There is a lot of misunderstanding out there regarding the equity research experience at the bulge bracket investment banks in comparison to that at boutiques or smaller independent shops, with some people claiming that the one and only thing to take into account is how your lead analyst is ranked on the ii or Extel rankings. This is far away from the truth, and here I am going to explain why:
1) Working at a main investment bank will get you better exposure to better clients. Your team head will decide when you are ready to start speaking to clients, but once you do, you get to interact and debate with PM’s and analysts from the likes of Blackrock, Fidelity, Alliance… as well as top hedge funds. This not only offers you the points of view of the top houses in the industry but also greatly expands your network if you are looking into making a jump into the buyside.
2) The size and quality of the sales and trading department at a bulge bracket will help you to get your name out there. If the sales people like you they will ask you loads of questions and try to grab you over to their desk when you visit the floor. This translates into more client exposure as they’ll want to bring you along with them. Sales don’t really care about hierarchy and will respect you if you know your stuff even though you might be a junior. Also interacting with traders allows you to be in the flow. When a client calls asking “why they hell is this stock up 3% if there’s been no news” you will be able to answer “oh, let me call my trader”.
3) Resources. Big banks have the capital to actually invest in department resources. I can’t tell you how awesome it is to not having to update company models every earnings because we have a guy in India who does it. You might have to proofread through it but that is so much easier then actually manually updating each model for the 15 companies you may have under coverage.
4) Management exposure. More often than not you will get more exposure to management teams outside the traditional analyst day, since they usually schedule their roadshows in liason with an investment bank. It’s pretty nice when you are 23 and you are on a first name basis with a CEO who who runs a company that is $8bn in mkt cap. If you want to jump into industry you know who to call.
5) IPO experience. If your sector is hot or you work for a top ranked analyst you will get a lot of IPO’s in your space simply because the company wants the top analyst to market them. This translates into you (aka the junior analyst) to be the guy who has to build the vetting model and write a substantial part of the initiation and marketing report. This is great experience to draw from when you are interviewing.
So all things considered, if you are in a position to choose between a junior role at a main investment bank or a smaller independent shop, take the bulge bracket offer and never look back.
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