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Apr 01, 2020

Reflections on the transition from Wall Street to investor relations

Steve Rubis weighs financial compensation against work-life balance

As a former sell-side analyst who transitioned to investor relations, I often get asked about the friction points in transitioning to investor relations. A couple of areas come to mind revolving around the difference in compensation and work-life balance. Transitioning from the sell side to investor relations ultimately means compensation becomes a function of tenure rather than merit – but the work-life balance can improve considerably.

Wall Street is a demanding place to work, where one trades stability for the opportunity to gain vast wealth. Roles are demanding and typically limit your free time. Many attempt the race to vast wealth only to find – either by their own choice or someone else’s decision – that such a goal may be a bridge too far. Fortunately, one can remake oneself with a better work-life balance by pursuing a career in IR.

The siren song of riches

The attraction of Wall Street is the opportunity to make a lot of money. Some may call it the siren song of riches but, for every seven-figure compensation package, there are hundreds of people who, despite hard work and perseverance, never get there.

Wall Street compensation is typically a meritocracy. While tenure plays a role in compensation, strong individual performance can often overcome a less lengthy tenure. A well-producing sell-side franchise that drives strong trading volumes, raises IPO capital and benefits from robust corporate access will be paid well, regardless of tenure. On Wall Street, hitting it out of the park on your key metrics allows you to increase compensation above what might be a rigid pay band in corporate America.

Analyst performance across key metrics not only drives compensation but also determines job stability. For example, a single capital raise for an analyst’s franchise likely buys the analyst another year of publication. Remember, IPOs and preferred raises improve trading volumes that then benefit an analyst’s franchise. And analysts lucky enough to be covering a growing industry vertical and producing well can take home seven-figure compensation packages.

Tenure-based compensation

If Wall Street provides an opportunity for vast wealth, then corporate America provides relative stability via work-life balance. Compensation in corporate America represents a rigid hierarchy that bases compensation on time. For example, ask any lawyer or HR professional about a merger-related lay-off, and the answer will be that fair compensation represents one week of pay for each year of service to the company. The actual merits of outperformance associated with the severed individual in question is irrelevant.

Corporate America’s focus on stability creates the risk of being locked into a number with no real upside for actual performance. On the corporate side, tenure represents a prerequisite for compensation to truly reflect personal impact. 

The real struggle occurs for the Wall Street pros who leave in the mid-to-junior analyst stage of a career. Base salary is too high to take a step down, and you likely do not have the tenure to command top dollar. For many corporates, Wall Street experience does not equal true IR experience. If you are no longer publishing or lack lengthy tenure, it becomes harder to convince management you are the right person for IR and deserve optimal compensation.

Wall Street represents an extreme work grind for the majority, where extreme riches are the reward for a lucky few. Most are one stock call away from humility and a new career, which likely leads to reinvention as an IRO. Many find themselves looking for new roles with the advent of Mifid II and declining trading commissions. What to do? Investor relations, right? But is life in IR any better than on Wall Street?

Work-life balance

Without a doubt, work-life balance in IR should actually exhibit balance compared with Wall Street. Achieving that balance may take a few quarters as many will need to get comfortable with the basics of IR and come to know vendors and processes.

For most working on Wall Street, work-life balance is a figment of the imagination. Wall Street represents a grind much like running a restaurant or any soleproprietor business. If one takes a day off, then no one is around to monetize the business that day. There are countless stories of analysts taking a wellearned family vacation in a far-off land with poorto- no internet access, only to have the largest merger (or some other crisis) in the history of their covered industry be announced. One cannot say, ‘I will take care of this when I get back next week’.

There is no balance during earnings season when seemingly 12 of your 15 covered companies report earnings on the same day. Balance is tough when you are initiating on an industry or companies, and need to write 20-40 pages per company, and then a 20 to 40-page industry initiation, as well.

Stress becomes a way of life when you throw in quotas of having to lead 12-plus investor conference calls a year and numerous morning call appearances every week, not to mention the knife-fight involved in getting on the morning call, topped off by the pressure around speed to publish.

Comparing travel schedules

Travel becomes a problem once you realize you are on the road 20 percent of the year due to quotas for 30-plus marketing days a year, as well as a requirement to schedule 12-plus non-deal roadshows a year. Real Wall Street hell is when you are a team of one! Will life as an IRO truly be any better?

Once you have your sea legs, yes – IR does represent an improvement in work-life balance. An IR program with good processes, helpful vendors and buy-in from management makes for an easier life. Late nights and stress during earnings should decline because you only have your employer to deal with rather than several companies. Travel abates because management prefers to run a business rather than travel. When you do travel it is to major cities and likely for a day or two at most. After all, most executives likely prefer to be home in time for dinner with the family, rather than debating the finer points of financial guidance and financial modeling.

An incredible part of investor relations revolves around the team aspect. Not only might you have a team of associates in IR to create investor materials, but you also get to rely on other parts of the company for help. Good IR becomes a function of harnessing information from financial planning, sales, marketing, strategy, et al. Ultimately, life becomes more balanced once you realize not everything is on you, and that you can leverage a team to help.

If you are a well-paid investment professional looking to switch to IR you may face a pay cut, but IR does represent a better work-life balance. For those in the mid-to-junior ranks, both Wall Street professionals and IR professionals, the opportunity to chase both better pay and better work-life balance actually exists. Over the long term, the particularly successful are even able to elevate to a higher level, above and beyond investor relations.

Steve Rubis has held senior IR roles at Caesars Entertainment and DuPont Fabros Technology, as well as working at Stifel for almost 10 years

This article was published in the spring 2020 issue of IR Magazine