I started my career as something called a ‘research associate’ back in 1999/2000. I’d just left university and I achieved a job at the bottom of the equity research pile at one of the more esteemed European investment banks. There were around 20 of us in the class, all of pretty much the same level of intelligence and with similar pretty exemplary qualifications. We all new the score – the idea was that we were hired as spreadsheet monkeys for two to three years and that if we were lucky we’d get to become equity research analysts for real.
That was sixteen years ago.This December, we had our annual reunion. And you know what? Banking careers aren’t all they’re made out to be.
Out of my class of 20, there are probably around three people who’ve ‘made it.’ By this I mean they’ve become seriously successful: they’ve paid off their mortgages and have big houses in expensive areas. They’ve made millions are are living ‘the life’ we all imagined was coming to us when we started hammering away at our spreadsheets over a decade ago.
As for the rest of us, we’re all pretty normal – many are stuck in jobs we don’t necessarily enjoy, some are saddled with huge mortgages and school fees.
What differentiates the top three (not all of whom even turned up to the reunion because they don’t move in these circles any more)? They all went to work for the buy-side. Two are in hedge funds and one is in private equity, and the amounts they’re earning there are an order of magnitude different to the pay for those of us who stuck with the sell side. They’re playing in a completely different league.
Knowing everyone in our group and looking back at how their careers have evolved, a lot was down to luck rather than talent. When you work in equity research you’re very dependent on market conditions and how good your boss is. You need to get staffed on a good sector when the market is growing and you need a boss who’s going to help you develop. Research is like a feudal system: you do your fealty to your lord before you get your freedom. If your lord is a baddun and you’re in the wrong place at the wrong time, you’ll be doing spreadsheets and then you’ll be booted out.
Personally, I had a boss who quit around a year after I joined. I was handed his stocks to cover – a role beyond my capabilities as someone who’d only ever tampered with Excel and in which I was stressed and out of my depth. Six months later, a new top-rated analyst and his team were hired to cover the sector and I was out.
By comparison, the guys who succeeded had good bosses who helped them along. They had the right breaks at the right time – bosses who developed them and allowed them to develop a following in banking before moving to hedge funds or PE. One of the three who did come to the reunion was pretty humble: he’d just got lucky, he said.
I’m not unhappy with my lot. I now have a perfectly acceptable role for a financial intelligence company, a modest flat in a modest location and a quiet life. I’m a lot luckier than most people. But I don’t fit the image that people outside the industry have of finance professionals – and nor do many of those who started with me. One member of my class confessed that he envied his dog walker, complaining that, “She gets to spend all that time outside with my dog and once working hours, tax and living expenses are factored in, probably doesn’t earn that much less than me.”
Brad Petworth is the pseudonym of an equity researcher working for a firm in London.
Photo credit: Nepal – Island Peak – 009 – Climbing the sumnmit headwall by McKay Savage is licensed under CC BY 2.0.