If you work in equity research now, it's important to be able to reinvent yourself. Equity research continues to be in a state of flux, particularly in the U.S., and investment banks have been cutting back. Senior researchers have been forced to move on.
Analysts in Jefferies' retail-focused research teams are the latest to look for new vocations. Mark Wiltamuth, a managing director in Jefferies' consumer and retail equity research function, left the bank in August.
Instead of going straight back into another equity research function, Wiltamuth has just taken a role as a consultant to the equity research department at UBS, according to his public profile. Wiltamuth worked at Jefferies for three years, but spent the previous 15 years covering a range of sectors at Morgan Stanley. More recently, he focused on food and drug retailers, grocery distributors and a range of other consumer companies.
Wiltamuth will be focused on 'best practices' at UBS and is clearly using his experience in a way that can be potentially lucrative without actually taking on a full-time research position.
Meanwhile, Edward Plank, Jefferies' lead analyst in the niche area of footwear and athletic apparel, also left the firm during the summer. He's just reemerged at Footlocker, as a senior director in business development.
Plank's move is more conventional, particularly as more senior investment bankers have moved on to corporate strategy and business development roles over the past 12 months. However, this move is more common among M&A bankers than researchers. Most analysts leaving the industry this year have gone into investor relations.
In Europe, equity research costs are being separated from other trading commissions under MiFID II, which has led to increased demand for senior well-regarded analysts (even if cuts are occurring elsewhere in the ranks). In the U.S., where there's no intention of unbundling research costs, equity research remains a significant expense for investment banks.
Investment banks global research budgets have been shrinking. Frost Consulting says that budgets have fallen by 50% from their peak in 2008 to 2015. What's more, it estimates that banks will continue to spend less in 2016, to around $4bn, and then $3.2bn in 2017.
Researchers have to add more value than simply scribing good research, Leigh Drogen, the founder and CEO of Estimize, which offers crowd-sourced equity research told us previously. “It’s not a secret that the buy-side doesn’t care at all about the actual written research from the sell side – they never have," he said. "They care about corporate access, special insights and models. Sell-side analysts are basically free-ish expert networks for the buy-side.”
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