When Does it Make Sense to Move from the Buy-Side to the Sell-Side as a Research Analyst? (2024)

When you've hit a wall in your career as a research analyst on the buy-side (usually in a non-HF setting), it can be frustrating, especially if your ultimate goal is to work in a faster-paced environment like a top hedge fund or on a top-performing absolute return/total return team at an asset manager or sovereign wealth fund. The competition for such positions is fierce, and you might find yourself wondering if there's a way to break through. Surprisingly, one potential path to success involves taking a step that may seem counterintuitive at first: moving from the buy-side to the sell-side. In this post, we will explore when and why this move makes sense for research analysts and how it can open doors to your dream buy-side role.

When Does It Make Sense to Move from Buy-Side to Sell-Side?

If you're a research analyst (equity analyst, economist, strategist, credit analyst, etc.), there are specific scenarios and reasons where transitioning to the sell-side can be a strategic career move:

1. Early-Career Research Professional: If you're relatively early in your career at an asset manager, especially in a role focused on plain vanilla/long-only products or within a struggling division (sadly this is the case for many asset managers these days due to industry headwinds), a move to a top sell-side firm can be a game-changer. Success on the sell-side can help you gain visibility among top hedge funds and other tier-1 buy-side institutions, effectively expanding your network and opportunities.
2. Desire for Risk-Taking: If your ultimate goal is to become a risk-taker at a hedge fund or Tier-1 asset manager, it is advisable to make the move from research to the sell-side earlier in your career. The transition becomes more challenging as you progress further in your career.
3. Client Base: Ensure that the sell-side firm you are considering has a robust institutional client base, including top hedge funds, asset managers, and asset owners. Without this network, your move may not be as beneficial, especially if you are moving to a bank with a client base more purely comprised of corporates (for example).
4. Transition to Desk Analyst: If the sell-side position offers a path to becoming a desk analyst, it could be an excellent opportunity. Desk analysts often work closely with traders, gaining valuable experience that sets them up well for a future move to a hedge fund
5. Building a Personal Brand: On the sell-side, your market insights and client interactions serve as your personal brand, making you more well-known to a wider variety of hedge funds and other top buy-side firms. Building up this network can greatly increase your chances of a future move to a top firm, especially if you have certain PMs that value your research.
6. Developing a Robust Research Framework: A strong sell-side research framework, exposure to derivatives, and a specialized skill-set can enhance your chances of landing a role at a top hedge fund or higher-calibre asset manager. Hedge Funds will often-times tell us that a research candidate with sell-side setting from a top firm would be their preferred profile, however this of course does not mean an exceptional candidate without a sell-side background would not be considered.
7. Compensation: Generally, the sell-side offers a more attractive compensation packages compared to asset managers, providing a financial incentive for the move, although this should of course not be the main driving factor.

Examples of When the Move Makes Sense

Here are a few real-world examples of when transitioning from the buy-side to the sell-side can be a strategic career move:

1. Transitioning from a Wealth Manager: If you're a top-performing analyst at a wealth manager, but you primarily work with plain vanilla products and longer-term investment horizons, making the move to the sell-side can broaden your skill set and make you more appealing to tier-1 institutional asset managers or hedge funds, while giving you more exposure to derivatives, long/short trade ideas, and thinking more tactically.
2. Moving from a Small Hedge Fund: If you're an analyst at a small hedge fund and struggling to transition to a larger platform, consider becoming a desk analyst on the sell-side. This move can enhance your future prospects and make you more visible to some of the larger platforms.
3. Lack of Sell-Side Training: If you started your career at an asset manager but haven't been exposed to a robust sell-side research framework or knowledge of expressing L/S trade ideas or derivatives, a transition to the sell-side can fill these knowledge gaps, therefore making you much more attractive to a wider range of buy-side opportunities down the line.

While moving from the buy-side to the sell-side as a research analyst may seem unconventional, it can be a strategic career move, especially if you've hit a career plateau or are struggling to secure your dream role at a top hedge fund or in a faster-paced/more excited buy-side setting.

By making this transition earlier in your career, strategically choosing the right sell-side firm, and focusing on developing your framework, you can increase your chances of ultimately achieving your career aspirations.

In today's job market, with growing demand for research talent on the sell-side, this move is becoming increasingly recognized as a smart career play, especially with a large number of asset managers currently struggling.

So, if you find yourself at a crossroads in your career as a research analyst, don't dismiss the possibility of considering moving back to the sell-side. It could be the missing piece of the puzzle that sets you up for a career with a much broader set of potential opportunities.