Equity Research out of MBA
Hi everyone,
I was recently accepted to the MBA program at Stern and am considering equity research as a post MBA path. I have a passion for markets, and while I am not so keen on the idea of focusing on one sector, I recognize that ER positions are a viable path to future opportunities in investment management, hedge funds, and the broader investment community. I would ideally like to get in somewhere covering maybe an energy sector since the research would have macro implications. Anyway, I was wondering what to expect in terms of real opportunities and what roles would be available to someone in my position (assume very little applicable valuation experience so far). I'm curious what an MBA candidate's job would be going into ER versus someone coming out of undergrad.
Thanks
Most investment banks will interview at NYU for an equity research associate position. I can assure you that you are in very good shape to get an ER job, but keep in mind that given the current state of the equity markets there will only be 1 or 2 spots available for NYU students at a given research department.
As far as the difference between an analyst and an associate, the big difference is that you are a bigger investment for the firm and you are getting paid more so you are expected to be more mature. An analyst is there at first to input the data and do some very basic modeling and writing, with very little thinking value add insight expected in the first year or two. You would be expected to be more mature, more independent and have decent writing, molding skills + understanding of the markets, strategy.... etc basically the skills of an MBA. You will also be expected to interact with companies and clients a lot sooner. Most research departments view MBA's as potential senior analysts, while analysts are more "disposable". The fact of the mater is that there are some excellent analysts, but MBAs are treated as being long term hires and will be treated better by HR and management.
In order to get the full time job you need to secure an internship which means that you have to start attending presentations and network from day 1. Because you are in NYC you will be expected to be proactive in reaching out to the firms and following up. Many people don't realize it, but recruiting starts day one of b-school. Banks take attendance at the presentations and closely track promising candidates.
I think you reversed a few things. In ER, Associates are at the bottom, and Analysts are at the top.
It should be:: An ASSOCIATE is there at first to input the data and do some very basic modeling and writing, with very little thinking value add insight expected in the first year or two.
Another case of verbal diarrhea that has been plaguing WSO since 1928.
Flake, unlike you, I actually have input into hiring decisions at my firm... I know that you think that you are very clever, but the people who run the process actually put in the time and take it very seriously. I don't really care but year after year you see undergrads and MBAs making the same dumb mistakes that keep them from being hired and getting the offers
there were like 10,000,000 stern mbas at my old shop. at my new shop we have a lot too. two of them on my team even.
MBA for breaking into Equity Research? (Originally Posted: 05/03/2015)
I was admitted to NYU Stern's full-time MBA program for the fall and am excited about the prospect of business school, but also nervous about making the leap and whether the ROI as a career switcher will work out.
I'm a career switcher looking to move into investment research from a non-finance background. I have assorted experience: 2 years economic research at a policy think tank, 1 year due diligence on financial fraud/securities regulation cases at a boutique consulting firm, and now in-house corporate compliance at a Fortune 200 aerospace & defense firm where I've ended up working closely with corporate finance on pre-acquisition due diligence for the 3 companies we've acquired in the last 2 years.
So as the last sentence suggests, I work for a thriving company, have zero debt as of now, and have a comfortable life that many would envy. I just know that professionally this is not where I want to be or my area of interest. Is it better to pursue this on my own, doing the CFA and trying to network etc. (I live in New York City)? Or should I go for it?
I would recommend it. Doing an MBA should make you at least a little nervous (incremental costs of tuition, opportunity cost of two years lost salary and career progression with no guarantee of improved circumstances ex-post). NYU Stern - good school, opportunity rich environment.
CFA will help build technical skill, but a lot of ER is building relationships (read: corporate access). An Stern alumni network beneficial to your long-term goals. Plus, if you are actively switching, CFA doesn't have the same recruiting engine that the MBA has (and was pretty much designed for).
My opinion.
Thanks for your advice!
CFA is great for the knowledge base. However, I think people do it with unrealistic expectations, mainly using the CFA to get into AM/IM/ER without relevant background. The MBA helps with transitions; once you get the job and the company sponsors you for it, taking the CFA makes sense since it is building upon what you are doing at work. This is not to say that you shouldn't do the CFA beforehand but merely a warning to not get your hopes up on what it will do for your professional trajectory.
It's pretty mixed. I know of some banks who are frowning upon MBA associates more and more because they automatically come in at a higher pay but don't necessarily add more value than a 1st year analyst. At the same time, there are some places/teams that value it more.
The fragmented nature makes sense since equity research teams are run like franchises, and each senior analyst has different preferences.
My own opinion is that an MBA is not necessary to break into ER, so long as you spend a lot of time separately trying to develop the skills necessary outside of your current job.
@MBAGrad2015" those are really good insights, thanks. Yes, I would be starting this fall, and the only time I could potentially study for a level of the CFA would be my 2nd year of school, if I had already gotten an internship and offer/solid possibility of offer. Agree that being overzealous is an unwise strategy, especially since I would be spending a lot of time networking and finding interview leads while in the MBA.
cob5 thank you for your post. I definitely think that one of my fears of doing the MBA is having it held against me, both because I'd be out of the workforce for two years, and may be seen as a more costly hire. (This in addition to the actual cost of the MBA for me). I'd really appreciate if you could elaborate on spending "time separately trying to develop the skills necessary." If it were you, what would you specifically focus on becoming and expert on? Would you do it in an entirely self-taught way? And if you did acquire the necessary skills, what would be your strategy to parlay that into a job offer?
@cob5 thank you for your post. I definitely think that one of my fears of doing the MBA is having it held against me, both because I'd be out of the workforce for two years, and may be seen as a more costly hire. (This in addition to the actual cost of the MBA for me). I'd really appreciate if you could elaborate on spending "time separately trying to develop the skills necessary." If it were you, what would you specifically focus on becoming and expert on? Would you do it in an entirely self-taught way? And if you did acquire the necessary skills, what would be your strategy to parlay that into a job offer?
[/quote]
I am also interested in your thoughts on this?
@attagirl, congrats! I'm planning to apply for Stern next cycle and was wondering what your stats were (GMAT range, GPA, extracurriculars etc.)?
I think you have a lot of great things going for you. It's certainly possible for you to break in to ER without an MBA. Certainly take advantage of being in NY, start networking with people in the industry. I'd think you have better odds targeting sectors where you had previous experience, i.e. A&D. CFA is helpful but you have to weigh the benefits against the time required for study. I would start looking for research positions now and if nothing happens before fall, you still have the MBA option open.
hippiehappymonkey thanks for your thoughts and encouragement. I think that's a good way of looking at it - the MBA provides me an attractive option to fall back on and continue in the pursuit. Networking now can also be helpful even if I don't get anything right away and go to school, in terms of internship leads etc.
Other than my undergrad alumni network (I went to an Ivy League that's decently represented in finance, though very few of my personal friends are in that group) what other avenues should I pursue for networking?
I do think the opportunity cost of the CFA is not very high -- I never work weekends and have reasonable hours, so it certainly can be done. Though it would take time away from networking, and may not be worth it if it only helps marginally in transitioning.
Hi attagirl -- first, congratulations! NYU Stern full-time is a pretty awesome place. Is Conor Grennan still dean of students? I read his book, "Little Princes." http://www.alumni.nyu.edu/s/1068/2col_scripts.aspx?sid=1068&gid=1&pgid=… He is the most amazing guy and if you are trying to figure out a way to help out in Nepal (I know, kind of OT, but if you read his bio you will see why I say this) check out his Twitter feed https://twitter.com/conorgrennan
I bring all this up because it has nothing to do with equity research. That's because your decisions are about more than equity research, they are about your future -- professionally and personally. If you decide to take off and go to business school, there's a 100% chance that you will have a new perspective than you would if you stayed on the job.
Business school is transformational. They design it that way, so you are in class with guys like Conor Grennan, or with people like other Sternies, who go into all kinds of things after graduation. I have a family friend who did the MBA program jointly with an MFA at Tisch in film, and she was constantly running off to Cannes and meeting great film types while she was there. Now she is in the business end of Disney's movie division -- not bad for a woman who didn't have a lot of in-office business experience before. Of course if you do decide you want to go into ER after Stern, you will probably be able to find a way, with or without the CFA. But I am betting that equity research is not your only path if you do the Stern thing. It opens doors to other ideas, including some really cool stuff (see NYU MBAs win on Shark Tank http://www.metromba.com/stern-students-keen-home-coolest-college-startu…)
One more thing -- and this is going to sound oh-so-WSO -- It looks like you are in compliance now? That always struck me as a place that folks wanted to leave. I also think that you are beholden to the lawyers in that kind of job. Ugh.
I say, move up and move out. That's the better way to reach your bigger goals.
Hi Betsy Massar Thanks for the good wishes ! And thank you so much for responding to me in such detail. It does look like Grennan still at Stern, at least this semester – thanks for the heads up, I hadn’t heard of him or his awesome work in Nepal before. Since a lot of Sternies end up staying in NYC to intern (or work post-MBA), I've also connected with a couple current/recent students last week on their experience, and hope to talk to a few more.
Hi cob5 thank you so much for sharing your these resources, and your experience on EQR recruiting. It's awesome that you've helped people who wanted to make the switch from industry, and your willingness to support others really evident.
Love the photograph midtown skyline on your blog btw. What do you think of people creating their own site as a portfolio to showcase models or reports they've worked on? (Sorry to mostly plagiarize this idea from you!)
Your questions on how the industry works seem pretty straightforward but there's one I'd appreciate your thoughts on: "how team success is measured." Is this different from general forecasting success and soundness of recommendations?
attagirl
Sorry for the delayed response ---
This goes beyond just trying to get into the industry, but it's good to have a general understanding of this stuff when going into interviews.
Think of it this way: equity research primarily makes money through 1) trading commissions, and 2) investment banking deals (indirectly). On 1), equity research teams primarily generate trading commissions by just generally helping buy-side clients. Buy-side clients use equity research for different things - good investment ideas, a sounding board to bounce ideas off of, detailed financial models, management access, proprietary data (like surveys that might give investors a sense of intra-quarter trends). On 2), you need to develop a good relationship with company management.
Some banks will also incorporate some other elements into how a senior analyst is judged, like public appearances or joint notes published (in collaboration with other teams).
A big part of being a good associate is understanding how your team separates itself from other teams (usually teams will focus on certain things... or maybe they try for the all-around approach), and making sure you don't eff up that aspect of the team. As you stay there longer, you can then start to think about how your team can stand out more by becoming stronger in other areas.
attagirl
Thanks! The pic turned out really blue for some reason, but oh well.
I think it certainly wouldn't hurt to have your models and writing up somewhere online. Alternatively, you can just send the files directly to the recruiter and to the team - you don't really need a site for that.
Stern is a great school for finance - very well respected. If you have the money, do it. CFA is just as good. ER will definitely look at you. Take a class with Damodaran - the guy is great at modelling etc. My favourite schools to hire from are LBS, Stern, Chicago and of course Wharton.
Batman81 thanks for your perspective as someone who actually hires MBAs! I enjoy reading Damodaran's blog and definitely think his class would be worth the elective bidding points.
Betsy Massar I realized you’re based in the Bay Area, and was wondering about your perspective on recruiting and opportunities on the West Coast for Stern students. How much harder do you think finding opportunities in California is compared to staying in New York for people attending Stern? I’m pretty seriously considering living in California in the near future (this past winter certainly did its share to move the needle in that direction.)
It looks like Stern grads overwhelmingly end up in the Northeast with 8% or less on the West Coast each year -- but I don't have a sense of how many people were actually interested in leaving the East Coast. I do have close friends in SF, but almost all in tech or medicine, so also don't have much of a sense of how much of a bicoastal MBA pipeline there is.
I did MBA to ER, and while i am not absolutely loving it at ER I don't regret doing the MBA as it gives me better career options moving forward and it was A LOT OF FUN. You get to meet a ton of people and have a lot of time to do the traveling etc. I always wanted to do with a ton of fun and interesting people. I think too many people look at the MBA in Xs and Os without taking into account how high your quality of life is for those two years (did not go to Stern, but generally speaking).
As far as the ROI, I was at a back office BB role prior to ER and if I were to stick to ER I definitely think the increased earnings power would be worth the MBA cost.
Thanks! I'm interested, what don't you love about it specifically, if you're willing to share? Also yeah, being on email threads for the pre-MBA trips that are already being organized by my future classmates makes me lean more towards going.
@attagirl, did you end up attending Stern? Would be interested to hear how recruiting for ER is like at Stern, especially for someone without prior finance experience.
What about ER prospects for candidates currently doing a Master's in Finance? I don't have relevant ER experience (worked in the BO at a BB before), and may try and see if I could get a part-time gig during the year to add to my experience in this area. Also, I have passed CFA Level I, and am re-taking Level II in 2013. Thanks!
Equity research and MBA (Originally Posted: 11/22/2008)
Does an MBA help in the field of equity research like it does in investment banking or would it be better to just work your way up the ranks? Essentially, would taking 2 years off the job to get an MBA be worthwhile or a waste of time if I want to follow a career path in ER?
im unsure of ur situation but..
im sure an MBA helps, but it depends on what u've done.
an MBA helps with a career change and amplifies ur work experience.
what i mean is this: if u were a financial analyst at an consumer goods firm for a few years and then became a manager and then got ur MBA. In research, they'd value the operational experience u have. The same with being an engineer of some sort, getting an MBA and then going into ER.
If u already are in research, then getting a CFA makes more sense. CFAs are more important than an MBA in research.
Well, say you get into research and are taking a CFA exam, but then decide to go back to get your MBA because you may want to branch out to a different career path later. Now if after your MBA you decide that you want to return to research, would the MBA have any sort of positive impact or would you basically have set yourself back as far as your research career is concerned?
Essentially...is there any room for MBA's at equity research institutions? Like investment banks have analysts for undergraduates, but associates for MBA's. Would an MBA be of any value to equity research firms and help speed me along on a path or is it totally worthless when compared to a CFA charter?
I'm currently working on my CFA now, but I do have plans to go back to graduate school. I'm just wondering if I decide to do graduate school if it would actually negatively impact me if I decide to stay in equity research afterwards.
A very, very senior research person at a BB in NY said to me that if you are in research after undergrad and plan on doing a career in research, then the only reason you would want to do an MBA is to have a two year vacation. So there is your answer.
After being an analyst for two years, you can get promoted to associate. If instead you decide to get an MBA then not only do you have to fight to get your job back, but you will also only be an associate while being two years older.
What is your current situation? Are you already in research?
I was a financial analyst for a manufacturing firm for 2 years, and I'm trying to switch to the investment world. I am interviewing right now for an equity research position, and I'm just a little curious as to my career path and options that lie ahead of me. If I am to get into a quality MBA program I am going to need to start getting extracurriculars on my resume now. I'm just overall undecided on what I want to do...the only thing I know is that I want get into the investment world (banking, private equity, equity research, wealth management even), and possibly move into a management position one day.
If you are interviewing for an ER position then make sure that you are ready for the stock pitch question. If you can get that job, then definitely take it. From ER you can move into HFs or get an MBA later.
With a couple of years in ER it will be easier to get a good finance job after your MBA than if you went to an MBA program now. Afterall, the average student at a top MBA program such as Harvard has 5 to 6 years of experience, so you may be at a disadvantage when it comes to recruiting with only two years of experience.
Good luck on your interview!
I've actually already had my interview, but thanks for the luck! I made it to the finals and am waiting for a decision this coming week. No stock pick question; though this is not with a BB in NYC.
I am definitely accepting the offer if I'm fortunate enough to receive it.
Everything somebody from undergrad will be doing but you are expected to pick up coverage faster and start marketing within a year.
Can you get into equity research post-MBA without doing an internship in the field? (Originally Posted: 10/30/2015)
I am currently doing a part-time MBA from a top 5 school. I want to get into equity research (preferably focusing on tech or semi), but I am not in a position to do an internship before I complete my MBA because that would require me quitting my current full-time job.
Just wondering how hard it is to get into Equity Research post-MBA without doing an internship in between? Also are there any projects or case competitions can I do during the MBA to help increase my chances of getting into ER?
I know a decent amount of people who got into equity research at a bulge bracket post MBA without any prior experience; I worked with 3-4 of them. I think you'll just need to demonstrate that you have the ability to model/write and have a strong interest in the field.
MHASS - I am similarly starting my mba at CBS this year and would like an ER internship. Given we're not competing against each other, would love to compare notes, game plans, etc. at some point if you are seriously considering ER. Let me know if you're interested and we can connect through email.
Post MBA S&T/Research (Originally Posted: 04/09/2014)
Hi all,
It seems that there are many threads on here discussing post MBA associate tracks, lack of buy side laterals, etc. Many people use MBA to rebrand and move into banking, despite possibly having no former banking experience. My question is, how common do those of you on the desk see MBAs, with no real prior experience in S&T or research, come on to the desk after finishing their MBA?
I'm not referring to any of the more "macro" desks or quantitative trading, but more in line with a desk analyst in credit or special situations? Is this a very common move or does it typically require a more specialized background and relevant skill set for a bank to consider you for a desk analyst position?
I've done a little searching on Linkedin, however given the opaqueness of these groups and positions, wasn't really able to discern anything concrete. I'd imagine that the best way to ever being able to move to the buy side for those without prior experience would be MBA --> SS research / desk analyst --> BS (since those getting the "rebranding" wouldn't likely have the required skill set to jump to the buy side without any hand holding).
Any insights in to general S&T research opportunities post MBA would be greatly appreciated.
Thank you! streetwannabe
Desk roles don't really have time for hand holding either and tend to pull internally from research, the buyside or grab juniors out of IB (occasionally out of undergrad but with lots of prior internship experience
SS research is doable. Desk analyst less so without the right background.
It happens, but in very limited quantities. There is an overall divorce between the Markets side of banks and the MBA.
MBA -> Desk analyst -> hopefully buyside
Is it doable. Yes, I did it.
Is it easy? No. S&T pretty much doesn't have a recruiting program for MBA's anymore. It really died the year after I did it, but was very difficult nonetheless. You'll have to network like crazy and make your own way in. You could go the credit publishing research way and try to learn more of the event driven type of trade ideas on your own. That would make you more marketable to hedge funds (rather than long only shops and mutual funds).
Thanks for the responses guys. So the most viable path seems to be HY publishing/ER --> desk analyst, given the current environment?
Do many banks recruit post MBA ER/HY publishing positions (in comparison to IB Associate)?
Thanks again!
Post MBA equity research (Originally Posted: 03/08/2011)
Hey everyone:
I am starting my MBA in the fall and was considering going for research associate positions upon completion. I have a feeling my situation will be difficult, considering I am a career changer (have been in Sales for 3 years since colllege).
Thanks, any information/help is much appreciated
thanks for all the replies guys. I am definitely going to explore all my options as I do have other finance related interests, but will stay on the ball in regards to recruiting events and so forth. Jay - let's keep in touch, would love to chat and see how your process is going
What is up with all the interest in equity research lately? Coming from a sell side guy's mouth. Try and get to the buyside, the sell side will be outsourced and obsolete for the most part in 20 years as funds add analysts and what not... For the most part ER is a complete cost structure for the sell side.
Didn't ppl say this like a decade ago?
In addition a lot of the increase of AUM was for passive ETFs.
And alternative Asset Management industry which needed buyside analysts - active/event driven etc. Passive ETFs don't need as many buyside analysts - passive.
thanks for sharing your logic. infallible.
Right, I was suggesting a lot of the AUM increase was within the passive fund space; which requires little headcount. Also I said that headcount for analysts has increased significantly over the last 4-5 years while there has been a mass exodus in the form of redemptions; so I am going to say those two points suggest that AUM is not a good argument point for the increase in analysts. Sorry.
Right, I was suggesting a lot of the AUM increase was within the passive fund space; which requires little headcount. Also I said that headcount for analysts has increased significantly over the last 4-5 years while there has been a mass exodus in the form of redemptions; so I am going to say those two points suggest that AUM is not a good argument point for the increase in analysts. Sorry.
Doloremque quaerat officiis corporis animi. Necessitatibus magnam minus blanditiis consectetur velit. Labore possimus veritatis at. Nisi rem voluptate explicabo nam.
Ea voluptatum porro repellendus eligendi. Nam qui illum distinctio illum ab perspiciatis. Incidunt accusantium occaecati et quis aliquid. Occaecati ipsa quae temporibus exercitationem dolores. Qui aut ab aut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Tempore unde officiis assumenda aperiam assumenda autem. Ipsam repellat reiciendis consequatur inventore provident incidunt beatae iste. Molestiae incidunt sed culpa itaque molestiae corporis numquam quod. Inventore incidunt hic nihil nam et velit reprehenderit.
Quo quibusdam laborum reiciendis quasi voluptatem sint. Saepe aspernatur ratione et enim tenetur vitae fuga.
Laudantium eligendi at incidunt est nostrum mollitia. Et et ut ea error nulla.
Quo est dolores quis. Aliquam non architecto eveniet tempora quidem in dolores. Ipsam qui omnis aliquam autem voluptas sequi nemo.
At nam delectus nihil perspiciatis sit. Harum dolor occaecati ducimus qui eum voluptatem. Ipsa rerum qui dolorem minus aut consequatur. Ea tempora iure consectetur voluptatibus possimus. Harum sint ab delectus voluptatem. Aliquid quibusdam consequuntur numquam qui hic placeat blanditiis.
Eveniet ut cupiditate voluptas. Dolorum laboriosam impedit rerum laboriosam dolorem sint. Hic ad omnis pariatur alias tenetur. Aut dolores ea eum consequatur. Et iste aut sed quam optio et rerum fugit. At vitae quam sed odit occaecati animi ex.
Mollitia iusto dolor praesentium suscipit aperiam voluptatem labore. Ut in aperiam sit dolor et. Omnis sed non quaerat perspiciatis dolore error. Rem aperiam eos unde sapiente qui sit quasi ab. Quis rerum maxime exercitationem fugiat ut.