In investment banking, there are two sides: the Buy side and the Sell side. The Buy side are asset management, wealth management, pension funds, hedge funds and insurance companies. Whereas the Sell Side are investment banks such as Goldman, Morgan Stanley, JPM, Citi, Deutsche, Barclays, BoA, UBS and HSBC.
The investment banks sell their products to the Buy side. For example, if an asset manager or a hedge fund needs an interest rate swap, a credit default swap, a mortgage-backed security, an FX forward or a repo, then they would buy it from one of the investment banks above. But if an asset manager or a hedge fund needs to buy or sell listed equity stock, then they use stock brokers such as Peel Hunt and Numis, not an investment bank. That is why asset managers and hedge funds are called the Buy side, i.e. because they buy investment products. Ditto pension funds like Railpen, university endowments, wealth managers, family offices and insurance companies.
The culture in those 2 sides couldn’t be more different. As we can see in BBC’s drama series “Industry” about a fictitious investment bank in London called Pierpoint, the culture on the Sell side is about working extra hours (late nights), partying/entertaining and a hard push toward sales (sales pitch to clients). The work rhythm is fast and often stressful, things need to be done in hours. The IT systems are more mission critical, can’t be down even for 5 minutes because they are placing trades for clients on minute-by-minute basis. People are very confident of themselves, some are arrogant. They have a “trading floor” where different teams are on Bloomberg terminals placing trades and acquiring positions.
Whereas the culture on the Buy side is much more relax, working 9 to 5, more caring to each other and no sales push. The time horizon when things need to be done is in days or weeks, not hours. The IT systems are less time critical – they buy and sell holdings in their portfolios/funds from day to day. So as long as the instructions get out to the brokers today it’s ok. People are more respectful and patient, and help each other.
I’ve worked for 3 investment banks, 3 asset management companies, 2 insurance companies and 2 retail banks. I’ve talked to colleagues who jumped from the Sell side to the Buy side and they said they’d never go back to the Sell side, mainly because of the stress level and the fast rhythm. I’ve experienced both sides and understand both views. I too moved from the Sell side to the Buy side and feel much more home in the Buy side.
