The extraordinary rise of mutual funds and the money management industry, together with the bull market in bank stocks, has spawned many opportunities for bank industry analysts over the past few years.
Once, most equity analysts pursued a relatively traditional "sell-side" career path at Wall Street's securities firms and cultivated long relationships with bank managements from that perspective.
Today, analysts' careers may easily lead in another direction, with more and more lucrative "buy-side" opportunities to deploy research talents in the money management sector.
While such moves are hardly new along Wall Street, they have been more frequent recently.
Banking analysts who have made the switch in the last several years include Mark T. Lynch, who moved to Wellington Management Co. from Lehman Brothers; Francis X. Suozzo, who shifted to Alliance Capital Management from SBC Warburg Inc.; and Katherine Hensel, who shifted to Chancellor LGT Asset Management Inc. from Lehman Brothers.
Many are like Ms. Hensel, who said she made the move in part to get "directly involved in picking stocks and watching my recommendations go to work."
Working on the money management side as opposed to being "in sales" at a brokerage can also amount to a significant lifestyle change, with fewer research reports to prepare, less extensive business travel, and additional time for family life.
And as the money management area has grown in scope, the once significant gap in the two groups of analysts' compensation has narrowed.
Finally, as the investment community has become more concentrated, corporate concern for "shareholder value" has allowed money managers to establish closer relationships with companies-gaining access traditionally reserved for sell-side analysts.
"Going to the buy side is the dream of every sell-side analyst," said Scott Page, president of Solomon Page, an executive search firm in New York.
Lee Pomeroy, an executive recruiter with Egon Zhender International, said analysts at money management firms are now treated as professionals, rather than mere support personnel, and compensation has moved more in line with Wall Street's.
"The competition for talent has tipped the scales toward the middle so that it's not so lopsided," Mr. Pomeroy added. Sell-side analysts have historically made three times as much as buy-side analysts, Mr. Pomeroy said. Now, he estimates, sell-side analysts only get 1.5 times as much.
The compensation structure also has been different; though a Wall Street bonus may be up to four times as much as the base salary for a sell-side analyst, a buy-side analyst's bonus may be less than or equal to base salary.
Analysts from both camps stress that much of the personnel movement has to do with lifestyle change. Sell-side analysts said that they spent as much as one-third of their time travelling.
Mr. Lupatkin added that buy-side analysts are now more involved more frequently and much earlier in the investment banking process than before, often building the relationship with the company.
Some also say that marketing pressures from the bankers caused them to leave for the buy side.
Analyst George Salem moved to smaller sell-side firm Gerard Klauer Mattison from Prudential Securities, saying marketing pressure had become a "pet peeve."
"It's not research when you're just a parrot for the investment banking fees," he said. "The analyst is the most essential part of the investment banking function and if the analyst refuses to play the game the business doesn't get done.
"You don't say 'sell,' you are reluctant to put a 'hold' rating, and never say anything negative about the firm," he said.
Another analyst echoed Mr. Salem's comments, saying she left the sell side because, on the buy side, "you have no M&A people on your back, and you can make your own decision with less pressure."
Frank Barkocy of Josephthal Lyons & Ross, who has researched banks for 30 years, said that the analyst's role at a sell-side firm has changed dramatically during his tenure.
"The job has gone from one of pure analysis to one where analysts are heavily involved with the marketing and working closely with corporate finance," Mr. Barkocy said.
To be sure, many who have moved denied any difficulties asserting an independent investment opinion.
Stephen Einhorn, director of research at Goldman Sachs & Co., said that analysts have complete integrity with respect to the research they do, and that if it's done properly, will have full support from the investment bank.
"Though conflicts arise where companies are upset by a rating, the conflicts are not all that frequent, and they understand that the analysts' independent judgement will be better for the company in the long run," Mr. Einhorn said.
But executive recruiter Debra Brown of Russell Reynolds said some analysts move because they want to enter a "purer" research environment.
And Maureen McNichols, associate professor of finance at Stanford Business School, found, in a survey of 2,400 equity offerings between 1989 and 1994, that 77% of the time, forecasts by affiliated analysts were more optimistic than those for analysts unaffiliated with investment banks.