As Wall Street and City big banks shave off staff and shutter units amid shrinking profit margins and trading commissions that have been driven down by dwindling market volumes, whether you’re a banker, broker, trader or analyst, the desire to ditch the sell-side for a buy-side career intensifies.
In many ways, the shift already has started without your making the move to another sector. Amid massive regulatory overhauls and proposals to make even more sweeping changes to the system, banks are increasingly forced to change the way they traditionally have done business and refocus on their customer-facing activities, delving deeper into asset and wealth management.
The global asset management industry got beat up in the financial crisis but has since emerged with vigor, thanks largely to greater diversification in asset classes.
And the competition is more fierce than ever.
"A lot of folks have been displaced by the buys side and (bankers) need to be aware of the competition that already exists," warns Roy L. Cohen, a career coach and author of "The Wall Street Professional's Survival Guide." "You have got to demonstrate your value, now is the case more than ever before."
The expectation and hope is often that you can earn more money and log fewer hours at a fund firm than at an investment bank. But today’s markets have become increasingly demanding on buy-side firms, and making the switch at mid-level or top tier may not deliver the ROI and improved work-life balance you seek. Unless you’ve made your name as a master dealmaker and are willing to test your skills at an event-driven hedge fund, there are few opportunities.
It’s always easier to shift sides earlier in your career, when less is at stake especially in terms of salary and bonuses, as well as a track record that could keep you on the course to steal the sell side. But don’t give up before you try.
“With hard work, stick-to-itiveness, believing in yourself and luck, I’ve seen this work way more often than not,” encourages John A. Breault, founder of headhunters Breault & Smith.
Here’s how some experts weigh in on ways to break into the buy-side.
Anyone with skills in a specific asset class, suite of products, technology or regulatory knowledge that spans sectors is sellable to the buyside. But experienced investment bankers who want to move into asset management can’t expect to be poached by fund firms. “I think (bankers) are attractive just in the nature of being from the hardest, fastest environment,” says Ben Cowan, director at recruiters Astbury Marsden. “Smaller organizations are more driven by the person than the skillset, so you must network to demonstrate your capability and worth. I think if they are just sat waiting for a recruiter to call, it’s unlikely."
“Get in the habit of at least some meetings each week,” says Breault. “You’ll be amazed how easily the habit is formed and the multiply affect that networking has.” Cowan agrees, saying “networking with people on the investment management side is the single most important thing.”
“Be long-term greedy to find the right algorithm that combines opportunity for growth, making a difference, working with great people and risk,” says Breault. “Compensation should be a very, very minor factor.”
“Investment banking is being hit hardest with new regulation aimed at remoulding the shape of the banking and financial services sectors; and these reforms will dictate hiring patterns,” notes Guy Emmerson, Operations Director, Banking & Financial Services, at Badenoch & Clark. But that can be good news for the investment banker moving on to the buy-side.
“There are definite similarities between investment banks and investment management firms, particularly regarding the levels of regulation and compliance controls, which mean candidates from investment banking will already be familiar with the back office processes involved,” says Emmerson. “It would be much more difficult to move from retail banking to investment management, for example. Even on the compliance side, it is unlikely for candidates from retail banking or the insurance industry would feel comfortable making a move to investment banking as the regulatory environment is unique to this sector.”
“The challenge for candidates from investment banking looking to make the move into an investment management firm is that they will face competition from candidates with greater experience in the sector,” says Emmerson. “However, investment banks and asset management firms are subject to similar processes and operate in very similar environments, so demonstrating that your experience in the sector is relevant will elevate your chances of success. While securing a position in an investment management firm can be difficult, even in a prosperous economy, candidates from investment banking can offer the right mix of transferable and soft skills, with an opportunity to build on this skill base in a new, but similar environment.”
“Through informational discussions with people in the position you are targeting or people that hire for the position lasting 15 minutes, have them validate and refine the edges you have that are a fit for the type of firm culture and position you are seeking,” says Breault. “Be very focused. Know yourself well and what your strengths and weakness are and be able to explain that.”
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