Buy-Side vs. Sell-Side Equity Research: Battle of the Burned-Out Analysts

When you hear the term “buy-side equity research,” you probably have two immediate questions:

1. How is it different from the sell-side equity research covered in many previous articles on this site?
2. How is it different from what normal “Analysts” or “Research Analysts” at hedge funds, asset management firms, pensions, and sovereign wealth funds do?

We’ll answer both questions here, but, as always, I’ll start with the short version in case you have the attention span of a TikTok doom scroller:

Buy-Side vs. Sell-Side Equity Research: The Short Version

In sell-side equity research, such as at large banks that produce equity research reports for clients, your job is to be a conduit by finding and passing along key information and connecting the right parties (e.g., management teams with investors).

It’s a bonus if you can make solid stock recommendations, but it’s not strictly required to advance.

By contrast, in buy-side equity research, your job is to make the right investment calls using the least amount of information/effort possible (decision paralysis and all that).

You are not acting as a conduit or relationship broker, though you will use information and relationships as tools.

This difference explains everything else:

• Buy-side equity research is a broad term that could refer to Analysts and Associates working at asset management firms, pensions, endowments, sovereign wealth funds, and hedge funds; the only commonality is that they must analyze publicly traded stocks and make investment recommendations. Sell-side equity research is a narrower term that applies mostly to the mid-to-large investment banks and some independent firms and to the process of writing research that clients pay for.
• Much of the day-to-day work is similar: You read a lot, speak with management teams, interview industry experts, build/update financial models, and write notes recommending for or against specific stocks.
• But the purpose is quite different (making money with investments vs. marketing/relationships), and so are the tempo and required outputs. Sell-side Research Analysts “must” publish a certain number of notes on each company each quarter, even when there’s nothing to say, while buy-side Analysts can pick and choose what to write about from a broader universe of stocks.
• In both fields, your career experience is heavily determined by the Analyst leading the group, with far more variability than in fields like investment banking. There are more varied paths to advancing up the ladder in sell-side research, while the only way to advance in a buy-side role is to make money for your firm.
• The compensation ceiling is higher in buy-side roles, with some hedge fund stars earning into the multiple millions, tens of millions, or beyond (vs. high-six-to-low-seven figures in sell-side ER), but the average pay across all levels isn’t necessarily that different – partially because professionals in fields like long-only asset management earn less than those at hedge funds.
• The top firms in sell-side research include the bulge-bracket banks, several middle-market banks, and a few independent firms; on the buy-side, it’s the top asset managers and hedge funds (institutions like pensions and SWFs should probably rank lower because stock-picking is not necessarily their core focus).
• Recruiting in both fields tests similar skills (accounting, valuation, stock pitches, etc.) and tends to follow the off-cycle timeline, as it’s less structured than the IB/PE processes. But very few people start in buy-side equity research because there are few positions, and it typically requires another role (e.g., sell-side ER, IB, S&T) as a prerequisite.
• Exit opportunities are also similar (HF/AM firms, IR at companies, corporate finance, etc.), but buy-side research may limit your options slightly; for example, it would be a bit odd to move to a sell-side role after working at a top long-only asset manager.

Buy-Side Research Analysts vs. “Hedge Fund Analysts”

You might have noticed that the short version above does not address question #2, about the difference between standard “Analysts” at hedge funds, asset management firms, etc., and “Buy-Side Research Analysts.”

The answer is that these titles mostly describe the same job, but not always.

Most large hedge funds operate either with 1) “Siloed” teams, where Research Analysts also consider the entire portfolio, risk management, and trading execution, or with 2) Separate “Research Platforms,” where Analysts make recommendations to multiple portfolio teams.

You’ll see more of a difference in the second case because if you’re part of the “Research Platform,” you’ll think more tactically about individual stocks rather than portfolio-wide issues, such as position sizing.

The first job is more like a traditional Hedge Fund Analyst or Associate role, with a broader skill set required.

On the Job in Buy-Side vs. Sell-Side Equity Research

You can find full day-in-the-life accounts in the ER Analyst and HF Analyst articles, but to summarize:

• In buy-side research, your coverage universe is often much broader. For example, you might cover the entire Energy sector rather than just Oilfield Services or Solar companies.
• Despite this broader universe, you often work with a smaller set of companies each day because you can pick whatever you think is interesting and run with it.
• So, the average day in sell-side research is more likely to be a mix of tasks across multiple companies: Issuing update notes on 5 semiconductor companies, reviewing an initiating coverage report on a hardware startup, speaking with 3 management teams, and meeting with another startup that is considering going public.
• The average day in buy-side research is more likely to consist of deep dives on the 1 – 2 most interesting companies in your universe. For example, you might spend hours untangling a potentially overstated backlog for one company and several hours getting a sense of the proper Discount Rate for one specific vertical in an emerging market for use in another company’s valuation.
• Teams are lean in both fields, but they tend to be smaller in buy-side roles because you do not necessarily “need” to write about an arbitrary number of companies.

Careers, Culture, and Advancement

The most important point here is that the culture, hours, and workplace norms vary wildly based on the Analyst in charge of your group.

If you go into a field like investment banking, you know it’s going to be awful no matter where you are.

But in research, you could get anything from 50-hour workweeks with regular start/end times to 70-hour weeks with “crunch mode” during earnings season.

In general, multi-manager hedge funds and bulge-bracket equity research teams tend to be the most stressful, but there’s so much variance that this statement is almost meaningless.

As you’re interviewing, you should create a set of questions to determine each group’s culture:

• What’s your view on breadth vs. depth in coverage?
• Is your coverage siloed, or do your Analysts and Associates work broadly across industries?
• What’s the expected quarterly output for each professional?
• How do you vet new ideas and companies to initiate coverage on (for sell-side role)?
• Do you make decisions based on a committee or on what the “star” PM or Analyst thinks?
• For buy-side roles, how do you think about risk management and position sizing and factor it into your recommendations?

Some would say that sell-side equity research is a more “stable” career because you’re not under constant pressure to generate alpha (unlike MM hedge funds, where anyone underperforming gets fired quickly).

There is some truth to this, but according to sources like Bloomberg, sell-side equity research is also in structural decline, with global headcount falling by ~30% over the past decade.

So, you’re effectively choosing between a high-pressure/high-turnover industry and a declining one.

Another big difference is that there are more paths to advancement in sell-side roles.

For example, you could be a terrible stock picker, but if you have great relationships with management teams and can set up meetings for investors, they might keep paying for your “research.”

Similarly, if you’re great at finding information nuggets that have escaped the market’s attention, investors might keep paying for your work, even if they disagree with your recommendations.

Salaries and Bonuses

On the surface, this seems simple: Hedge fund investment professionals start in the mid-six-figure range and can potentially advance into the millions (or even higher as a Partner or PM).

By contrast, Equity Research Associates at banks start in the $130 – $150K range and advance to the $400 – $500K range as they move up.

Senior-level research professionals at the Analyst level could potentially earn $1 million or more, but this is much less common in sell-side ER and tends to happen mostly in “hot” sectors, such as biotech.

Based on this, buy-side research roles win in a landslide, right?

Well, not quite, because “buy-side” includes more than just hedge funds.

At mutual funds, pensions, and sovereign wealth funds, the “performance fees” (carried interest) are either nonexistent or much smaller.

So, if you count these research roles as well, the average compensation may not be that different.

As a very rough approximation, you could say there’s a higher probability of earning $1+ million in senior-level buy-side roles, while this probability is much lower in sell-side roles.

The Top Firms for Equity Research

If you look at the lists of bulge-bracket banks, middle-market banks, elite boutique banks, single-manager hedge funds, and multi-manager hedge funds, you can get a sense of the top firms.

Within sell-side research, most people would assign the highest rankings to Evercore ISI, JP Morgan, BofA, MS, GS, UBS, Citi, and Barclays.

Many would also place Wolfe Research and several non-BB firms, such as Jefferies, Wells Fargo, and Bernstein (the AllianceBernstein and Societe Generale JV), in this tier.

Below that are additional middle-market firms and IBABs, including Cowen, BNP, Stifel, Baird, and Oppenheimer. Firms like Deutsche Bank and Susquehanna (SIG) might also fall into this category, even though they are not “middle market” or even “banks.”

In terms of independent research firms outside banks and much larger institutions, Wolfe Research is #1, but other top names include Green Street (real estate and REITs), Cleveland Research, Roth MKM, Strategas (owned by Baird), Telsey Advisory (consumer/retail), Zelman (housing; owned by Walker & Dunlop), and New Street Research (TMT):

There are many others, but I’ve focused on independent firms with > 50 employees (according to LinkedIn).

For buy-side research, the lists of hedge funds in the separate articles above are good starting points.

On the asset management side are firms such as Fidelity, Capital Group, T. Rowe Price, Wellington, MFS, Neuberger Berman, Dodge & Cox, ClearBridge, Putnam, TCW, and First Eagle:

Recruiting

Recruiting for both buy-side and sell-side research roles is mostly off-cycle and, therefore, highly dependent on your networking efforts.

While turnover is high at many hedge funds, it’s much lower in asset management, which explains why AM firms tend to recruit far fewer new hires each year (perhaps 50–100 vs. 1,000+ for HFs).

So, you normally win sell-side roles first via aggressive networking, top academic credentials, and relevant internships (see the ER recruiting article), and then you move to the buy-side after a few years of work experience.

You can find buy-side firms with entry-level recruiting programs, such as T. Rowe Price, Wellington, and Fidelity, but the process is unpredictable due to the scarcity of roles.

Also, even if you win a rotational role at one of these firms, you might be expected to get an MBA or move to another firm when the program ends.

We’ve covered hedge fund recruiting in detail, but you normally need a pre-requisite role, such as IB or ER at a top bank, and must be quite aggressive with your outreach.

When you’re networking for any of these roles, the best thing you can do is ask highly specific questions about the firm’s strategies, culture, and processes, such as the ones in the section above about Culture.

Any idiot can say they “like to pick stocks,” but few people ask thoughtful questions about portfolio construction or how the group decides on its coverage list.

The interview processes for these roles tend to test similar skills: Accounting, 3-statement modeling, and valuation.

You will get plenty of fit/behavioral questions about your strengths/weaknesses, work experience, and investment process as well.

Stock pitches are critical, so we recommend preparing at least 1 “Long” or Overweight pitch and 1 “Short” or Underweight pitch.

That is the bare minimum, and if you can prepare another pitch that’s suited to the group’s industry or strategy, you’ll do even better.

But don’t get too carried away; it’s not feasible to memorize the full details for 5 – 10 pitches (for example).

Exit Opportunities

There’s little to say about exit opportunities because they’re similar in all “research” fields: Move to (another) hedge fund or asset management firm, go into investor relations or corporate finance, or take a research role at a family office, pension, or SWF.

Deal-based roles such as investment banking, private equity, and corporate development are unlikely unless you’ve already worked in one of them before.

The main difference is that buy-side research roles arguably restrict your options more, especially if you’re at a hedge fund that uses a very specialized strategy.

Also, note that your exit options depend heavily on your specific coverage universe.

For example, moving into senior-level finance positions at companies seems to be more common in industries like biotech and TMT but less so elsewhere.

Buy-Side vs. Sell-Side Equity Research: Deciding on Job Offers

Honestly, this is a silly comparison because 99% of candidates will not win buy-side and sell-side research offers simultaneously.

But if you somehow win both buy-side and sell-side roles out of undergrad, and you’re 100% certain you want a long-term career in investing, take the buy-side role.

You’ll arrive at your goals more directly that way, the eventual compensation ceiling will be higher, and you won’t have to go through an annoying recruiting process all over again.

If you’re not certain what you want to do, you could either take the sell-side role or rethink your plans and aim for something with broader exit options.

A sell-side role could also make more sense if you are more interested in the sales/relationship/marketing aspect of the job and don’t necessarily want to be a full-time stock-picker.

But you shouldn’t have to think too much about what to do because most people start in sell-side roles and then switch to the buy-side.

It’s less of a battle and more of a progression.