Equity research analyst at a BB in London
Happy to answer your questions about career path, recruitment, the role, buy-side vs sell-side etc..
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Career Resources
What was your recruitment like?
What was the hardest question asked during your interview?
Comps?
I went though the summer internship to the graduate program to ER. So the process was the typical one for summer:
The AC was not technical in my opinion and much more about the fit.
The hardest question was during a phone call: “Tomorrow the UK parliament will vote for Brexit, what will happen to the £?”
Regarding the answer there is no right or wrong as it depends mostly on the outcome markets are pricing. It’s more about giving your thoughts in a way that logic.
Current comp is 85k currently, started at 50k in the grad. Now grads make more than that given base salaries have been raised consistently in the past 2 years
Do you think this industry is a lame duck for any incoming undergrads because of AI?
Why would AI make ER a lame duck?
A lot of the role involves hosting investor conferences and earnings calls, meeting with and evaluating company leadership, fielding investment questions from the buy-side, and writing in-depth profiles of companies and industries. These are all very human tasks, not those that can be emulated at this point through finding patterns in data sets.
Modeling seems the most vulnerable to automation (not the same thing as AI, but the two are linked), and this is just as applicable to entry-level IB as it is to ER.
Ok so tell me, how do you take that one post of the LO AM guy saying the buy side junior role is dead for ER/AM? You're telling me they'll cost-cut by slashing the junior roles on their own side, but the sell-side (who relies on the spending of institutional investors) is going to remain fat with juniors?
And I'm pretty sure that first year associates aren't the ones leading these earnings calls; ER isn't the apprenticeship that IB is
I don’t think so. AI for sure will help in some tasks such as inserting actuals in the models or do some forecasts. However, take the best 5 analysts in every sector and ask them to do the same forecast, I can guarantee that all will land on different numbers. Add AI and the numbers will be also different. The job is much more about what do you expect the fundamentals of the company will be in 2/3 years time, your thoughts why these company will be able to create operating leverage or have better sales trends than peers.
Even AI does not know the future and like everyone it can make a forecast.
What are best practices / advice to secure a return offer?
I would say it’s not about the technicals as these can always be learnt. I would say focus on reliability ie don’t be late in handing over tasks and assignments but more importantly you would like someone you get along well. We are already in the office for 12+ hours a day, so most important thing in my view is that the manager/who is looking after you feels okay sticking with you for that time rather than hoping to go home cause they are not able to stand you anymore.
These would be my suggestions.
How much industry knowledge is required in ER when working in a specific niche like in Life Sciences?
It depends on your coverage.
Are you covering niche biotech, zero-revenue companies developing highly complex genetic editing tools? Those are mostly people from industry — an MD at my firm in biotech has a biology PhD.
Are you covering big pharma or medical devices? You probably don’t need an industry background, you’ll just need to know how to build a complex model.
Sector specific knowledge comes second as every sector, even within the same space has different technicals or ways to look at fundamentals. Moreover, you’ll learn them with time. I would focus on having a good knowledge of excel and understanding of modelling and valuation. If you have those, then you can learn the sector specifics in a second time. However, some knowledge on the topic for sure helps but would say it is not a must
How is the lateral market at the moment? I have a few years of experience in valuation consulting and am considering going all in on the jump to ER.
(Also going to ask the boring question about comp progression specific to SS ER at a BB in London - what are your expectations for the coming years?)
Thanks for the AMA!
At the moment the market is not great, like for everything I guess. There might be some openings as maybe someone left and banks are looking to replace these people. However, not a major recruiting cycle at the moment but I honestly think this will change in the next 6-12 months.
In terms of comps, it really depends on every bank and on the team. Some best performing teams in some banks will have bigger bonus pool than other teams.
Sorry but not really willing to give it all away. Anyway, it would still be good money but I would not advice to do it only for the pay. If your aim is to maximise pay, then probably IDB pays slightly more.
How are the technicals for ER in general? Do they tend to ask about bottom-up or top-down approach? How essential is excel/coding ability for the role? Thanks!
Excel is a must, coding not essential. I would say, for excel, to be able to use it better than your MD will give you an hedge and will make the team feel they need you. At the end, it is all about making the team feel you are essential for their job and mastering excel better than other members is a good way to start.
In terms of technicals, it would depend for every sector but I would say that in ER SS it is much more fundamentals bottom-up approach. You can have some top-down views for some reports but I would say these are more short term views and calls you’ll make. On the other hand, you will see most buyside having top-down approach to decide where to put their money on and then do a bottom-up approach to see which company they want to own
1. Do you plan to move to the buy-side or look at SS ER as a LT career path?
2. Did you ever consider IB and did you apply for IBD internships to hedge options? If not, why not? And if yes, what made you go ahead with ER?
3. Did you have Master's students in your SA class?
4. Do you see people transition from IBD to ER in London? (after 1 year in IBD) How hard is this?
5. How big was your SA class? If possible, could you please reveal the total number of interns/interns per team? It's okay if you don't wish to though.
6. Do you have an econ/finance background? Or generally, what's your academic background?
Thanks a lot!
1) it really depends on your personality but I would say in ER it is split 50/50 between people looking then to exit (buyside, corporate or other) and those that want it to be their LT career path.
2) I was not interested in IBD as my main point of interest was to be in close contact with markets. So while IBD is good to learn the fundamentals, modelling etc you also step slightly away from markets as a junior.
3) I was myself one of the master’s student in my SA class. I would say we were ~1/3 of the whole class
4) definitely see that, in both ways. People from IB coming to research and vice versa. It is something doable and not uncommon
5) class of ~50. Generally one intern per team at the time but then it is up to every team to decide if they want an intern/grad or not. But can happen that one team has 2 interns in 2 different moments. So there is some competition but at the same time, the task or project you will be assigned will likely be different based on your background/experience
6) did a bachelor in economics and a master in management with a specialisation in finance. But atypical profile as I had already ~2 years of experience gained through internships when I graduated from my master
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