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I am going to try to keep this short . I just finished the CPA exam, and will start a big 4 gig in audit this summer (NYC). I want to be in equity research in the next few years (does not have to be a BB, I just want to break into the industry). I am considering focusing on the GMAT(for a top MBA) or the CFA to make the move more manageable and possible. I was wondering if anyone had any insight on this route, and if a move to Transaction Services would help at all? Thanks!

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Comments (21)

  • CaliforniaAssociate's picture

    if you just simply want to break-in regardless of the shop, it's easy after your mba and cfa

  • DCFwacc's picture

    I know of at least a couple of ER associates at my firm (not BB) who came from big 4 auditing and have their CPA (no MBA or CFA). I also know of a couple who started here as an associate post-MBA.

    To break in, it's definitely going to be easier post-MBA. CFA will only help marginally. Being a candidate may have helped me in some interviews but it didn't get me the job. If you can, do both. You need 4-5 years of work experience (in most cases) for b-school, so why not start cranking out some CFA levels before worrying about the GMAT just yet.

  • CaliforniaAssociate's picture

    agree with ^

    cfa might only help marginally with getting a job, but it will help clear some promotion barriers once you get the job...

  • Human's picture

    ***As a disclaimer, I work in ER, hired as Associate level after my graduate program, just finished my first year. I am taking the CFA Level 2 in June. I did my Masters in Accounting, that was just a way to keep my legal status in the US. I didn't need that and I would not go to graduate school if I didn't need that extra time to get myself a job.

    On MBA: What I am suggesting is for people who does not plan to go to GMAT >> B-School route. I don't think you need a MBA to get into ER. MBA is going to put you another $100,000 in debt. The decision for a MBA should not be the number one thing on the list to get a front office job. You need to consider holistically whether it makes senses, given the amount of financial, time and energy that you have to devote to. There are many other routes to get to ER or any positions in the world and MBA should not be a default choice.

    On Audit: I think you should try to get out of Auditing as soon as possible. To me, it is about perception. You are always going to be grouped as The Accountant, The Bean Counter, The Back Office Guy. Don't get me wrong, I have respects for Accountants, but it is the perception that matter.

    On CFA: I think CFA is only good for your own learning purpose. It doesn't get you the job. Are you going to spend 450+ hours studying this when you can be out there networking, learning about the sectors and making sample works, which can help you get there faster? CFA is only relevant once you are in ER, for you to move up the food chain. I know a lot of MO and BO people (The Asians, yes I am one too) trying to finish CFA believing that it is going to get them a job, but it does not. Networking does. Learning how to follow a sector does. Demonstrating that you can do the work does.

    On Transaction Services Group: I think that group is more relevant for IBD. Don't see how it can relate to ER.

    Step by Step Play:
    1) Your time is better spent trying to move into corporate finance. If not, accounting department within the sector that you like to cover. For example, if you wanted to be a retail analyst, working at A&F, Urban Outfitter, GAP, Bloomingdale's corporate office would allow you to position yourself better for that Retail ER gig, than the Auditing position.

    2) If corporate finance or Accounting at relevant industry doesn't work for you, you can try consulting. I mean, it all comes down to the transferable skills. Can you analyze the industry? Do you know what the growth drivers are? Do you understand how the company work? Consulting would give you similar skill sets. You have to learn how to number crunching on your own though. There are a lot of vendors that sell products on modeling.

    3) Think Small. Smaller regional firms are more likely to give you a chance compared to BB. The only challenge with the smaller firms is that you need to try a bit harder to demonstrate that you can get started quickly without much training. Smaller firms are resources-constrained and you need to be aware of that.

    4) Pick a sector. It is much easier, if you knew what you want. Even if you don't get into covering a sector that you like, at least you gotta it all nailed down on how things work and can "talk intelligently" about it. That is going to come across in interviews. And you want to be that guy who can impress the interviewer.

    5) Networking. Start with Cold-Calling. Once you figure out a sector that you like. You can just google the analysts who are covering the companies. Type: Urban Outfitter Analyst Coverage, you will see a list of analysts who are covering the company. (More details on how to get them on the phone, what to say, how to pitch and how to network, that's another post)

    6) Create sample work. It is easy to say that you want to do ER. Having a list of sample work make you more credible. It also provides prospective employers, a glimpse of what you can actually deliver once you are hired. It also shows that you are really interested in ER, you took the time to learn the sector, you interviewed industry experts to understand the industry (rather than just reading news), you took the time to apply what you learn and most importantly, you can PRODUCE a work that employers can take actions on, immediately. I think most people missed out this step #6. (I represented my school in NYSSA Investment Challenge, which gave me the mentoring, training, and also sample works that I used extensively while getting a ER job.)

    7) Focus on personal development. I think most people get caught up in going after a certain career goal that they forget to develop a well-rounded personality. For your own good, I think you should also pick up Public Speaking. I know Toast Master provides public speaking classes. It really helps in collecting your thoughts and explaining to others (which is something that you have to use everywhere and more relevant as you climb higher in the corporate world).

    Hope it helps.

    "I am the hero of the story. I don't need to be saved."

  • pktkid10's picture

    Op, IMO- I work at a BB.. Currently trying to move from a BO/MO function into the role. Within my bank the CFA is exponentially helpful (It's actually a requirement that analysts pass level 1 by said time). The people I've been networking with pretty much said, "Wanna be a player, get after level 1."

    That being said, if you're at a small shop, it might not help you.. But it surely won't hurt. I personally hate the exam. gotta shovel shit somewhere though.

    I'm on the pursuit of happiness and I know everything that shine ain't always gonna be gold. I'll be fine once I get it

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  • Flake's picture

    Excellent advice here. That xasgjl6290 dude's post especially.

    Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.

  • thedude12r43w's picture

    I would take the job in audit right now but start networking for ER immediately. Try to break in right now as opposed to later. Your degree is in accounting but you wont be stereotyped for it as you are a student and accounting knowledge is very helpful in banking.

    When I was interviewing for STRH I know that they place analysts into groups based on need - so you could end up in DCM/ECM/ER etc. I think you just need to get your foot in the door.

    If you can't break into ER right now I would aim for PWM at a BB (definitely not as competitive but relevant). Then you can spin a story on how you worked with clients helping them find the right investments but got more interested in the actual research side of things and thats why I now want to be in ER..

  • Nabooru's picture

    Having had experience in audit, corporate finance, and Toastmasters, I totally agree with sxh here.

  • Human's picture

    Would anyone of you guys (for students especially) wanted to take a look at sample equity research reports? I have two of them that I am allowed to share from NYSSA Investment Research competition. One is written in 2009 on PVH and the second one is written in 2010 on BITS.

    "I am the hero of the story. I don't need to be saved."

  • Chech4's picture

    Thanks everybody I really appreciate it, very informative

    Gang, Gang, Gang

  • paulydreamer's picture

    I want to thank everybody too. I am trying to make the switch to ER and there is great info here.

    Do not pray for easy lives. Pray to be stronger men.- JFK

  • Unforseen's picture

    This is great, I'm starting my journey to move to ER next week.

  • hansgruber's picture

    Being able to express your interest through researching and investing on your own time is extremely important. Asset Management can be very picky. When interviewing for ER I made the mistake of telling an ER analyst that I was a value investor -- he was growth. Having models, stock pitches and your own research would be extremely helpful, especially if you don't have modeling experience.

    CFA helps. My experience has been that you will get a pat on the back but if you lack the experience then it isn't as meaningful.

  • Human's picture

    Getting Into Equity Research, Part 2

    How to Follow a Sector to Land a Job in Equity Research

    Step by Step Play:

    Step 1: Read Analysts' Research Reports

    The first step to going after your career opportunities should start with a sector. Take your time to figure out what sector interests you. If you were not interested in a particular sector, learning about the companies within the sector will be extremely boring and counterproductive. So pick a sector. To my understanding, most banks are categorized into 6 big sectors: FIG, Industrial, Consumer, Energy, Technology and Healthcare. There are many sub-sectors within each sector. Personally, I believe that Healthcare requires the most sector-related knowledge. Most of the Healthcare analysts usually have healthcare-related background (Med School, Pharmaceutical Background).

    In order to have a better understanding on how to coverage a sector you should start with reading sell-side research reports. BBs always publish sector-related thought-piece and industry landscape reports on top of the research reports that they publish on individual companies. This should provide a basic understanding of how a company performs within the sector and macroeconomic context.

    A few important things to note down while reading those research report from macro to company specific issues. How big is the industry? What are the major trends? What are the growth drivers? What is the competitive landscape? What is the outlook of the industry in the context of macroeconomic issues? Then it comes down to analyzing the company within the sector context.

    What are the metrics on evaluating the company within this sector? Retail uses SSS (Same Store Sales) and Sales per Square Feet; most tech company (think LinkedIn) utilize registered users, % of registered users who are subscribers, and then average revenue from each subscriber. Then you go down to on the company analysis, looking through individual components of the Michael Porter's Five Forces.

    Then how these factors drive the financials: how competition would result in cutting down prices, the elasticity of demand for company's products, and whether increase in raw material from suppliers will begin to cut into profit margins. These would provide analyst with a better idea of how to project future revenues, gross margin, net income (GAPP vs Non-GAAP) and most importantly NTM (next twelve month) EPS to forecast price target (PT) for the next 12-15 months.

    Then you can move down to valuation section, where you can start pulling in valuation metrics for the comparable companies. Stack the subject company against the comparable companies who are producing the same widgets. A few things that people look at: revenue growth and profit margin. Ask yourself how your subject company stack against them, and whether it makes sense in term of the projections that you made at the earlier stage. Then you look at those valuation metrics: EV/EBITDA, EV/Sales and PE (usually FY0, FY1, FY2). With that you can somewhat come down to conclusion on whether at how many times PE should your subject company be trading based on comparable companies.

    Personally, it is harder to make a good case on valuation based on DCF. Mostly because there are too many moving parts and it usually turns into "garbage in garbage out" situations. Most analysts use DCF when the subject company is currently having negative EPS, and they think that the company will do well in the next 5+ years and they couldn't come up with a PT using comparable multiples.

    Come up with a price target. List out reasons why you think why the company has not reached this particular price target and what changes will need to happen for the stock to move to a particular direction. With a PT in place, analyst will issue BUY, HOLD, SELL. Usually most analysts will not issue a SELL. If they don't believe in the growth promised by the management but don't want to change the rating to SELL, they usually maintain a HOLD rating with a reduced price target. (That's another long story about ER.)

    Step 2: Contact Research Department

    Armed with knowledge from Step 1, now you can proceed to step 2. For example, you are interested in Urban Outfitter, type in "urban outfitters analyst coverage" which would lead to something like this: http://investor.urbn.com/phoenix.zhtml?c=115825&p=.... It lists out contact information of all the analysts from major Wall Street firms including their phone numbers and email addresses.

    The main reason for contacting the Research Department is for you to get a job but there are many possible outcomes and how to deal with each different outcome. I saw an earlier post from Flake, that everyone in the business know that "informational interview" is just an excuse for you to talk to Research Associates and Research Analysts, to network with them and land a job. And bottom line comes down to whether they believe that 1) you are smart enough to work with 2) do you have the right attitudes about work and most importantly 3) would they get along with you.

    While you are going through informational interviews, it is important to keep those three points in mind. Any informational interviews that you come across professionally, always remember that they are an interview itself. Whatever you say or do will be counted for/against you. So treat all informational interviews as a real interview. Don't slack off. Do your search.

    Most importantly, be courteous and be thankful. None of these people (from ER) owes you anything. They don't even know you. They have other more important things to bother. The only reason they talk to you is that they feel like you seem like a motivated individual (empathy, remind them of themselves when they were at your position), you have some sort of affiliations with them (went to same colleges) or you got referred through a mutual contact (personal reason). So it is in your best interest to respect their time.

    For this step, the first thing you need to do is to send out a well thought of cold email, informing that you will be contacting him. When you call, there are four possible scenarios that you are likely to meet:

    1: Headquarter Operator. They don't have any information that you want. So just tell them whom you want to reach and they will transfer you. They will not give out emails or any other relevant information.

    2: Research Department Secretary: Be nice to them. You are perhaps talking to the most powerful person in the Research Department. He/she knew everyone in the group. Just ask her to transfer you to the Analyst that you want to talk to. Always ask her (because most of the time for me, it has been a she), right at the beginning, "If the line got cut off, what would be best way to reach this number."

    You don't want to keep going back to the mainline operator's number. 8/10 times when she transfers the phone to the Analyst, it will go straight to voice mail (my experience tells me that leaving a voicemail usually doesn't work). Dial back to the number that she gave you to reach back to her phone, and tell her:

    And if she said, would you like to talk to the Research Associates, by default, always say "YES".

    "I am sorry to bother you, but it went through the voicemail. My name is (John Doe). I am student at (XYZ college). (Working people just leave this student part out). I am interested in learning more about the company that (Mr. Analyst) covers and do you know whether I can talk to someone else in the office (hint hint: Research Associate for the Mr. Analyst)."

    3. Research Associate: Give the same pitch. "Hi my name is (John Doe). I am student at (XYZ college). (Working people just leave this student part out). I am interested in learning more about the company that (Mr. Analyst) covers. (Always remember to say this) Is this a good time to call or should I reach you out at a different time." (Again being considerate, if said now is fine, move on)

    "How to Pitch Research Associates and Research Analysts to get a job" will be posted sometimes next week. Give me some time to write something more thorough.

    4. The Analyst. Pitch your story. Learn about the industry. (More on this later)

    All the possible outcomes of this step can be summarized as below:
    a) No one pick up the call and can't get to the analysts or the associates. (try it again a few weeks later)
    b) Get to the Secretary and not reachable to Research Associates and Analysts. (Thank her for her time and ask her when would be the best time to call. What time does Research Associates and Research Analysts are at the office? Note that down and call her back again at the designated time.)
    c) Get to the Research Associate. You need to know that you are not going to get hired right on the spot. You are trying to network and build up rapport. No one in the right mind, or rather they cannot give you a job right on the spot. The best outcome is to thank him for his time, ask for email and send him a thank you letter later on, follow up with a request for a face-to-face informational session. You need to make him comfortable enough for him to forward your resume to his boss. Remember he is putting his reputation on the line and no one will do that for you for free. You need to prove those three things above: 1) you are smart enough to work with 2) do you have the right attitudes about work and most importantly 3) would they get along with you.
    d) Get to the Research Analyst. Talk about the sector. Ask him about his background. Pick his brain on the company. Remember not to drag this along. And same thing as Research Associate. Thank him for his time, follow up with a thank you letter, and follow up request for a face-to-face informational session.

    (What kind of questions to ask and how to talk. That's another long story)

    Everything takes time and you need to be patient. Great professional relationships were not built in a day. It takes time.

    Step 3: Build Sample Work

    So, so far. What have you learned and achieved? Well now you know how the companies work. Now you know which companies are hiring. You know who the key decision makers in hiring are. You know how they think. What they like and dislike. Most importantly, you know how the analysts think about the sector, company and valuation. This is going to help you in putting together the equally important part of the equation: building sample work.

    The point of this goal is to learn how to PITCH a stock because all ER interviews will ask you to pick some stocks. With this 2nd step, you will be more knowledgeable about the sector because you already read their reports, and you already talked to the analysts (for networking purpose as well), you can spend more time forming your own opinion, using the things that you have learned to build a model from scratch and write an initiation report or a market update report. These are just work samples that you can use down the road.

    And I see this processes as 1 + 2 + 3 = Repeat. You are going to keep doing this as a cycle, building up your knowledge, network and produce more work sample, until you get an ER offer.

    "I am the hero of the story. I don't need to be saved."

  • In reply to Human
    Flake's picture

    sxh, looking forward to your consolidated post.

    *Fixed for Unforseen.

    Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.

  • vitaminc's picture


    I know a lot of sell-side people constantly interviewing candidates with experiences from the industries that are being researched. The easiest way of 'channel checking'.

  • Unforseen's picture

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  • In reply to Unforseen
    Flake's picture

    Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.

  • In reply to Shorttermbuy
    Flake's picture

    Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.