So you often hear or read about the terms ‘Sell side and Buy side’ in financial discussions and reports, but do you truly know what it means? In today’s article, we are going to be breaking down the terms for you, as well as sharing with you possible career opportunities you can consider. We hope you are excited and let’s get started!
What is sell side?
Let’s start by exploring what sell side is. Sell side refers to the selling of securities to raise money. Firms can raise money either through issuing debt or equity securities. These securities include common shares, preferred shares, bonds, derivatives, or a variety of other products.
Sell side companies work with firms to help them facilitate the issuing of securities. Examples of sell-side companies include investment banks (JP Morgan, Morgan Stanley), who help firms to underwrite share issues to determine the price they should issue their shares at. They earn through charging commissions. They essentially act as market makers who provide liquidity in the market.
For instance, Company XYZ needs to raise money. They will then contact Investment Banks, who will provide them advice on what securities to issue as well as what price to issue at.
What is buy side?
For every seller, there must be a buyer. This is what the buy side is about. Buy side refers to using money to buy securities issued by these firms.
Buy side analysts work with clients and make recommendations on what securities to invest in, depending on their preferences and goals. Common institutions that belong to the buy side include hedge funds, mutual funds and pension funds. Funds are essentially a financial vehicle that consists of money pooled from many investors that are invested in a composition of stocks, bonds, and other assets. Typically, the goal of these funds is to outperform the market by earning a positive return above the market return, also known as generating alpha. This is done through determining which securities are underpriced.
For instance, Client XYZ wants to decide on what securities to invest in.They will then contact buy side analysts, who will then provide them with advice on what securities to invest in, and whether to sell, buy or hold.
Sell side and buy side combined.
In essence, sell side analysts help firms to make decisions on how to raise capital. Firms then issue either debt or equity securities (sell side), and then fund firms buy into these securities and create a fund (buy side). Buy-side analysts then make recommendations to investors who invest into these funds.
Careers in the sell side
Now you have a clearer picture on what sell and buy side is about, we know that you would be wondering what are some of the careers available in the finance industry. Here are some of the careers you can consider.
- Investment Banking
Investment Banking is one of the top careers in the industry. Investment Banks underwrite debt and equity securities for firms, as well as help firms with mergers and acquisition processes. It is a highly sought after role as it offers one of the highest salaries in the industry. Despite the perks, the environment is very challenging and stressful, and you are typically expected to work really long hours of 80 to 90 hours a week, and even up to 105 hours at times. If you enjoy a challenging environment, then Investment Banking is for you!
- Equity Research
Are you someone who prefers to work independently behind the scenes? Then Equity Research might be the one for you! Analysts produce analyses and reports on investment opportunities that investment banks and other firms may refer to. They use financial modelling tools to make recommendations on whether to buy, hold, or sell a particular investment security. The salary is also very competitive.
- Sales and Trading
Perhaps you want to be like one of those cool guys you see on television, dressed in suits with multiple screens displaying share prices facing them, running around the office with phone calls shouting ‘Buy, Sell!”. This is exactly what the Sales and Trading department is about (though perhaps not with the same level of commotion that you saw in The Wolf of Wall Street). They work for Investment Banks, which consists of salespeople that communicate with clients, traders who execute orders and advise clients on whether to enter or exit certain financial positions. The salary is on par with Investment Banking. The number of working hours follow the markets you are tracking, which can result in really intense and uncertain working hours. In fact, rumours have it that one cannot even afford the time to go for a wee. If you enjoy a fast paced environment that requires you to think on your feet and make decisions quickly, then you can consider joining Sales and Trading!
- Commercial and Corporate Banking
Do these roles with intense working hours sound too overwhelming for you? Then you can consider a role in Commercial and Corporate Banking instead! They are very similar to Investment Banks, with the difference being that you get to work with many different types of clients, including the general public. There are abundant opportunities to learn and grow. In fact, some choose to join Commercial Banks because they love to see the impact they are making on the general public.
Summary of careers in the sell side
| Career | Role Description |
|---|---|
|
Investment Banking |
Underwrite debt and equity securities for firms, and provide advice on mergers and acquisitions transactions. |
|
Equity Research |
Produce analyses and reports. |
|
Sales and Trading |
Communicate directly with clients and execute orders. |
|
Commercial and Corporate Banking |
Provide financial services to clients. |
Careers in the buy side
Want to consider a career in the buy side instead? Here are some of the jobs available.
- Asset/Portfolio Manager
Asset/Portfolio Managers are investment decision-makers that act on behalf of their clients. They devise investment strategies, make investment decisions, and construct a portfolio based on their clients’ risk preferences. These assets include stocks, bonds, mutual funds, ETFs, derivatives e.t.c. They earn through charging brokerage fees.
- Wealth Manager
Perhaps you want to go beyond just managing clients’ assets, and prefer a more holistic approach to managing one’s personal finance. In that case, you might want to consider Wealth Management instead. On top of Investments, Wealth Managers also provide advice on retirement planning and insurance. Since the role is commission-based, you can expect to earn a very high salary if you can bring in many clients.
- Private Banking
Would you love to have the opportunity to serve high net worth individuals (HNWI) as your clients? Then you can consider Private Banking, which sits in the Wealth Management department. Roles include Investment Counsellor, Relationship Manager e.t.c. They are very similar to Wealth Managers, providing personalised financial services and products to HNWI, with a focus on investments.
Fun fact: Singapore is one of the leading private banking and wealth management centres globally and in Asia. We are ranked number 2 in the Deloitte International Wealth Management Centre Ranking 2021!
- Fund Manager
Ever wonder who’s in charge of the funds that you and I invest in? They are the fund managers. They manage the funds and ensure that it aligns with the funds’ investment strategies. Funds can include hedge funds, mutual funds, pension funds and trust funds. If you want to be the backbone behind the funds that investors invest in, then being a fund manager is right for you!
- Private Equity
Private Equity is a form of private financing, where investors directly invest their money into private companies that are not listed on exchange. Private Equity roles include helping firms to raise capital through identifying investment opportunities. However, take note that it is very tough for undergraduates to land an internship in Private Equity, as they typically only look for experienced hires.
- Venture Capital
If you want a similar role to Private Equity with shorter working hours, then Venture Capital is right for you. Roles include helping firms to pool investments into start-ups and other firms that have high-growth opportunities.
Summary of careers in the buy side
| Career | Role Description |
|---|---|
|
Asset/Portfolio Management |
Investment-decision makers that devise investment strategies and curate a portfolio to meet their clients’ goals. |
|
Wealth Management |
Provide holistic financial advice to clients. |
|
Private Banking |
Similar to Wealth Management. Includes roles such as Investment Counsellor, Relationship Manager. Serve High Net Worth Individuals (HNWI). |
|
Fund Manager |
Manage funds and ensure they align with the funds’ investment strategies. |
|
Private Equity |
Help firms to raise capital through identifying investment opportunities and invest money in private firms that are not listed on exchange. |
|
Venture Capital |
Help firms to pool investments into start-ups and other firms that have high-growth opportunities. |
How to land a career in sell and buy side?
After learning about the possible careers available, we are sure you want to know how to land yourself a role in these areas.
Firstly, you should do enough reading and learning to ensure that you have the basic and relevant skill sets needed to enter this industry. Common skill sets needed include research and financial modelling. You can also enhance your knowledge through reading financial news from platforms such as Financial Times, WallStreetJournal, and Economics Times (they offer student subscriptions at discounts), and take up courses online from Coursera (NUS subsidises some of the courses for free!) or other platforms such as Udemy. We also encourage you to join talks and networking sessions with industry experts, as well as competitions to get a sense of how real-life cases are like. NUS Invest invites industry experts to come down for a talk every semester. For instance, we have invited speakers from HSBC, Nomura and Stashaway. We also host competitions, such as the yearly NUS-SGX Stock Pitch Competition. Do look out for upcoming opportunities available!
The next step is to try to get internships. Internships allow you to gain experience in these fields, as well as find out if the career path is right for you. Take note that many of the big banks and asset management firms have their applications for the summer internship positions happening around September to October, so do apply early. If you want more career tips, do check out our previous blog, titled ‘10 types of interns you would see in the workplace and which should you be’!
Final Words
We hope this article sheds light on what people in the financial world mean by “buy and sell side”, as well as the types of careers available. However, this article is non-exhaustive; there are many other roles that may not be as obvious to us from the public’s perspective, and the financial world is rapidly changing with many new and exciting trends. Stay tuned here to find out more!
(P.S. if you are still reading, see below for a list of some renowned firms!)
Written by: Khoo Jing Xuan (Brand Management Executive)
Illustrated by: Zhang Rong, Mathilda (Brand Management Executive)
- DBS Group
- Overseas Chinese Banking Corporation
- United Overseas Bank
- Bank of Singapore
- Citibank Singapore
- CIC Singapore
- HSBC Singapore
- Maybank Singapore
- Standard Chartered Bank
- RHB Bank
Top Investment Banks in Singapore
- BAML
- Nomura
- Goldman Sachs
- J.P. Morgan
- Barclays
- Citi
- Deutsche Bank
- Morgan Stanley
- HSBC
- Standard Chartered
- DBS
- OCBC
Top Private Equity Firms in Singapore
- 3i Investments PLC
- 3V SourceOne Capital PTE Ltd.
- Abraaj Capital Asia PTE Ltd.
- Adams Street Partners, LLC
- Affinity Equity Partners (S) PTE Ltd.
- AIGF Advisors PTE Ltd.
- AISB Holdings PTE Ltd.
- Al Salam Asia Pacific PTE Limited
- Altair Capital Advisors PTE Ltd.
- Ancora Capital Management PTE Ltd.
Top Asset Management Firms in Singapore
- UBS
- Aberdeen Standard Life
- State Street Global Advisors
- Lion Global Investors
- DBS
- UOB Asset Management
- Vanguard Group
- Blackrock
- Bordier and Cie
- Fidelity Investments
Top Venture Capital Firms in Singapore
- Alpha JWC Ventures
- DreamLabs
- B Capital Group
- Golden Gate Ventures
- 500 Startups
- CyberAgent Ventures
- Sequoia Capital
- Monk’s Hill Ventures
- Quest Ventures
- Life.SREDA