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First Step To ER - CFA Level I
 

Knowledge Kick's picture
 
Points)
 on 7/27/12 at 1:00am
Open Door

I'm sitting for the CFA Level I in December. Assuming I pass, do you think that would be enough to land an entry-level Equity Research position? I graduated with a Finance degree from Rutgers in May with a 3.5. Decent, but not great.

I currently work in the middle office of a BB doing ops work on stock trade settlements. It's well documented on this forum that ops = junk, but it's not such a bad job right out of college.

It's okay for now, but what do you think my next move should be? What steps would you take to get the ER job if you were me?

Thanks in advance.

-Steve

http://DollarDrip.com Username: Knowledge Kick
Tags:
Vagabond85's picture

CFA is a good start, but

AM
 
Points)
 on 7/23/12 at 9:45am

CFA is a good start, but should have multiple processes running. In addition, read some related books (i'm guessing you want value like everyone but if not disregard) so you actually know how to pitch a stock/analyze a company. CFA give a good foundation, but a lot of people see this as the finishing line, which it is not. Nothing beats getting your hands dirty writing an initiating report etc. How are you financial modeling skills? Also, look into MSF programs and apply to those. Can't break in after a year? Head to MSF.

sk8247365's picture

Like above said, it is a

PE
(Gorilla, 524
 
Points)
 on 7/23/12 at 10:43am

Like above said, it is a start. Most ER shops screen by CFA from what i have seen. I.E. not on resume in any way = resume in trash.

Sovjet's picture

The majority of ER

ER
(Orangutan, 250
 
Points)
 on 7/23/12 at 11:05am

The majority of ER recruitment is done at the post-MBA level, or people from industry (I suppose you could claim "Financial Services") with at least Level II completed. Not to dash your hopes, but it will be a tough fight with an undergrad and Level I only.

The main reason for this is that Level II is arguably the level that teaches "Valuation" (especially equity valuation). It's also the more difficult of the bunch, and is seen as the "hurdle" that someone serious about completing the designation must first pass. The three levels are as follows:

- Level I - Finance foundations - accounting, time-value-of-money, bond valuation, ratios, stats, economics, formulas, WACC, etc.
- Level II - Valuation - mostly focused on equity and derivative valuation, together with advanced accounting concepts
- Level III - Portfolio management - bringing it all together to advise a client on a suitable portfolio.

As you can see, Level II would be most applicable from an ER standpoint.

Knowledge Kick's picture

Any advice on what type of

 
Points)
 on 7/23/12 at 11:40am

Any advice on what type of job I should be in prior to applying for ER then? Should I just stay where I'm at for now until I pass Level II. I could potentially have Levels I and II done within one year from now.

http://DollarDrip.com Username: Knowledge Kick

Sovjet's picture

Depends on what sector you

ER
(Orangutan, 250
 
Points)
 on 7/23/12 at 6:03pm

Depends on what sector you wanted to cover. If financial services interests you, your current position (depending on what you do in the "middle office") could be a decent background.

If you wanted to cover a different sector, working as a financial analyst at a company in that sector would be helpful.

grapefury's picture

Sovjet: it will be a tough

(Baboon, 117
 
Points)
 on 7/24/12 at 7:59am
Sovjet:

it will be a tough fight with an undergrad and Level I only.

The main reason for this is that Level II is arguably the level that teaches "Valuation" (especially equity valuation). It's also the more difficult of the bunch, and is seen as the "hurdle" that someone serious about completing the designation must first pass. The three levels are as follows:
As you can see, Level II would be most applicable from an ER standpoint.

I totally agree with this, I work in ER and took the L3 exam this June.

ER is mad hard to break into, especially now. I would argue it's harder than asset management or investment banking for multiple reasons. ER as a business is contracting faster than AM, the skill set required is also harder than AM. A lot of people within the industry try to get into ER and have a lot to bring to the table. So you are competing with them in addition to finance folks. Investment banking at the junior level is FAR easier than ER at the junior level (in general). ER associates are usually given much more responsibility because the teams are so small.

Honestly OP, your chances are not so good, even if you can clear L1 and L2. Passing L2 will be a very good step for you, but in today's environment, a lot of ER shops are closing and it floods the market with experienced people. Keep in mind, not only is there a really steep learning curve, ER requires you to get 4 FINRA security licenses. So, having those licenses is a big plus for any new person to hit the ground running on day 1.

83carb350's picture

"ER requires you to get 4

IB
 
Points)
 on 7/24/12 at 9:19am

"ER requires you to get 4 FINRA security licenses. So, having those licenses is a big plus for any new person to hit the ground running on day 1."

He's talking about the Series 7, 63, uhhh 87 and 86 i think. The 7 is semi-beast. Alot of memorizing, takes about 8hrs. You gotta hit that before moving to the others. I have my 7 and 63, and like you also taking Lev 1 in Dec.

blastoise's picture

lol rutgers

O
 
Points)
 on 7/24/12 at 9:36am

lol rutgers

GS's picture

Is this a US statement or a

ST
 
Points)
 on 7/24/12 at 10:06am

[quote=grapefury]

Sovjet:

it will be a tough fight with an undergrad and Level I only.

I totally agree with this, I work in ER and took the L3 exam this June.

ER is mad hard to break into, especially now. I would argue it's harder than asset management or investment banking for multiple reasons. ER as a business is contracting faster than AM, the skill set required is also harder than AM.

.

Is this a US statement or a global statement? i.e. are there places where ER shops are expanding?

GS's picture

For some reasons the quote

ST
 
Points)
 on 7/24/12 at 10:08am

[quote=GS]

grapefury:
Sovjet:

it will be a tough fight with an undergrad and Level I only.

I totally agree with this, I work in ER and took the L3 exam this June.

ER is mad hard to break into, especially now. I would argue it's harder than asset management or investment banking for multiple reasons. ER as a business is contracting faster than AM, the skill set required is also harder than AM.

.

Is this a US statement or a global statement? i.e. are there places where ER shops are expanding?

For some reasons the quote isnt showing up in my browser. I was referring to the statement
"ER is mad hard to break into, especially now. I would argue it's harder than asset management or investment banking for multiple reasons. ER as a business is contracting faster than AM, the skill set required is also harder than AM.
"

Futures Trader Man's picture

grapefury: ER as a business

IB
(Orangutan, 299
 
Points)
 on 7/24/12 at 10:17am
grapefury:

ER as a business is contracting faster than AM.

Well I guess that can't be too much of a bad thing then, given that AM is one of the few financial industries which isn't hurting right now.

"Well, you know, I was a human being before I became a businessman." -- George Soros

pktkid10's picture

I work @ a BB and considered

(Baboon, 159
 
Points)
 on 7/24/12 at 12:59pm

I work @ a BB and considered ER for quite some time.. After networking I was able to speak w some guys that basically told me the following

-Everyone is expected to be pursuing the CFA (Might as well get an early start)
-Know how to navigate a model.. You don't have to be able to build it from the ground up
-Consider your writing skills- not every writes well enough to write research
-They will not hire externally. They might bring people in, but they don't get offers. That being said, it's all internal transfers, or kids in programs.. Too much risk for a shotty recruit

bearing's picture

Pretty much every new

ER
(Neanderthal, 2,082
 
Points)
 on 7/24/12 at 1:52pm

Pretty much every new associate I've seen on the floor that wasn't a returning intern had either prior ER/FO experience or came from industry (which was 1 guy). This industry is not growing.

Also BS on not knowing how to build a model, my third month on the job I had to build an integrated 3 statement model with EBITDA bridges. All associates are expected to know financial analysis and modl building cold. It's the industry expertise you are trying to build up.

grapefury's picture

83carb350: "ER requires you

(Baboon, 117
 
Points)
 on 7/24/12 at 2:42pm
83carb350:

"ER requires you to get 4 FINRA security licenses. So, having those licenses is a big plus for any new person to hit the ground running on day 1."

He's talking about the Series 7, 63, uhhh 87 and 86 i think. The 7 is semi-beast. Alot of memorizing, takes about 8hrs. You gotta hit that before moving to the others. I have my 7 and 63, and like you also taking Lev 1 in Dec.

Correct. those are the 4 licenses required for a research analyst

JamesCannariato's picture

Hey guys, great post. Really

AM
(Chimp, 4
 
Points)
 on 7/25/12 at 1:26am

Hey guys, great post. Really appreciated the perspective from people currently in ER. Quick question: Where are the threads explaining why Ops isn't a good route in?

I'm going into an interview with a AM shop that is very research heavy for an port. analytics analyst position, and I was hoping to use that foot in the door to become an ERA. Any links?

Coram Deo

UnclePanda's picture

The Back Office at a Hedge

 
Points)
 on 7/27/12 at 1:22am
Oreos's picture

^^^^ the link would have been

HF
(Neanderthal, 2,450
 
Points)
 on 7/27/12 at 4:37am
Vagabond85's picture

Pump the brakes. Portfolio

AM
 
Points)
 on 7/27/12 at 7:50am
R0bin's picture

I've seen full-fledged CFA's

(Orangutan, 292
 
Points)
 on 7/27/12 at 11:44am

Baby you're the perfect shape, baby you're the perfect weight. Treat me like my birthday, I want it this way and I want it that way. It makes a man feel good baby.

neil joseph's picture

OP im someone who just

PE
 
Points)
 on 7/27/12 at 5:35pm

"A man travels the world over in search of what he needs and returns home to find it." ~George Moore

Oreos's picture

R0bin: I've seen full-fledged

HF
(Neanderthal, 2,450
 
Points)
 on 7/27/12 at 7:14pm

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