Institutional Sales Jobs at an Independent Research Firm: The Best of the Buy-Side and the Sell-Side?

We like to categorize things.

The buy-side… the sell-side… fixed income vs. equities…

But sometimes there are roles that don’t quite fit into a pre-defined category.

One example is institutional sales at an independent research firm.

It’s not quite “equity research” because you’re not doing much modeling or report writing, though you do speak with the buy-side.

But it’s not “buy-side research” because it’s a sales role, and you’ll be spending far more time on the phone than you will in Excel.

So if you’re interested in those areas – sales, research, and the buy-side – it might just be the perfect role for you.

Here’s how our interviewee got into the industry and performs well while working far less than he would in a traditional finance role:

Getting Into Sales After Trying Everything Else First

Q: Could you briefly describe how you moved into sales?

A: I would say that I started out in sales, because when I was younger I spent time starting businesses, picking up clients and customers in the neighborhood, and talking to people and convincing them to buy my products.

I learned about finance at university, and started thinking I could combine finance and sales by becoming a stock broker.

After graduation I accepted an offer in commodities sales, stayed there for a few good years, and then left because of all the new regulations introduced post-financial crisis.

A lot of boutiques and smaller firms that specialized in commodities were shut down, and opportunities dried up along with liquidity.

But I knew I could leverage my sales skills in other ways, so I joined a startup, did sales there, and then took a few roles in business development and investment banking.

Q: I could see the move from commodities sales to sales at a startup, but isn’t it quite a leap to go from that into investment banking?

A: Not really, because there was a tech boom in California at the time and there was a close relationship between many tech/healthcare companies and the banks advising them.

I heard about a venture-funded healthcare company that needed someone to do “business development,” so I reached out and won a consulting role there.

On the side, I also began working with a middle-market bank to source and evaluate deals, follow-up with potential clients, and so on. I had plenty of experience doing all of that in my previous roles.

That banking role eventually turned into a full-time one as I moved out of the consulting gig.

Q: But then you moved away from all that to get into independent research.

Why?

A: I liked being on the institutional side of the business and making stock recommendations to clients, similar to what I did in my original commodities sales role.

Some people prefer working on M&A deals, but for me the process was always very slow and I wanted something faster-paced and closer to the markets.

Also, while you do gain a “valuable skill set” in IB, you gain more valuable relationships in institutional sales roles – if you know the CEO of a major hedge fund, for example, you can bring that relationship anywhere.

So I started looking for other sales-oriented roles, and eventually accepted an opportunity at a well-known independent research firm.

Independent Institutional Research: Say What?

Q: So what exactly does your firm do? And what do you mean by “independent research”?

A: We’re a leading provider of global macro research, and most of our clients are large pension funds and hedge funds. I’m responsible for selling our independent research to these funds.

Firms pay for our product because they want “something different” – ideas that they may not have considered before.

As previous interviewees have pointed out, sell-side equity research is not always terribly insightful – plus, banks often promote their clients’ stocks rather than actual good ideas.

We also have a good track record of providing actionable recommendations that, while not always correct, at least contain valid points and go outside the mainstream view.

Our research differs from equity research in the following ways:

• There are no specific equity recommendations – we just make sector recommendations, such as “Overweight technology based on expected pickup in CapEx spending and lower long-term interest rates than the market expects.”
• We look at a lot of proprietary indicators in addition to the standard multiples and growth rates seen in other research.
• The research is more about sector and industry allocation advice so that clients can think through their entire portfolios and enhance returns while preserving capital.

Unfortunately, I can’t share an actual report here.

Q: I see. So how did you find out about this firm?

A: One difference in sales roles is that sometimes recruiters come to you.

For this role, I started out by doing a bit of networking at local hedge fund associations, the CFA society, etc., but I also maintained a big social media/web presence (Twitter, LinkedIn, a personal website, and so on).

I didn’t have a huge number of followers, but I was always tweeting and posting links to all things M&A and finance-related.

So a recruiter at this firm saw my social media activity and reached out to me about the role.

They wanted people with a very specific profile: knowledge of finance and the global macro landscape, including commodities; experience selling to C-level executives; and a willingness to place cold calls and handle rejection.

The interviews focused on what I did in my previous roles: how I reached out to C-level executives when I was at the boutique bank, how I pitched our advisory services to potential clients, and even what I did in commodities sales.

They asked questions such as:

• Who do you sell to in your current role?
• How many cold calls did you make in a day?
• How much money did you bring in?
• What are the current challenges you run into when you’re selling your product, and how do you overcome those challenges?
• How can you synthesize complex information and present it to executives in a concise way? (This is where my IB experience came in handy)

The conversations went well, and I ended up accepting an offer there.

I think I won the role mostly because:

• I learned as much as I possibly could about the company by setting up Google Alerts about it and its competitors and reading up extensively on everyone in the market.
• I researched the company’s products, including a proprietary analytics program it had just released, and talked through how I might present it to prospects.

On the Job at an Independent Research Firm

Q: Yeah, I don’t know if the web / social media approach would work as well for more traditional roles, but it sounds like a winning strategy for this job.

So what has the job been like so far? What do you spend your time doing, and how do you sell effectively?

A: I split my time between maintaining current accounts and bringing in new business.

Most of my “new business development time” is spent building a pipeline of potential clients, and then emailing people to get meetings and introduce our company.

I’ll often send email updates about the latest market news and suggest a few strategies within the email. Since our firm is reasonably well-known, that alone can lead to a first meeting if the tips are good enough.

These are all based on what our research team comes up with, and then how well I can match the strategies to different firms’ styles.

A lot of the “current account maintenance time” is spent speaking with clients, seeing what their concerns are, and then presenting our relevant ideas or bringing in specialists to speak with clients and answer their questions.

Q: What does it take to sell to hedge fund and pension managers in the first place? How much of what you learned in your previous roles is transferable?

A: The key skill is being able to convey complex information in simple terms.

Senior executives at these funds are all very intelligent, so you’re not exactly going to use the tactics of a used-car salesman.

I spend about 80% my time listening and only 20% talking; the key question is always, “What’s your biggest concern? What are you most worried about?”

And then I find ways to address those concerns.

For example, if a client is concerned by a recent drop in oil prices, I might dig in and ask exactly how that’s going to affect him/her: do they own energy stocks? Have they invested directly in commodities? Do they have investments in other businesses that are highly dependent on oil prices?

And then I might find a recent research piece we published on one of those topics and send it over to the client to present new ideas on how to take advantage of this price movement.

It’s more about managing the process, being organized, taking notes on everyone’s key concerns, and following up frequently to add value.

Most of these funds have a specific decision-making process when purchasing research, so you want to be front and center when they’re about to go through that process.

Q: Great. And what about the overall work environment?

A: There’s almost no “hierarchy” because our team is quite small and you’re measured nearly 100% by the sales you generate.

The base salary for entry-level hires ranges from $80K to $90K USD, with a bonus of 25-50% depending on your performance. So the all-in pay might be anywhere from $100K to $135K.

That compensation may not seem great compared to IB/PE roles, BUT the hours are also much better.

You can potentially work only 5-6 hours per day here, and no one cares as long as you’re delivering results.

So if you can sell more efficiently than other people, potentially you could earn far more on a $ per hour basis.

On the other hand, it is more stressful because you’re running your own business on their platform; if you don’t meet your quota, you’re out.

As a result of all this, the culture is “relaxed” in some ways – reduced hours and no facetime at all – but higher-stress in other ways.

Future Plans and Advice for Readers

Q: So what are your plans? Will you stay there for the long-term?

A: I’ve moved around quite a bit before this, so I want to stay here for at least a few years and help the company grow its sales as much as I can.

Of course, sales roles tend to have a very high turnover rate, so realistically I’ll eventually move to another sales/business development role where I can leverage my background in finance.

Q: Thanks for sharing that.

What are your tips for readers who are looking to leave a number-crunching role in finance and enter sales, or at least something that involves more people and less Excel?

A: First, you need to ask yourself if this type of role really fits your personality and skills.

I’m good at sales and sourcing deals, and I’m an outgoing person – my strength is talking to people, not crunching numbers.

A lot of bankers say, “I never want to look at Excel again!” but they’re not ready to deal with cold calling, getting rejected, and so on.

Some people have this fantasy that business development roles involve having lunch with Ron Conway and Ashton Kutcher and then turning down multi-billion dollar acquisition offers, but it’s mostly “dirty work” where you do everything imaginable to generate sales.

So you need to pick your poison and understand that there are trade-offs in every role.

If you decide that sales/business development roles are for you, focus on startups or companies in growth mode, like I did, and pitch yourself to them.

If you can deliver results, you’ll have a lot more success breaking in than you would at a Fortune 500 company.

Q: Great. Thanks for your time!

A: My pleasure!