the moment.

I could go on. I'm glad I made the switch, but I guess the point is, no matter where we are in finance or in life, be human to each other. And for those in ER maybe debating making the switch to IB, really decide if it is necessary to get where you want to go. If it is, then absolutely go for it, and if not, then enjoy what you have.

I know these are biased opinions and fueled by N.O. Explode at 10pm, but hopefully worth something.

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11/21/17

I think the key differences regarding the work-life balance of the ER associate vs. IB analyst come down to predictability and application.

As an associate, you are essentially on-call 24/7. That said, the odds of a coverage company releasing an unexpected press release are very low, outside of the typical 6am-6pm window (depending on your sector). So you have good visibility into your workflow, and it is easy to plan your social life, and make routine commitments, like Wednesday night hockey @ 8:00pm, with the exception of busy season 4x/year. As anyone on this forum can tell you, this is not the case in IB.

On the other side of the coin, when you are in the office for those ~60 hours a week, you are working your ass off the entire time. The majority of your work is extremely time sensitive, with the exception of thematic reports you keep on the backburner for when things slow down. There are no lunches away from your desk, there are no opportunities to go for a 15 minute walk outside, and there are no slow periods when it is acceptable to go to the gym for an hour.

Effectively, a full day of research is on average shorter than a full day of banking, but it can be exhausting, due to the lack of downtime, and the constant application of critical thinking involved in primary analysis. No part of my day would I consider anything short of applied critical thinking. And don't get me wrong, it is a rewarding, intellectually stimulating job.

That said, I am leaving my current ER posting in several weeks for one in IB, because as previously mentioned, to climb the ladder in ER, the commitment to the job only increases, until you've established a successful research franchise, and have one or two associates beneath you. To make matters worse, comp does not increase at the same rate as banking. And ultimately, the research industry is structurally challenged by regulation and technology, as broker dealers bundle ER with S&T when they bill clients, so I don't see career opportunities improving down the road.

11/22/17

Curious, would you or @IntlBaller consider Asset Management over IB?

I'm incredibly biased & naive but investment management sounds awesome. Personally, I find people in public market roles to be a lot more happy about their job than the PE & IB people I've met. I do agree that ER is in a pretty difficult spot with mifid 2.

11/22/17

Yes, it was definitely something I considered, once deciding that I would transition my career.

So, I sat down with a few HF PMs to discuss opportunities, and we didn't really click philosophy wise. Wasn't really excited by long-only AM, and all the long-short shops I met with had fundamentally different views on investing styles and other philosophical concepts.

Decided it would be best for me to gain some exposure to IB in the near-term, which interested me as well.

Keeping in mind that transitioning from ER to IB, is not necessarily closing the AM door for down the road, although ER is a more direct path, if you end up working for one of your clients.

11/22/17

I absolutely would have if that's where I wanted to end up. No need to pass through the dregs of IB first.

I'll never forget a meeting I had with my senior analyst and an analyst at a top AM firm. He was probably my age, showed up in a flannel shirt, jeans and Nikes while he grilled the F out of my analyst. That was the first of many times where "I am on the wrong side of the table" slapped my face.

11/21/17

Really interesting post, thanks for sharing. The only caveat I'd add is that many banks have policies now that protect most Saturdays. All the other points still apply but interesting to see how the industry's shifting.

11/21/17

great post, like yourself I'm amazed how the analysts/associates on the west coast are up for the morning call with the time difference...definitely not worth it in my mind

one thing I'm curious about is where you get a greater sense of fulfilment...sure in ER when you update a model/write a note, it's something that has to be done in order to get your research out...but at the same time, the odds of anyone actually reading any report from front to back is near 0

on the other hand, in IB a lot of the tasks you have to do are fairly menial (formatting slides again and again), but at least a small fraction of the time you see the fruits of your labour when a deal that you've contributed to actually closes. Plus at the higher level you can directly affect change

12/24/17

But then, I hear from bankers (mostly during my time as a SA) saying how "the bst meetings are ones where the pitchbook isn't even opened."

This made me think - why aren't IB analysts spending more time just informing their MD/VPs Of information, instead of suffering through pitchbooks. To which I countered (and thus realized) that these pitchbooks arent actually for the clients. They're are for the MD/meeting attendee. So I'm still on the fence about whether IB work is actually "value-additive" in the way that ER work is.

However, you cannot discount two aspects - 1) at the junior level, IB is still a better platform for getting into the HF/AM space and 2) ER really is going through a structural decline with Mifid II, and the proliferation of research out there.

Really think those interested in ER at the junior level would be better suited trying to break into buyside research ASAP.

Even in banking, I've seen anecdotally from people here on WSO that they leave for their HF/AM gigs in some cases only MONTHS into their IB Analyst careers.

But I'm really postulating all over the place, and people in IB or ER (and who have worked in both) have more valuable contributions. SBs all around though.

11/21/17

Thanks a lot for the insight, definitely fills a lack of ER coverage on here. I was curious if there was a difference in balance between research within the banks vs. independents?

11/21/17

Interviewed with Piper Jaffray's Simmons & Co Oil and Gas division in Houston . Never got the job, but they told me hours would look like 6 AM to 10 PM.

What do you guys think ? Did I get it easy or was it my misfortune to miss out on an awesome experience.

The really cool thing is that the people in this job matter. Two people that interviewed me are regularly quoted in the WSJ.

D.I.

11/22/17

If I could add a little perspective, I feel the work life balance and hours depended immensely on the writing analyst's attitude and the sector you are covering.

I followed the hours of the junior analysts and associates and most of the time I got in at 0730 and left at 2300, but with very rare weekend days. Earnings were a complete nightmare because the day started at 0330 (covering stocks that weren't listed locally), and probably ended earliest midnight.

I've seen hours from ~50 to ~80 depending on how much the team published.

11/22/17

Which coverage sector/group has long and short hours in your ER dept.?

I'm sure it depends on the company but I've been interviewing for ER (currently in IB) and I hear Tech/RE/Insurance have longer hours, while Consumer/Retail is more reasonable.

11/22/17

I'll add a datapoint. I'm a senior associate covering tech in NYC. Non-earnings hours are generally 730 - 7 with some later nights when we publish. I'd say these are average hours for my office. During earnings we work until we're finished which can mean anytime from 9pm to 2am. I'm out by 5 most Fridays and I never work Saturday. Sunday I might put in a few hours but it's rarely required.

11/22/17

Associate covering Life Insurance.

My hours match up with 1000Talents. I would say the average is in that range.

11/22/17

I'll add some perspective as a Senior Analyst who has climbed the ranks.

The hardest I have ever worked was the time between getting some coverage and being established as a covering analyst. As noted above, if you are on your own covering stocks it requires a lot of time. This is due to the time required to travel, meet with clients, do calls with clients and meet with covered companies. As an associate you will do some of this, as a senior this is your full time job. If you have no one in the office backing you up when press releases hit and reports need to be written it can be a lot.

The good news is that once you are established you can work as hard as you want to and have a ton of flexibility with your time. My hours range from 40-80 per week and my time in the office ranges from 6AM-midnight to none (work from home).

When you are a senior you also travel a lot. I am typically flying somewhere 3-4 times a month, often for 3-4 days. I don't mind this, but getting delayed on a Friday flight home can be a drag.

Is it all worth it? I think so, though burn out is real. The best part of being in ER is constantly engaging with incredibly smart people. Investors are typically very smart and you can learn a lot from how they think. Management teams are typically great to interact with and you can learn a lot about business and incentives from covering a stock.

The future of the industry is questioned a lot on these forums. Research is still valued and will not go away, but I do think the industry is a bit bloated relative to value add. There are 50+ analysts covering Apple and maybe 5 add real value. On the other hand, some small cap companies are covered by 1-2 analysts. Some rebalancing needs to occur.

12/24/17

+1 on the small cap coverage angle.

Really think that a subscription based shop that covers names with sub $1bn market caps would KILL it on fees from hedge funds.

11/22/17

I don't mean to speak out of my ass as I have not worked in either jobs but I will relay what a very good friend of mine said about his work as an associate in ER. One of the things he really liked about his job was that while he doesn't get to learn all the most complicated models that analysts in IB do, he thought he got a much better understanding of the industry that he was covering and how the businesses actually worked by following those companies than by working on deals. From that perspective, I think that is a positive to add to ER.

I'll also add that when he was starting out, his analyst at the time was expanding his coverage to new companies (and so my buddy was still coming in for a few hours on Saturday and Sunday) so that might be something else that puts more load on the associate.

"They pull a knife, you pull a gun. He sends one of your guys to the hospital, you send one of his to the morgue. That's the Chicago way.

11/24/17

I recently worked in ER in an EM country. It was quite awesome cos it was a start up and I came in as employee number 3 in the firm. The guy who started it had previously been the Head of Research at a Bulge Bracket, was a top rated analyst in his sector and decided to go out on his own in anticipation of Mifid 2 regulation coming soon.

Anyway, I had no previous experience but was hungry and passionate about markets. My boss taught me a great deal. Mostly what I'm grateful for is that he really allowed me to spread my wings. I worked as his associate but he didn't give me a lot of his work to do. Instead he gave me my own sector to cover and started me out on a single company. I had a couple of months to research, build my own models from scratch and initiate on that one company (He said that was the best way for me to learn).

Because I was competing with guys with 10+ years experience, it was up to me to grind to close the gap. My boss encouraged me to come up with real unique, 'out the box' ideas and gave me crap every time I came up with industry standard ideas (It's quite crazy how identical most sell-side research is). So naturally, I often stayed in the office til about 3.30am (one time I left the office at 5am on a day I was on a roadshow with my boss. I went home to shower and change to be ready for my first 8am meeting. Later that day I caught myself falling asleep in the middle of a meeting). I worked everyday. Saturdays and Sundays included, because it was going to be my name on my reports.

Anyway, I agree that ER work is more meaningful. I also really didn't like earnings season cos you have to put out work under pressure. I believe this is why analysts end up putting out junk and probably why many people don't bother reading research reports. I don't care who you are, but to come up with meaningful ideas you need time to digest and really think about the info and its implications.

"I started my life with a single absolute: that the world was mine to shape in the image of my highest values and never to be given up to a lesser standard, no matter how long or hard the struggle." - Ayn Rand

11/25/17

I would say the hours in ER come at an opportunity cost not only for comp but also job stability / long-term career outlook and the mental strss that brings. Banking is doing well from a revenue standpoint and has been for a while, there hasn't been any good news with regard to ER for about a decade. MiFID, Automation, active to passive, compressing margins, shrinking salesforce, etc.

I am not saying ER is going away any time soon, and this may be for another post, but I would rather work the extra 20 hours a week if it meant better exits, bonuses 2-3x the size, and a job I didn't have to worry about constanly getting worse than the day before due to issues out if my control.

I will cavaet this by saying you have to go with what interests you and if you are young both of these jobs will likely be a relatively short term part if your career. If you really love the public markets and would never consider PE then go ER, if you like deals and the widest possible exit ops then go IB.

With regard to exit ops it seems like ER can go to HF, AM, IB, Corp Dev/IR/FP&A, FoF, Family Office which is every IB exit op besides PE, and you can always try laterling into IB for that. I included VC with PE as most VC funds that take bankers are closer to PE than Seed Stage VC.

11/26/17

Very interesting perspectives here. Appreciate all the feedbacks / thoughts.

I am working in mid / back office at a large hedge fund, and will be attending a top mba soon. I debated between research vs IBD in my head, and I decided that I will recruit for banking / consulting at MBA OCR.

The major reason for that is I've found out that the investment research guys at my fund tend to be huge nerds, quite arrogant / condescending, who are generally poorly socialized. I don't mean to generalize, but I would find the coworkers in banking / consulting to be more to my liking: more collegial, social, and team work-oriented. (because it's a client facing job and many team members work on same project in banking or consulting) Also, rather than following the markets or doing research on stocks all day, I realized I am more interested in analyzing the business with regards to strategy or transactions.

Lastly, as everyone here's pointed out, active management AUM has been declining overall due to money flowing into passives. Many mutual funds / hedge funds don't even recruit at MBAs nowadays because the industry / aum is shrinking overall and there isn't much need of additional bodies in investment teams. I would rather bet on becoming a seasoned banker / consultant whose value proposition is based on industry knowledge / contacts / relationships, rather than a research guy whose only value proposition is knowing how to do valuations on stocks or bonds..

11/28/17

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"I started my life with a single absolute: that the world was mine to shape in the image of my highest values and never to be given up to a lesser standard, no matter how long or hard the struggle." - Ayn Rand

12/25/17